Precarious Work in Sri Lanka

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Precarious Work in Sri Lanka

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1Institute of Policy Studies, Colombo, Sri Lanka

Corresponding Author:Nisha Arunatilake, Institute of Policy Studies of Sri Lanka, 100/20 Independence Avenue, Colombo 7, Sri LankaEmail: [email protected]

Precarious Work in Sri Lanka

Nisha Arunatilake1

Abstract

This study describes different uncertain, insecure, and unstable working arrangements experienced by workers in Sri Lanka. Findings show that most informal sector workers experience precarious employment. The main types of precarious workers are temporary or contractual workers who work in the formal sector. Faced with competition, and in their attempts to cut costs and increase productivity, employers pressure workers to produce better goods, faster. Also, to adjust the workforce to meet the fluctuating demand in the market at lower cost, workers are given temporary or contractual contracts, so that their work is easily discontinued. The insecurities and instabilities of these workers come from several sources. First, they are deprived of some of the protection afforded by labor legislation because they do not have a permanent contract, and they have to constantly look for alternative work. Second, the intense nature of the work they are exposed to can increase their risks to different adverse health conditions. Poor health and lack of a permanent job can adversely affect their income-earning potential. Third, being temporary workers, they have fewer interactions with labor unions. Better information on the size and trends in precarious employment needs to be systematically collected so that policy makers will be better informed of the issues relating to precarious work in Sri Lanka and can initiate informed initiatives to improve the situation.

Keywords

Sri Lanka, precarious work, employment, informal employment

The nature and structure of employment in Sri Lanka has changed drastically since the introduction of a far-reaching economic liberalization program in 1977. The reforms moved the production structure of the economy from an import-substitution-oriented industrial policy to an export-oriented industrial policy. With this change,

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new employment opportunities opened up, mainly for young women, in the export-oriented labor-intensive light manufacturing sector and trade- and tourism-oriented services sector (see Lakshman, 1997; Rodrigo, 2001). To be competitive in the global market, the firms in the liberalizing economy continuously had to improve productiv-ity and decrease costs. Faced with increased competition, employers looked to improve flexibility by resizing workforces and lowering fixed costs to better adjust to the changing demand patterns in the global market. Some measures adopted by enter-prises included reducing the permanent workforce and offering more contractual and temporary working arrangements, making employment more unstable and uncertain to workers. Along with this, there was greater demand on the workers to meet targets and sustain quality, creating a more intense working environment and raising issues concerning the health and safety of workers. Together, these developments have made new employment opportunities more uncertain, unstable, and insecure. This article defines such working arrangements as precarious work. Precarious work is apparent not only in new employment opportunities created. Agricultural informal sector workers producing for the domestic market as well as workers in the export-oriented plantation sector are also largely in precarious working arrangements.

Precarious work is not a commonly used term in Sri Lanka. Different categories of work that could possibly come under the broader definition of precarious work have received varying attention by policy makers and researchers over the past several decades. A better understanding of the prevalence of these different types of work and of the specifics of the uncertainty, instability, and insecurity relating to precarious work conditions is prevented by lack of information. This article attempts to bring together the existing literature on the different types of workers who may be experi-encing precarious employment in Sri Lanka. The article also provides profiles and details trends of different types of precarious employment, as the available data per-mit. The following section provides background information on the changing eco-nomic environment since independence in 1948 and the development of labor standards. This is followed by a discussion of informal sector workers in Sri Lanka and different types of precarious work conditions they experience. The final section looks at precarious workers in different industrial sectors.

BackgroundStructural Change

Sri Lanka is a small country with a low- to middle-income economy located in the Indian Ocean. It has a population of nearly 20 million (see Table 1). A large share of the country’s gross domestic production is in services, and this proportion has increased over time. In contrast, the share in agriculture production has declined over time. The share of industrial production has remained stagnant, although its absolute value has increased (Table 2).



Arunatilake 3

Table 1. Sri Lanka: Labour Force Participation and Employment Patterns (in millions)

1980 1985 1990 1995 2000 2005 2010

Total population (no.)1 14.7 15.8 17 18.1 19.1 19.7 20.7Economically active population (no.)2 —a — 6.0 6.1 6.8 8.1 8.1Unemployed (No.)2 — — 1.0 0.7 0.5 0.6 0.4Labour force participation rate (% of

population)333.8 38.9 51.9 47.9 50.3 49.3 48.1

In agriculture (% of employment)4 51.2 47.7 42.2 36.7 36.0 30.3 32.5In industry (% of employment)4 19.5 21.6 20.1 22.2 23.6 26.3 24.6In services (% of employment)4 29.3 30.7 37.7 41.1 40.3 43.3 42.9

Sources: (1) Central Bank, 2010, Annual Report. (2) Department of Census and Statistics, Labor Force Survey–Annual Report, 2010; values exclude Northern and Eastern Provinces except for 2005, when all districts are included. (3) Central Bank, 2010, Annual Report; the value for 1980 is approximated with the value for 1981. (4) Values for 1980, 1985, and 1992 are for the closest year; values for 1980 and 1985 are from the Central Bank Annual Report, 2010; other values are from the Department of Census and Statistics, Labor Force Survey, 2010.a. Not applicable.

