News
As micro, small and medium enterprises bear brunt of COVID and economic crisis more than million workers go abroad
The unofficial number of Lankan workers migrating for jobs abroad may by now be more than a million, Prof. Sunil Chandrasiri, senior professor of economics at the University of Colombo and one of the authors of International Labour Organization’s report on ”Impact of multiple economic crises on Sri Lanka’s micro, small and medium enterprises” which was published recently.
“The Government estimates that roughly 73,000 jobs were lost. But the actual loss of jobs is likely several times higher. A total of 311,000 Sri Lankans left the country for foreign employment in 2022, according to official figures registered with the Foreign Employment Bureau. Moreover, 874,955 passports were issued that year suggesting that the unofficial number of workers migrating out of the country may by now be more than a million. The crises exacerbated long-felt skills deficits while doubling the poverty rate; and a quarter of all Sri Lankans are likely to remain poor over the next few years,” he said.
The COVID-19 pandemic severely or very severely impacted the business operations of nearly 80 percent of Sri Lankan micro, small and medium enterprises (MSMEs), while the economic crisis of 2022 impacted 89 percent of them, he said.
According to Prof. Chandrasiri his study looked at 521 MSMEs that had survived the twin crises and 50 MSMEs that did not survive them. The surveys and interviews were conducted between January and March 2023 in 10 districts, he said.
He added that micro, small and medium scale enterprises employ about 75 percent of the country’s workers.
“About 21 percent employed in micro scale enterprises have lost their jobs in the last few years due to the economic crisis and Covid. 23 percent and 22 percent of employees of small and medium scale enterprises have lost their jobs respectively,” he said.
Skilled workers, unskilled workers as well as those at executive levels, too, have lost jobs, Prof. Chandrasiri said.
Nearly half of all the surviving firms found it difficult to retain or hire people because they could not pay enough to cover the rising living costs. “Most entrepreneurs claim that they are not able to pay a salary that matches the cost of living. A lot of people have migrated,” he said.
There is also migration within the country, he said. A large number of workers from the villages, working in towns, have returned home voluntarily because they can’t sustain themselves in the towns. The cost of living is lower in the villages and these workers try to find work near their homes, he said.
“On the other hand small and medium entrepreneurs claim that electricity and water bills, as well as loan repayments, are about 80 percent of their expenditure. They are also troubled by taxes that have increased the cost of their products. The end user can’t afford the prices of goods and services and thus have dramatically reduced consumption,” he said.
By subsector, the impact of the multiple crises was severe on MSMEs in the tourism, manufacturing, construction, transport and storage, wholesale and retail trade and other services. At the national level, these sub sectors account for more than 55 percent of GDP.
Continuing low employee morale and low productivity are likely to hamper recovery. The crises left in their wake high levels of indebtedness, which will impede the continued survival and growth of MSMEs. About 42 percent of the surviving MSME proprietors reported that they were at risk of failure within a year, he said.
Given below are highlights from the study: “The surviving MSMEs displayed more adaptive behaviours, such as using digital technologies for business operations (38 percent), sourcing from new suppliers (38 percent), introducing flexible work practices (39 percent), adjusting the product or service mix to the labour that was available (39 percent), using online sales and social media to market products (32 percent) and rescheduling bank loans (36 percent).
“In contrast, proprietors of MSMEs that had closed reported more passive behaviours, such as laying off workers (39 percent), reducing working hours (38 percent), borrowing money from other sources (43 percent) and liquidating assets (46 percent). Relatively more non-surviving firms reduced workers’ salaries (at 30 percent of enterprises) than the surviving MSMEs (at 20 percent).
“In terms of dynamic capabilities, the surviving MSMEs responded proactively to the uncertain and changing business environment in the country. For example, 83 percent of them cut costs and eliminated waste; 71 percent improved customer services; 60 percent identified new customers; and 58 percent improved employee safety and welfare facilities.
“Many surviving MSMEs resorted to digitalization in their adaptive behaviour, but the digital strategies they adopted were at the low end of the digitalization scale, such as using social media platforms mainly for information search.
“Resilience emerged as an entrepreneurial skill that enabled enterprises to adapt and grow stronger in the face of challenges.
“The study identified entrepreneurial orientation, technological adaptation, factor substitution, minimizing waste and searching for new markets as the primary resilience factors. Different actors in the MSME ecosystem should include these topics in training programmes for training providers, policymakers and private and nongovernmental organizations.
“The overwhelming majority of MSMEs did not receive any support from institutions dedicated to supporting MSME development and instead struggled or closed on their own.
“Although the COVID-19 stimulus packages offered by the Sri Lankan Government to affected individuals and MSMEs was much smaller than what was offered in other countries in the region, these, too, seemed to have bypassed most of the MSMEs. Political affiliation and influence appear to have had a hand in who was able to access the support.
Financial institutions also dedicated to supporting MSMEs seemed to have offered little financial support to them by restructuring loans, etc. during the economic crisis, even though they posted substantial profits while the economy contracted.”
