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Editorial

The goose and the golden egg

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Labour Minister Nimal Siripala de Silva has accused the plantation industry of attempting to sabotage the 1,000 rupees a day wage award by resorting to court action. A pile of cases have been filed in the courts challenging the wages board award and when these will be determined is not yet clear. The case was called on Friday but not taken up at the time of writing and had later been postponed for Tuesday. Equally unclear is whether the challenge that has been mounted by regional plantation companies (RPCs), tea factory owners and other interested stakeholder will succeed or not. If it fails, will plantation workers get the promised thousand rupees with arrears? What will the employers do in such an event? The whole picture is murky with both sides having dug their heels in. The demand from the workers is very long standing and has seemingly been under negotiation forever. The industry response from the RPCs is that they just can’t afford to pay this wage and keep the estates viable.

Other noises too have been heard. Among the more ridiculous of these is that the government will take the estates back if the employers do not fall in line with the 1,000-rupee wage. Post land reforms, the big estates were not sold to the RPCs or anybody else. The Sri Lanka State, And hence the people, retains the ownership of these properties. What happened was that two state-owned entities, the Sri Lanka State Plantations Corporation (SLSPC) and the Janatha Estates Development Board (JEDB), were entrusted were entrusted with their management. Former Finance Minister Ronnie de Mel was fond of often saying that “the magic is in the management.” Unfortunately where the nationalized plantations of this country were concerned, there was no “magic” in their management. The result was mounting losses and near-total disarray.

That was when post-1977, the decision to privatize the management of the plantations was taken. During President Premadasa’s tenure, the plantation assets were grouped into regions but, with an abundance of good sense, they were not allocated region-wise to what were termed the Regional Plantation Companies that took the management contracts. This was because of climatic factors like rainfall, or the lack thereof, that determine performance of plantations. Therefore the different RPCs were entrusted to manage a mix of estates in different climatic zones; and this logic has proved impeccable. There was, and there is, in this country strong opposition to divesting national assets to private interests and President Premadasa brilliantly overcame this hurdle. He did not call what was being done “privatization” but coined a new word “peoplization” to describe the process then underway. To top it all, he gilded the lily by giving the plantation workers a 10 percent stake in each of the RPC’s free of charge. He believed that this would give the workers a sense of ownership of their workplaces.

That did not work out quite as intended. The RPCs were listed on the Colombo Stock Exchange and their shares, like those of any other quoted company, were freely tradable. That resulted in most, if not all, workers selling their shares to ready buyers. While there were small windfalls for a large number of people, the proprietorial sense that President Premadasa was aiming at did not result. The plantation economy as most people know is highly dependent of climate and prices. As a result it is cyclical with frequent ups and downs. Editorialists, once upon a time, were fond of writing “tea needs sympathy while rubber has lost its bounce.” Right now, fortunately, the green leaf price of tea is around a remunerative 100-rupee level and rubber which was deep in the doldrums is picking up.

Tea is a particularly labour intensive industry with about 70 percent of the cost of production being the labour component particularly of harvesting. The employers tried as best as they could to persuade the unions to accept a productivity based wage model enabling the demanded Rs. 1,000 to be earned and even topped by bringing in more leaf than the prevailing norm. But the unions, some might say stubbornly, resisted this formula presented as a win-win proposal, There is no escaping the reality that worker productivity in our tea fields falls far short of those prevailing in other big tea producing countries like India and Kenya. But the highly unionized labour, conscious of the political muscle they command, have flatly refused to take this route. Their unions with the ability to deliver block votes at elections are able to effectively influence the various contenders as they have done time and again.

The cost of a wage increase to the employer is not only the basic wage. There are various other costs like EPF/ETF, holiday pay, gratuity, maternity benefits and more involved. Over and above that, a very large number of persons who do not work on the plantations live on them occupying estate housing and benefiting from the plantation-paid infrastructure. This builds up to a formidable figure which, according to the RPCs, the industry cannot afford. On the flip side of the coin are management expenses and fees payable to the controlling shareholder. This has sometimes been waived during lean times but not always. Mr. Arumugam Thondaman, at one round of negotiations with an RPC, once told the employer on the other other side of the table, “You pay your CEO a million rupees a month and grudge the worker 1,000-rupees a day.” But the employers say that management costs absorb only about 8% of the COP.

Given the current cost of living and prevailing wage rates outside the plantations, the demanded wage is obviously not unreasonable. Against that the worker too must contribute in productivity terms to ensure that his livelihood provider is viable. A dead goose cannot lay golden eggs.



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Editorial

SL in vortex of despair

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Saturday 17th April, 2021

The Colombo Port City Economic Commission Bill has run into stiff resistance. The proposed law, which has even led to dissension within the ranks of the SLPP, is fraught with the danger of Sri Lanka being left with no control over the Colombo Port City, legal experts warn, insisting that the Bill has to be approved by the people at a referendum in addition to being passed with a two-thirds majority in Parliament to become law.

The Opposition has got something to hold onto. Besides political parties, several key organisations including the Bar Association of Sri Lanka have come forward to move the Supreme Court against the controversial Bill. This is a worrisome proposition for the government, which has many other problems to contend with.

