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Labour imports must be managed professionally to avoid destabilisation


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From left: Access Engineering MD Christopher Joshua, CA Sri Lanka President Jagath Perera, GMOA General Secretary Dr. Chandana Dharmarathe, International Trade State Minister Sujeewa Senasinghe, NHRDC Chairman Dinesh Weerakkody (moderator), IESL Vice President Eng. Arjuna Manamperi, Immigration and Emigration Department Controller General Nihal Ranasinghe, IPS Research Director Dr. Nisha Arunathilake and Labour Department Commissioner General A. Wimalaweera at the constructive discussion titled ‘Bringing skilled foreign workers into Sri Lanka; is it a viable option?’ organised by the NHRDC together with CA Sri Lanka and the International Chamber of Commerce Sri Lanka

A group of professionals belonging to several agencies said in one voice on Tuesday that foreign worker policies must be carefully drafted and should not in any way be allowed to destabilise the local labour market. 

The known facts about Sri Lanka’s labour market are: the skills mismatch, low female labour force participation at 36%, youth unemployment, demography, ageing population, and outdated labour policies. 

To address our labour shortages and the skills mismatch we need to up-skill our domestic labour pool, tap into our overseas Sri Lankan workers and diaspora, and finally for short-term gaps look to foreign labour. 

It is estimated based on Immigration Department data that around 40,000 foreigners, mainly from India, China and Bangladesh, are working in different sectors. Some however put the figure as high as 200,000. 

Sri Lanka currently has no adequate institutional, legal, policy and operational framework for facilitating and regulating foreign worker movement in Sri Lanka. According to the Department of Census and Statistics, there are nearly half a million vacancies in medium- and large-scale private sector enterprises in 2017 (see chart). 

The hardest to fill vacancies are found in the occupation categories of ‘sewing machine operators’ (46,576), ‘security guards’ (45,316) and ‘other manufacturing labours’ (31,277). 

Large-scale labour shortages in selected industries including the tourism, construction and Information and Communication Technology (ICT). Moreover, industry level estimates show that the labour shortages are likely to increase over time in key sectors, largely driven by a skills mismatch and young people not interested in certain jobs.

Shortage is real

Sri Lanka is increasingly facing domestic labour shortages in key economic sectors and industries. While demographic, social attitudes, expansion of the economy and outward labour emigration largely contributes to the shortfall, lack of interest in certain types of jobs, competition, insufficient salaries and payments, lack of qualified people, poor terms and conditions of the job also play a significant role. 

Shortages are today recorded in many projects with foreign direct investments as well as in Sri Lankan own companies. As the labour component is a key input to economic development, the consequences can be critical, leading to a drop in productivity and direct output losses. 

Acute labour shortages will affect economic growth and also investor confidence. Economic research in other countries suggests unemployment below 5% builds wage pressure as businesses struggle to find suitable candidates. 

Labour shortages – and the resulting higher labour costs – make markets inefficient and are a disincentive for investment like what is now happening in many developed markets. Therefore a clear policy is required to deal with the issue of labour shortages, both in the short-term and the long-term.  In the short-term we need to increase the female labour participation level, training of existing workers to do new jobs, improvement of benefits to attract more workers, mechanisation, improvement of HR management practices, and lastly foreign workers as solutions through local certification and Mutual Recognition Agreements (MRAs). 

Long-term however we need to invest to get our labour ready for the emerging new jobs. The government and the private sector will need to address this challenge jointly.

Options 

Some industries in the country are adopting varying strategies to overcome the shortage. Some industries in the construction and tourism sector are now using foreign workers to fill vacancies. 

Notwithstanding economic consequences, labour import to any country is a sensitive issue as its impact will be felt across its social, cultural and economic fabrics with far-reaching consequences. 

Some of key challenges of bringing foreign labour and skills include loss of job opportunities to locals due to cheap labour being imported, skilled Labour becoming unemployed, threats to social-cultural identity, health, order, and national security. Unregulated labour immigration may also lead to illegal immigration, drug trafficking, overstaying, abuse of visa conditions, and risk of human trafficking, resulting in the loss of public confidence in the immigration system. 

Therefore as the panel of experts suggested this week the Government immediately needs to: 

a) Establish a national mechanism to quantify and publish total foreign worker requirement per year, by sector and by occupation

b) Establish a national mechanism to set and verify qualification/skills/experience of professionally qualified persons and persons with special skills 

c) Establish eligibility guidelines for employers intending to hire foreign workers 

d) Establish a work permit issuance mechanism and 

e) Establish guidelines and robust verification mechanism to ensure job opportunities are first offered for Sri Lankans, before hiring foreign workers. 

Therefore the foreign labour hiring policies needs to be carefully drafted so as not to destabilise the local labour market.

(The writer is a thought leader.)

 


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