The W.T.O., Labour Standards and National Legislation

Franklyn Amerasinghe

The The key objective was to exert international pressure, which would force governments to be truly democratic and to formulate policy in consultation with the key stakeholders, namely, the employers and workers. The Declaration of Philadelphia adopted on the 10th May 1944, which forms an annex to the Constitution of the ILO, states that experience has demonstrated the truth of the statement that, lasting peace can be established only if it based on social justice. The Declaration states that the principles contained in the declaration are applicable to all peoples, and that while the degree of compliance may vary according to the stage of economic and social development, that the progressive application of the standards is a matter of concern to the whole civilised World. The tripartite structure of the ILO, attempts to maintain a balance among the stakeholders.

Globalisation has had a serious impact on the social fabric of almost every country, be it developing or developed. The ILO in its report on globalisation says that it has brought about prosperity and inequality, which are testing the limits of collective social responsibility. The publication released to the ILO conference in 1999 speaks of a new relevance for the ILO in these terms:

“The ILO provides the international community: the global reference point for knowledge on employment and labour issues; the centre for normative action in the world of work; a platform for international debate and negotiation on social policy; and a source of services for advocacy, information and policy formulation”

The Havana Charter, in 1948, which was to create the International Trade Organisation at that time, spoke of a common understanding on fair labour standards related to productivity and in the improvement of wages and working conditions as productivity may permit. The Uruguay Round of Trade Negotiations in 1994 refocused attention on a “social clause” that sought to establish the linkage between trade and labour conditions, but there was no consensus. The developing countries vehemently opposed the implementation of the concept as being “protectionist” and unfair, given the state of their under – development, although they accepted the need to work towards the goal of eliminating child labour and other practices which were inhuman or against the principles of fundamental rights.

In June 1994, barely two months after the Uruguay Round, the Director General of the ILO addressing the 75th Anniversary Conference, clearly articulated the policy of the ILO when he made the following key points:

1. The ILO standards are for universal application.

2. Flexibility clauses are built in to make allowances for different levels of development in the hope that the developing countries will work towards achieving the benchmarks set for universal application.

3. The new economic order makes it necessary to re-examine this issue and to look at how to curb the growing impoverishment of certain parts of the world and certain groups,

4. The need for new initiatives on the side of the ILO to continue its recognition as an essential agent in the new international economic regulatory framework.

At the World Summit in Copenhagen in March 1995 it was decided that the ILO would continue to enjoy its primacy as the engine for implementing labour standards. It was stated categorically, that the ILO should safeguard and promote respect for basic workers’ rights. These were identified, as the prohibition of forced labour and of child labour, freedom of association, the right to organise and bargain collectively, equal remuneration for men and women for work of equal value, and non-discrimination in employment and opportunity. It was said that where states have ratified them, the ILO should ensure that the ILO Conventions are fully applied, and in the case of others, that the principles are taken account of.

In June 1998 the Annual Conference of the ILO adopted a Declaration of Fundamental Principles and Rights at Work. This followed months and years of debate, and finally had the support of all the employers and Governments as well.

The Declaration contains a set of principles and rights derived from the Constitution of the ILO. All members are obliged to respect and promote these principles irrespective of whether they have ratified the relevant Conventions or not. These principles are:

1. Freedom of Association and the effective recognition of the right to Collective Bargaining.

2. The elimination of discrimination in respect of employment and occupation.

3. The elimination of all forms of forced or compulsory labour.

4. The effective elimination of child labour.

The relevant ILO Conventions that cover these issues are:

Freedom of Association Convention no. 87

Collective Bargaining Convention no. 98

Forced Labour Convention no. 29

Abolition of Forced Labour Convention no. 105

Minimum Age Convention no. 138

Worst Forms of child labour Convention no. 182

Equal Remuneration Convention no. 100

Discrimination in Employment Convention no. 111

The Declaration which sets out the aims of the Organisation, among other things, states that the war against poverty requires international effort in which representatives of workers and employers enjoying equal status, with those of Governments, join in free discussion and democratic decision in the promotion of the common welfare. Elsewhere the Constitution talks of the need for continuous improvement of productive efficiency and the involvement of workers and employers in the preparation and application of social and economic measures. The mandate of the ILO, as stated before, is to establish equitable conditions of employment by a social partnership.

The philosophy which pervades the structures set up to achieve social justice throughout the world, clearly required, that as much as the richer countries should contribute to helping the less fortunate, that there was a reciprocal obligation on the part of the latter, to strive towards achieving ideal standards.

The Impact of Multi National Enterprises and Globalisation

Multi National Enterprises (MNE’s) have been spreading their tentacles all over in search of potential investments, and moving operations to wherever they have competitive advantage, sometimes creating job losses in their own countries. In the developing countries sorely in need of employment to improve the quality of human existence, there has been a desire to seize opportunities to entice MNE’s and their investment, even at the cost of accepting standards frowned upon by the developed world. Some MNE’s, resorted to the use of supply chains and chose to be seen as mere buyers of products, rather than being physically present in developing countries, thereby neglecting or refusing to see under what conditions the goods and services were in fact produced. This situation has changed considerably due to pressure from international bodies, governments, NGO’s, Trade Unions and consumers.

