Private Sector Emphasizes Importance of Labor Law Reforms to boost Sri Lanka’s Competitiveness

• Shippers Academy, AmCham, JAAF hold forum to highlight importance of labor law reforms to increase competitiveness
• Stakeholders emphasise flexible work hours, restructuring costs of vital importance to sustain apparel industry
• Ministry of Labour states increasing female workforce participation remains key objective

The Shippers Academy of Colombo, in partnership with the American Chamber of Commerce (AmCham) and The Joint Apparel Association Forum (JAAF) held an awareness programme on the need to prioritise Sri Lanka’s labour law reforms to develop competitive industries and services.

In his opening address, Advisor to the Ministry of Labour and Foreign Employment Shan Yahampath stressed that a priority of labour reforms is to attract investments through high-skill job creation and spur entrepreneurship and innovation. ‘If we are to develop quickly, we need to generate USD 15 billion per annum. To do this, we need to attract FDIs,” he noted, adding that “adopting efficient labor laws are pivotal to this, as we need to focus on job creation and understand the role SMEs play.”

Representing the apex body of the apparel sector, Secretary General of JAAF Yohan Lawrence emphasized that reforms should formalize administrative relaxations on the flexibility over a five-day week. Believing this will encourage more people, especially women, to enter the workforce, he said that this will increase not only human resource capabilities in the industry but also female labour force participation overall. “Improving flexibility in terms of work hours is advantageous not only for employees but also employers,” he stressed.

Lawrence further said that termination and the cost of restructuring are detrimental to companies under the status quo. “If a manufacturing plant is located in a region that doesn’t make the economies of scale worthwhile, the cost-effective ability to relocate and restructure is essential. The law should allow this.” The need to upskill employees via timely learning and development which is crucial for the sector’s growth was also highlighted.

He also expressed his appreciation that the Ministry made available a seven week window of consultation where any individual, association or union could make representation of issues in the current law that needed addressing and hoped the input provided would be reflected in the final draft act that is currently being prepared.

Among the speakers was the President of AmCham Shirendra Lawrence who stated, “The textile, security, catering and other sectors are governed by a separate set of laws. Unifying this will certainly be more attractive to investors.” He highlighted the potential of encouraging the 51% female population to enter the labour force via more flexible labour laws, especially as an impetus to attract and retain investors.

CEO of the Shippers Academy Rohan Masukorala explained that the 8-hour work week initiated in 1926 is not conducive to the modern world which is marked by the rapid growth of Artificial Intelligence. “Sri Lanka cannot be a competitive business hub without adhering to current international labour practices. This must be achieved through industrial harmony.”

Representing the collective of the Free Trade Zones, Chairman of the Free Trade Zone Manufacturers Association Dhammika Fernando expressed his concerns about Sri Lanka’s existing labour laws, stating that the current legal framework does not prepare Sri Lankan workers to enter or stay competitive in the changing world of work. “The number of jobs that will be created in ten years’ time is unknown to us. Sri Lanka must prepare its workforce for that future while keeping investments in mind. The Board of Investment was given an FDI target of USD 1.5 billion to be met for this year.  However, it’s October and the country is struggling to bring in USD 750 million. In comparison, regional peers like Bangladesh have already gained the infusion of USD 2 billion and even countries like Myanmar has attracted USD one billion.”

Private sector representatives in the service and manufacturing industries who participated at the forum, raised concerns, while also adding clarifications to labour reforms.