Open market policies underpinned by export-led industrialization continue to be the major strategic thrust of the Government. To achieve rapid economic growth, generate productive employment and eradicate poverty, government policies have focused on private sector growth while at the same time stimulating higher productivity and economic growth in the agricultural sector, which remains the primary source of income for the rural population but suffers from widespread under-employment growth rates and reduction in poverty continue to be adversely affected by the prolonged ethnic conflict which hampers overall development.

In the formal sector of the economy, a modest decrease in the rate of unemployment from 8.5 percent to 8 percent was registered in the first quarter of 2000. However, the major constraint to enhancing incomes is low productivity.

Women play an important role in the economy; their participation rate in the labour market has increased (34.2 percent). Female unemployment however remains however twice as high as that of males. The majority of working women are engaged in low productivity, low technology, low status and low paid jobs. Women workers make up the majority of plantation workers, garment workers and overseas migrant workers – the three most important sources of foreign exchange earnings.

The current thrust of the active labour policies is designed to encourage new graduates to seek job opportunities in the private sector; for some time now the Government has been under pressure from the business sector as well as from the Bretton Woods institutions, to review and amend the labour laws, and the Termination of Employment Act, with a view to strike a new balance between the concerns of both enterprises and organised labour-the first claiming greater flexibility, the latter advocating the maintenance of the protective legislation now in vigour.

Tripartism remains a bed-rock of the Sri Lankan social landscape. At the institutional level, the National Labour Advisory Council ( NLAC) has provided the framework for debating social issues and in particular the desirability of moving or amending social and labour legislation. The social partners often express the view that this institutional framework should be more often used to clear contentious issues.

In 1999, Sri Lanka adopted an amendment to the Industrial Disputes Act ensuring that trade unions representing 40 percent or more, of the workforce, should enjoy recognition by the employers for the purpose of engaging in collective bargaining; it is expected that this legislative change will contribute significantly to strengthening the collective bargaining "culture". Where the amendment will unfortunately prove insufficient, is in regard to freedom of association in the Free Trade Zones ( FTZ). Although the Ministry of Labour, is anxious to see change occurring and freedom of association practised, this is unlikely to take place in the foreseeable future. A court test case by a union claiming recognition on account of nearly 80 percent of the plant employees unionized, is now pending before the Court in Colombo.

Lately the country has been reclassified as a low middle income country. This may have some positive impact on its ability to attract Foreign Direct Investment (FDI), and hence on the level of employment.

ILO Constituents

Government- Ministry of Labour

The current Labour Minster is Mr. Alavi Mowlana . The new ( since May 2000) Labour Secretary is Mr. Mahinda Gammampila.

Recent significant illustrations of ILO technical support to the Ministry concern:

• an audit of the Ministry, in terms of institutional management, substantive and monitoring functions in pursuance of ILO Convention No. 81 (Labour Inspection).

• assistance rendered in training labour officers in law enforcement and dispute settlement. ILO is committed to completing, three staff upgrading programmes which will in part also provide the newly appointed, or promoted, labour officers experience with new trends and practices relating to the tasks which labour ministries are expected to perform in an increasingly globalised labour market situation.

• review of the implementation of Conventions Nos. 87 and 98. Although this activity was carried out in a tripartite framework, the Labour Ministry’s commitment to the exercise was crucial. It was expected that Working Parties will be formed to oversee the review of the implementation of the concerned fundamental instruments, including any progress made in respect to Freedom of Association approved enterprises (see ref. point made regarding the FTZ under ‘Overview’).

• an institutional audit of the Sri Lanka Bureau for Foreign Employment (SLBFE, a subsidiary of the Ministry of Labour).

The Ministry of Labour used to have responsibility for vocational training in the past- but since 1997, in the wake of an internal Government restructuring, a separate Ministry for Vocational Training was formed. ILO maintains close working relations with that Ministry, in particular with respect to on going ADB loan projects addressing skill development capability in Sri Lanka, for which the ILO had submitted Expression of Interest (EOI).

The Employers’ Federation of Ceylon (EFC), an affiliate of the International Employers Organization (IOE), is a highly professionally-run organization. Its new Director-General, since October 2000, is Mr. Gotabaya Dasanayake.

The EFC is currently the representative and advocacy organization for the plantation as well as the commercial sector enterprises. In the latter, it represents some 40 percent of the enterprises listed on the Colombo Stock Exchange.

The ILO assists the EFC in the provision of training programmes, and other client services for its affiliates on various management and human resource development issues. The ILO was instrumental in building up an information and research capacity within the EFC.