State coffers suffered huge losses
A probe conducted by the Auditor General’s Department and the Parliamentary watchdog committee, COPA (Committee on Public Accounts) has revealed that a large number of luxury cars and SUVs have been imported with the help of forged documents that declared them as tractors.
During a recent COPA investigation into the Department of Motor Traffic (DMT), it was disclosed that the files related to the registration of those vehicles had gone missing.
COPA Chairman Aravinda Senaratne pointed out that BMWs and Mercedes-Benz cars had been declared as tractors. A total of 158 such cases had been specifically identified, the COPA said.
At the last COPA meeting, the DMT was instructed to provide details regarding those instances, but the Department has not yet done so. Some officials had already been identified and charged with the fraudulent registration of vehicles, Senaratne said.
“Wrong information about these vehicles has been entered deliberately. Their years of manufacture have been altered. According to our records, whenever an issue is raised, officials claim that the relevant files are missing,” Senaratne stated.
Current Commissioner General of the DMT, Nishantha Weerasinghe, said that those incidents had occurred before he assumed office.
Former DMT Commissioner General Sumith Alahakoon revealed that he had lodged two complaints with the CID. “When I took office, there were about 12 container loads of files flagged for errors. Out of those, 118 files were recovered by internal auditors and submitted to the CID. Thereafter, I was removed from my post,” he said.
The COPA Chairman accused the current DMT Commissioner General and his officials of failing to follow up on the complaints lodged with the CID by his predecessor.
When asked about action taken against the prime suspect in the fraud involving the luxury cars imported as tractors, the current Commissioner General said the suspect had been released due to insufficient evidence. A system analyst had been interdicted as investigators found that the database contained wrong information about vehicle imports.
COPA member MP Chandana Sooriyarachchi remarked that COPA investigations would be meaningless if officials sought to absolve themselves of responsibility simply by claiming that files had gone missing.
Sooriyarachchi said such fraudulent actions had cost the state coffers billions of rupees.The COPA Chairman said all aspects of the case would be thoroughly investigated.
by Saman Indrajith
SLMC General Secretary Nizam Kariapper, MP, yesterday (23) said that the National People’s Power (NPP) government owed an explanation as to why it continued to ignore indiscriminate Israeli attacks on Gaza.
Parliamentarian Kariapper pointed out that a statement, dated March 21, issued by Foreign Affairs, Foreign Employment and Tourism Ministry, while expressing deep concern over the deteriorating conditions in Gaza, requested all sides to avoid any action that would lead to further escalation of the situation.
The government statement conveniently failed to mention that Israel killed over 400 civilians and launched a fresh ground offensive in Gaza regardless of the ceasefire in place, lawmaker Kariapper said. The top SLMC official accused the NPP government of remaining silent on US approved slaughter of civilians taking place.
“The majority of victims in the Gaza war were women and children,” MP Kariapper said. If the NPP government lacked the strength to issue a statement that properly dealt with the ground situation, Sri Lanka should have refrained from commenting on the latest developments.
The SJB National List MP said that the Jewish State also launched operations in Yemen, Syria, and Lebanon as it sought to exploit the situation to its advantage.
MP Kariapper urged the government to take a principled stand on Israeli military action that so far claimed the lives of over 60,000 people since late 2023.
Israel launched large-scale offensive action after Hamas terrorists killed over 1,200 Israeli civilians in raids carried out in early Oct 2023. Hamas abducted a large number of Israelis and a section of them have been released so far.
By Shamindra Ferdinando
There has been an increase in underworld activities and gun violence this year, and 27 shooting incidents have left 22 persons dead, and more than a dozen others injuried.The latest shooting incident was reported from Devinuwara on Friday night, when two gunmen killed two youths at point-blank range.
The shooting spree which began in early January has continued into March, with incidents reported from areas such as Mount Lavinia, Mannar, Galle, Kotahena, and Devinuwara. Victims included civilians gang members, and a former prison official.
On 19 February 19, a man and his two young children were brutally gunned down in Middeniya. On the same day, underworld figure Ganemulle Sanjeewa was assassinated inside the Aluthkade Magistrate’s Court by a suspect disguised as a lawyer. Those brazen attacks, often carried out in broad daylight, have caused serious concerns over public safety and the proliferation of firearms in criminal networks.
January saw multiple targeted attacks, including the contract killing of two men in Mount Lavinia for Rs. 1.5 million on 19 Jan. A dried fish trader narrowly escaped death outside his home in Devinuwara on 13 Jan., when gunmen opened fire on a house in Dodangoda. A shooting incident on Jan 31 in Hiniduma, Galle, claimed three lives, including that of a lodge owner.
The gun violence intensified in February, with the assassination of an alleged gang member in Kotahena on February 10 and the shooting of a man near a school in Minuwangoda on 07 Feb. Following the courtroom assassination of Ganemulle Sanjeewa on 19 Feb., the violence continued with two separate shootings in Ja-Ela and Kotahena on 21 Feb., leaving two people dead.
March saw a further escalation of gun violence, with the fatal shooting of former Boossa Prison Superintendent Siridath Dhammika at his residence in Galle on 13 March. A day later, a man known as Podi Sudda was gunned down in Ambalangoda.
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