The World Employment Report[1] states, “poor quality jobs, low pay, overwork, unsafe and unhealthy working conditions, job and income insecurity are more widespread. People living in poverty, in the developing world, about 1.2 billion, are almost entirely supported by the earnings of the 500 million workers among them, “the working poor”. If those people who work substantially less than full time, but wish to work more, are included, then one third of the world labour force of about 3 billion are either unemployed, underemployed or earn less than is needed to keep their families out of poverty”. Multi National Enterprises (MNE’s) create jobs and generate wealth in developing countries selectively, depending on internal markets as well as strategic

[1] ILO, Report 2001.

advantage in terms of resources and markets. There is much concern about the disparity being caused by the effects of globalisation, but not enough attention is paid to achieving a balance that would ensure that the fruits of globalisation are equitably shared. Summing up the problem succinctly, Ghose[2] says, “Trade Liberalisation – which together with marked improvements in transport systems and communication/in formation technologies, has been driving globalisation – has suddenly acquired the status of a much maligned monster.”

The issue of equity or equitable distribution of the fruits of globalisation should be discussed against the backdrop of how prepared the countries themselves are to receive MNE’s in terms of their labour markets, infrastructure and political conditions. The issue is whether such equitable distribution should ideally be through legislative means, or through a social consciousness resulting in a voluntary sharing. Kofi Anan, Secretary General of the UN proposed a voluntary response, when at Davos in 1999[3] he appealed to the business community to enter into a “Global Compact”, which could address the needs of labour standards, the environment and human rights issues. De Silva states[4], “There is inadequate recognition that reaping the benefits of globalisation requires a range of policies and institutions at the national level.” De Silva also states “the connection between trade and poverty reduction is not always easy to establish because other factors such as investment, macro economic policies, investment in education policies etc… in countries, also affect this question”[i]. A study entitled “import – export structure and trade expansion in South Asia” referred to the dangers of inward looking policies, which produces an inefficient industrial structure. The study advocated that the developing countries pressurise the developed countries to liberalise their import policies and secondly to promote trade among developing countries especially on a regional basis.[5]

Management techniques and business strategies have undergone tremendous change in the last two decades to enable enterprises to survive in a market where as Smadja [6], says “you need to drive on flexibility, versatility and speed. In the old economy it was the big fish, which was eating the small fish. This is today irrelevant. Today it was the fast fish which was eating the slow fish”.

The rules of the “entrepreneurship game” have changed. Thurow[7], looks at the massive downsizing of the 1980’s and 1990’s, and says, that unlike in the 1980’s,when for every three blue collar workers only one white collar worker was retrenched, the downsizing in the 1990’s affected employees at all levels and could not be defended only on the basis of rationalisation due to a recession. The downsizing, in most cases, as we know, involved a new way of structuring business. This includes, business process re-engineering, management de-layering and outsourcing. Outsourcing to cheaper suppliers of goods and services brought about savings in costs in many forms.

[2] ‘Trade Liberalisation, employment & global inequality”, International labour Renew, (2000), Vol 139, No.3N, Pg 281

[3] Speech at World Economic Forum – See Global Compact web site: www.unplohalrompact.org

[4] S.R De Silva, ” The Globalisation Debate

[i]Seepage 21.

[5] Trade Expansion in South Asia- Committee on studies for co-operation in development in South Asia, Marga 1990.

[6] Managing Director World Economic Forum, speech at Enterprise Forum 96, Geneva 8th Nov. 1996

[7] Thurow, (1996), The Future of Capitalism, Allan & Unwin, Pg. 26

It involved savings from wage costs as well as infrastructure. This was also aided by the vast strides in communication technology, which helped to trim numbers and improve response time to customer needs.

Entrepreneur ship has naturally received an impetus from the scientific developments of the recent years especially in the area of communications.

The impact on the way in which work is done has been so tremendous, that the ILO World Employment Report for 2001 focused on the “Information Economy”. The Report states, “using ICT lowers costs and can increase productivity economy-wide.” In Sri Lanka, the Central Bank”[ii] reports that the use of information technology has ensured consistency in output and product quality. It has also helped to improve marketing, supply chain management, strategic decision-making and greater cost efficiency in our industries. It has also inevitably made changes in the employment relationship with many employees being hired on a part time basis and working in environments which cannot be easily monitored to ensure proper working conditions.
Handy[8] refers to a “vast reconfiguration of work” not because of a recession but as a result of corporate restructuring brought on by heightened competition in the global market place. He poses the question of why people should work on a full time basis occupying office space, when they can be hired to work only when their services are needed. Handy says, “this great squeeze out is causing tremendous changes in the world of work, creating new patterns of opportunity and risk, and forcing us all into new ways of thinking about jobs, careers, remuneration and the whole shape of our lives.” It has inevitably been a body blow to Trade Unions, which find it difficult to unionise such workers.

The impact of this new approach to entrepreneurship on employment has been remarkable and issues of protecting part-timers, home workers, casuals and subcontract staff have challenged the ingenuity of the ILO. A convention on Part Time Work was adopted by the Conference at its sessions in June 1998. Discussions have also taken place on regulating contract work as recently as June 2003 at the International Labour Conference and will no doubt in due course result in an international instrument.

The global economy presents opportunities as well as threats to entrepreneurs some of which are the following:

The stance taken by the World Trade Organisation on unfair competition especially by the use of unfair labour standards and the suppression of human rights. The intention is to level the playing field especially in the context of jobs being at stake in countries, which are receiving goods from developing ones, who may be at an unfair advantage purely by using lower standards to be cost effective. We are aware of the issue with regard to the

[ii] Annual Report 2002 Pg. 98

[8] Handy, (1995), Beyond Certainly, Hutchinson, See “The coming work culture.”

Sialkot footballs, in Pakistan and the carpets from Bangladesh and Pakistan, where the issue was in respect of child labour.

