Global recession which had taken a stranglehold on the world economy has spread its tentacles in Sri Lanka too forcing 16 leading business ventures to lay off their entire workforce while 29 companies have retrenched part of the staff, Inter Company Employees Union said.
Among the companies which had laid off their entire work force are several garment factories and manufacturers of aluminium products and tiles. Companies located in remote areas such as Anuradhapura had also been forced to close down because of the global economic downturn
Some manufacturers of apparels, cement, cloth, plywood and bags have reduced their workforce while the others have warned of possible retrenchment after the Sinhala-Hindu New Year in April.
ICEU President Wasantha Samarasinghe, a former JVP parliamentarian told Daily Mirror the export volumes of some companies had dwindled by 80 per cent, and as a result were compelled to suspend their business operations.
Mr. Samarasinghe said his union identified the business ventures which stopped the overtime work of their employees or sent them home on compulsory leave following the financial crisis.
He said a leading cement manufacturer had curtailed its production by 40 per cent while the export earnings of a ceramic product manufacturing plant had come down by 30 per cent.
The International Labour Organization has predicted that more than 50 million workers will lose their jobs
worldwide due to the recession. In Sri Lanka, 50,000 private sector employees are expected to lose jobs this year. Sadly though, the government has not worked out any plan to ensure the welfare of those who may be pushed to the streets, he said.
Mr. Samarasinghe said that though a Compensation Formula was introduced, there was no fund to compensate those losing employment in the present circumstances.
We are proposing the establishment of a safety net for these people. If this down trend continues, the government will also lose its revenue in terms of taxes levied on exports and imports, he said.
UNP parliamentarian Kabir Hashim said the absence of a proper macro-economic policy had resulted in the present economic crisis effecting Sri Lanka.
Mr. Hashim said inflation had increased because of the government had printed money despite the warnings by opposition parties, and this had resulted in increasing interest rates leaving businessmen in the lurch.
Today, our garment manufacturers have to obtain loans at an interest rate of 12 or 13 per cent. However, it is only two or three percent in countries such as Vietnam and India. So, some of our leading manufacturers have started factories in those countries while closing down their plants here, Mr. Samarasinghe said.
However, Consumer Affairs Minister Bandula Gunawardane admitted that Sri Lanka had begun to feel the pinch of the global recession, and it was beyond the government s control.
In the United States, 2.6 million people have lost their employment. A similar situation prevails in countries such as Singapore, Britain and Dubai. We have not felt the crisis to that extent, he said.
Rubber exports contribute only 1.8 per cent to the economy. From tea, we get around 16 per cent. There is a notable impact on the garment industry. The Board of Investment has made arrangements to provide employment to those losing jobs in other industries. There will be no problem for skilled workers, he said.
Minister Gunawardena said the Labour Ministry had worked out a programme to train the unskilled workers so that they could be absorbed into areas where job security prevails.
When asked whether the government would be able to guarantee an income to all workers losing their jobs, the Minister said no government in the world could do it.