In any vibrant democratic system, trade unions are recognised as an essential mechanism that helps maintain a healthy check and balance between two major driving forces of the economy namely the employers and employees. Since employers and employees are inseparably interdependent entities in organisational context, both segments are expected to discharge their economic responsibilities that are undertaken by them for economic wellbeing and smooth functioning of production facilities in a country.
However, when trade unions are confused and failed to understand their role in the economic management, a country generally ends up in economic chaos and retardation as it has been experienced by Sri Lanka.
The Constitution grants as a fundamental right for employees to join a trade union, while the Trade Union Ordinance permits any seven people to form such an organisation. In recognition of trade union rights, they are protected by the legislations promulgated by the Government. For example, union rights and their operation are protected by several pieces of legislation such as inter alia:
Terms and conditions of employment - The Shop and Office Employees (Regulation of employment and remuneration) Act - Wages Board Ordinance
Social security - Employees provident Fund - Employees Trust Fund - Payment of Gratuity Act
- Industrial safety - Factories Ordinance - Workmen’s Compensation Ordinance
- Industrial relations - Industrial Disputes Act - Termination of Employment (Special provisions) Act - Trade Union Ordinance
- Employment of women and children - Employment of Women, Young Persons and Children Act - Maternity Benefits Ordinance.
It appears that employees and their trade unions are well entrenched by legislative provisions against the arbitrary actions that may be initiated by their employers.
In Sri Lanka, there are 2,074 registered trade unions, of which 54.5 percent are in the public sector, 27.5 percent in public corporations and 18 percent in the private sector. The number of members covered by the trade unions stands at 9.5 percent of the total workforce of the country.
While several unions are affiliated to the Global Union Federations (GUFs), there are four unions that are affiliated to the International Trade Union Confederation (ITUC). The ITUC members include: Ceylon Workers’ Congress (CWC), Sri Lanka Nidahas Sevaka Sangamaya (SLNSS), National Trade Union Federation (NTUF) and the National Workers Congress (NWC).
Supplementary role
The International Labour Organization (ILO) office plays a supplementary role, with the most representative unions or collectives within a sector or trade in the implementation of activities under the mandate given to the ILO. Sri Lanka’s trade unions from the inception have demonstrated an inward-looking attitude as regards the employee rights and benefits in the conduct and organisation of trade union activities. This tendency can be observed in the intensity of labour strikes which are used as the main strategic tool by the unions for exerting pressure on the Government when it comes to bargaining mainly for their financial demands.
The number of man days lost due to labour strikes between 2008 and 2019 shown in Table 1 provides a searchlight for assessing the gravity of the current state of affairs of the economy which is being sandwiched between the mounting budget deficits on one hand and the pressure exerted by trade unions demanding higher perks on the other, by resorting to the wildcat strikes and arm twisting tactics that make it virtually impossible for the Government to exercise fiscal management.
An objective review of trade union activities in the recent past portrays a dismal phenomenon due to their remarkable aberration from the rational and responsible behaviour which resulted in the country being dragged towards an economic abyss in coalition with and connivance of political parties that administered the country from time to time.
The table below illustrates the number of strikes and the man days lost in Sri Lanka due to trade union action from 2006 to 2019, but the data given there shows only the tip of the iceberg since the total economic loss to the country could have been manifold in contrast to the official estimates. Direct man day forfeiture due to trade union work stoppages is a mere fraction of the total loss since the total loss encompasses the losses, both direct and indirect, incurred resulting from the loss of physical production which topped up on the loss resulting from indirect negative ramifications of the union strikes.
The total damage to the economy resulting from trade union action should include the loss of man days to service recipients of organisations, loss of production in financial terms which is much higher than the value of labour days lost provided that production value of goods and services sacrificed due to strikes must be higher than that of the value of labour days lost.
The normal practice of striking workers is to organise public protests often obstructing commuter transportation which again causes multiple indirect losses to the country generated by the cascading effects of work stoppage. First, if the public thoroughfare is blocked, then vehicles plying on the highway in two directions are forced into a grinding holt, duration of which may extend over several hours, that causes fuel wastage as well as manpower losses of commuters which, if calculated per annum, runs into billions of rupees causing irrevocable damage to the economic lifeline of the country.
