Should industrial action by trade unions be banned for the next five years?

by Sanjeewa Jayaweera

A few weeks back, the Ceylon Electricity Board (CEB) United Trade Union Alliance announced they would resort to trade union action unless the Government of Sri Lanka (GOSL) agrees to suspend or abrogate the agreement to divest 40 per cent of shares of Yugadanavi Power Plant in Kerawalapitiya to New Fortress Energy (NFE) a US firm. They have now been joined by the Ceylon Electricity Board Engineers’ Union (CEBEU) who have stepped up its work-to-rule campaign, making six demands, including the cancellation of the deal with NFE and the continuation of the LNG tender process that had been progressing when this backdoor deal was struck.

Several other trade unions, including those from the Ceylon Petroleum Corporation (CPC) and Sri Lanka Port Authority (SLPA), both critically necessary to the daily functioning of the country, have announced that they too would join in solidarity with the CEB unions.

Adding fuel to the fire, several constituent parties who are part of the government have announced that they too are opposed to selling the shares. One presumes that their opposition is more due to their socialist ideology. A prominent minister opposed to the sale of shares has slammed the Finance Minister for having included the cabinet paper under any other business and for not having circulated the same for study and comments at the cabinet meeting.

There is a lack of transparency regarding this transaction which no doubt contributes to the controversy. This, of course, is nothing new as successive governments are guilty of not placing sufficient information before the public and other stakeholders when it comes to important transactions or legislative enactments. It is a reflection of the sheer disregard and contempt for public opinion.

The Supreme Court will consider several Fundamental Rights (FR) petitions filed against the NFE deal on December 16.

In my opinion, the unions’ proposed industrial action is not the way to compel the GOSL to suspend the transaction as those who will suffer untold hardship from such will be the public. Many of us remember the sheer agony we went through for 72 hours in 1996.

In addition, the manufacturing sector serving the local and the export market will come to a standstill causing further financial losses in addition to those suffered due to the pandemic related lockdowns. The public and the commercial sector can ill afford to endure additional hardships.

Over several decades the unions attached to public utilities in our country have used their considerable power mainly through the threat of industrial action to prevent much-needed reforms. As a result, the CEB, the Ceylon Petroleum Corporation (CPC) and the National Water Supplies and Drainage Board (NWSDB) have operated at a considerable loss to the taxpayers. I hasten to say that the losses are primarily a result of ill-conceived policies by successive governments. No organization can be operated profitably if, at a minimum, the cost of providing the service is not passed on to the consumers.

I believe electricity and water tariffs have not been revised for nearly four years despite incurred losses. Currently, the world over, the sharp increase in oil prices are passed on to the consumers through higher pump prices. In Sri Lanka, despite a recent hike, we are not doing so in line with world prices.

It is no secret that reforms are needed at the CEB, CPC and NWB, and all other state-owned enterprises (SOEs) to improve supply, service levels and cost management efficiency, all of which will benefit the consumer. As a result, the governments of most developed and developing countries have since the mid-1980s divested the utility companies to the private sector, albeit with regulatory oversight. That model has proven to be a winner, with cash strapped governments relieved of supporting loss-making enterprises and the sale raising funds and the consumers benefiting from efficient service.

However, the trade unions in Sri Lanka have successfully thwarted such reforms or, should I say, thought of such reforms! Although, to be honest, the trade unions have not had to do too much as successive governments have lacked the political will and intelligence to go through such an exercise. From 2001 to 2003, under Chandrika Bandaranaike Kumaratunga and Ranil Wickremesinghe, a study was undertaken with World Bank funding to work towards some reforms at the CEB and CPC. However, the dismissal of the government of RW by CBK resulted in the study being abandoned. Since then, nothing has been done, a sure reflection of why our country is in its current predicament.

The trade unions have used the threat of industrial action to negotiate wages, perks and work norms that are not in the country’s interests and, importantly, the consumers who are also taxpayers. A significant portion of the public is not aware of the high remuneration and benefits that employees at these enterprises earn.

In Sri Lanka, unfortunately, any proposed divestiture of government-owned assets is politicized. The often-used slogan is “apey sampath wikunanawa”, which means selling the family silver. It is a slogan supported by whichever party is in opposition, the left-wing parties, trade unions, nationalistically minded intellectuals and the media. As a result, the commercial benefits and necessities are forgotten. The abrogation of the undertaken given to India and Japan to allow their nominated parties to invest in developing the East Container Terminal (ECT) at the Colombo port is a classic example of how “thuggery” won over commonsense.

