90 years of the Employers’ Federation of Ceylon

By Sriyan de Silva, Franklyn Amerasinghe, Gotabaya Dasanayaka and Ravi Peiris

This tribute to the Employers’ Federation of Ceylon (EFC) on its commencing its 90th year is jointly authored by four of its former CEOs whose service in the EFC cumulatively exceeds 100 years. They are Sriyan de Silva (December 1964 to December 1989), Franklyn Amerasinghe (May 1974 to September 2000), Gotabaya Dasanayaka (October 1979 to December 2006), and Ravi Peiris (May 1992 to July 2015). The period of service of the four co-authors stretches over 51 years of the 90 years of the EFC’s existence (1964 to 2015). In fact the EFC had its own CEO only from 1946 having shared the services of the Ceylon Chamber CEO before that. 

The organisation was mooted in 1927, had a meeting of the interested parties in 1928, and finally the Interim Council met in January 1929. It was an off-shoot of the Chamber of Commerce created to further British interests. Many events both local and foreign, influenced their decision to set up the Federation. In the UK the Labour Party had displaced the Liberals as the second largest party; the creation of the International Labour Organization (ILO) gave a voice to trade unions at the international level, and in Sri Lanka A. E. Gunasinghe provided leadership to workers in a nationally-recognised trade union. 

As pointed out by Kumari Jayawardena in her monumental book ‘The Rise of the Labour Movement in Ceylon,’ the period from 1923 to 1929 was one when “the working class which made use of the opportunity to improve its economic position through trade union activity, also began to assert itself as a political force”. The British business community, quite presciently, felt that it needed an organisation with specialist skills relative to labour matters and an ability to deal with trade unions to meet the challenges posed by the rise of the labour movement.

What makes 

the EFC unique?

What makes the EFC unique and different from other organisations which represent business interests? During the first half of its existence its pre-occupation was with industrial relations, as is obvious from the fact that the British business community which created the EFC intended it to have a mandate quite different from that of the Chamber of Commerce. It was during the second half of its existence that the EFC’s uniqueness increased, thanks largely to its professional expertise in the Secretariat which kept on growing to meet member requirements. 

The Industrial Disputes Act of 1950 and the creation of labour tribunals in 1957 led to the EFC developing legal and representational services for business. The competency and professionalism of the EFC staff was such that it substantially reduced the need for members to resort to outside legal services. Its unique character continued to evolve with the addition of several other services. Consequently, the EFC came to be recognised as also promoting and engaging in the development of social policy. It can therefore be said that the work of the EFC fitted within the pillars of Sustainable Development.

What is of particular significance is why and how the EFC survived,  evolved and developed into being the nationally recognised representative of the business community in its field of operations, and gradually came to be recognised by the International Labour Organization as the best and most professional employers’ organisation in developing and economically emerging countries. It is this latter perception that led to all four of the above-named CEOs of the EFC being recruited to senior positions in the ILO. 

Development, stature 

and recognition 

In the pre-independence period there was no problem of survival since the EFC had been created to serve the economic interests of the British business community. Even in the 1950s the EFC had considerable influence. This was reflected in the fact that its CEO, A. J. Mullins (a Britisher), had a telephone line direct to the Governor-General, Sir Oliver Goonetilleke. However, after the 1950s several factors accounted for the development, stature and recognition of the EFC by successive governments as well as trade unions. 

First, the EFC did not depend on political patronage )which is very different from having good relations with the government) for its survival. 

Secondly, it instead focused on enhancing its competency in the field of employment relations to be able to provide professional services which were readily accessible and of the highest quality. One consequence of this was that member companies had little need to retain lawyers to obtain advice and representation in the field of labour law and relations. 

Third, the EFC dealt with trade unions on the basis of equality and on industrial relations principles rather than political ones. It recognised that just as much as the EFC was registered as a trade union of Employers (in fact it was the first registered trade union under the Trade Unions Ordinance in 1935), the workers had a similar right to belong to trade unions to further their interests. However, the EFC always maintained that the Union’s right to negotiate depended on its acting in a disciplined manner and on one occasion when the Union acted in a criminal and unlawful manner, the EFC repudiated a Collective Agreement. Thus changes in governments had little impact on the EFC’s dealings with unions. 