Indirect economic losses are not confined to the short term on the spot damage, but they keep on causing cascading or ripple effects all over the economic atmosphere of the country which produces negative impacts on the GDP and the Balance of Payments (BOP). For example, a one week strike in a tea plantation takes the form of workers’ refusal to pluck tea leaves which allows tea bushes to keep on maturing tender shoots that make them unsuitable for processing into made-tea when the strike reaches a settlement one week hence creating an irrevocable loss resulting from the strike.
A quick review of press conferences conducted by trade unions and their public behaviour bear evidence to the presumption that trade unions believe that they are not only a totally different entity but also they act on the belief that the organisations they are associated with are their arch adversaries with daggers drawn at each other.
Trade unions affiliated to the CEB, the CPC and the Health Ministry, for instance, have often become the harbingers of announcing negative information against their employers, which in reality must be the other way around since all the trade unions encompass the ownership structure of each entity.
Contrary to the anticipated behaviour as an organisational partner, the CEB trade unions always euphorically announce the total failure, blackout or collapse of the CEB in providing the lifeline utility service to the public which can be pronounced as a self-annihilative action that erodes the confidence of the CEB as a provider of a vital service. The story about the heath trade unions is identical to that of the CEB trade unions.
At daggers drawn
Trade unions affiliated to the health sector are not only at daggers drawn with the Health Ministry but also antithetical to and non-cooperative with almost all the activities initiated by the Ministry when the Covid-19 epidemic was at its peak in the country.
The pathetic behaviour is myopic and self-destructive and can be construed as a dilution of their role to the level of mercenaries influenced mainly by short sighted political objectives that supersede the obligations of trade unions to their organisational commitments.
The total alienation from and non-cooperation of trade unions with their employers leads to a situation of total refusal to accept the partnership concept between the two stakeholders of an organisation, employer and employee, that creates an insurmountable obstacle against the delivery of anticipated service to the already frustrated public. The feeling of belongingness and commitment to the organisation both by the management and the employees is a sine qua non for the satisfactory performance that culminates with the satisfactory delivery of service to the target beneficiaries.
Exceptionalism and self-centered attitudes
Members of trade unions affiliated to the leading state sector that supplies utility services have demonstrated their insensitivity to the alarming economic crisis of the country as well as to global economic undercurrents when trade unions mobilise their members to engage in frequent walkouts from the work place to achieve pecuniary benefits from the Government.
In this context, trade unions appear to be influenced by the general opinion that the employer or the Government is under contractual obligation to fulfill all the demands of trade unions irrespective of the general financial and social problems the Government grapples with in the contemporary economic environment. The behaviour of the teachers trade unions in the height of the Covid-19 epidemic can be cited as an example that created an unprecedented mayhem in the country when the pandemic spreading right across the country.
Teachers enjoyed all their employment benefits including their full salaries while staying at home during the school lockdown period that extended over one year and thereafter; nevertheless, once the government decided to recommence schools, they not only refused to report back to work but also organised violent protests in all major cities while obstructing other commuters from travelling to attend to their legitimate business in addition to using intimidating tactics to prevent teachers, who are not supportive of the boycotting campaign, from reporting to duty.
Although teachers are generally considered as an elite category of employees, their behaviour during the protest campaign demonstrated the lowest level of behaviour setting a negative precedent to students and other trade union members.
This, after all, cannot be construed as an isolated demonstration of mercenary behaviour of one trade union since other professional trade unions such as DMOs and nurses unions exhibited an identical, if not worse, behaviour compared to that of the teachers’ trade union protest campaign since health unions mercilessly instrumentalised helpless patients as a human shield to bargain for their demands with the Health Ministry.
While trade unions were clamouring for their rights and wage hikes in 2020 and 2021, the people, hoi polloi, of the country were engaged in a hard struggle day in and day out to drive away the wolves from home and save their lives from the Covid-19 epidemic. These are verifiable facts if one is bothered to browse through news bulletins, newspapers and social medial that reported socio-political development pertaining to the bygone years.
The total expenditure on salaries and wages in 2019 was 22.6 percent of the total GDP of that year, according to the Central Bank and the figure reached 27.6 percent in 2020 showing an increase of five percent over a period of one year. Since salaries and wages are categorised as recurrent expenditure, its increase on the other hand connotes a meagre availability of funds for capital expenditure and investment which surfaces by way of economic stagnation that erodes the economic foundation of the country in the long run.