National Governments are making their economies as open and as flexible as possible to attract investment thereby making the competition fierce.

The globalisation of technology, which gives buyers more information and consequently more choices. Networking in relation to communications, transport etc. puts more pressure on suppliers.

The end of the Multi Fibre Agreement in 2005, which will remove the quota system for garments/textiles. In Sri Lanka as well as in many other developing countries, dependent on quotas, the prospect of serious unemployment looms large, unless there is an ability to command markets purely on the basis of quality, efficiency, delivery and variety of products.

The sharp and often unchecked flow of capital around the globe, which creates opportunities as well as threats. .

The concerns of consumers are resulting in social labelling and codes of conduct being introduced by MNE’s.

The emergence of cross-border collective bargaining by MNE’s with International Trade Unions.

De Soto[9] states, “It is essential that the state remembers that before it can redistribute the nation’s wealth, the nation must produce wealth. And that in order to produce wealth, it is necessary that the state’s action not obstruct the actions of its citizens, who after all, know better than anyone else what they want and what they have to do”.

The ILO and its Decent Work agenda

The ILO has in recent years adopted a strategy of promoting decent work in its quest for social justice. It is pertinent that no less a person than John D. Rockefeller Jnr. is quoted in the International Labour Review of 1921 as saying, that “the day has passed when the conception of industry as chiefly a revenue-producing process can be maintained. To cling to such a conception is only to arouse antagonisms and to court trouble. In the light of the present, every thoughtful man must concede that the purpose of industry is quite as much the advancement of social well-being as the production of wealth.”[10]

Since there are many who assume that the International Labour Organisation is, as the name appears to suggest, an organisation which is concerned with the protection of

[9] De Soto, (1990), The Other Path, Perennial library, Pg. xix.

[10] “Co-operation in Industry”, International Labour Review Vol. 135 (1996) No.1-4, Pg 292.

labour, it may be worthwhile to look at the mandate of the ILO which is a much broader one, focusing on social justice by gain-sharing, thus making it essential for the parties to collaborate in productivity issues, The Organisation could truly be said to be concerned with social justice, and not merely with worker rights. The current strategy of the ILO office in working through four sectors, namely, Fundamental Principles and Rights of Work, Employment, Social Protection and Social Dialogue is meant to reflect this wide mandate to find solutions which address all the issues that would result in a more equal society. The “Decent Work” agenda of the ILO therefore has also been identified as a development agenda[11], resulting in the ILO being an active participant in poverty reduction strategies in developing countries, including Sri Lanka.

The complaint, now being made is that there is a rush for the bottom in terms of labour standards in order to attract investment. Allegations are also being made of social dumping, namely, that polluting, hazardous, and dirty jobs are being farmed out to the poorer countries. Globalisation and structural adjustment have gone hand in hand, with Governments realising that they cannot compete effectively with the private sector in commercial areas of activity. The sum total of these two issues has been that there has been great concern for efficiency both in terms of newer skills and knowledge, and for the sloughing off of unproductive jobs and even whole industries. Job losses have been phenomenal.

In Sri Lanka as well as in many other developing countries, the state was the most significant employer and was responsible for keeping many persons employed although their jobs were unproductive and a burden to their economies. Security of employment has been a major issue and with the current situation of employers requiring speedy restructuring to meet market swings, safety nets are an obvious answer, but they too have to be financed. Does the Government have the wherewithal to support safety nets? In any event can a Government sustain such safety nets in the event of an economic downturn? This is why the ILO maintains that economic and social developments are two aspects of the same process, which must sustain and reinforce

each other.

Juan Somavia, Director General of the ILO, in his submission to the W.T.O Ministerial Conference at Seattle[12] charts a path for action by the ILO and its constituent states. He states that the ILO will through its Declaration of the Fundamental Principles and Rights at Work:

Directly hasten the elimination of “the most inhumane labour practices such as the worst forms of child labour and forced labour that have outraged the conscience of the international community”.

Through guaranteeing freedom of association and the right to bargain collectively, it will create the negotiating power necessary to eliminate the

[11] “Decent Work Deficit”, ILO, 89* session 2001, Pg 18.

[12] Nov. 1999, See Perspectives of Decent Work, ILO, 2001, Pg 6 et seq.

many forms of unacceptable labour practices that still exist, whether in the export industries or elsewhere in the economy.

Through freedom of association and collective bargaining, create a countervailing power to redress the central problem of uneven distribution of the gains from trade and economic growth.

The concept of Decent Work could be attributed directly to the concern of the ILO to ensure that its member states adopt some standards, which ensure human dignity and social justice. It is also part of a call, which has been made to create a new “global architecture”, which includes changes in the working of the international financial organisations, growth-oriented national economic policies, exchange rate policies and measures to regulate the flow of speculative capital.

What is “Decent Work”? It would appear that it is associated with jobs of acceptable quality, which subsumes considerations of forms of work, conditions of work, as well as value and satisfaction. The challenge is expressed as a need to devise social and economic systems, which ensure basic security and employment while remaining capable of adaptation to rapidly changing circumstances in a highly competitive global market. The required security should be provided by the state, relying on strategies like safety nets. Security could also be achieved by retraining, and in fact the new theory of labour market flexibility includes strategies for retraining and enhancing employability.