The EFC has also undertaken to assume the lead role under the ARMADA (Association of Resource Managers against Alcohol and Drug Abuse) which focuses on the prevention of drug and alcohol abuse among, principally, plantation workers and their families. The ARMADA, however, is conceptually a framework bringing together employers, workers and government.

EFC was involved in an ILO study on sexual harassment in the plantation sector.

ILO currently assists the EFC in setting up an Employers’ Network on Disability. The new mechanism, the details of which had been discussed in a recent Workshop in Colombo, will function from within the EFC.

The multiplicity of trade unions (over 1000 registered trade unions, mostly in the public sector) and the close political linkages of trade unions constitute a specific feature of the trade union scene in Sri Lanka. It is sometimes claimed that this accounts for the poor performance of the industrial relations scene in the country.

ILO works mainly with the larger trade unions in the country, such as the the Ceylon Workers’ Congress (CWC) which is the sole union affiliated with the ICFTU (the CWC caters essentially to the Tamil labour force, heavily concentrated in the plantation sector); the Lanka Jathika Estate Employees Union (LJEWU); the Sri Lanka Nidhas Sevaka Sangamaya (SLNSS); the Jathika Seveka Sangamaya (JSS); the Commercial and Mercantile Union (CMU); the Inter-Company Employees Union, linked to the Janatha Vimukthi Peramuna (JVP). This latter organisation has in recent times grown strong in membership, and is now recognized as major a trade union in Sri Lanka. It has branches in over 150 enterprises across the country. Its ties with politics (which other unions also have) are viewed in some quarters with some concern.

Among the significant programmes designed specifically for workers are activities concerning gender, collective bargaining, contract labour, occupational safety and health in agriculture, HIV/AIDS and workers rights, and unionisation of workers engaged in the informal sector.

The reluctance thus far of the multi-bi community to support operational activities in Sri Lanka, remains a constant preoccupation. The protracted internal conflict and allegations of human rights abuse are the chief reasons invoked by them to explain their stance. Yet, as will be seen below, Sweden (SIDA) is currently supporting under its bilateral funds, an ILO multi-bi project.

Norway provides financing to a Sri Lankan component of a South Asia (and Vietnam) project on social dialogue at the enterprise level. Most of the activities benefit from expertise drawn from within Sri Lanka.

Operational country-specific activities deserving special mention concern:

b) A SIDA (Swedish)-funded Start and Improve Your Business (SIYB) programme, already mentioned, which aims at introducing training material suitably adapted for training entrepreneurs through Partner organisation and master Trainers.

Both projects focus on poverty alleviation and employment generation through targeted support to the key private sector catalysts.

The International Programme for the Elimination of Child Labour(IPEC), which commenced practical operations in 1997, further expanded in 2000. Currently two child labour programmes/ projects are operational:

i) A "general" IPEC programme designed to eliminate child labour and,

ii) A parallel project designed to address specifically the issue of trafficking in child labour.

The Government of Sri Lanka which has ratified ILO Conventions No. 138 and, lately, No. 182, has consistently shown its determination to combat all forms of child abuse.

Technical support to ILO operational activities is largely derived from ILO's South Asia Multidisciplinary Advisory Team ( SAAT), based in New Delhi. Frequent missions complemented by an on-going dialogue on technical issues, ensure the provision of technical support to ILO constituents and other government and non governmental organizations concerned with social and labour matters. ILO Colombo also benefits from technical support from HQs, particularly in areas not covered by SAAT in New Delhi, (e.g. post- disaster rehabiltation); by the ILO East Asia MDT based in Bangkok (e.g. in respect of rehabilitation of the disabled) as well as from ILO International Training Centre in Turin, on a wide range of training activities encompassing most ILO fields of competence

The Government has ratified to date seven "core" (e.g. fundamental) Conventions (Nos. 29, 87, 98, 100, 111, 138, 182). The ratification prospects of the remaining fundamental Convention No. 105 are being currently reviewed.

Sri Lanka is one of the states with an impressive ratification record in the region: 37 conventions ratified.

Trade unions have at times lodged complaints regarding lack of compliance with Freedom of Association and the Right to Collective Bargaining. They have in particular raised the issue of Freedom of Association in the Free Trade Zones. Other issues of concern relate to legal provisions regarding essential services and emergency regulations. In the course of 2001, the press reported cases of massive sacking of workers, in application of these regulations.

Though tripartism is deeply entrenched in Sri Lanka, which has ratified Convention No. 144 concerning Tripartite Consultation, the actual application of it is not always even.

Updated by CHW. Approved by RD. Last update: 17 July 2001.