One only needs to appreciate the significant improvement in service levels achieved at Sri Lanka Telecom due to the part divesture and management control given to a Japanese investor in the 1990’s. Had that change not been made, I shudder to think how the country would have coped up with the rapid advancement made in the fields of communication and information technology in the last quarter-century. Many of the mobile communication providers in our country are foreign investors. This should not be lost on those who oppose foreign investment on ideological grounds.

We must also not forget the significant service efficiency and improvement in the operational and financial performance of the national carrier under the management of Emirates. As I remember, the opposition at that time, the United National Party (UNP), said that they would abrogate the share sale and management agreement when they came to power. That did not happen because they were aware of the benefits of the transaction. Unfortunately, in our country, the main opposition party, whoever it might be, opposes everything the government proposes despite knowing well of the benefits. They mislead the public to cause controversy and score some cheap points, and much-needed initiatives to take the country forward are delayed and at times discarded. The ultimate loser is the public, misled due to lack of information, transparency, and constructive debate and a misguided notion that these are our sampath.

In my view, very few people in our country understand and appreciate how disruptive and damaging the actions of trade unions in the public utilities, the GMOA and Teachers and Principals have on the nation viz a viz the public. Furthermore, the people are unaware that nearly all industrial action resorted to by these particular trade unions are motivated solely to maintain their high salaries (teachers and principals excluded), perks and insanely bloated numbers resulting in large scale inefficiency.

Unfortunately, successive governments are responsible for this state of affairs as they have repeatedly used state enterprises to give non-existent jobs to the “boys.” Instead of developing the economy with sound policies, they had taken the easy route by creating jobs when none existed. The SLPA employs nearly 10,000 staff to operate one terminal at the Colombo port. The other two terminals operated by private companies handling almost 70 per cent of volume manage their operations with a staff of less than 2,000. Incidentally, the former Chairman of the SLPA, a retired Army General, said that in his view, the maximum needed was around 3,000. The fact that the 7,000 employed in excess earn high salaries and perks at the cost of the taxpayers of this country is lost on the public.

The deplorable trade union action resorted to by the teachers and principals over several months impacting our children went on as long as it did due to the government’s failure to deal with it decisively. The GOSL continued to pay the striking teachers and principals their salaries despite not reporting to work. It is a fact that remuneration is a right when a service is provided. Therefore, it was necessary, or should I say mandatory, that GOSL should not have paid those not reporting to work their salaries.

Had the GOSL so acted, the strike would have been called off no sooner it started. I need to emphasize that I believe that our teachers are not paid adequately. It is agreed that successive governments have not invested sufficiently in education. The net result is that our educational system is in shambles. However, resorting to industrial action penalizing students during a pandemic and an economic meltdown is unacceptable. To make matters worse, they disregarded covid restrictions that the rest of us adhered to. I am not sure what sort of example they set the students who invariably look up to teachers for guidance.

In the private sector, dealing with unreasonable trade union demands more often results in wasted valuable management time and energy. Many initiatives needed to improve efficiency, productivity and cost management are either not implemented or delayed due to the intransigence of the trade unions. In most instances, the rank and file of union membership are amenable. However, those who hold positions in the union hierarchy at the National and Branch level pursue policies that are part of their own personal agenda and not necessarily their memberships’. There are many instances that I can share with the readers based on my 25 years in the private sector. Due to space constraints, I shall restrict it to just one.

In 2016 there was a sudden increase in demand for the products that the company I was working for was manufacturing. But, unfortunately, the manufacturing capacity was insufficient, and it was going to take the company over 12 months to order machinery from overseas and install additional capacity. So the senior management team of which I was part approached the trade union and requested that the practice of shutting down the production line for lunch be changed. Our request was for the workers to go for lunch in batches so that the production line could continue to operate, and the 40 minutes lost when shutting down the plant and restarting after lunch could be saved and utilized for much-needed production.

I was bewildered by the reply we got “For so many years we have enjoyed our lunch looking at the face (seated opposite) of my friend, and now you are asking us to agree to have lunch looking at the face of a person who may not be my friend? How can we enjoy our lunch?” I was livid by the response. The Managing Director pacified me a bit saying, ” Sanjeewa, you are lucky. They used to stand on the table of the Finance Director (my predecessor) previously when they were unhappy!”

Given the precipitous state of our economy, the GOSL and the private sector would need to make difficult and unpopular decisions in the future if some meaningful solutions are to be rolled out towards some recovery. In that context, I believe that the country will be well served if industrial action, particularly in those classified as “essential services”, is banned for the next five years. I am aware that some might not favour such a proposal saying that it will infringe on personal freedom. However, as a person who experienced and had to deal with stubbornness and lack of common sense from trade unions when trying to find solutions to commercial problems, I believe there is no alternative unless we collectively wish Sri Lanka to sink into extreme poverty.