Reaction of Consumers to Unsatisfactory Labour Standards and Voluntary Initiatives

The reaction to the bad effects of globalisation are also surfacing through customers of MNE’s resulting in the bigger multi-nationals imposing their own codes of conduct and some developed countries adopting standards for suppliers. Recently we read in our local papers some concerns and perhaps threats held out by the EU in relation to an issue in a specific company regarding the right to associate and form Trade Unions. Some time back there was a report by the Canadian Centre for Policy Alternatives, that the major Transnational Corporations were designing a Bill of Rights for themselves, which would be in the nature of a multi-lateral agreement on investment with countries in which they invested. We know that Governments are virtually impotent in controlling their own economies due to the new economic order dictated by Globalisation. It would therefore be interesting to see how they would cope with such a treaty if it became a reality.

ILO and its Constituent States

The content and objectives of the core standards are embodied in the Constitution itself, but there are independent Conventions based on these core values of the Organisation and the question has been whether a member state can justifiably retain its membership if it does not ratify them. On the other hand, there are states, which have ratified the Conventions but not implemented their requirements. Sri Lanka has ratified all the core labour standards, but from time to time there are questions asked about the level of actual compliance.

It would be clear that any State, which permits Child Labour, would not be complying with the call for Decent Work. The Declaration in order to permit countries which due to economic conditions are still not ready to eliminate child labour, only focuses on the immediate elimination of the worst forms of child labour, (forms such as where moral standards are breached as in employing children in the sex trade, in child trafficking and combat [13]).

In general, it is true that the developing countries have opposed the social clause and the imposition of minimum standards and charged the developed countries with being guilty of a hidden agenda. The charge levelled being, that the developed countries are guilty of protectionism. Sri Lanka has always been identified as a country with a reasonably good record, with the one reservation being in relation to the Export Processing Zones where allegations have been made that there is no freedom, of association although the workers enjoy the same legal rights on paper. The Board of Investment (BOI) has officially announced its policy that where Unions are in existence, the company concerned must deal with it and agree to collective bargaining[14].

Sri Lanka and Globalisation

According to studies done South Asia too has attracted a reasonable amount of foreign direct investment in the wake of globalisation. Thilan Wijesinghe states[15] that between 1979 and 1982 the average net inflow of FDI was approximately 1.2% of GDP. Between 1960 and 1976, however, the corresponding figure was negative. What influenced this change? Among 5 principal reasons, he mentions the following, which ‘ are relevant to us:

1. Implementation of policies to promote export-oriented industrialisation within a liberalised trade regime.

2. The setting up of the Greater Colombo Economic Commission (GCEC) and the Export Processing Zones (EPZ’s) under them.

3. Ratification of Art. 157 of the new Constitution protecting investments from nationalisation and expropriation.

[13] See Convention 182.

[14] “Labour Standards and Employment Relations”, BOI, Publication Oct.2(X)2.

[15] “Impact of FDI on Industrialisation in Sri Lanka” – Seminar, 50 years of Independence – Central Bank 23/24th March 1998.

It must be borne in mind, that it was not only foreign investment which we needed, we also needed local investors and existing businesses to make their contributions to solving socio-economic problems. Our strategies at the time of liberalisation also incorporated the need to industrialise in order to address the serious threat caused to society by unemployment and underemployment which had already caused a holocaust in 1971. According to Korale[16] unemployment in 1977 had risen to 23%. Unemployment in the 3rd quarter of 2002 is given as 8.6%.[17]

According to the Central Bank Report for 2002, the BOI Companies provided 416,756 (in 1996 it was only 241,970 jobs). Of these textiles, weaving, apparel and leather products account for 280,234.

Has the Government a strategy for tackling these issues of creating employment and attracting investment? The Government elected in 1994, in its Agenda for Action, stated thus:

“Change labour laws to balance legitimate concerns of both enterprise and labour, but keeping in mind the need to create employment.”

The Agenda for Action focuses clearly on productivity and opines that rising productivity will provide the basis for increases in real wages and living standards [18]. In the most recent strategy of the present government entitled “Regaining Sri Lanka,”[19] it is said that 2 million new jobs must be created. It recognises the fact that, excluding the North and the East, the open unemployment is 528,000 and the underemployed cohort is about 1.2 million. The employed persons also include 673,000 unpaid family workers. In the next few years about 500,000 more are expected to be entering the labour market. Among the priority actions required are the needs to find “accommodation on the problems associated with existing labour regulations” and “for better labour relations”. It is said, that “Perceptions of the climate for investment will be influenced positively by a comprehensive settlement” of this contentious issue. It also speaks of the review of labour laws and mentions a few steps being taken.

In 1999, the Employers Federation prevailed on U.S.A.I.D. to carry out a survey in the United States to ascertain what the reputed MNE’s there thought about our laws and industrial relations climate. The reason for choosing the U.S.A. for this study was that this country had brought pressure on us to ensure proper labour standards and specifically shown concern about a perceived lack of freedom of association here. The study incorporated the views of well-known multi-nationals as well as Academics and Industrial Relations practitioners. Some of the most important findings and relevant comments on them are:

That it was a matter of concern that the right to terminate an employee was dependent on the decision of a public official. The concern here was

[16] Dept. of Census & Statistics – Employment & labour Statistics, Pg. 14.

[17] Central Bank Report 2002 Pg.164.

[18] Joint Sri Lanka Govt.-World Bank study 1996, Pg. 38.

[19] Vision and Strategy for Accelerated Development – May 2003.

both with the rights given to the Commissioner of Labour to decide whether an employment should be terminated or not, as well as, the right of reinstatement given to an Arbitrator and Labour Tribunal.

