Netting some work

With Sri Lanka’s unemployment level stealthily creeping up to undesirable levels, the Jobs Net programme was launched in 2002 with the aim to abate it. It was the brain child of the then Labour and Employment Minister Mahinda Samarasinghe under the Ranil Wickremasinghe UNP government. The objective of this device was to be an electronic resource base for employers to list any job vacancies they have, which is matched by any unemployed individuals who have registered as looking for jobs. When the search criteria and listed criteria match, the registered individual is informed of the vacancy, and he or she is able to further pursue that opening. Most developed countries have an efficient and effectively functioning jobs search service. In Britain, job centres provide a massive resource base for all unemployed labour to find jobs suited to their skills and interests. It is also based on their performance in the job search programme that determines the unemployment benefits they’re entitled to. With no such unemployment benefit programme existing in Sri Lanka, the only incentive for unemployed people to register under Jobs Net is sheer desperation to find employment. One would think that such a tried and tested system used in many countries today would work well in Sri Lanka too, where the asymmetries of job vacancy information desperately need to be bridged, and the unemployed population would hail this as a very useful device in their search for work. However, this has not been the case. Initial reports suggest that only 10% of the 180,000 unemployed who registered with Jobs Net since its inception, were actually found work. Despite the many regional centres that were set up, and the extent to which the government went to streamline the device to make it very user friendly, Jobs Net has failed to reap the desired results. Jobs Net is a private-public partnership mechanism. Bodies like the Employers’ Federation of Ceylon, the Chambers of Commerce and other private business bodies would register under Jobs Net and its members would be requested to list any vacancies they may have, on the Jobs Net database. Simultaneously, the government opened up walk-in centres for the public to register themselves in the database giving all relevant applicant detail.

Ugh, our mindset…

The Sri Lankan work ethic and mentality is such that, for most graduates seeking employment the most favoured jobs are positions in government departments and offices, where productivity is low, work is slack, tour seat is safe once you get it, and you take a pay packet home at the end of the month. No (performance-based) questions asked. Therein lays the downfall of Jobs Net. It seems that the only applications entered in the database are by graduates looking for government employment. Whereas, the matching up of those, with actual vacancies in those offices are seemingly non-existent, owing to the fact that our govt depts are already choked with an over capacity of workforce, with tens of others (mostly ministerial henchman) merely employed as letter boys, tea boys and clerks just to satisfy a cheap political fancy.

Trying it again….

In the past week, Jobs Net came into focus once more, with the present government deciding to revive it and make it more dynamic. The private sector has assured the government that most of their members do actively part take in the programme, and do constantly register job opportunities with them, if and when they arise. However, they have cited severe difficulty in finding the workers they look for. For example, a showroom may register as requiring sales girls to serve customers, but hardly anyone has registered under jobs net to become sales girls. If someone was looking to be a sales person, they would be content with waiting for an opening to appear in the vacancies page in the daily papers. Those who register with Jobs Net seem to be only the very desperate of the unemployed, who have limited skills, and have limited experience, thus rendering little service to the private sector’s specific labour supply needs.

What needs morphing?

Until a few conditions are satisfied, Jobs Net will show limited results in the game of matching up skills to vacancies in the Sri Lankan job market. The mindset of the unemployed (or as I like to call it ‘yet-to-be-employed’) must change. They need to be willing to move away from the age-old yearning to be in govt employment for the sheer convenience of it, and take up more diverse employment options. Also, Jobs Net needs to be more robust, to ensure that it appeals to not only the most desperate searchers, but also to those who are temporarily shopping around for another job, whether it be a free lance web designer looking for his next assignment or a part time copywriter looking for some extra work.

Why it’s so vital…

Sri Lanka experiences a huge loss in productive output on a daily basis owing to the number of people unable to find suitable employment, those engaging in search unemployment and those suffering from a mismatch of skills. This can be largely attributed to asymmetric information within the job market. Jobs Net has placed the first steps towards breaking this down. It is now upto the private-public partnership to ensure it becomes the effective and efficient model it was intended to be. This is particularly important at a time when Sri Lanka is aiming to provide more BPO services to global businesses. With the advent of flexible labour markets and the breakdown of traditional, rigid, hiring and firing procedures around the world, Sri Lanka needs to adapt. A more detailed discussion on this to follow….