Table 2. Structure of the Sri Lankan Economy

1980 1985 1990 1995 2000 2005 2010

GDP (constant 2000 US$ millions)

6,515 8,295 9,822 12,774 16,331 19,839 27,029

GDP (current US$ millions) 4,025 5,978 8,033 13,030 16,331 24,406 49,552Agriculture, value added

(current US$ millions)1,038 1,512 1,909 2,686 2,908 2,885 6,341

Agriculture, value added (% of GDP)

27.6 27.7 26.3 23.0 19.9 11.8 12.8

Industry, value added (current US$ millions)

1,116 1,431 1,884 3,098 3,986 7,368 14,586

Industry, value added (% of GDP)

29.6 26.2 26.0 26.5 27.3 30.2 29.4

Services, value added (current US$ millions)

1,612 2,518 3,461 5,890 7,718 14,154 28,625

Services, value added (% of GDP)

42.8 46.1 47.7 50.5 52.8 58.0 57.8

Source: Key Indicators of the Labour Market, International Labour Organization, and World Development Indicators, World Bank.

As summarized by Lakshman (1997), immediately following independence in 1948, the primary sector, consisting mainly of agriculture, forestry, and fishing, was the main contributor to the economy. Over time, successive governments have attempted to diversify the economic base of the country. In the initial period, the main




emphasis was on promoting import substitution, first in the agriculture sector and, since 1956, in the industrial sector. These reforms were instrumental in changing the structure of the economy away from agriculture. Despite a weak attempt at introducing more export-friendly economic policies under the 1965 to 1970 political regimes, in general, the country continued with import-substitution economic policies until 1977. However, like other countries that followed a similar policy regime, Sri Lankan policy makers also soon realized the limitations of the import-substitution policies, and the United National Party that came into power in 1977 introduced widespread liberaliza-tion policies, sharply moving the economy toward an export-oriented industrialization regime. The United National Party continued to be in power for the next 17 years, and even after its defeat, successive governments continued the liberal, export-oriented economic policies adopted in 1977.

In 1983, ethnic tensions that had long troubled the country turned violent. This conflict lasted intermittently for nearly three decades, ending only in May 2009. Although the country continued to maintain an average growth rate of around 4.6% throughout the conflict period, the rapid economic growth experienced following ini-tial liberalization slowed.

The above-described attempts to diversify the economy had a considerable impact. The agriculture share of the gross domestic product (GDP) declined from 46% in 1950 to 31% by 1977, reaching 13% by 2010. In services, there was an increase over the same period, from 37% to 41% and then to 59%. For industry, the increase was from 20% in 1950 to 29% in 1977, and then it remained relatively stable at around 30% after that (Central Bank, 2010; Lakshman, 1997).

Changes to Employment PatternsImmediately following independence, reflecting the structure of the economy at the time, the agricultural sector was the main contributor to employment. In 1953, nearly 53% of total employment was from agriculture, forestry, and fishing. Despite the decline in the agricultural sector, it continued to dominate as a source of employment, contributing 51% of total employment even in early 1980s. The importance of agri-culture as a source of employment has declined with liberalization, in 2010 account-ing for roughly a third of employment opportunities.

The labor-intensive light manufacturing industries that were established with the liberalization of the economy following the 1977 reforms attracted mainly young females from both rural and urban areas into the factories. Although at the aggregate level the employment share in the industrial sector has changed only marginally since early 1980s, the sector experienced a structural change in the post-1977 period. With the adoption of more liberal economic policies, the tourism and trade sectors also expanded. Along with these domestic developments, and helped by an oil price rise in the Middle East, opportunities for foreign employment increased from the early 1980s. Again, mostly unskilled female workers benefited from these opportunities in the ini-tial period. The main sources of formal employment for young men were in military



Arunatilake 5

and security services (Rodrigo, 2001).1 Over the past decade, there has been an increase in the service sector jobs for more educated workers in the information and communication technology. There has also been an increase in information technology and information-technology-enabled services.

In 2010, close to half of Sri Lanka’s population aged 10 and older was economi-cally active. The official unemployment rate is less than 5%, indicating that labor is a relatively scarce commodity. As indicated in Table 1, almost 43% of the employed population is in the services sector, followed by the agriculture (32.5%) and industry (24.6%) sectors. Although industry’s share of production has remained reasonably constant, its share of employment has increased over time. Mirroring changes in pro-duction, agriculture’s share of employment has declined over time, whereas the ser-vice share of employment has increased.