That where Trade Unions existed in work-places, that the preference would be to have collective agreements, on the basis that such agreements could give certainty to terms and conditions of employment. The reality in Sri Lanka is that, even with the benefit of “No Trade Union Action” clauses, there are many infringements, which we have now got accustomed to accept. A law, which states that a violation of a Collective Agreement is a punishable offence but requires that action be initiated by the Commissioner of Labour alone, has proved to be valueless, because the Commissioner does not use his prerogative.

That stable industrial relations were a sine qua non for the promotion of investment. Many countries are competing with each other to woo investors by assuring them of tight controls over labour. Some Free Trade Zones of the world are touted as “Strike Free”. In Sri Lanka strikes are usually legal and can be resorted to without any notice.

Legislation in Sri Lanka

In relation to our discussion one of the most significant developments was the Trade Unions Ordinance in 1935, which provided protection to registered unions and made bargaining by any other unregistered group illegal. It is interesting that the latest publication of the Board of Investment (BOI), on Industrial Relations permits collective bargaining by unregistered Employee Councils[20]. The Wages Boards Ordinance of 1941 and a series of legislation in the 1950’s saw the rights of workers being afforded necessary protection in relation to wages, social security, protection from arbitrary dismissal, working hours and in many other ways to bring employment conditions in Sri Lanka in line with developed countries.

Freedom of Association and the Right to Organise

This is an area in which Sri Lanka has been under attack from time to time. Although the complaint has been that in the Free Trade Zones unionisation is frowned upon and very little collective bargaining takes place, in terms of the law a lawful strike does not require the backing of a Trade Union, and in the Zones there have been many strikes. In Sri Lanka, unless there is a Collective Agreement or a declaration of essential services whether under the Industrial Disputes Act or the Public Security Ordinance, or the purpose of the strike is one, which is prohibited by the Industrial Disputes Act

[20] Labour Standards and Employment Relations, BOI Publication Oct.2002.

used these provisions to eliminate union activists in the belief that the Unions if allowed to operate would hinder their business.

Unlike in some countries we have all the laws of the country applicable in the Zones as well. However, Unions complain that they cannot unionise the workers. The employers in the Zones, by and large, are not totally opposed to Unions, but fear that Unions, have no interest in the well being of the enterprise and will raise the expectations of workers to levels, which cannot be met. Another issue, which is often ignored, is that the Garment manufacturers who form the mainstay of the Zones, not to mention the manufacturing industry in Sri Lanka, survive on meagre margins, and have very little leeway for wage bargaining.

What we need to do is to face up to reality. The threat is no longer from the W.T.O. The Multi National Enterprises are introducing their own codes of conduct and demanding compliance therewith if we wish to do business with them. The developing countries are no longer competing as states but as a collection of individual suppliers, who are prepared to do the bidding of these giant corporations.

*

Convention 87 provides that workers and employers have the right to establish and join organizations of their choice with out prior authorization. Public authorities are prohibited from interfering in their activities. The ILO has a committee of experts who examine complaints from constituents and there has developed a set of precedents in relation to the implementation of the convention. These do not constitute binding precedent but have much persuasive authority. In relation to the constitutions of these organisations, it has been decided that if the statutory rule in a country is that an organisation should include specific particulars, there is no unfair interference. It has also been decided that if the law lays down the majority needed to adopt a constitution that it does not breach the principle. A law that states that the organisation is subordinate to the economic policy of the government is incompatible with the requirements.

Organisations should be free to elect their own representatives. State authorities cannot lay down criteria for election or election procedures. Where the law states that a candidate should belong to a specific occupation to hold office, the restriction has been held to be improper. The argument is that organisations should have the benefit of qualified persons such as lawyers and retired workers. If persons are prevented from holding office due to specific political affiliations, this would not be acceptable. In ont case, decided by the Committee of Experts of the ILO, the fact that one of the members of the government is at the same time a leader of a trade union, which represents several categories of workers employed by the state, was considered as being in a position where there could be a violation of the principle which required independence from authority.

It has also been decided that mere conviction for a criminal offence should not debar a person from holding office, unless the conviction reflects on his integrity. The state should also not lay down a maximum period for office bearers.

Unions should not be subject to dissolution or suspension by administrative authority. There should always be a possible recourse to a court in case of administrative action, which debars the functioning of an organisation.

Article 5 of the Convention gives the trade unions the right to federate and affiliate as they so wish. Any restriction of this right is also a violation of the principle of freedom of association. It is also clear that unions may have links to political parties and it is unquestionable that they have the right to involve themselves in economic issues. They cannot involve themselves in any illegal activity and should respect the law of the land.

Convention 98 states that workers shall enjoy adequate protection against acts of anti union discrimination in respect of their employment. This protection prevents the employers from laying down conditions that the worker should not be in any union or that he should relinquish membership. It also prevents the employer from penalising the worker in any manner for such membership in a union. The establishment or promotion of unions under the domination of the employer is prohibited. The extent to which these provisions apply to the armed forces and police is to be determined by the national laws. Convention 154 also deals with collective bargaining but is more concerned with the promotion of collective bargaining at national level.

The recognition of trade unions for the purpose of bargaining is obviously inter-linked with this Convention, and employers are obliged to recognise the most representative organisation for bargaining purposes. The question of who may be a member of a union is left to the constitution of the union, but the committee of experts has stated that, those in truly managerial positions could be restricted from joining unions to which subordinates belong, so long as they could exercise their own rights by joining a body of their own.

