A recent ILO study on the impact of the global economic crisis on labour and industrial relations in Sri Lanka shows that the traditional unequal bargaining power of workers has been sharply skewed in favour of employers while structural deficiencies of labour authorities has further widened the gap.

"There are institutional problems at the Department of Labour. There is no rules based system in place to tackle labour issues where decisions are based on discretion leaving room for those with influence to hijack the queue and seek an early address to their problems," Dr. Ramani Gunatilaka, a consultant to the ILO and author of the report said.

She said the department lacked the freedom to make more objective and well informed decisions on terminations, voluntary retirement schemes because they are subject to pressures from both employers and unions.

Dr. Gunatilaka said it was extremely difficult to gauge the extent to which the global economic crisis affected employment in Sri Lanka for want of better official statistics.

She had to rely on a collection of figures for job losses, temporary layoffs and voluntary retirement schemes from the Census and Statistics Department, the Board of Investments of Sri Lanka, JVP Intercompany Employees’ Union and other anecdotal evidence.

According to the Census and Statistics Department the industrial sector lost 96,000 jobs during the first three months of the year and 36,000 in the construction sector. However, the agriculture sector and services sectors saw the creation of new jobs amounting to 203,000 and 129,000 respectively.

There were no significant changes in unemployment recorded for the last quarter of 2008.

According to the BOI, 11 firms had closed between September 2008 and January 2009 because of a fall in demand or loss of orders. About 3,198 workers had lost their jobs.

The district labour offices of the Department of Labour figures show that 55 firms had closed down since September 2008 to March 2009. According to reports from 11 districts over 18,000 people had lost their jobs.

Last May, The Commissioner General of Labour, M. J. L. U. Wijeweera said 32,000 jobs have been lost due to the effects of the global financial crisis but the unofficial figure could be 70,000.

"The official figure is 32,000 but unions tell us that 70,000 people have lost their jobs due to the global financial crisis," Wijeweera said back then.

The ILO report also quotes a labour union figure of 300,000 job losses caused by the global economic crisis.

Dr. Gunatilaka also said there is evidence suggesting professional and highly skilled migrant workers have returned to Sri Lanka, but here again official mechanisms are unavailable to capture conclusive data.

There is also anecdotal evidence to suggest that employers have terminated workers without making the statutory compensation payments and workers are sometimes compelled to go quietly with the little firms are willing to pay fearing the crisis would get worse and they stood to lose even that.

The report points out that the response of many firms to the crisis was reactionary and seemed to be focused on cutting labour costs.

T. M. R. Rasseedin, General Secretary of NATURE, a consortium of labour unions, said the Department of Labour is keeping the tripartite National Labour Advisory Council in the dark with regard to the number of jobs that had been lost due to the financial crisis.

Ravi Peiris, Director General of the Employers’ Federation of Ceylon said it was impossible to get information on layoffs and voluntary retirement schemes from its 500 odd members.

Given Sri Lanka’s high fiscal deficits and macro economic inbalances the government is not prepared to meet the effects of the global financial crisis with a significant stimulus package.

The rapid assessment study is supposed to prepare policy makers for what is yet to come but the lack of mechanisms to collect conclusive data on employment related issues is no doubt an impediment.

Job losses in the county’s large informal sector are not captured anywhere either.

An official of the Ministry of Youth Affairs who was present when the ILO presented its report made a suggestion that the report be revised and published three to four months from now because by then things would have improved and the report would have good things to say.

This official obviously did not know what a rapid assessment meant and the need to find out quickly enough whether or not people were suffering so that something can be done, with or without the limited fiscal space.