Fourthly, the relationship between the EFC and trade unions was viewed positively by member firms as inuring to their benefit, as did the unions themselves who often sought dialogue with companies through the EFC to avoid conflict. The EFC promoted and practised the idea of dialogue and negotiation as a key means of avoiding or reducing disputes, and harmonising conflicting interests. Trade unions therefore, came to respect not only the professionalism of the EFC, but also its willingness to help settle disputes amicably and on a fair basis which enabled both parties to benefit from a win-win situation. It is significant that leading trade unionists such as Panditha, Batty Weerakoon, Shanmugathasan, Bala Tampoe and Sayumyamurthy Thondaman in their own way enhanced the EFC’s credibility with their own members.

The July 1980 General Strike which was the last of such strikes saw many workers lose their jobs. The EFC handled this issue on a basis quite differently from the government and made it possible for strikers to voluntarily return and resume employment subject to conditions which most of the Unions considered fair. The cases which reached the Labour Tribunals were handled successfully by the EFC Secretariat against some of the leading lawyers in the country. 

The second JVP insurrection in the late 1980s adversely impacted employee relations at workplaces, but the members of the EFC had relatively fewer problems at their workplaces. Industrial relations stability and the future of trade unions which had been in existence for decades were seriously threatened. The restoration of normalcy and the JVP entering the mainstream of politics as well as normal trade union activity through its Inter-Company Employees’ Union led to it understanding the apolitical professional approach of the EFC and what it stood for. The EFC can take a share of credit for this union’s entry into mainstream industrial relations activity, by maintaining that there were sacrosanct rules for Industrial Relations dealings which should be observed for the good of both parties.

Recognition and appreciation from governments

Equally important were the views that different governments held of the EFC. During the dark days of the private sector in the 1970s (incidentally the EFC was along with the Estate Employers Federation and the Planters’ Association dispossessed of their offices without proper notice and any justifiable cause), the government comprising the SLFP, the LSSP and the Communist Party, was not in favour of the private sector. 

However, some leading politicians among whom were Dr. Colvin R. de Silva, Dr. N.M. Perera and T.B. Subasinghe summoned the EFC for a discussion at which they appreciated the fact that the EFC had contributed substantially to maintaining industrial peace. They wished to obtain the views of the EFC on the practicality of a law to compel companies employing a minimum number of employees to be members of the EFC, perhaps in the hope that this would stabilise Industrial Relations in the country. 

The EFC managed to convince them not to pursue the idea as it could have serious implications both for the government and the EFC. This was undoubtedly a vote of confidence by a government which was essentially hostile to the private sector in the ability of the EFC to be a reliable “social Partner”. 

When the EFC celebrated its 50th anniversary soon after the political and economic changes in 1977, the Minister of Labour stated: “As Minister of Labour, I commend to all employers in this country to follow the example set by the Federation in the fields of collective bargaining and employment relations. Such measures of cooperation by employers, I am sure, will go a long way in helping the government to establish a just and free society.” 

Similar support was received from Chandrika Kumaratunge when she was the President who persuaded the Ceylon workers’ Congress to negotiate wages without reference to the cost of living which she said was the government’s responsibility to address. It is known that Kumaratunge had recommended to a government-owned bank that they should join the EFC when this institution had a major dispute and this perhaps was a start for State-owned institutions to join the EFC. The EFC received recognition and appreciation from governments from both sides of the political divide.

It may also be mentioned that until the 1980s there was some concern on the part of the EFC about admitting State institutions into its membership as the organisation wished to ensure that its role should not be compromised by any political pressures and State Institutions which have joined, have done so in the knowledge that they would have to abide by policies of the EFC.

A new challenge

With the change of government in 1994, trade unions posed a new challenge. They assumed there would be a reversal of the open economy and a return to a regime where industry is controlled by the State and privatised institutions re-nationalised. 

There was a fresh call for a “Workers Charter” which had been first proposed during the ULF government. The main issue was that Unions had found that they had failed by and large to set up Unions in the Free Trade Zones. The Unions also felt that if they could pressurise the government to take back privatised ventures they would have greater power. The Charter demanded what they considered proper implementation of the State’s undertakings under specific Conventions of the ILO. 

What some employers outside the EFC did not appreciate was that there were global pressures which were very much on the lines of what the Unions were demanding, and that audit standards being applied by foreign buyers made it essential to have some compromises in place so that the country could benefit from globalisation. The private sector was divided. On one side were the enlightened employers who saw the need to deal with Unions if they were sufficiently representative, and on the other were those who felt that the Workers’ Charter was a means for Unions to disrupt the private sector. 