The workers of Sri Lanka can be divided into those who work in the formal sector and those who are in the informal sector. Although the formal and informal sectors are defined more thoroughly below, in terms of the statistics shown in Table 3, formal sec-tor workers include all permanent public sector employees, as well as permanent workers working in private sector establishments that are registered, keep regular accounts, and employ more than 10 workers. As may be seen in Table 3, the proportion of public sector workers in the country has declined since 1990, and despite an uptick in 2010, the proportion in 2010 remains lower than that for 1998. In the private sector, the official data show a big increase in the proportion of workers in the private sector between 1990 and 1994, with stagnation since then, at around 41% to 44%. The avail-able information indicates that in 2010, close to 40% of private employees, amounting to 1.7 million workers, were working in the informal sector (Department of Census and Statistics, 2010, excluding data from Northern Province). In addition to these pri-vate informal sector employees, own-account workers and unpaid family workers may

Table 3. Employment Status, Selected Years, 1990–2010 (%)

Employee

Year Public Private EmployerOwn-account worker (A)

Unpaid family worker (B) A + B

All informal-sector workers

1990a 21.5 33.7 1.8 29.2 13.8 43.0 —c

1994a 16.4 44.3 2.3 27.2 9.8 37.0 —1998a 14.5 41.2 1.9 28.9 13.6 42.5 —2002a 13.4 44.5 2.8 28.6 10.7 39.3 —2006a 13.4 42.1 3.1 30.8 10.5 41.3 61.62010b 14.3 41.2 2.6 31.5 10.4 41.9 62.6

Source: Based on Labor Force Survey data of the Department of Census and Statistics–2010.a. Excludes Northern and Eastern Provinces.b. Excludes Northern Province.c. Not applicable.




also be considered as being in the informal sector. As can be seen in Table 3, the pro-portions of own-account workers and unpaid family workers have not changed much over these years.

Labor Standards and Social ProtectionThe initial labor legislation in Sri Lanka was developed to safeguard the Indian migrant workers in plantations.2 During the colonial period, with the growth of the better educated middle class and the influence of the urban workers in the early 20th century, Sri Lanka (then Ceylon) was granted universal adult suffrage in 1931 and was the first British colony to hold an election with a universal adult franchise (Alailima, 1997). The impact of this change and the rise of Marxist and labor parties and unions saw the government responding by becoming more responsive to social issues. The depression of 1930–1933 and a malaria epidemic in 1934–1935 also highlighted the need for state intervention to provide social assistance during times of economic downturns and adverse economic shocks (Alailima, 1997). The labor legislation that is in place today (with amendments) was initiated during the 1930 to 1935 period. The broad areas of labor legislation in the country at present are to (a) specify terms and conditions of work, (b) ensure industrial safety, (c) improve industrial relations, (d) provide social security, and (e) provide special safeguards to vulnerable employees such as women and children (Ministry of Labour Relations and Productivity Promotion, 2010).

Labor disputation and political contestation led to legislation for introducing terms and conditions of work, which was enacted at an early stage, starting with the Shops Ordinance of 1938, which specified working hours, overtime payments, and holiday and casual leave for shop workers. The Wages Board Ordinance No. 21 of 1941 extended the minimum wage legislation, which was previously applicable only to the Indian plantation workers, to 35 trades. These wage boards were empowered to specify minimum wages, statutory holidays, and leave for workers in their respec-tive sectors. The Factories Ordinance No. 45 of 1942 and its amendments specify standards to uphold in the functioning of a factory to ensure safety and cleanliness, and the Workman’s Compensation Ordinance No. 19 of 1934 specifies compensa-tion for occupational injuries (Ministry of Labour Relations and Productivity Promotion, 2010).

Legislation to improve industrial relations was introduced soon after the granting of the universal franchise, reflecting the active participation of workers in politics at the time. The Trade Union Ordinance introduced in 1935 allowed employees to organize and bargain for their rights with employers. The Industrial Disputes Act No. 43 of 1950 and its amendments aimed to prevent, investigate, and settle industrial disputes. The Termination of Employment of Workman Act of 1971 provides a high level of job protection to formal private sector workers. According to this act, employers with more than 14 workers must seek authorization of the Commissioner of Labor for lay-offs. In the case of a layoff, workers are provided with compensation. Compensation



Arunatilake 7

amounts are quite high according to international standards and are more than suffi-cient to cover wages for 6 months, even for those with only 3 years of service (see Gunatilaka & Vodopivec, 2010).

Specific legislation concerning employer–employee relations was enacted follow-ing liberalization in 1977. For instance, the Employee Council Act No. 32 of 1979 aims to facilitate cooperation of employees and employers in achieving industrial peace and working together to improve productivity in large public organizations. Similar to this, the Board of Investment of Sri Lanka (BOI, 2004) facilitates the estab-lishment of employee councils in BOI enterprises.3

The permanent public servants in the country are the only group who are covered by a government-funded pension plan—the Civil Service Pension Schemes. Table 4 summarizes the current state of social protection schemes. As seen in the table, there are voluntary pension schemes for informal sector workers, depending on their occu-pation, including farmers’ pension schemes, fishermen’s pension schemes, and self-employed pension schemes. These contributory schemes have poor coverage and inadequate benefits. The Employees’ Provident Fund, established in 1958, provides superannuation social security for private sector workers. But rather than an annuity, it provides a lump-sum payment to the employee at retirement in accordance with