The right to strike is described as one of the essential means available to workers and their organisations for the protection of their economic and social interests. It has been stated by the committee of experts that when trade unions are politically aligned their political relations should not be of such a nature as to compromise the continuance of the trade union movement. If the strike action is intended to express dissatisfaction with the way members are affected socio – economically, it would be justified. Strikes of a purely political nature and unconnected to negotiation for better terms and conditions of employment, would not be protected. The prohibition of boycotts where the union members are not directly involved in the dispute could be an acceptable interference with the right to strike. Legislation, which imposes an obligation to resort to conciliation and arbitration before a strike, is justified. The dismissal of workers for mere participation in a strike is a violation of their right. A general prohibition on strikes can only be justified in a time of a national emergency and crisis, and only for a limited period of time.

The 1978 Constitution gives jurisdiction explicitly to the Supreme Court to deal with complaints relating to the violation of fundamental rights. Article 12 guarantees the right to equality and Article 14 (c) and (d) specifically refers to the right to associate freely and to join a trade union. Although the Constitution creates specific fundamental rights such as the Freedom of Association and the right to join a Trade Union, the rights cannot be enforced unless the violation is by administrative or executive action, so that private sector employees cannot vindicate their rights against their employers by using the special jurisdiction of the Supreme Court [21]. However, it is now argued that an employee could bring a fundamental rights complaint to the District Court for redress[22].

By the amendments in 1999, to the Industrial Disputes Act, it is illegal for an employer to discriminate or take other action against a worker on the grounds of union membership or other reason connected with union activities[23].

Sri Lanka, ratified convention 98 many years ago, but delayed the ratification of convention 87 till 1995, because there was an issue regarding public servants because they had no right to federate. The Trade Unions Ordinance does not violate the principles and the rules laid down come within the principles of justifiable control in relation to the private sector.

With regard to collective bargaining, which has existed in the country from 1929 when the first agreement was signed between the Employers Federation of Ceylon (EFC) and the All Ceylon Trade Union Congress[24], there has been very little interest in the process outside the EFC. Recentiy, as a follow up to the Workers Charter the Industrial Disputes Act was amended to compel employers to bargain with unions which had a minimum of 40% representation.[25] Some of the issues, which should be highlighted, are:

Collective Bargaining in terms of The ILO conventions must be a voluntary process and the Government’s obligation is to facilitate it, not to compel parties to enter into Agreements. The current Amendments attempt to compel even unwilling parties to bargain.

Employers and Unions agreed on mutually acceptable lists of unfair labour practices but the amendments failed to incorporate the unfair labour practices of workers and Unions, making the list one sided and creating the impression that workers could be undisciplined but employers would still need to negotiate with them. The right of an employer to de-recognise a Union if it fails to observe its obligations under an Agreement or commits and unfair labour practice should be a necessary safeguard for employers, if there is mandatory recognition of Unions.

The amendments leave it to the Union to decide for whom they wish to bargain. This allows them to unionise each gfoup of workers

[21] Samson v. Sri Lankan Air/ines [2001] 1 Sri LR 94.

[22] Sec Shermila Anthony, “Fundamental Rights: The sole and exclusive jurisdiction of the Supreme Court”, Moot Point-

[23] Legal Review 2001, Vol 5, Centre for Policy Alternatives. 23 Amendment No. 56 of 1999.

[24] Amerasinghe E.F.G, (1994), The Hmployirs Vukmtion of Ceylon 1929-1994, Employers Federation of Ceylon, Pg 49, 23 Act 56 of 1999. Sec also Acts 11 & 13 of 2003.

independently and seek bargaining irrespective of the employer’s wishes to treat them as one group or could also mean that different groups join different unions so that there need to be several agreements in the same work place. The problem of multiplicity of Unions, which is the bane of our society, could be further aggravated.

Discrimination in Employment

Convention 111 is engaging much attention as a result of international concerns in relation to gender, disabled people, migrant workers and others who are disadvantaged and not treated as equals in many societies. The Constitution of Sri Lanka guarantees equality and in relation to employment it could be said that there is equal opportunity, as selection to positions is usually on fixed criteria. The use of criteria, which determines eligibility on functional responsibilities and skills, would not amount to discrimination. There can be no serious complaint about discrimination in employment. We have an equal wage policy and the concept of equal pay for equal work is well recognised.

Forced Labour

Conventions 29 and 105 are the specific instruments, which call for the abolition of forced labour. This covers the use of compulsory labour for political purposes, economic development, as a means of labour discipline, as a punishment, and for racial and similar reasons. In Myanmar there is still an embargo on UN aid on the basis that forced labour is used. In Sri Lanka there is no legal possibility of using forced labour. Recently there was a report of prison labour being used by an apparel manufacturer, and this gave rise to an immediate complaint from the Apparel Exporters Association itself, as the implications to the entire export trade could have been disastrous.

Child Labour

We have compulsory schooling till the age of 14 years. In terms of the Factories Ordinance a Young Person is defined as a person between the age of 14 and 18 years of age. Sec.77 of the Ordinance is worth noting, as it states that a young person who has not attained the age of 16 years shall not remain in employment in a factory after a prescribed period not exceeding 7 days, unless he is examined by the authorised factory doctor and certified as fit for employment. There does not seem to be a period that is in fact prescribed by Regulation. However, what is of significance to us is that the law was intended to scrutinise very carefully any situation where a person between 14 and 16 was employed. When the law to implement the workers charter was being drafted the Employers Federation suggested that the age of entry into the workplace should be raised to 16 years.

