Workers' rights and employment gains
Marx's exhortation to the workers of the world to unite will certainly be unheeded by the workers of Sri Lanka today. They will march and gather in various places under different political banners. Their slogans would not be demands to better their working conditions as much as to support or oppose the government. In fact the main opposition party has stated that its objective this May Day is to bring down the government.

Perhaps each group of followers of political parties believes that if their party is in power their interests would be best served. This is of course an indirect way of espousing their interests.

The modern world of globalisation has created very different conditions to those prevailing in the past. The intense international competition ensures that only the fittest will survive. This places severe pressures on management to extract the most from labour. Industries rise and fall in the face of new emerging competition and economic changes. The need for flexibility is paramount for industry to survive in such a harshly competitive set up. Productivity is the key to success. Rigid labour regulations to protect the employed can be detrimental to enhancing competitiveness.

Sri Lankas’ traditions are not consistent with the current economic order. The socialist influence and regimes have tended to institutionalise workers rights to the extent of such protection inhibiting industrial efficiency, reorganisation and expansion. The rigidity in maintaining the workforce has induced inefficiency. The inability to contract an industry or firm in response to market conditions has inhibited the expansion of firms.

In a society with high unemployment that should bring about labour intensive modes of production, capital-intensive technologies are being adopted to circumvent labour problems. There continues to be a conflict of interest between the employed and those seeking employment.

While the employed may be protecting their employment, those seeking employment may have lesser opportunities to be employed. The Sri Lankan economy is performing at a lower level of labour absorption than its potential. This has resulted in the government over-employing to reduce the rate of unemployment among the more articulate sections of the unemployable, thereby increasing the public burden on wages and ultimately on pensions. Such a strategy is not only costly to the public purse, but also detrimental to efficiency in the public service.

The conflict between management and workers has been sharpened all over the world in both capitalist and former communist countries. The underlying factors have been the global competitiveness just mentioned and the incessant seeking after maximisation of profits. The later is seen most clearly in developed countries where seeking maximum corporate profits has led to downsizing of firms. The laws in those countries permit such reduction of employment and workers move on to seek employment elsewhere. East Asia and South East Asia have seen more varied practices. In South East Asian countries like Malaysia there has been flexibility to hire and fire. This has enabled the economy to change its industrial structure in the face of changing cost structures, especially owing to new competition from lower labour cost countries such as Bangladesh and Vietnam and rising wages in Malaysia.

In some East Asian countries, notably Japan, industry traditions have not favoured downsizing even when facing conditions that necessitated it. Instead owners, management and workers have accepted lower profits, salaries and wages to sustain the industry. Recognition of a common interest between management and workers has enabled such an approach. This is based on values steeped in the past when workers considered employment in a firm a life long involvement. However these values are being gradually eroded.

What this brief discussion points out is the need to fashion new means of ensuring the interests of both workers and their management. Crucial to such a strategy would be a need for trust between the parties and the acceptance of the stark economic fact that a conflict of interest could lead to economic stagnation and collapse of industries. This means that workers interests would not be served ultimately. The interests of workers would be best served by the rate of employment rising and consequently the wage rates rising in tandem. This can be achieved only in the long run with painful adjustments in the immediate future.

Labour regulations, trade union actions and the political milieu in the country are hostile to the adoption of the needed flexible adjustment policies. Consequently long run increases in employment are likely to be hampered. Workers of Sri Lanka should unite with management to ensure higher levels of economic activity and employment.

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