External pressure is also mounting on the government over the Chinese project. The US has already said the Colombo Port City may end up being a money-laundering haven. The US, India and other enemies of China are shedding copious tears for Sri Lanka’s sovereignty, which, they say, China is subjugating to its economic and geo-strategic interests. But is China alone in doing so? India has been furthering its interests at the expense of Sri Lanka; it has even had the latter’s Constitution forcibly amended and Provincial Councils set up. Sri Lanka cannot even protect its territorial waters against rapacious Indian poachers; under pressure from New Delhi, it has to release the culprits taken into custody.

It is only natural that India and the US have not taken kindly to the mega Chinese ventures in Sri Lanka. But if they and/or the other partners of the strategic alliance they represent had cared to help this country instead of bullying it, China would not have been able to consolidate its position here.

The US and India stand accused of having had a hand in the 2015 regime change in this country. In fact, Prime Minister Mahinda Rajapaksa has publicly stated India’s spy agency, RAW, was instrumental in ousting him as the President in 2015. India and the US may have expected the yahapalana government to get tough with China and scrap the Port City project. They were disappointed when that administration, having initially suspended the project, allowed the Chinese to build their artificial island bigger, on a 99-year lease, and, worse, leased the Hambantota Port to China for 99 years. The yahapalana regime received no financial assistance from its foreign well-wishers and, out of sheer desperation, banked on Chinese support like its predecessor.

The Bill at issue, if enacted, would turn the Port City into part of China’s territory in all but name, according to legal experts. Dr. Jayampathy Wickramaratne, PC, critically examines the Bill, in his column published on this page today. SLPP MP and former Justice Minister Wijeyadasa Rajapakshe has said what the proposed law seeks to achieve will be worse than the Hambantota Port deal. There arguments are compelling. It, however, needs to be added that if Sri Lanka had given in to US pressure and signed the MCC compact complete with SOFA (Status of Forces Agreement), etc., in return for USD 450 million from Washington, it would have faced a far worse situation.

The hostility of the US and its allies has driven Sri Lanka into the arms of their mutual enemy, China. If the US and India had helped Sri Lanka rebuild its post-war economy and desisted from their human rights witch-hunt in Geneva, they would not have created conditions for Beijing to endear itself to Colombo in this manner.

If the US, etc., want to counter what they call Chinese expansionism, they have to win over the nations that are dependent on China for funds and protection. They must stop harassing these countries.

The enemies of China have warned Sri Lanka that it will become a Chinese colony, and they, too, would have to take part of the blame for such a fate ever befalling this country.

 

 

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Editorial

Free-market and socialism

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Friday 16th April, 2021

Former Finance Minister and newsmaker, Ronnie de Mel, has attracted media attention, again, at the age of 96. He is reported to have said, during a recent conversation with Opposition Leader Sajith Premadasa, that the Sri Lankan economy should be repositioned with a tilt towards socialism. He has also stressed the need for equitable growth, and other such pro-poor measures in keeping with the tenets of Buddhism.

It is being argued in some quarters that de Mel, who presented 11 budgets consecutively under the better-dead-than-red J. R. Jayewardene government, has faced about, but going by what he is heard saying in a video clip of the aforesaid conversation, which is accessible on the Internet, one can see that he only opines how capitalism can emerge stronger and remain relevant, especially in this country. Speaking boastfully about the epochal economic change the country underwent in 1977, he says there is a pressing need for another such momentous event for the Sri Lankan economy to come out of the doldrums.

Ironically, there was no love lost between de Mel and the late President Ranasinghe Premadasa, while they were in the JRJ government as the Finance Minister and the Prime Minister respectively, but the former is now of the view that the latter’s son, Sajith, is the only hope for the country!

We had two epoch-defining elections as regards the national economy. In 1970, the SLFP-led United Front (UF) government, which secured a two-thirds majority in Parliament, adopted a statist approach to economic management and threw in its lot with the socialist bloc in a bipolar world. It took things to an extreme in experimenting with its autochthonous politico-economic model. The state’s vise-like grip on the economy retarded the growth of the private sector much to the resentment of the capitalist bloc. Many arguments have been put forth in defence of this kind of state control over the economy, stringent regulations, etc., under that regime; they are not without merit, but the UF government became hugely unpopular, as a result. In 1977, the UNP, made a stunning comeback and formed a government with a five-sixths majority in the House with de Mel as the Finance Minister and upended the UF’s economy policies, triggering an open-market tsunami as it were; that revolutionary change led to the evisceration of many vital state institutions. Both regimes failed to maintain a balance, and their economic reforms, therefore, did not yield the desired benefits for the country. If only they had heeded the classical, oxymoronic adage, festina lente (‘make haste slowly’).

