Disruptive elements for economic recovery | Sunday Observer

Disruptive elements for economic recovery

12 March, 2023

The trade unionists and the political parties that are backing them for opportunistic political gains seem to have completely forgotten the extremely negative repercussions of some of their disruptive actions. For example, an official of a trade union, speaking to the media recently during a protest, publicly declared that their intention was to make way for huge losses for the country by disrupting work at the Colombo port.

Going further, another trade unionist, during the same protest campaign, victoriously announced that they had forced eight cargo ships to abandon unloading at the Colombo port, causing a loss of millions of rupees.

It is not difficult for a layman to understand the cruel intentions and malicious mentality of these disruptive elements. The irony is that most of the media that reported on these television voice cuts did not spend time explaining the possible negative economic consequences of such actions to the cash-strapped country.

Whilst the Opposition politicians who are vying to grab power hail such offensive remarks, the Government media machinery customarily ignores such comments and adopts a lame, lethargic, and lacklustre approach to educating the public about the severely undesirable aftermaths and the possible damage to society.

These dubious Opposition politicians who encourage such trade union action opportunistically ignore that they will have to confront bigger problems if or when they rule. They solely want to make use of the prevailing issues, run with the tide, and increase their respective vote bases.

Trade union activities and street protests have been a common occurrence in Sri Lanka for decades. While these protests are an essential aspect of democratic societies and play a crucial role in protecting workers’ rights and interests, they can also have enormous negative impacts on the economy, even in a steady economic situation.

However, at this time of extreme distress, when the economy is going through the worst, the trade union actions must be more reasonable. The public impression is that their actions must not damage the common interests that can further harm the well-being of already suffering citizens, especially low-income groups. For example, the strikes of the medical fraternity harm only those who visit the Government hospitals and not elite society.

Public institutions

It is no secret that most of these protesters are from public institutions. Most of these public sector workers, despite the habitual inefficiency in delivering public services, enjoy various benefits by way of overtime and various other allowances. It is common knowledge that those agitators who are attached to institutions such as the CEB, Petroleum, the Ports Authority, and some other Government and semi-Government organisations are earning and enjoying exorbitant salaries and perks.

Trade union responsibility does not end with providing job security or working on financial and other gains for their members. They have social responsibilities. Regrettably, in most cases, they mercilessly disregard public needs when they perform street protests or strikes. For example, the teachers who are assigned to mark the papers of the recently concluded GCE advanced level examination have refused to proceed until they are given higher payments.

There is no argument that they are delivering an important service and should be considered for better payments like everyone else because they too suffer due to the current turmoil. Nevertheless, can they hold innocent students, who are eagerly waiting for this life-changing result, for ransom? Is it not extortion and coercion?

The country is desperate for foreign exchange. Numerous issues are created due to inadequate foreign reserves. One key method of attracting much-needed foreign exchange is to attract foreign investors. Trade union activities and street protests can create a negative perception of a country among foreign investors. Companies may be hesitant to invest in a country where labour unrest is common, as it can increase the risk of supply chain disruption and affect their bottom line. This can lead to a reduction in foreign investment, which can be detrimental to the economy in the long run.

Also, at this crucial juncture where a virtual bankruptcy prevails, obtaining the IMF facility is extremely important. Sri Lanka has been in negotiations with the International Monetary Fund (IMF) for a loan to support its struggling economy. However, if the Government fails to conclude negotiations and conform to the conditions laid down, the country will confront decisively damaging imminent repercussions.

After a considerably long period, the Sri Lankan rupee has appreciated against the US dollar consecutively during the past few days. The Sri Lankan rupee depreciated by 80 percent last year due to the acute shortage of foreign exchange. According to some economists, the appreciation in the currency exchange is being attributed to the fresh inflows from the Washington-based International Finance Corporation (IFC). Earlier last week, the corporation agreed to provide a 400-million-dollar swap facility to three private banks in Sri Lanka for trade financing. This will help the country obtain crucial forex liquidity.

However, the US$ 400 million IFC loan is a temporary measure. According to the experts, if the IMF loan is not approved, the Sri Lankan Government may be forced to devalue its currency to maintain competitiveness in the global market. This could spike inflation and make imports more expensive, which could further impact the economy. Additionally, a devalued currency could also make it more difficult for Sri Lanka to repay its staggering debt as the amount owed in foreign currency would increase.

In the event that the Government fails to obtain the IMF facility, the entire country will face multiple difficulties in many ways. In such a scenario, the Government may be forced to reduce its spending on important public services such as health, education, infrastructure, and other critical essential services. This could have significant impacts on the lives of Sri Lankan citizens and, more crucially, further deteriorate the already suffering economic growth.

Also, a rejected IMF loan at this point can have a considerable negative impact on investor confidence. If the Government is unable to secure an IMF loan, it may indicate that the country is not able to manage its finances effectively.

This could lead to a reduction in foreign investments and have long-term impacts on the country’s economic growth. Moreover, Sri Lanka will not be able to obtain foreign loans, even from friendly countries, for any emergency.

However, the assistance of the IMF and other temporary loans only provides a breathing space to come out of the current financial pit. Hence, not only the Government but also the Opposition and the entire citizenry must come together to find mid- and long-term solutions. Currently, the best remedies are to promote tourism to at least the past glorious days when the country earned US$ 4 billion, increase export revenue, and bring the expat revenue back to normal.

Another key factor the Government must immediately consider is improving the business environment. Currently, all sizes of businesses confront numerous issues, such as the electricity tariff, raw material import restrictions, escalating operational costs, and so forth. In addition, despite the vehement demands for system change, the public service keeps on going with the customary inefficiency of rules, regulations, and circulars that slow down business processes. Hence, the Government must work on improving the business environment by reducing regulations, streamlining processes, and providing possible incentives to businesses that provide a living for millions of families.

Negative impact

More importantly, the people who are struggling for a system change must be more conscious of the harmful negative impact on the country due to some of their campaigns that waste valuable man hours and other important resources. The politicians who instigate their followers are aware of the repercussions, yet they willfully ignore such consequences for opportunistic political glory. The common citizenry must identify these intentions and rally to find lasting solutions.