Wildcat strikes
Trade union work stoppages/strikes at it could be observed during the past few years to have overstepped all moral and rational norms that are generally followed in civilised and self-disciplined societies in other parts of the world. Providing advance notification about strikes to be launched to the employers is a bygone practice as it has been evidenced from many wildcat work stoppages launched by the railway trade unions in the recent past showing their callous disrespect to the public convenience and to the obligations they have towards their employers.
Not many moons ago when the railway trade union decided to launch a strike, some train drivers stopped their trains instantly ignoring the fact that the trains were moving at the time through the track lying in a jungle, leaving commuters to strand on the spot till outside assistance was provided to evacuate commuters to safe places. There were media reports stating that when engineers of a public sector organisation were on a trade union action, they threatened to open the sluice gates of reservoirs to curtail the capacity of hydropower generation as an arm-twisting tactic to pressurise the Government to comply with the union’s demands.
This has become the general pattern of trade union behaviour and, in support of that view, the teachers’ trade union action can be cited. Following the footsteps of the railway trade union, teachers not only stopped teaching in schools but also decided to abstain from online teaching causing much heart burn to students and parents.
Trade union members, irrespective of their sector difference, generally resort to thuggery, arm twisting and violent practices as regards the employees who do not cooperate or comply with trade union decision, emulating the famous, much quoted statement of Niccolò Machiavelli that end justifies the means.
There are reported instances in which trade unions resorted to sabotage that resulted in the loss of public property and suffering to the masses, which is driven by myopic objective of achieving success at the expense of the country and the economy. This situation can, perhaps, better be described as trade union terrorism which has been the de facto strategy deployed by trade unions to varying degrees depending on the circumstantial needs and political clouts that trade unions can wield.
Trade unions and their membership appear to be under a conceptual dilution when their trade union actions initiated in June 2022 resorting to work stoppage demanding that they be considered a privileged and priority population segment of the country when providing scarcely available fossil fuel when ordinary people are compelled to stay in fuel queues for endless days and nights.
Irrespective of economic hullaballoos that prevailed since the end of 2021 in the country, trade unions pretend to be believing that they exist in the Alice’s Wonderland where whims and fancies can be satisfied at the drop of a hat when they starts slogan shouting and protest marches on the thoroughfare causing unbearable inconveniences to the already stressed people which results only in further aggravation of the economic woes of the country beyond one’s imagination
Paradox in public sector
The public sector, according to the Encyclopaedia Britannica, is the portion of the economy composed of all levels of Government and Government controlled enterprises and excludes private companies, voluntary organisations and households. The size and the texture of the public sector vary among countries depending on the legislation that governs the state-owned organisations. It generally focuses on providing services that can benefit the entire society rather than just those who are using the service. The public sector and public goods are supposed to be intertwined in economic sense.
The public sector, therefore, includes public good providers and Government services such as public education, health care, police, military, physical infrastructure and those who work for the Goverment. Rather than its mere functions as a service provider, the public sector represents a supervisory authority on matters such as exercising public wellbeing and the implementation of public policy. Public enterprises on the other hand are, per se, self-financing commercial enterprises which are owned by the Government and operated on a commercial basis to provide private goods and services at a price to the beneficiary.
In many countries, particularly in the developing and underdeveloped regions of the world, the public sector is expected to bear a dual responsibility by performing as a regulatory authority on one hand and acting as the state organ on the other hand in the implementation of public and development policy. Therefore, non-performing public sector institutions constitute not only a burden on the taxpayers of the country but also a carbuncle that causes contamination of the body of administration negating all prospective economic progress.
Welfarism
A built-in characteristic of a welfare state is the oversized labour force employed in the State Owned Enterprises (SOEs) in which case the public sector institutions become virtual employment agencies that absorb a large number of unwanted employees at the whim of the Government adding another dimension to the welfare conundrum. Employment in the public sector consists of four sub sectors mainly; 1) employees in the Central Government, 2) employees in the Provincial Councils, 3) employees in Local Government institutions and 4) employees in SOEs and other statutory bodies which altogether stands over 1.5 million employees in 2020.
The bulging public sector reached 1.1 million employees in 2016 from 0.419 million in 1968, registering a growth of 164.77 percent over 48 years averaging to 3.43 flat percentage growth rate annually which provides an interesting contrast as against the GDP growth rate during the corresponding period.