There is a certain amount of child labour in the informal sector and in domestic service, and in both instances the reason is one of economic necessity. Children abandon school and seek employment, which is often coupled with the provision of not only pay, but includes the advantage of clothing and shelter (in some cases education too). Sri Lanka has no child labour in the formal sector. Enlightened education policies that are geared to produce the needs of the job market would help when all other conditions in the country are conducive for investment in industry.

Conditions of Work

This includes both the terms and conditions of work. As far as workers are concerned the most important factors are the payment for services, their safety at work and their security of employment. The obligation to lay down minimum wages is contained in Convention 26, which deals with the need to set up machinery for a minimum rate. Convention 99 thereafter laid down the requirement for minimum wages in the agricultural sector. Convention 131 adopted in 1970 took account of the needs of developing countries in this regard. Convention 95 also deals with minimum wage issues.

In Sri Lanka we have a minimum wage machinery which has existed for many years (Ordinance No.27 of 1941). In most trades the rate is fixed on the rate applicable per month and does not permit any adjustment on the basis of output. There are 37 Wages’ Boards set up for specific trades under the Ordinance and they take their decisions at tripartite meetings convened by the Board periodically for the purpose of reviewing wage rates. However, the position has been that these Boards are more or less directed by political imperatives, and are rarely summoned on the requirements of employers or workers. When wages are determined by time at work alone, the tendency is for workers not to interest themselves in reasonable productivity, which situation cannot be condoned in the current situation of fierce competition based on speed, cost and quality. Many employers are providing incentives to workers merely to attend work and we need a serious change in work ethic to become competitive at international level.

Employment Security

Employment security is covered by convention No. 158 and recognises the right of an employer to terminate for a valid reason connected with capacity or conduct of the worker or based on the operational requirements of the undertaking. It is stated that if the termination is associated with:

Union membership or office in an union

The filing of a complaint or participation in an inquiry connected with a violation of the law by the employer or an inquiry by a relevant authority

Race, religion, sex, family responsibilities, pregnancy or other specified forms of discrimination

Absence on grounds of maternity

The reason would not be valid. Temporary absence because of illness or injury is not a valid reason. What duration of absence would be reasonable is left to collective bargaining and national law and practice to define.

The Convention states that no one should be dismissed on grounds of his conduct or performance, without an opportunity to defend oneself, “unless the employer cannot reasonably be expected to provide this opportunity”.

A worker who considers that his employment was unjustifiably terminated should be provided with a forum that could grant him relief. This would not apply to termination, which is already approved by a competent authority in keeping with national practice. Article 10, states that the issue of reinstatement for unjustified termination is one which is left to the national law and practice, but states that other relief such as compensation should be granted if reinstatement is not possible.

The convention envisages that notice is given to all workers who are being terminated except where there is serious misconduct.

A severance allowance or other benefit based on the length of service should be paid in keeping with national law and practice to all terminated workers, except where the termination is due to serious misconduct. When the termination is on grounds of redundancy or retrenchment, it is required that a process of consultation with workers and their representatives, and adequate notice be provided. It is worth noting that provision is made for limiting this provision to a percentage or a number of a workforce to be terminated, thus restricting this right of consultation to a situation when large numbers are being displaced.

The Convention excludes persons who are temporary, probationers and casual for a short period.

No doubt, it is the area of termination of employment, which is worth a longer discussion as the issue of labour market flexibility is often referred to as an important issue for investors who look at means, and costs of exit if their ventures fail.

In Sri Lanka, in relation to non-disciplinary terminations, in scheduled companies, there is an obligation to either have the consent of the worker concerned to his/her termination, or it should be a term of a letter of appointment or a collective agreement, or it should be with the approval of the Commissioner of Labour. Workers who have been in employment for a period under 12 months prior to the date of termination and who have worked for less than 180 days in that period are also excluded. The law also does not apply to an establishment, which has less than 15 employees in the period of six months immediately preceding the date of termination, The law of course has no relevance to the public service and government owned institutions and companies. The order of the Commissioner is said to be final and conclusive and can be challenged only by way of writ. A recent amendment[26], which will come into effect in January next year, sets a time limit of two months for the conclusion of inquiries, The earlier law also set a same time span, but one has to bear in mind that the Commissioner also has the sacred duty to hear the parties and to adhere to rules of natural justice. Perhaps for this reason many years ago the Supreme Court stated that the three-month rule, which prevailed at that time, was not mandatory.

The law in our country is one of the most stringent controls on termination of employment for non-disciplinary reasons. The Courts have held that incompetence is not a disciplinary issue. The Act has been attacked by business on the ground that it creates too much rigidity in the labour market, and is stoutly defended by unions in the context of the difficulty in relocation in a market, which is over supplied with labour. The government in order to balance the conflicting interests is contemplating the introduction of a safety net for displaced workers. The amendments to the law also envisage a standard formula for the payment of compensation for displaced workers[27]. The compensation formula is also expected to be made known by the 31st December 2003 and should be operative from the lst of January, 2004.

Where a termination is in violation of the Termination of Employment (Special Provisions) Act, the act of the employer is null and void, and an order for reinstatement would be tantamount to an order that there is no break in service. The worker is not deprived of any benefit he would have received had he been there right throughout. In such instances of illegal termination, the new amendment says the worker must seek his relief from the Commissioner of Labour, within three months of his dismissal.

Workers seeking redress from Labour Tribunals on account of dismissal have to file their applications within six months of their termination.

