Thumbs up for migrants

Given the estimated 800,000 labour shortage for the construction industry, Government action to open up the sector to allow Nepalese, Bangladeshis and Indians to work in Sri Lanka is a positive and progressive step that deserves to be applauded for several reasons.  

There is deep fear that Sri Lankans will lose jobs if migration is allowed but the simple truth is that locals do not want to work in the construction industry and the lack of labour is driving up prices, making it more expensive to build in Sri Lanka than other South Asian nations. Even with sufficient technical training, feeding demand would take years because of the time needed to teach and gain experience for highly technical jobs within the construction industry. 

If there is free movement of labour then workers from oversees can take temporary jobs when an economy is booming and then return home when the boom is over. This is particularly beneficial for cyclical job markets such as construction.  For example, during the Irish property boom (2000-2007), construction workers migrated to Ireland. However, numbers reduced by nearly 50% between 2008 and 2009, and over the past two years the number of employment permits issued has dropped by 66%. If an economy experiences labour shortages, it will put strong upward pressure on wages; higher wages can easily lead to inflationary pressures. Free movement of labour means rising wages will attract more labour into a country and this will prevent excess wage inflation. It would also allow the industry to expand and for more people to have access to it. Nearly a million houses are needed over the next few years and low-end housing would be more accessible if construction costs are reduced, thus creating the space for sustainable development. Migrant labour also helps to deal with demographic challenges. Many countries in Western Europe are experiencing a demographic time bomb with a rapidly ageing population. Sri Lanka is also the second-fastest aging country in Asia with its population shrinking to the point that locals could be employed in better jobs requiring higher skills and making better salaries. Free movement of labour can see young immigrants come to areas of declining working population and make a net contribution to public finances.

Availability and quality of labour is known to be a key investment location factor for many businesses. Since the end of the war, construction has become one of the fastest growing sectors and it can feed many other linked fields. For example, tourism can develop faster in Sri Lanka because more hotels can be built faster and cheaper, attracting more investment and rapidly improving infrastructure. The synergies created by the construction industry could overflow into many other areas including real estate development, interior design, architecture and logistics.        

Legal immigrants in work pay direct and indirect taxes and are likely to be net contributors to the Government’s finances, which have always suffered from lacklustre revenues. Many countries in Europe and elsewhere have evolved strong systems that have clear regulations governing work permits and strict monitoring. Even though many people imagine open floodgates, the reality is that Sri Lanka has full and absolute control of its borders and can decide who will stay and who will not be allowed in. 

The fact that Sri Lanka badly needs affordable labour is beyond dispute. Sri Lanka has a choice to either embrace its challenges and fix them or let them fester in distrust and insecurity.