Why we shouldn’t set our clocks back

The issue of changing our clocks back to the GMT+5 1/2 time has been one of much discussion and contempt over the last few weeks. In the mid 1990’s Sri Lanka set its clocks forward by a half hour (corresponding to a GMT+6 time zone) on the directive of then President CBK, with one’ve the main reasons being the severe energy crisis faced by the nation at the time. It was hoped that the additional half hour of daylight in the evenings would reduce electricity consumption significantly, thereby somewhat easing the burden faced by the national grid. While the premier insists that the time change has not resulted in much of a power saving and the benefits of the earlier time are greater, and tech guru Arthur C. Clarke vehemently opposing the taking back of the clocks, it has been decided that from the 14th of April our clocks will indeed be pushed back by an hour. It will correspond to the time of the astrological ‘litha’ as well as the standard time observed in the Tiger controlled areas of the North and East. All this is very sweet and convenient, but how much consideration has the premier put into this in terms of the impact it has on the economy?

Sri Lanka is very much integrated in the global business arena. Whether it’s shipping and air freight or an international BPO centre, the time change affects business activity in a seemingly infinite number of ways.

Banks and other financial institutions that run their own Treasury and Trading departments will have to change their clocks, readjust their trading times, re-evaluate the global market synchronisation strategies and do a bit of an overhaul to their systems. These treasuries are where all the biggest and most lucrative FOREX trading takes place. Being in sync with different time zones is crucial to them, and a change such as this, does little help.

Other sectors affected by the times change would be airlines and tourism. Airlines will be compelled to revise their entire flight reschedule, carry out revisions with international air traffic control, and revise there systems to suit the new time of the country. Many airlines have already expressed their disappointment that the time change is being enacted without much consultation with affected parties like themselves.

Another very significant change would be seen in the computer systems sector, where all the new computers running MS Windows have been programmed with Sri Lanka being GMT+6 in their internal clocks. The revision of this will be a costly and cumbersome effort, no doubt.

However, the president stands by his argument that the energy saved by the time change has not been significant enough to warrant the continuation of this time. Right. So assume we didn’t save more than a couple of thousand mega watt hours per month. But we SAVED a couple of thousand mega watt hours a month! – a massive saving for a country neck-deep in a severe power shortage and sky-rocketing energy prices! Those of you in industry will know how burdening this crisis has come to be. Over the last decade, this issue of high energy prices and the national grid being choked to capacity has resulted in a rise in cost of production for factories, adversely affected competitiveness of exporting industries, and severely hindered foreign investment prospects. With Norochcholai still in development and Dendro power still in its infancy, the existing hydro and diesel power plants can barely cope with the national energy demand. Now is certainly not the time to throttle our national grid with an additional hour of power guzzling every evening, everyday.

Again, he reiterates that the move by CBK at the time may have seemed the logical step to conserve energy, but according to him, it caused more inconvenience than did good. This next argument is not exactly an economic one, and hence I will not dwell on it in detail. The president claims that much inconvenience is caused to school children by the current time. They are required to wake up much earlier, and go to school while it is still dark outside. But wouldn’t it be an even bigger hassle to get your children adjusted to yet another new time? How long do you think it’ll take? Also consider the fact that the lost daylight in the morning is well compensated for by the fact that school’s now begin at 8am and not at the previous time of 7.30am.
This also applies to the labour force of the country, especially in highly commercialised areas. The inconvenience caused to them by having to completely revamp their daily travel and living timings has been ignored.

The children-having-to-wake-up-early argument seems the only one being voiced by the president and others advocating this change. Personal opinion: that argument is far too trivial to be the basis of such a dramatic decision. Carry out a small poll, a referendum maybe. See what the general public actually feel about it. Do they agree with your conception that the time should be pushed back just to suit this purpose? Surely, there must be some economic reasoning behind it, considering the economic impacts the change would have? Even if it is the most convincing argument to the general public, isn’t it a minor trade-off to have to make? Considering how much more is actually at stake? Altering and re-altering major national features of a country which is quite integrated in the global economy is not a very prudent move. In our quest to become a more investor-friendly, stable and business-conducive economy, this time change will not go down as one’ve our smartest moves.

Strike out!

