Liberalization Of The Labor Market: Is It the End Of Permanent Employment?
By Sumanasiri Liyanage –
Sumanasiri Liyanage
How do the three main parties in Sri Lanka, United National Front for Good Governance, United Peoples Freedom Front and the Janata Vimukthi Peramuna respond to the increasing demand made by the international financial agencies for labor market liberalization? Do these parties address this issue?
Last weekend I attended two meetings. While the first is organized by the people working on the Free Trade Zone, the second is a meeting of the office-bearers of branch unions of the CMU. The principal focus of the both meetings was manpower agencies and the labor market. The second meeting was more focused as its organizers opted for the title, “Is it the end of permanent employment?” In fact, I borrowed the phrase used by the General Secretary of the CMU, Comrade Sylvester Jayakody’s apt phrase, “manpower contagion” as part of the title of this article.
I have no idea when the manpower agencies entered the Sri Lankan labor market. When Mahaweli Development Project was underway, private agencies entered as intermediaries in bridging the demand for and supply of labor for various project sites. Individual intermediaries also facilitated in finding domestic helpers. Foreign employment agencies have proliferated since the beginning of the outflow of labor first to the countries of West Asia and later to other emerging economies. As far as I know, a very limited studies were done on the subject of the role of these intermediaries. According to the data I possess, these agencies usually charge from the organization that demand labor once and for all payment. When the workers were transferred to said employer, the role of the intermediaries usually comes to an end. The responsibility of the employee would be shifted to the new employer. The manpower agencies are different as they leave the employee rather ‘undefined’ the issue to which I will turn shortly.
There is another novel element. In the past, this service of intermediaries was used only by the private sector. Today, many government and semi-government agencies have also used manpower agencies in meeting the labor demand of those organizations. Lake House, Sri Lanka Telecom has been widely using manpower agencies in ‘recruiting’ people. National Savings Bank once hired around 500 people through manpower agencies. Manpower agencies were very much present in the Free Trade Zones and also in many private sector companies. Comrade Jayakody used the word ‘contagion’ primarily because of the increasing presence of the manpower agencies in the Sri Lankan labor market. The degree of extensity and velocity of the presence of manpower agencies appear to be phenomenal.
The way In which manpower agencies operate is quite simple. When a company needs additional labor, like in good old days it does not advertise calling for application. It contacted manpower agencies some of them were set up by people closer to politicians. Manpower agency sent a list of names to the employer company and the company select the number they want. These employees are neither the employee of the company nor the employee of the manpower agency. Company pay a daily wage which may be a little higher than the wages of its regular employees. In many FTZ situations, if the daily wage of the regular employee is Rs 750, manpower worker gets about 1200- 1300 and out of which about 1000 is paid to the worker and the balance goes to the manpower agency. For the calculation of ETF and EPF, the only payment made to the worker is taken into account. These workers do not enjoy even limited rights of the regular workers. For example, they are entitled for only half day leave per month.
Is the manpower agency modality of labor demand and supply popular among workers? Well, ironically it is and this preference shows the fetishistic character of the commodity ‘labor’. This system provides a new kind of freedom for workers. They can work when they wish to do so; and when they prefer leisure, they can go for that option as well. Similarly, the employers get responsibility-free labor. Labor comes to them without any strings that were developed in the past. Recruiting and sacking can be done through SMS although the words “hiring” and “firing” cannot be applied in this context with rigorous meaning those words have embodied historically. Another interesting development is some regular workers find additional employment in their “free time” to work in different companies. Hence we are entering into a freer labor market condition.
This is what neoliberalism and the international financial institutions have been calling for since the early 1990s. Recently, European Institutions (troika) that includes European Union, European Central bank and the International Monetary Fund demanded the left wing Syriza government should take measures to liberalize the labor market meaning hiring and firing should be made easier. This has been one of the prescriptions suggested by the right wing economists in Sri Lanka. Their argument is that would make the labor market more rational and efficient. While the bourgeois economics called for supply-determined price in the goods market, they call for demand –determined price at the labor market. We have witnessed everywhere and everywhen, this so-called liberalization or flexiblization had led to increasing income inequalities, weakening worker organizations and poor working conditions.
To what extent these developments have affected the human living condition have shown in a recent IMF document. Even IMF has been compelled to accept and to propose that one of the solutions to increasing income and wealth inequalities is unionization of the workers.
I read the election manifesto of the United National Front of Good Governance (UNFGG) that proposes to promote moribund idea of social market economy. The countries that had adopted SME have now abandoned it. The clearest example is Germany which have not only abandoned social market economy, but also played a leading role in enforcing Greece to adopt a policy package that counters to social market economy. Under social market economy, Germany adopted job and employment security making firing more difficult. However, I did not see any suggestion in the UNFGG to face this increasing manpower contagion.
It was a welcome move on the part of the trade unions and worker friendly organizations to commence work and advocacy to flag this issue in the context that none of the main political parties wish to encounter this issue and to find justifiable solution to it. If this issue is put into the backburner, we will find a class of ‘slaves’ in modern factories. Capitalism will not show a hesitancy to revive archaic forms of exploitation if it favors their profitability.
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