The table below indicates the growth pattern of the public sector, including Government and semi government sectors, from 1968 to 2016 with a ballpark average of hundred percent over the entire period. With the phenomenal expansion of the public sector, the Government is committed to disbursing a large percentage of recurrent expenditure for public sector emoluments as shown in the Central Bank Annual report. Of the total government expenditure of Rs. 1,637.9 billion in 2020, salaries and wages comprised Rs 451.4 billion which in percentage terms equals to 27.55 or more than one-fourth, as ballpark figure, of the total expenditure which could have been diverted into capital investment if a proportionately adequate public sector cardre is maintained. In the same year, the total recurrent expenditure of the government stood at Rs 1,457.7 billion of which the share of public sector emoluments recorded as Rs 451.4 billion or 30.9 percent or around one third of the annual recurrent expenditure.
The classification given in the Labour Force Survey by the Department of Census and Statistics of Sri Lanka includes three typologies such as the Provincial Public Sector, the Central Semi Government Sector, the Central Government Public Sector of which the largest share is occupied by the Central Government public sector reported at 43.8 percent in 2016.
The public sector employment to population ratio stands at 21.1 million to 1.5 (21.1: 1.5) million or one public sector employee to serve 14.06 people which requires further rationalisation by way of conducting a benefit cost analysis. The public sector is mainly responsible for providing services which are generally not quantifiable in financial values except in the supply of electricity, water and some other selected service areas.
The bulk of the public service employment includes clerks, office assistants, SLAS officers, teachers and health workers whose numbers are disproportionate to the service requirement in addition to the poor management and supervisory guidelines in force to get them to render a commensurable service to their employers at least on par with their remuneration.
As the Finance Ministry statistics reveal, the expenditure on salaries and wages of public servants including Provincial Councils increased by eight percent to Rs. 274 billion in the first four months of 2021, compared to Rs. 253.8 billion in the corresponding period of 2020. The pension payment increased by 9.3 percent to Rs. 87.3 billion in the first four months of 2021, compared to Rs. 79.9 billion in the corresponding period of 2020, the data revealed.
The bulging state sector employment, apart from siphoning off a substantial part of government revenue, creates a layer of employment with questionable level of contribution and productivity, proliferation of institutes that muddle the entire development administration structure, acts as an octopus tightening its grip through a well-orchestrated trade union mechanism which gathers momentum to generate an extraneous burden not only to the Government but also to the entire economic system.
Employment policy
This section provides a lucid description of the employment policy of the government that has been conceived, nurtured and carried out with the intention of achieving self-contradictory dual objectives of economic growth and equity of income distribution at the same time through unsustainable welfare-oriented employment policy which created a juggernaut that produces little but bleeds national economy to the point of exhaustion.
The country’s education system, with a multistage filtering process, leads to the development of a white-collar labour force that is oriented from the inception, wittingly or unwittingly, to be absorbed into the state cadre since they are moulded by the traditional social value system and nature of the secondary educational design to visualise that the state employment is the best and easiest opportunity for one to aspire into as far as future livelyhood is concerned. Examples include job categories such as Development Officers, Samurdhi Officers, Office Assistants, Economic Development Officers and a large percentage of clerks whose cadre is not only in excess of the institutional manpower needs but also with questionable contribution to the national GDP and national productivity.
The excessive public cardre first creates a budgetary problem due to vast amounts of fund required for their maintenance but the problem does not cease there as it cascades into negative consequences in the form of employee resentment, indiscipline in the public sector, existence of a workforce with no marketable talents and artificially maintained low unemployment rate due to disguised unemployment that fetter the economy.
Elevator pitch
A country’s economy being an integrated whole cannot be expected to perform in a satisfactory progression unless its components and subsectors operate in unison in which activities of all subsectors are synchronised for gathering momentum towards achieving economic development through generation of synergy.
However, the current model of development appears to be heading towards partial equilibrium of the economy with some temporary patch work and tinkering done to maintain a fragile balance, while chaos, indiscipline and egocentric conduct are the salient characteristics demonstrated by the development partners such as trade unions, student community, sinecure bureaucracy and apparatchiks of political parties.
The writer is a former Senior Consultant, Sri Lanka Institute of Development Administration.