The worker also has the right of requesting conciliation from the Labour Department, which if it is unable to resolve the dispute may recommend to the Minister of Labour that he should refer the dispute to compulsory arbitration in terms of the Industrial Disputes Act. The parties may also agree to refer their dispute to voluntary arbitration under the Act. There is as an appeal available from a decision of the Labour Tribunal but in the case of an arbitrator’s award, the remedy would be by way of writ. Labour Tribunals as well as Arbitrators are entitled to reinstate workers or to award compensation.

Unlike in some countries where the term worker or workman (as used in our Acts which are not gender sensitive), does not cover those in management grade, in Sri Lanka all workers are covered by the Industrial Disputes Act and the Termination of Employment (Special Provisions) Act.

[26] Act 13 of 2003.

[ 27] Act 12 Of 2003.

Hours of work and holidays

The first convention adopted by the ILO in 1919 fixes the maximum working hours in industry as eight and the working week as 48. Convention 30 extended the same benefit to commercial establishments and offices. Weekly rest is prescribed in Convention 14 for industry and for others categories in Convention 106. Convention 52 covers holidays with pay. A later Convention 132 adopted in 1970 extended the leave entitlement to three weeks.

The laws of Sri Lanka in relation to hours of work, holidays and leave are in line or in some instances more generous than the norms set by the Conventions. The relevant laws are the Shop & Office Employees Act and the Regulations made under the Wages Boards Ordinance, by the relevant Wages Boards. There are also special provisions in relation to women, children and young persons, contained in the Factories Ordinance, Shop & Office Employees Act and the Women, Children & Young Persons Act.

It maybe worth making special mention of night work for women in factories, which was prohibited earlier but is now possible in terms of Act 32 of 1984. There are specified conditions to be met, which include obtaining the consent of the worker and the Commissioner of Labour. The work should not be for more than 10 days in a month and is at 1 1/2 times the normal rate of pay.

Occupational Safety and Health

Safe working conditions have always been a major concern of the ILO Mines and quarries, factories which are producing or using hazardous chemicals, as well as the newer issues, of stress and repetitive work which cause physical and mental illness have been the concern of many studies to alleviate conditions of work. A large number of Conventions have been adopted. Many of them are specific to different occupations. Convention 148 is a general standard protecting workers in all activities against occupational hazards in the working environment due to air pollution, noise and vibration. Convention 155 lays down principles and suggests action to be taken at national and plant level to enable greater safety in the workplace. Convention No.119 prohibits the sale and use of inadequately protected machinery and equipment.

The law in Sri Lanka in relation to safety and health is found in the Factories Ordinance, which lays down conditions to be observed in organisations which run production facilities, the definition of a “factory” being very wide and including primary manufacture as well as any type of preparation of material for sale. For Shops and Offices, the relevant provisions are contained in the Shops & Offices Act. There are also provisions found in the Maternity Benefits Ordinance, which have a bearing. The Women, Children & Young Persons Act also has provisions, which are concerned with safety and health, such as duration of working time.

The SA 8000, which is a voluntary standard commonly adopted by many MNE’s especially from the EU countries, requires that there should be compliance with proper health and safety standards in line with the ILO Conventions in this regard.

Social Security

A large number of Conventions deal with security for the workers and their families.

Convention 102 deals with nine areas of social benefits, namely, medical care, sickness, unemployment, old age, employment injury, family, maternity, invalidity and survivor’s benefits. There are also specific Conventions that deal with die nine areas. Some of the more important Conventions are:

Conventions No.3 and 103 dealing with maternity benefits.

Conventions 35 and 102 and 128 providing for old age pensions.

Conventions 12, 17,18, 102, 121 provide for employment injury benefits.

Convention 44 dealing with Unemployment benefits.

Our law in this regard, are the Gratuity Act, EPF and ETF Act, Workmens’ Compensation Ordinance, the Maternity Benefits Act and the Shop & Office Employees Act.

The debate goes on, but what we need to do is to face up to reality. The threat is no longer from the W.T.O. The Multi National Enterprises are introducing their own codes of conduct and demanding compliance therewith if we wish to do business with them. The developing countries are no longer competing as states but as a collection of individual suppliers who are prepared to do the bidding of these giant Corporations merely for survival. The advantage producers had of attracting investors through low wages appears to have eroded and it is quality, reliability and speed in delivery, which hold sway in determining who gets a deal. All these factors depend on motivated, competent employees and employers seem happy to share gains with those who are prepared to contribute to enhancing corporate performance. Collective bargaining needs to move from a confrontational, positional mode to a participative, gain and problem- sharing mode, to enable employers to be comfortable with the process.

The investors whom we should attempt to attract are those who would honour their obligations under the Code of Multinationals of the ILO (Tripartite Declaration of Principles concerning MNE’s and Social Policy). It is interesting that this Code states:

“With a view to stimulating economic growth and development, raising living standards, meeting manpower requirements and overcoming unemployment and underemployment, governments should declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment. Multinational enterprises, particularly when operating in developing countries, should endeavour to increase employment opportunities and standards, taking into account the employment policies and objectives of the governments as well as security of

employment and the long-term development of the enterprise. Arbitrary dismissal procedures should be avoided. Workers employed by multinational enterprises as well as those employed by national enterprises should, without distinction whatsoever, have the right to establish and, subject only to the rules of the organisation concerned, to join organisations of their own choosing without previous authorisation. They should also enjoy adequate protection against acts of anti-union discrimination in respect of their employment.”

The laws in Sri Lanka comply with the requirements of the W.T.O and the ILO The question is whether there is compliance with the law. We cannot say that there is strict compliance, but we could say that Sri Lanka has a better compliance rate and a genuine desire to implement standards unlike many of its competitors.