Table 4. Summary of Major Social Insurance, by Type of Worker

Old age and survivor supporta

Disability, illness, sickness, and pregnancy Unemployment

Public sector Civil service pensionContributory Widows and

Orphans Pension scheme (WOP)

Disability plan is available under a voluntary schemeb

Covered by statuary sick pay only

Maternity leaveDisability insurance mostly

for injured soldiers

None; employment of public servants is terminated very rarely

Formal private sector (permanent workers)

Retirement benefits and survivors benefits under mandatory Employees’ Provident Fund

Disability and some health insurance under Employees Trust Fund

Maternity leave

None, but employees are given large compensations at termination; termination of workers for nondisciplinary reasons is possible only with permission from the worker of the commissioner of labor

Informal private sector (self-employed, unpaid family workers, contractual, or casual workers)

Some voluntary pension schemes (e.g., farmers’ pension, fishermen’s pension, self-employed pension)

Survivor pension and death gratuity from voluntary schemes

No health scheme at present except disability under voluntary schemes

None

a. Pension refers to a stream of income, whereas benefit refers to a lump-sum payment. All types of workers can access government medical services, which is provided free of charge in state hospitals.b. Public servants have an optional disability plan. If they join, they have to make contributions.




contributions. Initially, only workers in establishments with more than five workers were covered by the Employees’ Provident Fund, but in 1971 coverage was extended to all workers. This is a contributory scheme, where both employers and workers con-tribute an agreed proportion of the employee’s salary toward a fund. The Trust Fund Act No. 46 of 1980 covers all public employees not covered by the Civil Servant’s Pension Scheme and all private sector employees. Employers are required to remit 3% of the gross earnings of their employees to the fund. Employees or their beneficiaries can withdraw funds at death or in the case of a serious injury or disability. The pay-ment of Gratuity Act No. 12 of 1983 also specifies the employer’s liability to pay employees’ gratuity for workers with a tenure of more than 5 years as severance pay.

In addition to the above-mentioned labor legislation, Sri Lanka has several laws to safeguard female and child workers. The country has also ratified most of the 8 core International Labour Organization (ILO) conventions, all 8 human rights covenants, and 11 conventions on the environment (Sivananthiran, n.d.).

Precarious Workers in the Informal SectorWhat Is the Informal Sector?

Comprehensive information on the informal sector is available only starting with 2006, through the revised Labor Force Survey conducted by the Department of Census and Statistics. Yet even in the version of the schedule of the survey, only the informal sector is defined, not informal workers. The Department of Census and Statistics defines formal sector organizations as those that are registered with either the Employees’ Provident Fund or the Inland Revenue Department and that also keep regular accounts and employ more than 15 workers. All other organizations are con-sidered to be informal sector organizations. By this definition, all permanent workers who are employed by formal organizations are considered to be formal employees. All others—that is, self-employed workers, employers of informal organizations, employees of informal organizations, and casual or temporary employees of formal organizations—are considered to be informal workers. All informal employees—that is, all workers in the informal sector as well as nonpermanent workers in the formal sector—can be considered precarious workers in Sri Lanka.

Types of Informal Sector WorkersAlthough all precarious workers can be lumped together, it is recognized that their characteristics differ widely according to their employment status. At a broad level, informal workers comprise (a) own-account workers, (b) unpaid family workers, and (c) informal employees. Although the share of unpaid family workers of the total employed has decreased marginally over the years, the proportions of these workers and own-account workers remained much the same between 1990 and 2010 (see Table 3). Data in 2006 and 2010 demonstrated that all informal workers made up more than 60% of all workers in the country (see Table 3).



Arunatilake 9

Own-account workers—also often referred to as self-employed workers—are indi-viduals who work for themselves. According to the Department of Census and Statistics (2010) nearly 95% of own-account workers, amounting to 2.3 million work-ers, are in the informal sector. Some of these workers produce for larger manufacturing companies, who in turn export their products (e.g., small tea producers sell their green leaves to factories that process the tea and sell it on the world market). Unlike the permanent workers in the manufacturing sector, these own-account workers do not enjoy social protection afforded by the legislation. In 2010, 76% of own account work-ers were male (Department of Census and Statistics, 2010). A majority (51%) of own account workers were in the agriculture sector, followed by the services sector (33%; Department of Census and Statistics, 2010).

Unpaid family workers are workers who are in home-based income-generating activities, including in agricultural activities. Nearly 92% of unpaid family workers, amounting to 700,000 workers, are in the informal sector (Department of Census and Statistics, 2010). The majority (72%) of unpaid family workers were female. A large proportion (70%) of unpaid family workers were in the agricultural sector, followed by the services (19%) and industry (11%) sectors (author’s calculations based on Department of Census and Statistics, 2010, data).

