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TU action and economic impact

19 Feb 2022

By Vinu Opanayake While the general public views trade union action such as protests, strikes, and work-to-rule campaigns as a hindrance to day-to-day operations of respective State institutions as well as to the private sector, the trade unions view such actions as a move to ‘strengthen’ the national economy while protecting the sovereignty of the country. Petroleum General Employees’ Union President Ashoka Ranwala stated that every successful trade union action had benefited the country’s economy, contrary to damages as assumed by the general public. However, there are diverse views regarding the economic impact of trade union action, some within the trade union movements themselves. Ranwala stated that many attempts to sell the State-owned Ceylon Petroleum Corporation (CPC) at low prices were stopped by the trade union and the union had made it profitable for the corporation by doing so.  “We have stopped every move by the Government to pressure the public and made sure the public receives relief. Trade union actions have never impacted the economy negatively. The country’s economy lost only during the times trade unions could not resort to any sort of action to prevent certain incidents from happening,” Ranwala claimed. According to him, a potential collapse of the country’s health system and the formation of ‘illegitimate’ doctors were prevented by the trade unions as they ensured the South Asian Institute of Technology and Medicine (SAITM) did not provide the relevant degrees, through protests and campaigns. “However, a trade union action only becomes a strength to the economy when it manages to achieve its intended target. We have to win that and only when we win can we make sure the country’s economy and sovereignty are protected. If the policymakers defeat the protests, it will definitely impact the economy,” he opined.   He explained that his trade unions did not resort to reckless protests or work-to-rule strikes as assumed by the general public as they always assess the situation to ensure public services are not hindered.  “We have resorted to massive protests but there is not a single day we closed down the operations of our refinery due to protesting. When deciding on a protest, we divide into groups and launch the protest. Once a group is done with the protest, they go back to the refinery and continue the operations while another group will come to the protest to replace the group that left.” He stated that for a country to go forward, protests were an integral aspect. According to him, what hinders the economy is the actions taken by the policymakers of the country. Economic impact is the whole point of the protest Contradicting CPC Trade Union Leader Ranawala’s point of view, Free Trade Zones and General Services Employees Union Joint Secretary Anton Marcus told The Sunday Morning that the trade unions use protests and strikes as a bargaining tool and it was obvious that an impact would be caused to the economy. “If there is no impact, there is no bargaining either. How can we bargain, if not? Therefore the responsibility of mitigating the potential damages or losses to the economy lies with the particular State authority. A protest usually happens between two parties and these two parties are mostly the trade union and the Government. The most powerful party here is the Government. Only the most powerful party has the responsibility to protect the economy,” Marcus opined. According to him, ideally, policymakers should attempt to discuss and solve matters before the trade union resorts to any action. “Only when the Government fails to do this, the relevant parties and the general public will be in trouble,” he added. “However, trade unions are also bound to reduce the impact of the strikes and protests on the general public and the economy. But if the Government feels like they cannot address our concerns and they have to let us protest, the Government should at least inform the public prior and tell them that they cannot do anything despite discussions and therefore they have to let us protest, so the public would be better prepared. Unfortunately, the Government does not do this,” Marcus pointed out.   ‘We have to let them protest’ Minister of Labour Nimal Siripala de Silva when asked how trade union actions were impacting the overall economy, told The Sunday Morning that under International Labour Organisation (ILO) Conventions, trade unions had a right to resort to strikes and protests. “But of course they have to be reasonable. If they want to protest, they can protest on the side of the road, not in the middle of the road. It impacts the economy, but what to do? We have to let them protest. We have to preserve their rights as well. But the economy is doing well so far despite the trade union actions,” de Silva stated, pointing to the record high reported in export earnings last year. How is it really impacting the economy? When The Sunday Morning contacted the Ceylon Chamber of Commerce (CCC) and the National Chamber of Exporters’ (NCE) to inquire about the impact trade union action had on the economy and industry, both organisations were not available for comment. However, speaking to The Sunday Morning, Ceylon National Chamber of Industries Chairman Canisius Fernando stated that these trade union actions were having a ‘terrible’ impact on businesses in Sri Lanka. “Most of the companies have trade unions. They do not really think about the survival of the company but they just want to get the maximum out of the company regardless of whether they make a profit or loss. Their interest is looking out for themselves only and these actions are politically motivated. They are not trade unions as such, they are politically created unions,” Fernando stated. Fernando expressed doubt in the ability of the Government to control such actions as the majority of the trade unions belonged to one national political party, the Janatha Vimukthi Peramuna (JVP). However, he added that controlling trade union actions depended on how well a company dealt with its employees.   