The global financial and economic crisis is the worst ever crisis faced in Sri Lanka but in some ways it is a blessing in disguise to the corporate sector, a human resources expert said.
“Though unfortunate, this situation is a blessing in disguise. We can look at cutting costs and reducing colossal waste in organisations. Substantial savings could be made,” noted C. Hewapattini, Head of HR at Nations Trust Bank (NTB) and a leading member of the Institute of Personnel Management, making a presentation at a Colombo seminar this week on the Sri Lankan impact of the global economic crisis. It was organised by the Royal Asiatic Society of Sri Lanka.
He said the challenge faced by companies is that if revenue is falling, then there is a need to cut costs. But he said the uncertainty is not good for productivity and morale. In the west there is a social net, but what does Sri Lanka have – three months pay and VRS, he said, adding that there could be many layoffs.
Mr Hewapattini congratulated the JVP-controlled Inter Company Employees Union for coming up with a comprehensive document on layoffs and the companies that are doing it. “I tried to get this information from the Central Bank, the Labour Department and the Employers Federation but what they had was bits and pieces of information unlike the comprehensive document prepared by the JVP. Most of what the JVP has presented is accurate. I checked it,” he said.
He said at NTB substantial cost savings have been made and the Bank has not resorted to any layoffs adding however that some companies are in serious trouble.
One of the problems, he pointed out, was in the ‘big’ salaries received by top executives. According to one newspaper report, some executives at the failed Golden Key company had rewarded themselves with huge bonuses but at whose expense, he asked. “Bonus is an appreciation (and reward) that you have performed well.”
He said that unless companies manage executive pay (making sure they are not too much), there could be state intervention (like in the US or the recent case of the Central Bank supervision of Ceylinco-related finance companies).
“Sri Lanka is taking the crisis too lightly. We are not ready. Some high officials say although 50 factories have closed, another 50 factories have opened? But they don’t talk about the social consequences of losing jobs, feeding families,” he said.
he HR expert said measures taken by various organisations to tackle loss of orders, income and revenue include freezing increments and bonus payments; sending staff on leave; stopping overtime and allowances; voluntary executive paycuts and layoffs.
He believes this is the time to develop talent and consolidate. “While there are other budget cuts, we (at NTB) are investing Rs 20 million in training and development. When the recession ends, we want to be prepared to face the competition and be ahead of the rest. That’s why we need to be develop talent,” he added.
Harsha de Silva, the well-known economist, said Sri Lanka has been unable to raise commercial loans since the HSBC $500 million loan in October 2007. “Another $300 million was sought but couldn’t be raised,” he said adding that the crisis was both external and internally-driven. Referring to the proposed $1.9 billion IMF loan which he believes will come with conditions, Dr de Silva said although this (securing the loan) is inevitable, Sri Lanka would have a huge, huge debt problem this year.
Dr G. Uswattearatchi, a retired UN civil servant and Dr Sirimal Abeyratne, senior economics lecturer at the Colombo University, also spoke.