Increasing Precarious Employment and the Socio-Economic Costs

07 Jul 2015 - Commentary

Below is the text of the presentation made by Buddhima Padmasiri at the Sunday Times Business Club, in the forum on “Outsourcing Jobs Versus Permanent Employment” on 29 June 2015

Thank you very much for giving the Collective for Economic Democratisation the opportunity to participate in this forum today. In my presentation, I will relate outsourcing to precarious forms of employment in general. Such precarious work is a problem both for our workers and our society. Furthermore this is a global problem. In the ILO report, Global Employment Trends 2014, precarious forms of employment are identified as a trend in the world economy, which could result in delaying the achievement of development goals and hampering the sustainable progress in poverty reduction.

The whole idea of outsourcing and insourcing labour has prevailed in Sri Lanka since the 1980s with economic liberalization, especially in garment factories and other export-oriented production. Subcontracting was used as a strategy to reduce production costs by hiring cheap and flexible labour. But at present, the precarious workers, workers who are employed on temporary contracts for various durations has become a serious issue.

According to the 2012 Labour Force Survey, 2.5 million of the work force - around 54% of the workers including both public and private sectors - were in precarious forms of employment. Precarious employment is visible in both high end and low end employment. At present, “manpower workers,” referring to workers who are in-sourced by a company through manpower agencies, a category of precarious form of employment, has become one of the most crucial issues facing labour.

While precarious forms of labour are commonly associated with the private sector, currently, this form of employment has become a pressing issue in the public sector and semi-state companies like Sri Lanka Telecom. In Sri Lanka Telecom 27.2% of its workers are constituted of precarious workers. The in-sourced labour at Sri Lanka Telecom come through its subsidiary company Sri Lanka Telecom- Human Capital Solution Private Limited (SLT-HCS). According to a union leader of the Bank Employees Union, one-fifth of the workers in the state banks are manpower workers. There are a significant percentage of contract workers in the Ceylon Electricity Board (CEB) and the Water Board. A trade union activist stated last week that the CEB has recently established a subsidiary company called “Energy Lanka” to outsource manpower workers to the CEB.

However, 92% of all temporary workers are in the private sector. Indeed, most of the workers and trade unionists I have talked to in the Katunayake Free Trade Zone (FTZ), private banks and factories located outside Colombo have identified the division into permanent and manpower workers as the main problem they have in their workplaces.

What do these workers and trade unionists mean by precarious forms of employment being an issue, when this is not just a phenomenon in Sri Lanka alone? This has to do with job security, equal employment rights, exploitation of labour, access to benefits, for dignified status of employment and living, and most importantly because it is spreading. This is not just a local issue but also an issue of the global economy as recognized by the ILO.

When it comes to the Manpower workers in Sri Lanka, their salaries are paid to them by the recruitment agency that is their nominal employer, after deduction of the agency’s commission including the cost for the workers transportation and food. The factories in which the manpower workers work are not accountable for them. Therefore the manpower workers are not entitled to benefits such as medical and insurance, which the permanent workers who do the same work in the core business of the establishment are entitled to. Furthermore the increase of precarious employment is distorting the employer-employee relationships. It is creating an employee for whom the employer is not responsible.

In the public sector the temporary workers are denied holiday leave, pension and bonus entitlements provided to their permanently employed co-workers. Also precarious workers are deprived of social protection benefits as well as basic rights of joining trade unions and bargaining collectively. Last week, on the 25th of June, a massive protest was held outside the CEB by its manpower workers along with manpower workers of other government organizations. Their main demand is to become part of the organization’s permanent workforce. The next day it was reported that 26 of the workers who had contributed to this protest had been interdicted. This is a very recent example of the deprivation of the workers collective bargaining rights and job security.

According to manpower workers at Sri Lanka Telecom, the minimum salary of a permanent worker can be as much as four times the manpower worker. Even in the banking sector the manpower workers obtain only one third of the pay received by permanent workers.
The economic and social costs of these deprivations are seen in the day to day lives of these workers. Their employment conditions are hindering their entitlements to equal pay, rights to personal development and achieving a higher standard of decent and dignified living conditions as citizens of this country. Furthermore, the precariousness of their employment has sidelined them from other social benefits. For example, obtaining bank loans are a major issue for contract workers. There are reported incidents of workers employed by the Sri Lanka Telecom - Human Capital Solution Private Limited being denied bank loans. According to a manpower worker in the janitorial industry, there are incidents of continuous sexual harassment taking place in the Katunayake Free Trade Zone, using the context of job insecurity to the employer’s advantage. So, the job insecurity of these workers not only has economic repercussions but it also leads to differential treatment and violations of their basic rights.

In this way, precarious forms of employment have become a serious issue in our country. The most pressing factor is that it is spreading across sectors and even in different ranks of employment. If this continues at the same pace, the future of workers is grim. Workplaces will have zero accountability towards the employee, and create a serious social and economic crisis for workers.