Informal employees are mainly low-skilled workers who work in elementary occu-pations or in low-skilled occupations. Informal employees can be considered to be in three distinct categories. If they are working for an employer, they fall into the infor-mal category when their work is not permanent. These nonpermanent workers are contractual workers hired to complete a specific task, temporary workers hired for a specific period, and workers with no employers who are largely wage workers who constantly change their employers.

Workers in professional-grade occupation categories and white-collar jobs are likely to be permanent workers. Skilled agriculture and fishery workers and craft and related workers are workers in traditional occupations. A relatively small proportion of these are permanent workers. Fewer than 40% of sales and service workers, plant and machine operators and assemblers, and those in elementary occupations are permanent workers (See Table 5).

Characteristics of Workers in the Informal SectorPrior to 2006, only own-account workers and unpaid family workers were distinguish-able as informal sector workers. However, according to data from 2010, 4.8 million (or 62.6%) of the total employed population worked in the informal sector (Department of Census and Statistics, 2010; data exclude the Northern Province). This included 85.6% of agricultural workers and more than half (51.0%) of nonagricultural workers.

Generally, low-educated males are more likely than their female counterparts to be informal sector workers. Of the total employed, 65.4% of males and 57.1% of females work in the informal sector, and around 75% of those working in the informal sector have less than a junior secondary-level education (Department of Census and Statistics, 2010). By industry, the proportion of informal sector workers was highest (86.5%) in




agriculture. The construction, mining, quarrying, electricity, gas, and water supply sector was a close second, with 83.2% of workers in the informal sector (Department of Census and Statistics, 2010). The majority (56.1%) of those in the hotel and restau-rant sector and 45.1% of those in the manufacturing sector are also informal sector workers (Department of Census and Statistics, 2010).

Informal sector workers are spread across a variety of occupations. Almost 97% of skilled agriculture and fishery workers are informal sector workers (Department of Census and Statistics, 2010). Among other occupation categories, proprietors and managers of enterprises (77.1%), craft and related workers (66.8%), elemen-tary occupations (62.1%), plant machine operators and assemblers (60.4%), and sales and service workers (59.8%) have large proportions of informal sector work-ers (Department of Census and Statistics, 2010).4 As can be seen in Figure 1, most of the above-mentioned informal sector workers do not have permanent work

Table 5. Type of Work Arrangement, by Occupation Category (2009)

(% of total)

Permanent Temporary CasualNo permanent

employer Total Total (no.)

1. Senior officials and managers

90 8 3 0 100 110,744

2. Professionals 87 9 3 1 100 410,118 3. Technical

and associate professionals

81 14 4 1 100 360,872

4. Clerks 72 20 7 1 100 308,262 5. Proprietors and

managers of enterprises

69 15 12 4 100 8,677

6. Sales and service workers

39 44 13 3 100 329,706

7. Skilled agricultural and fishery workers

11 36 15 39 100 117,699

8. Craft and related workers

26 35 14 25 100 798,037

9. Plant and machine operators and assemblers

36 44 12 8 100 363,091

10. Elementary occupations

29 28 13 30 100 1,497,755

Source: Author’s calculations using Department of Census and Statistics Labor Force Survey data, 2009.



Arunatilake 11

arrangements. A large proportion of skilled agriculture and fishery workers, craft and related workers, and workers in elementary occupations are workers who are temporary or who do not have permanent employers. They are mostly wage work-ers who move from employer to employer. On the other hand, most sales and ser-vice workers and plant and machine operators and assemblers are temporary workers. These statistics confirm that employment in the liberalized economy tends to be precarious; it is uncertain, insecure, and unstable, most especially for nonpro-fessional and low-skilled workers.

Vulnerabilities of Informal WorkersAs social protection in Sri Lanka is linked to employers, workers in the informal sec-tor who work for themselves, work for their families, or do not have permanent employers simply are not covered unless they participate in voluntary social insurance schemes. In addition, informal sector private employees are less likely to be protected against income losses and health expenditures resulting from illness and disability (see Table 4). Vodopivec and Arunatilake (2011) found that compared to public and private sector workers, informal sector workers—both casual and the self-employed—work until they are very old and retire primarily because of poor health. An analysis of wages received by different types of workers by their work arrangement shows that, in general, permanent workers receive higher wages than temporary or casual workers. For example of “plant and machine operators and assemblers” permanent workers earn Rs. 5,200 more than temporary workers and Rs. 3,600 more than casual workers, on average, per month (see Figure 1).

- 20,000 40,000 60,000

Senior Officials and Managers

Professionals

Technical and Associate Professionals

Clerks

Proprietors and Managers of Enterprises

Sales & Service workers

Skilled Agricultural and Fishery workers

Cra and Related workers

Plant and Machine operators and Assemblers

Elementary occupa�ons

o permanent employer Casual Temporary Permanent

Figure 1. Average monthly earnings, by occupation categorySource: Author’s calculations based on Department of Census and Statistics Labor Force Survey data, 2009.Monthly earnings include gross salary, other earnings, and in-kind payments.