Those who expected capitalism to flourish following the collapse of the Soviet Union (1991) only cherished a delusion. Capitalism has been in crisis; this situation is mostly due to the fact that the capitalist state has to carry out two mutually contradictory functions—accumulation and legitimisation. The process of legitimisation basically requires maintaining social harmony, which cannot be achieved unless the ill-effects of the unbridled capital accumulation are mitigated for the benefit of the ordinary people. Hence attempts by the capitalist state to give its policies a socialist flavour with social welfare and pro-poor schemes. (The JRJ government went so far as to call this country a ‘Democratic Socialist Republic’, in the Constitution it introduced. (Emphasis added.) It is against this backdrop that former Finance Minister de Mel’s aforesaid advice to the Opposition leader should be viewed.

Besides, critics of capitalism inform us that the current free-market model has led to a triple crisis for capitalism—financial instability, lack of environmental sustainability and political unpopularity. “Adapt or perish, now as ever, is nature’s inexorable imperative,” H. G. Wells has said. This aphorism applies to economic models as well. Even the US has had to make dramatic course corrections over the decades. Some of these measures run counter to its unsolicited advice to the rest of the world; Washington opted for a massive bailout package to save the American banks, etc., during the 2008 financial meltdown, which marked a turning point in capitalism and modern economic theories. The Occupy Wall Street movement, which emerged in 2011, was another manifestation of the crisis of the capitalist state; the protesters who took to the streets were young Americans enraged by intolerable economic inequalities.

President Donald Trump had no qualms about openly practising protectionism to boost the US industries at the expense of other nations, especially China, through controversial tariff hikes. His successor, Joe Biden continues with, more or less, the same policy. All US Presidents have been closet protectionists.

Biden has recently got a 1.9-trillion-dollar stimulus package approved by the Congress to jump-start the economy, facilitate the ongoing Covid-19 vaccination drive, and grant relief to the pandemic-hit Americans. These measures are part of the legitimisation process aimed at bringing about social harmony.

One can only hope that the present-day political leaders and economic policymakers will take note of the fact that one of the main architects of the Sri Lankan version of market economy has owned that things are far from copacetic for capitalism in its present form; the key takeaway for the incumbent government from de Mel’s advice to Sajith, in our book, is the need to ensure equitable growth, which, however, is not attainable through occasional cash handouts and politically-motivated poverty alleviation projects.

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Editorial

Happy New Year!

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Tuesday 13th April, 2021

The Sinhala and Tamil New Year is the time when ordinary people have their fill of merrymaking, and traders and pawnbrokers laugh all the way to the bank. The much-talked-about need to preserve traditions associated with the national festival for posterity is only an excuse for the annual splurge.

What is being celebrated is essentially a harvest festival. In days of yore, people toiled away for months and produced a surplus, part of which was set aside for the New Year festivities. They did not have to worry about the rest of the year as they had enough food stocks. Today, there is no such surplus production, and most people spend borrowed money on New Year celebrations only to regret later when the festive hangover gives way to sobering reality.

Today, harvesting makes only moneylenders and the middleman happy. The farming community is caught in a debt trap. Loan sharks prey on them with impunity. Harvesting is followed by debt-servicing, and farmers either cannot pay back their loans or are left with little or nothing after debt repayment; they have to borrow more for consumption and cultivation purposes, and never will they be able to break this vicious circle unless the state makes a meaningful intervention. Avurudu provides them with some respite from suffering. The same is true of most other people as well.

The koha is said to be conspicuous by its absence, this year. Is it fed up with looking for trees to perch on, given the rate at which the country is being denuded? Its cry which is considered the herald of the traditional new year is, in fact, a desperate mating call. One wonders whether its cry is not heard these days because it has opted for remaining silent by way of family planning, as it were, on account of serious habitat problems.

Health experts have been trying to knock some sense into the public, but in vain. People have thrown caution to the wind, and are behaving as if the pandemic were a thing of the past. They seem to consider Avurudu to be something worth dying for. Shops are chock-a-block, and nobody cares two hoots about the physical distancing rule. People jostle inside clothing stores as if they had never worn clothes before. They also strip bare the racks of grocery stores as if they had never seen food, all these years. Adult males religiously flock around liquor outlets as though their very survival were dependent on the bottle that cheers.

Yesterday, India reported 168,912 COVID-19 infections overnight and overtook Brazil as the second-worst hit country in the world. Unless precautions are taken during the current festive season, Sri Lanka may find itself in the same predicament as its big neighbour.

Politics has apparently taken precedence over the COVID-19 protocol although the health authorities fear that a surge of infections is on the horizon. The government seems reluctant to have the health regulations strictly enforced lest such action should not find favour with the public, who had to be immured in their homes during the festive season, last year. The Provincial Council elections are also expected before the year end. Hence the distribution of cash handouts by the government, which is playing Santa months ahead of Christmas.

The national economy and productivity will take another severe beating due to holidays. Workplaces will remain closed until early next week. It takes, at least, one whole week to reboot the country after the New Year celebrations. Economists should figure out how much the country loses owing to numerous holidays.

Perhaps, it was only last year that Sri Lankans celebrated Avurudu meaningfully. They confined themselves to their homes due to strictly enforced lockdowns, which may have caused numerous difficulties, financial or otherwise, but members of most families huddled together as never before; this is what Avurudu is all about.

We wish our readers a very happy New Year!

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