With a strike called by certain regional CTB employees yesterday and a strike in elements of the public health sector looming overhead, a heavily repeated debate of banning strikes in the essential services sector has sprung up again. One would hope that at least this time something tangible is done about it. The strike action of the CTB is owing to the salary anomalies and arrears in salary increases promised under the 2005 budgetary proposals.

During her rule as Prime Minsister of Brtiain, the ‘Iron Lady’ Margaret Thatcher passed a law banning all strikes in the essential services sector. I.e. strikes in specified public services like health, railways etc., were made illegal. Although the move will be highly controversial and violently opposed, I firmly believe that adopting a similar policy with regard to the essential services in Sri Lanka is very much in need. The slow down in economic activity during periods of strike, the financial loss experienced by firms, and the sheer inconvenience to the general public due to constant strike action by these services are matters requiring serious attention when debating this ban.

However, many issues in support of rejecting such a ban exist in plenty. Many third world governments have proven to be very lethargic and casual when paying attention to issues like salary anomalies in the public sector, unless its workers go on strike. (or if an election is near!). Therefore the case for allowing strikes, to give the unions a more powerful voice, is very strong. Workers in these sectors see no other way out. However, what we must remember is that in most cases where strike action is taken, it has not been taken as a move of last resort, as is stipulated in much of the economics of industrial relations. The moment the workers have grievances, the effort to approach managerial level and iron out those problems may take a back seat. The immediate solution seems to be to stage a strike. That has proved to be the case on numerous occasions over the years in the Sri Lankan public sector labour force.

If a total ban on strikes in essential services does not materialise due to political opposition, we must look to establishing mechanisms to streamline the bargaining process, with more efficient and effective mediation and arbitration methods. The concept of productivity linked pay hikes in the public sector must also be seriously explored. A recent example of this concept was shown by Tony Blair a few years ago in the context of a firefighters’ trade union action. Besides carrying out reasonable discussions with the unions with regard to their salary grievances, Tony Blair and other labour representatives insisted on productivity linked pay hikes. The union was required to show satisfactory productivity and efficiency improvements which will in turn entitle them to pay hikes, over and above the inflation/index-linked wage increases. This is a model we need to actively pursue, especially with the severe inefficiencies and absurdly low productivity levels existing in the public sector. Meanwhile let us hope that the president as well as labour ministry officials will take a much stricter stance towards strikers in the essential services sector in the future, albeit at the risk of being politically unpopular.

Snatched up power!

The Initial Public Offerring of 50 million ordinary shares of the Dhammika Perera-owned Vallibel Power Erathna Ltd has been over subscribed on the day the share issue was opened. Managers to the issue, DFCC said, Rs410 million worth of subscription for 51.2 million shares has been received. The share issue will close at 4.30pm today. Now we await the opening day of trading for these shares to see by how much the market value jumps from its selling price of LKR 8.00. Most investors were expected to be retail investors looking for a quick buck stemming from capital gains. Foreign investor interest was not seriously expected.

Mini hydro goes macro

Amidst much anticipation, the Initial Public Offering (IPO) of Vallibel Power Erathna Ltd opens today. Being the first IPO for the year, investors, traders and business – watchers alike all wait with baited breath to see how it will fair during the first days of the opening. The anticipation will be probably be second only to the day its shares hit the stock market for trading. The first couple of days, will be crucial to assess the popularity and success of the IPO, while many predict a quick (possibly single-day) over-subscription of the 50 million ordinary shares (20.1% of the company) being released. Vallibel Power Erathna is a fully owned subsidiary of the Vallibel Power Group controlled by the dynamic local investor Dhammika Perera. This mini hydro power project is one the many enterprises under his belt which boasts ownership of a diverse array of companies, from Pan Asia Bank and Rocell Tiles to the Amaya Resorts Group. Vallibel Power Erathna will be the country’s biggest IPO by a mini hydro power producer. A share is being sold at LKR 8, with a par value of LKR 1. The IPO comes at a time when the market is showing a slight flicker of hope, following the
Geneva peace talks and improved business confidence. Watch this space for an update of how the IPO subscription performed.Meanwhile, the bourse recorded its highest turnover in months of 706.8 billion owing to the block sale of a 3.8% stake in DFCC held by Commercial Bank yesterday. It went for LKR 487.6 million