Precarious Workers, Precarious EmploymentWorkers in the Export Processing ZonesThe first free trade zone (FTZ) in Sri Lanka was set up in 1978, immediately follow-ing the liberalization efforts of 1977, in Katunayake, close to the only international airport in the country. Since then, similar FTZs have been opened across the country. The main objectives of these zones are to attract foreign direct investment, expand exports, participate in foreign exchange, and generate employment. The enterprises in the zones are offered free trade conditions and a liberal regulatory environment. Although in the initial period there were attempts to have more liberal labor laws in these zones, resistance by labor unions compelled the government to grant the work-ers in these zones the same legal protection enjoyed by workers outside. However, Sivananthiran (n.d.) shows that there are issues regarding the lax enforcement of these laws within the zones. Although several trade unions have come forward to protect the rights of the FTZ workers, the establishment of unions and their activities are restricted in the zone.

Industrial activity in the zones is characterized by light manufacturing such as gar-ment factories and other export products. Large numbers of mostly young female workers work in this zone (Hewamanne, 2006; Shaw, 2007). Many of them are work-ers who have migrated from rural areas and the agricultural sector (Hewamanne, 2006; Shaw, 2007). Systematic information on these workers is not available from official government sources. Roughly 250,000 workers are estimated to work in 14 FTZs spread throughout Sri Lanka (Free Trade Zones and General Services Employees Union, 2010). In these zones around 80% of the workers are women.

Hewamanne (2006) highlights many of the hardships faced by workers in the FTZ. Many have come to the FTZ from poor rural areas in search of better employment. However, the working and living conditions inside the FTZs are poor. Available evi-dence suggests that the work is stressful, as workers have to meet difficult and demand-ing production targets. Those who do not meet these targets are harassed in different ways by the supervisors. The work is also monotonous, with little that is challenging. In addition, there is no clear career path for the workers. The pay, taking into account the fact that the workers have to spend money on residing away from home, is high. Being internal migrants, many reside in temporary boarding houses close to the zones, where the conditions are very poor. Based on the author’s observations, it is clear that, if they are unmarried, several workers will be required to share small poorly ventilated rooms with minimum facilities. Workers share common kitchens and toilets. These boarding houses allow very little personal space. The main reason for workers’ dis-satisfaction with the work is the nonwork environment; 59% of the workers chose this as their main reason for dissatisfaction (Shaw, 2007).

Shaw (2007), who investigated the employment decisions of female garment workers in FTZs, shows that most workers are pushed into employment in the FTZs by poverty and a lack of opportunities in their home villages. Shaw finds that the



Arunatilake 13

majority choose to work in the FTZ to contribute to the household incomes. It was also found that most workers were not satisfied with their work and would prefer to work elsewhere, but the lack of alternative employment opportunities tied them to their FTZ jobs.

After 2004, with the phasing out of the Multi Fiber Agreement that had regulated the export of garments from developing countries to developed countries through a worldwide system of bilateral tariffs and quotas, competition among producer coun-tries increased, as the ensured market was gradually lost. Kelegama and Epaarachchi (2001) envisaged that this increased competition would compel producer firms to become increasingly conscious about cost and quality and to deliver goods on time. The authors further argued that this would need to be done while upholding labor standards as consumer groups and buyers are increasingly demanding adherence to international labor standards. Sivananthiran (n.d.) found that social audits and the reorganization of the labor inspectorate at the Labour Department of the Ministry of Labour actually resulted in improvements in the enforcement of labor standards in the FTZs compared to those in 1997. However, the same study showed that the number of labor inspections was reduced immediately following 2005. Since the end of the agreement, several factories have closed abruptly, leaving over 3,000 workers without employment or proper compensation for their termination. Some companies also defaulted on the payment of provident funds—a criminal offense in Sri Lanka (Sivananthiran, n.d.).

In recent times, pressure from buyers, consumer groups, and trade unions for improving wages and working conditions has also changed operations in the FTZs (Sivananthiran, n.d.). The government, together with some exporting companies, developed initiatives to promote Sri Lankan products on ethical grounds. “Garments without guilt” is one such initiative; it uses Sri Lanka’s relatively high labor standards as a marketing tool (http://www.garmentswithoutguilt.com/). The “factory improve-ment program” is another initiative by the Employers Federation of Ceylon and ILO (http://ilo-mirror.library.cornell.edu/public/english/region/asro/colombo/ilotech-prgms.htm). This program attempts to improve productivity and working conditions in factories through a participatory and training approach (see Peiris, 2007). However, for several years, trade unions have questioned the effectiveness of these initiatives in improving labor standards (Samarajiva, 2010; Sri Lanka Apparel Association, 2012).

Until 2010, Sri Lanka was also the only country in Asia to benefit from the Generalized System of Preferences (GSP) Plus, which reduced to 0% the import duty on 7,200 items exported to the European Union. This benefit was provided to show commitment to the uplifting of labor standards through the ratification of all core ILO conventions and human rights conventions as well as 11 conventions on the environ-ment (Sivananthiran, n.d.). However, GSP Plus status was not renewed in August 2010 because of alleged noncompliance with some of the ratified conventions (European Commission, 2010). With the removal of GSP Plus, Sri Lanka lost a price advantage it had enjoyed over its competitors.




