Sri Lanka‘s business activities are slowing down at present and expected to further weaken in the coming months amidst struggling private sector firms for survival in the aftermath of the COVID-19 pandemic and the ongoing economic crisis, Labour Ministry sources divulged. These firms are facing supply side uncertainties at present and most of those companies [...]

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Business slowdown, staff cuts and freezing recruitment

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Sri Lanka‘s business activities are slowing down at present and expected to further weaken in the coming months amidst struggling private sector firms for survival in the aftermath of the COVID-19 pandemic and the ongoing economic crisis, Labour Ministry sources divulged.

These firms are facing supply side uncertainties at present and most of those companies were compelled to reduce employment by layoffs, non-renewal of employment contracts, and halting new recruitments, a recent Labour Department survey has revealed.

Businesses are downsizing their operations amid the worst economic crisis although many respondents from the manufacture of textile and apparel sector mentioned that they were able to increase the employment count. Government-imposed restrictions on imports have led to the shutdown of many private companies.

Hundreds of thousands of workers have already lost their jobs in the construction sector, while several small and medium enterprises have revealed that they cannot pay wages to about 4.5 million workers.

The impact is more severely felt by unprotected workers. Currently, more than 1.7 million temporary employees in the private sector are at risk of facing drastic wage cuts and layoffs. President of the National Trade Protection Council (NTPC) Mahendra Perera said that SME’s used to pay interest rates for their borrowings from banks and financial institutions ranging from 14-18-20 per cent per annum and this will increase to 21- 25-27 per cent or more with hike in rates.

These business enterprises are currently facing liquidity issues due to a loss of revenue and difficulties in the importation of raw material in dollar crisis and rupee depreciation along with the decline in cash flow, loss of sales, he added.

According to the Labour Department survey for 2022, the highest demand for labour was made by large companies with current employment of more than 100.

The highest labour requests of 69 per cent were made by the manufacturing sector while 15 per cent was in the trade sector.

There was a high demand for female labour in several economic activities namely, the Plantation sector, ‘Manufacturing of food, beverages and tobacco’, ‘Manufacturing of Textile, wearing apparels and leather products’ and health.

The list of top 30 jobs shows the changes and emerging patterns in labour requirements for 2022.

‘Sewing machine operators’ accounted for almost half of the labour requirements, while 22 per cent are obtained by Manufacturing supervisors and Manufacturing labourers. ‘ICT operations technicians’ and ‘Software developers have acquired positions in the top 30 list for 2022.

“Employment also declined, particularly in the manufacture of food and beverage sector, mainly due to the discontinuation of casual employees,” the Department revealed in its survey findings.

Meanwhile, the survey also found that employment had continued to fall in the services sector through July due to a freeze in recruitments and non-renewal of existing employment contracts amid subdued business activities.

Out of the companies that responded, 45 per cent recorded labour need for 2022. Out of these, nearly half of the companies are situated in Colombo district while Western province covered three fourths of it.

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