The EFC found that many of the provisions of the Charter only highlighted obligations which the country had undertaken by ratifying International Conventions of the ILO and which had been already included in legislation, but were not in the view of the Unions being effectively implemented. It was a situation where the EFC was required to assume leadership and exhibit its expertise as the premier employers’ organisation.

In its relations with the Chamber of Commerce, in view of the situation created by the Workers’ Charter, the Chambers and the EFC forged a common bond for consultation and synergy. The EFC was reorganised in the mid-1990s to accommodate a special Group of Employers called the “Affiliated Employers’ Group” which gave permanent representation to the interests of National Organisations such as Chambers and Trade Associations on the Council of the EFC. As a reciprocal measure, a representative of the EFC sits in the Ceylon Chamber of Commerce Committee. An Agreement was entered into that on matters pertaining to employment, the EFC would be the spokesperson for the business community.

Ability to change

The organisation’s continued relevance was also due to its ability to change to accommodate the requirements of its members and other stakeholders. It has been able to adapt and re-engineer itself and emerge stronger to meet the challenges they were confronted with. 

While initially the EFC was more concerned with general initiatives with an industrial relations flavour, it later became proactive in relation to developing processes and competencies in order to enhance productivity. The EFC set up a training wing for this purpose and also spearheaded the formation of the Skills Development Fund which was originally sponsored by the World Bank as a Public-Private Partnership to contribute to national productivity.

The publications the EFC has produced over the years have become standard references on the respective subjects. They are resorted to by Practitioners, the Department of Labour and have been referred to with approval by the Supreme Court on many occasions. 

The EFC had considerably expanded its services by the beginning of the present century. With the privatisation of the management of plantations in 1992 which created 23 Regional Plantation Companies the EFC not only increased its portfolio of services, but also made it more representative of the employers and sectors in the economy. 

New services were developed such as in the areas of safety and health when the need was felt. The EFC ‘Employers Network for the Disabled’ offers programs for differently-abled persons in employability skills, followed by initiatives for their placement in member companies. This activity has been recognised at national and international level as an example of how an Employers Organisation can contribute in reaching out to the marginalised groups in the Labour Market for greater diversity and inclusion. In this same overall context, the EFC also took the lead in facilitating enterprise level initiatives for handling workplace related issues such as sexual harassment. 

Importantly, it is little realised that before human resource management became a key aspect of management in companies, the EFC commenced its promotion as a means inter alia of developing a satisfied workforce and winning the workers’ cooperation. In 2012, the EFC set up the HR Solutions Division which undertook HR Consultancies for Companies. The service is fee levying. Today, it has expanded with a team of young professionals engaged in a range of HR services. 

The EFC’s regional expansion scheme through which it has signed nine MOUs with regional Chambers to work together to reach out to SMEs, has further extended its reach. The launch of the Compliance + program along with an internationally recognised Compliance Auditor has not only been received with great approval in Sri Lanka but is now being used as a model elsewhere. 

Continued relevance 

and value 

The gradual increase in the membership and staff of the EFC over the years to 668 members and 33 professional staff, speaks for its continued relevance and value. This increase of members and the new services have led to its recognition and reach beyond the earlier category of largely Colombo-based businesses. 

We can be proud of an institution which has continued to be recognised locally and abroad, by several countries and organisations, for the excellence it has achieved in the delivery of its services. What is more, and even rare at the present moment of time, is that those who have passed through this great institution (certainly the co-authors of this article) have carried away nostalgic memories and a sense of pride in having been associated with the organisation. 

It has generally been recognised that it is the Secretariat of the EFC that has made the difference to its reputation, and we wish to thank all our colleagues who have served with us. It is a significant fact that during our careers the organisation’s policy making bodies provided the necessary space and support for the staff to conceptualise, develop and deliver the services which have earned the EFC its reputation. 

As a matter of fact, at no stage did such bodies seek to dictate to the professional staff as to what it should do and how it should be done. They were mindful of where the knowledge and skills lay. We therefore wish to thank them as well and hope that the same approach will continue in the years to come.

(These are the personal views of the four writers who have covered their periods of employment with the EFC to provide a composite picture.)