Workers in the Plantation and Commercial Crop Sectors

The estate sector consists of workers who are engaged in work on plantations produc-ing commercial crops. Around 224,000 workers, including both permanent and casual workers, were employed by the larger companies in the sector in 2009 (Ministry of Plantation Industries, 2009). Although traditionally tea was produced on large estates, the small-holder sector has gained importance in recent times (Van de Wal, 2008), and more than 60% of the tea produced in the country is produced by small holders. Recently, this has been the trend also for rubber and coconut production. According to the agricultural census of 2002, 44% of the land devoted to tea production, 59% of the land for rubber, and 82% of the land for coconuts is small holdings of less than 20 acres (just more than 8 hectares; Ministry of Plantation Industries, 2009).

Many of the workers in the larger plantations were brought to Sri Lanka from southern India in the early 19th century, particularly for the purpose of working on the large tea and coffee plantations. The plantation sector has undergone several structural changes in the past couple of decades. In 1992, recognizing the need to revitalize and modernize the sector, the government grouped approximately 449 state-owned plantations into 23 regional plantation companies and transferred their management to private agents on 5-year renewable contracts (Arunatilake, 2000). Starting in 1995, in a second phase of privatization, these were extended to 50-year leases with the hope of generating capital investment. By the end of 1997, 20 compa-nies, comprising all commercially viable tea and rubber estates, were fully privatized. This privatized regime faced many challenges. On one hand, external factors such as variable world prices, technological advances, developments in competitor countries, and, more generally, government strategies in restructuring the sector have influ-enced the competitiveness of the sector on the world market. On the other hand, the sector is faced with a plethora of internal problems relating to production costs, resource availability, allocation, and management. Among these, labor’s future cost and availability are gaining importance.

In earlier times the plantation companies were solely responsible for providing workers residing on large plantations with everything from employment to housing, health care, and education facilities (Arunatilake, 2000, 2001). The workers on the large plantations are highly unionized, have guaranteed work for 300 days each year, are covered by the national Employees’ Provident Fund, a formal retirement program, and receive wages arrived at through a tripartite negotiation process.

Despite these advantages, plantation sector workers continue to work in poor cir-cumstances. Many estate sector workers do not own land or houses outside the planta-tions. Even on the plantations, only those who are actively working on the estate are entitled to stay in estate housing. Although the legal environment in the country does not prevent estate workers from obtaining assets outside the sector, financial con-straints resulting from lack of access to credit (because of unavailability of collateral) and poor financial management prevent them from moving away from estates. There is a recent trend of younger individuals moving from estates to urban centers in search



Arunatilake 15

of employment. However, interviews with estate workers revealed that these move-ments are largely temporary movements, and many migrants come back to the estate after getting married. Despite better pay and social protection, there is persistent pov-erty in the estate sector. The nutrition and other health outcomes in the sector are also worse than in the rest of the country. This is partly the result of the historical depriva-tions of the sector (Kamphuis & Sivaram, 2001).

The increase in the small-holder sector has increased the number of casual and nonpermanent workers working in the sector. This greater casualization has partly been attributed to the high costs of permanent workers arising from the aforemen-tioned fringe benefits. This is especially the case in the small-holders sector (Bandara, 2002). Increased international competition and periods of oversupply of tea in the international market, and the resulting downward pressure on global tea prices, have induced tea plantations to lower costs and be more productive, putting pressure on working conditions and wages (Van de Wal, 2008).

Workers in the Hotel IndustryOne of the sectors that benefitted from the liberalization of the economy was the hotel and hospitality sector. Although the initial expansion of the sector later slowed, after the onset of the violent civil conflict in 1983, the hotel sector has remained important to the economy. According to the Labor Force Survey, 145,795 workers were working in the hotel and restaurant sector in 2010. Qualitative information gathered from the hotel sector reveals that many of the workers in the sector are temporary seasonal workers, who are unlikely to benefit from social protection. It is also the sector with the longest working hours in Sri Lanka. According to the Labor Force Survey (Department of Census and Statistics, 2010), more than 65% of workers in the hotel and restaurant sector work more than 50 hours a week.5 A large proportion of the workers in the chain are variable workers who are hired for a short period. Although permanent workers receive better social protection and more stable employment con-tracts, variable workers are hired for short periods, usually during the tourist season. Interviews with hotel managers revealed that variable workers are usually hired for about 5 months. At the end of the season, contracts are terminated and workers are assured that they will be rehired in the next season.