The Sunday Morning also spoke to Colombo Chamber of Commerce President Saranga Wijeyarathne, who stated that there were incidents where trade union actions had prevented unlawful or bad things from happening. “But in a country like Sri Lanka, most of the trade unions are either politically motivated or led by people who just want to create issues. There are a set of people who want to highlight issues in everything. These are not sometimes genuine actions for the betterment of the country or for the particular organisation. They have some other objectives,” he noted. Wijeyarathne noted that such actions would negatively impact the morale of the employees of the particular organisation as for an employee to give 100% of their performance, they have to be mentally prepared.  “I believe some of these actions are not based on genuine objectives. In such cases, it causes a lot of damage to the particular company and also to the economy of the country. I believe these trade union actions have to be a genuine effort. When a country has lots of trade union actions going on, it will make the current situation worse. I believe companies and the Government must work together and make sure they do not create a situation leading to trade union actions,” he added.  The losses caused due to strikes and protests are often not calculated precisely. However, in 2019, it was reported by the Government that a three-day strike conducted by Sri Lanka Transport Board (SLTB) employees alone had caused the Government a loss of around Rs. 75 million.  Economists’ point of view Meanwhile, Advocata Institute Chief Operating officer Dhananath Fernando stated that there was an economic motive behind trade union actions and added that trade union action was a problem created by bad economic policies. “When you have recruited too many people in one State sector, this is the outcome. Trade union actions impact everyone and also the productivity of the country. There are financial implications afterwards. In January also we provided a Rs. 229 billion relief package for State sector workers. Reform the State sector. There has to be some sort of a contributory pension,” he said, regarding trade union actions requesting salary hikes. Meanwhile, University of Colombo Faculty of Arts Department of Economics Senior Lecturer Dr Shanuka Senarath told The Sunday Morning that trade unions had different ways of affecting the economy and one could not deem them inherently bad or good. “Trade unions prevent or dilute the Government’s intervention on employment and wages. When it comes to a country like Sri Lanka where there are a lot of State employees, it is more likely the Government will recruit people from its own list, so the trade unions will periodically say they cannot do so and discipline them accordingly,” he added. However, focusing on the more macroeconomic aspect of this issue, Senarath stated that economic activities became less efficient due to scheduled actions, work-to-rule actions and other actions which would affect the labour market and labour supply and create comparatively higher wages than essential. He added that trade union actions would result in a marginal increase in the cost of production when it came to employment. He further noted that because of trade unions, reducing certain employees would be hard. “In Sri Lanka, trade unions are more politically backed as in the trade unions are more or less representing the political parties. Most of the time they are puppets of governments and their actions are influenced by what governments want. Sometimes governments use trade unions to fulfil their own objectives. When the former Government was in power, this Government – the then Opposition – would try its best to sabotage the economic activities of the country,” he added. Trade unions in Sri Lanka Under the Trade Union Ordinance of 1935, a “trade union” is defined as any association or combination of workmen or employers, whether temporary or permanent. Any person under the age of 21, but above the age of 16, may be a member of a registered trade union, (unless provision is made in the rules contrary to this) and will (subject to the rules of the trade union), enjoy all the rights of a member. In Sri Lanka, as of December 2021, there were 2,074 registered trade unions, of which 54.5% were in the public sector, 27.5% in public corporations and 18% in the private sector. The number of members covered by the trade unions amounts to 9.5% of the total workforce of Sri Lanka.  While several unions are affiliated with the Global Union Federations (GUFs), there are four unions that are affiliated with the International Confederation of Trade Unions (ICTU). The ICTU members are: Ceylon Workers Congress (CWC), Sri Lanka Nidahas Sevaka Sangamaya (SLNSS), National Trade Union Federation (NTUF) and the National Workers Congress (NWC). Collective Bargaining is facilitated by the Industrial Disputes Act No. 56 of 1999. The Industrial Disputes Act defines Collective Bargaining as bargaining between an employer or employers and workers, or trade unions of workers on terms and conditions of employment and other related matters. The Government intervenes in deadlock situations in Collective Bargaining to conciliate on issues in dispute. There have been a number of TU actions this year alone. A total of 18 health sector non-medical unions, including those of the nursing and paramedical services, Public Health Inspectors (PHIs), and medical laboratory technologists, launched a strike last week at hospitals islandwide, demanding that the Government provide speedy solutions to their issues including salary and promotion-related anomalies. In addition, they had also organised protests in several districts in recent days. The non-medical health sector TUs that were engaged in strike action since 6 February decided to suspend the strike for a period of 14 days last Tuesday (15), urging President Gotabaya Rajapaksa to intervene to provide a concrete resolution to the demands of the strike.  


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