Regular jobs going out of fashion
Permanent work contracts and life-long-jobs are going out of fashion in Sri Lanka with more and more businesses opting for informal work arrangements.
The latest findings show that Sri Lanka’s job market is ‘informalising’ at a rate, jerking labour market regulatory systems out of gear. Given the changes, the experts say Sri Lanka needs to re-look at existing labour regulations fast, to make sure they remain useful.
“Sri Lanka’s labour market is becoming increasingly informalised. Traditionally our labour market was about fulltime jobs and sometimes people had one job for life. This is not the case anymore,” said Dr Athula Ranasinghe, from the University of Colombo’s Social Policy Analysis and Research Centre (SPARC). The latest research on labour flexibility and economic security in Sri Lanka was conducted by SPARC, with International Labour Organisation (ILO) support.
“Now we are seeing more ‘atypical’ workers because the typical structures are changing. This is because businesses now hire workers under many different arrangements instead of hiring in the traditional way. The result is increasing informalisation of the labour market,” said Ranasinghe.
Companies are increasingly outsourcing activities to third parties that in turn hire casual workers. “So jobs that were previously in the formal sector are migrating to the informal sector,” said Ranasinghe.
Companies are also increasingly issuing short term contracts instead of permanent contracts. More people are also holding down multiple jobs and more people are looking for part-time work.
“But our existing labour regulations are not designed to cater to these types of different working arrangements. Most of the time the labour regulations are applicable to the formal labour market but now it is the informal sector that is growing,” said Ranasinghe.
The result is that both labour laws and labour market institutions are becoming less relevant to Sri Lankan society. For instance the SPARC-ILO surveys found that trade unions are losing worker support.
“Younger people are beginning to feel that trade unions are less supportive of worker objectives and problems. So this means traditional trade unions need to change or some other type of arrangement needs to be developed to give voice to working people,” said Ranasinghe.
Education not enough
The growing informalisation of the labour market is also raising questions about the effectiveness of education in finding employment.
The surveys found that informal methods of using ‘contacts’ and ‘influence’ are still the main route to jobs, rather than finding jobs by going through the formal systems on the strength of educational qualifications.
“Around 24% of people visited prospective employers to get jobs and another 25% applied for jobs through contacts. Only about 30% applied for jobs through the formal, published job vacancies. So where does that leave education?” asks Ranasinghe.
The experts say growing informalisation is reducing employment security for working people in Sri Lanka. The power balance in the labour market, despite the existence of labour laws, is shifting in favour of businesses. “Although the laws are there, because they are less effective in the informal sector, the legal protection available to working people is relaxing. Because traditional trade unions are also losing relevance, collective worker power is also reducing. So the safety nets for workers are gradually dissolving,” explained Ranasinghe.
The experts say lower skilled and unskilled poor masses are the most vulnerable to exploitation under these conditions as they have less bargaining power. Because of less employment security, overall, people will also have less economic security.
International labour experts say growing informalisation is a global phenomenon and not just a development in Sri Lanka. People in rich countries as well as poor countries are caught up in the process. But by now many western countries are officially developing systems to protect their people from these changes.
“There are many factors that are causing informalisation. It could be due to internal conflicts, misplaced policies and are also very much due to globalisation and liberalisation,” said Dr Azfar Khan from the ILO.
Increasing global competition is forcing companies to outsource business processes and cut costs to maintain profits. Cutting costs often translate into less benefits and less security for workers.
“Aided by ICT developments, firms are moving towards work-from-home arrangements and other systems, like outsourcing non-core activities. In these cases they do not have to provide social security for workers,” said Khan.
In developed countries the impacts on people are seen as less severe because these countries have strong legal systems. But governments are already moving to protect working people.
“Governments all over the world are looking into this situation. Already the UK and the US are considering pension reforms,” said Khan.
Sri Lanka has also been advised to re-examine labour regulations to keep pace with the changes.