Workers in Outsourced CompaniesVery little literature is available on the issues faced by workers in outsourced compa-nies. These workers work for labor contracting companies that provide labor services to third-party companies. The services provided by these companies include cleaning services, security services, and clerical services. The main characteristic of these workers is that they are not directly employed by the companies for which they pro-vide services. Depending on the requirements of the market, the working locations of these workers can change from time to time. They are distanced from their direct




employer, as they do not work at the same location. Since only a few workers from each company work in a particular workplace, they are also distanced from their fel-low workers. As such, they have limited opportunities to discuss or voice their griev-ances. Actual numbers of these types of workers and the types of work conducted by these workers are not readily available.

ConclusionsThe above analysis describes different uncertain, insecure, and unstable working arrangements experienced by workers in Sri Lanka. According to the analysis, most informal sector workers are in precarious work conditions. The main vulnerabilities of informal sector workers who work in the informal sector—that is, own-account workers, unpaid family workers, and private employees without a permanent employer—arise from exposure of their livelihoods to natural and manmade disasters. Given the difficult working conditions they face, incidences of disabilities and injuries are likely to be higher for these workers. These workers are their own employers, and the labor legislation of the country that provides social protection to workers through employers does not apply to them. These workers are also at a higher risk of adverse health outcomes. However, since most of them are working for themselves or their families, not working could leave them destitute, and unlike the workers in the per-manent sector, these workers will not receive compensation for occupational hazards, again as they work mostly for themselves. Furthermore, evidence shows that because of a lack of social protection in old age, most informal sector workers are compelled to work until they are very old, and many retire because of their poor health.

The other main type of precarious workers is temporary or contractual workers who work in the formal sector. Faced with competition, in their attempts to cut costs and increase productivity, employers pressure workers to produce better goods, faster. Also, to adjust the workforce to meet fluctuating demands in the market at lower costs, workers are given temporary or stipulated contracts, so that their work is easily discon-tinued. The insecurities and instabilities of these workers come from several sources. First, they are deprived of some of the protection afforded by labor legislation because they do not have a permanent contract, and they have to constantly look for alternative work. Second, the intense nature of the work they are exposed to can increase their risk of different adverse health conditions. Poor health and a lack of a permanent job can adversely affect their income-earning potential. Third, being temporary workers, they have fewer interactions with labor unions. This distances them from a mechanism to voice their grievances.

There are two main issues facing precarious workers in Sri Lanka. The first issue concerns the conditions of their work, namely, issues such as safety at work, working hours, production expectations, paid leave days, and superannuation payments. The second issue concerns the nature of their employment contract. Over the years, several pieces of legislation have been added to the labor code in Sri Lanka to safeguard work-ers’ rights through legal means. These also have increased the cost of labor for



Arunatilake 17

employers. Imposing high fixed costs on employers can be counterproductive, when employers resort to different means to avoid such costs, such as hiring workers on a temporary or contractual basis. Given the nature of their employment, temporary and contractual workers have less say in the terms and conditions of work. Also, as many of these workers are rehired, it is apparent that in many instances short-term work arrangements are used to avoid the higher costs of hiring permanent workers. There have been some attempts outside the legal framework to find solutions to the issues faced through participatory schemes (e.g., employee councils). But these measures aim more to improve working conditions in factories rather than to make changes to the nature of employment contracts. Information on the size and trends in precarious employment in Sri Lanka is not readily available. This article has attempted to bring together available information to highlight the main issues. Better information could draw the attention of the policy makers to the nature and extent of the issues to aid informed policy making.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

This article is a part of a Sawyer Seminar Program that received support from the Andrew W. Mellon Foundation. Workshops were held in Seoul, supported by the Institute of Sociology at Chung-Ang University, and in Chapel Hill, supported by the Carolina Asia Center, University of North Carolina at Chapel Hill. This support is gratefully acknowledged.

Notes

1. The insecurities brought on by the secessionist conflict increased the need for guards at entry points to establishments. The total strength of armed forces increased from 12,000 to 210,000 from 1981 to 1997 (Gunaratna, 1998, pp. 293-294).

2. From the early 19th century the workers for first coffee and then tea plantations in Sri Lanka were brought down from mainly southern India. These workers were given accom-modation in the estates and remained Indian nationals until recently. The legislation on health and education and social security was first introduced in Sri Lanka for these Indian migrant workers (Alailima, 1997).

3. An employee council is an elected group of employees representing different departments of an enterprise. The election of the council is facilitated by the Board of Investment (BOI). The objective of the council is to work with management to find solutions to industrial issues and to contribute to and promote industrial harmony and work toward the improve-ment of the enterprise (BOI, 2004).

4. Managers in informal enterprises are defined as being informal workers.5. According to the Shop and Office Employees Act of 1954, the hours of work cannot exceed

45 in any one week. The maximum number of hours of work per week is different for dif-ferent sectors. According to BOI guidelines, the maximum number of hours of work for




shift workers is 8 hours during weekdays and 5.5 hours on Saturdays (www.investsrilanka.com/pdf/labour_sandards.pdf). For work beyond these specified hours, workers need to be compensated with overtime pay.

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Bio

Nisha Arunatilake is a Research Fellow at the Institute of Policy Studies of Sri Lanka.



Documents

Precarious Work in Sri Lanka