Importing people as a solution to our labour shortage

By Dinesh Weerakkody

There is a perception that the government will allow skilled foreigners to compete with our citizens for good jobs. The GMOA has said professionals such as doctors will be disadvantaged through the influx of human resources to the country through the proposed FTAs (mode 3). However, middle to higher-skilled foreign labour in the workforce can complement workers by bringing along relevant skills to create new industries and job opportunities. Skilled foreign manpower can help fill the labour gap and facilitate the transfer of skills to locals.

This will allow us to anchor new industries such as biomedical sciences, digital media animation, components manufacturing, and aerospace. Equipped with the appropriate skills and expertise, over time, locals will be able to take on the good jobs created within these industries. Based on industry surveys, at least a minimum of 400,000 new jobs will be available at all levels in the hotel, tourism, and industrial sectors per annum in the next three years. According to a survey conducted by University of Colombo Dean of the Faculty of Arts Professor Athula Ranasinghe the unfilled vacancies in the apparel sector was 58% of the total vacancies, 20% in the food industry, and 33% in other manufacturing sectors.

Policy Interventions

Therefore the real issue is not about jobs, but good jobs and finding skilled and semi-skilled people to fill those jobs. The National Human Resource Development Council of Sri Lanka has identified five broad issues that need to be addressed. The first challenge is to attract more women employees into the workforce.

To achieve this, there is a need to provide an accommodating ecosystem to attract and retain women in the workplace. Current participation is only 38% from the estimated 8.5 million. Almost 2.8 million of the labour force constitutes economically inactive women. This is in spite of the fact that educated and qualified women outnumber men. Secondly, urgent Labour Law reforms are needed to drive employment creation, greater productivity, innovation, HRD, and FDI.

Thirdly, Sri Lanka lacks adequate vocational and technical skills in the labour force. A high proportion of firms in Sri Lanka identify a shortage of vocational and technical skills as a major constraint compared to other middle-income and developing countries. The drive for industrial growth is especially hindered by the shortage of technically skilled labour. Therefore, Tertiary and Vocational Education (TVET) must be made relevant in consultation with the private sector.

Fourthly, access to higher education needs to be improved. We spend less than 0 .4% of our GDP on higher education. We need to drive innovation in higher education, particularly online and by using modern technology including robots, which will make training cost effective, more flexible, and personalised as compared to the present manner in which the traditional degrees or postgraduate courses are delivered.

Lastly, the talent supply for industry needs to be built. Generally, young Lankans shun taking skilled and non-skilled jobs with a monthly pay of around Rs. 25,000-40,000 in factories and hotels, but prefer to work as trishaw drivers instead. Currently we have around 1.2 million trishaw drivers. Many institutions are struggling to fill vacancies. The government needs to work with the industry to address this serious issue. For example in Malaysia, rubber tappers were given gainful employment in the electronic industry after completion of their training.

Need to Act

Most of the new jobs will come from the tourism, construction, services, and ICT sectors. Therefore, we need to enhance access to ICT degrees by linking with non-state higher education providers through SLAACOM under the direction of ICTA, and create access for both local and foreign students, additionally providing a loan system. The country projection is that there will be 150,000 new jobs in ICT sector in five years – present maximum is 18,500 (State and non-State).

The tourism sector would also create around 350,000 direct and indirect new jobs by 2020 and the yearly intake is only around 14,000 (State and non-State). Sri Lanka’s construction, manufacturing, and tourism service sectors would find it extremely difficult to grow speedily in the coming years, because of a shortage of semi-skilled and skilled labour.

The outcomes of studies, conducted by many committees, have not delivered the required results. Another key reason for this is a huge shortage of both skilled and unskilled labour, due to the unwillingness of people to join industry and, on the other hand, people looking to migrate overseas.

We are steadily becoming a country that is not able to cater to the demand for workers in mid-professional, skilled, and semi-skilled job categories. Companies facing problems to continue their work have already gained permission to employ Indian and Chinese workers in small numbers.

One option would be to move industry focus to the areas where the required labour resides, but this needs careful planning. Our labour shortage problem is largely due to the absence of poor manpower planning over the years, too many agencies and commissions involved in formulating national skills development policies, lack of career guidance, inadequate number of effective training facilities, and lack of on-the-job training programmes for most school leavers.

Foreign labour to fill gaps

Sri Lanka is increasingly facing domestic labour shortages in some economic sectors and industries. While social attitudes, expansion of the economy, and outward labour emigration contribute to the shortfall, lack of interest in certain types of jobs, competition from other employers, insufficient salaries and payments, lack of qualified people, poor terms and conditions of the job are also significant factors.

Shortages are recorded in projects with foreign investments as well as in Sri Lanka’s own companies.

Overall industry level studies indicate large scale labour shortages in selected industries including the tourism, construction, and information and communication (ICT) sectors. Moreover, industry level estimates show that the labour shortages are likely to increase over time.

As the labour component is a fundamental input to economic development, the consequences are critical leading to productivity and direct output losses. Acute labour shortages affect growth ambitions and investor confidence. Economic research in other countries suggests unemployment below 5% builds wage pressure as businesses struggle to find suitable candidates. Labour shortages – and the resulting higher costs – make markets inefficient and are a disincentive for investment.

In the absence of a clear policy to deal with the issue of labour shortages, industries are adopting different strategies to overcome the problem. Some industries are using foreign workers to fill vacancies. Some estimates show that roughly 200,000 foreigners mainly from India, China, and Bangladesh are working in different sectors. Some industries are mechanising operations while other industries have relocated their factories to other countries, for example to Bangladesh. Notwithstanding economic benefits, labour import to any country is a sensitive issue as its effects will be felt across its social, cultural, and economic fabrics with far reaching consequences. Some of the key issues include loss of job opportunities to own nationals due to cheap labour, threats to social-cultural identity and health and order, ethnic and religious disharmony, and national security. Unregulated labour immigration may also lead to illegal immigration, overstaying, abuse of visa condition, and risk of human trafficking, resulting in loss of public confidence in the immigration system.

Today, our youth are distancing themselves from the agriculture and construction field. Therefore, if international firms need foreign workers to fill the gaps and complete projects on time in accordance with their agreements with the government, Sri Lanka will definitely need to attract foreign talent and be open to welcoming workers from overseas to plug immediate, as well as emerging, talent gaps. Manpower shortages in the construction sector is driven not only by low wages on offer, but rather by shifting aspirations and work ethics that is not conductive to occupations seen as hard labour. Changing this attitude among our youth will be very difficult. Therefore, importing labour for specific projects, periods, and skills would help to fill critical short-term skills gaps, but a clear strategy is essential for growing our own talent pool.

While our labour market gaps are largely attributed to skill mismatches and poor planning, we need to now look beyond the labour and skill agenda, and move towards a new agenda for business growth, job creation, and improving our competitiveness.

The writer is a HR thought leader

Labour Shortage in critical sectors is affecting our GDP Growth. Sri Lanka plans to get to $ 5,000 by 2020