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Wage increase makes mockery of collective bargaining

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by J. A. A. S. Ranasinghe

Productivity Specialist and Management Consultant.

This addendum to the topic is based on the incisive analysis of the plantation wages: Collective Bargaining or otherwise by Gotabaya Dasanayaka (GD) in The Island of 01st March 2021. The eminent labour legislation specialist, former Director General of the Employers Federation of Ceylon (EFC) has most undoubtedly hit the nail on the head drawing the attention of the readers to more sensitive aspects revolving round the importance of the time-tested collective bargaining systems prevailed in the determination of wages of the plantation workers for over three decades in particular as well as to the possible economic consequences, the new wage structure gives rise to the survival of the plantation industry in general.

 

Industrial Dispute Act No 43 of 1950 (ID Act)

The ID Act quite explicitly deals with the functions of the Commissioner of Labour (CL) under part 11 of the Act which says when an industrial dispute arose, it shall be the duty of the CL to refer such disputes for settlement by conciliation or by arbitration or by an Industrial Court including that of a District Court. It should be noted here that neither the Minister in charge of Labour nor the Commissioner of Labour (CL) nor the Deputy Commissioner of Labour (Industrial Relations) nor any other authorized person seems to have the gumption to abide by aforesaid conciliatory methods as envisaged in the ID Act, when the collective bargaining process of the plantation workers came to a deadlock a few weeks ago.

The most sensible course of action what the Minister or the CL should have done was to have recourse the dispute in question to a compulsory arbitration as per the provisions of the ID Act for a just and equitable award as articulated by GD. The reluctance on the part of the Minister to refer this sensitive issue to the compulsory arbitration is a moot point. Probably, he may have thought that the decision of the arbitration would not be favourable to the trade union demands. On the other hand, he may have thought that the reference to the arbitration is a time-consuming affair and the trade unions agitation is too severe to be ignored. However, it is crystal clear that the Minister had totally condemned the gist of the ID Act in toto by referring it to the Wages Board by circumventing all the bottlenecks in the pipeline for the first time in the history by creating a new precedent. It must be stated here that nowhere in the ID Act that an unfettered latitude is granted for the Minister to refer this labour dispute to the Wages Board. It is highly questionable as to why the Regional Plantation Companies did not challenge the Labour Minister’s arbitrary decision by way of a writ before the court and finally bore the brunt of the unconscious increase of the wages, which has far-reaching ramifications over the plantation industry and the smallholder sector.

 

Wages Board Ordinance (WBO)

Under section 8 of the WBO, the minister is empowered to establish Wages Board (WB) for any trade. It is a tripartite constituency representing the officials of the Labour Department, employers and employees of a particular trade. At present, there are 45 wages boards for different trades including that of plantation, agriculture and manufacturing industries and they receive minimum wages protection under this WBO. As regards the plantation sector, employees of rubber plantations 25 acres and above, coconut plantations 10 acres and above and tea plantations-no limit on acreage, are protected by the WBO. Though WB has been in existence for the last seven decades, the collective bargaining process initiated by the ID Act and the WBO functioned in tandem without interfering in each other’s territory.

As a matter of fact, collective bargaining process is more instrumental among the more organized sector where collective agreements are in force. By and large, the wage structure in the organized sector where collective bargaining operate is far superior to that of the establishments covered by the Wages Board. The minimum wages paid to employees covered by the WBO are conspicuously lower than the wages paid under the collective agreements. The Wages Boards are considered to be subsistence level wages as referred to above and in sectors where the trade unions are virtually non-existent. Hence, it is unprecedented that a matter which is subject to collective agreement was referred to wages board by the Minister of Labour in the annals of the labour movement of this country without realizing the repercussions that could arise. It is true that the plantation workers were covered by a Collective Agreement and periodically it has been renewed after collective bargaining. In a matter covered by Collective Agreement, if any dispute arose, the matter should have been referred to compulsory arbitration under the ID Act. However, in this instance, it is surprising that the issue was referred to the relevant wages board at the instance of the Minister of Labour.

Wage Impact on the industry

Mr. GD in his well-articulated article made a comparison between the wage structure of the different Wages Board in selected trades and the proposed daily minimum wage for the Tea and Rubber Growing and Manufacturing Trades and pointed out the huge disparity, if the proposed daily minimum wage of Rs. 1,000/= is paid across the board. Both the tea and rubber sectors are owned 70% by the smallholders, definitely the proposed increase will have a deleterious impact on the productivity of the tea and rubber sectors and the smallholders can ill-afford to bear the increased wage at this juncture. Right at the moment, a large number of rubber small holders in Kegalle, Kalutara and Ratnapura districts have abandoned their plots in the face of the exsisting wages and the dearth of labour. Right at the moment, Regional Plantation Companies (RPCs) make a desperate attempt to contain the high cost of production and there will be an inevitable impact-detrimental to the well-being of the industry, in the face of the enhanced wages approved by the Wages Board.

GD in his article had incorporated the minimum wages applicable to selected eight trades to pinpoint the irrational disparity of wages and I would go further to highlight the inadvisability of enhancing wages through the wages board mechanism.

The Collective Bargaining process stipulated in the ID Act provided a reasonable effective mechanism to maintain healthy industrial relations and a healthy industrial peace and harmony for the last 30 years. Moreover, the sustainability of the industry and the commercial viability on the basis of labour productivity, profitability and the efficiency of operations were some of the key prime-movers at the collective bargaining table, which both parties took cognizance of seriously. Every Dick, Tom and Harry knew quite well that the government made a solemn pledge at the Presidential Election as well as the last Parliamentary election that the daily wage of the estate workers would be enhanced to Rs. 1,000/= as per the election manifesto (Chapter 10 of the Vistas of Prosperity and Splendour). It is this pledge that the government had to initiate at the last Annual Budget at the instigation of the labour trade unions in the estate sector.

Obviously, there are many obstacles both statutory and bureaucratic in the implementation of this pledge. The Commissioner of Labour (CL) who was well versed in the sustainability of the estate sector and the procedural initiatives involved as per the ID Act and Collective Bargaining Process was seen as a stumbling block and he had to be booted out by installing a provincial bureaucratic who was absolutely unaware of the commercial viability of the plantation sector, which is associated with many operational and financial ills.

It must be stated here in fairness to the former Commissioners of Labour in the calibre of Mr. G.Weerakoon and Mr. Mahinda Madihahewa who had served the Labour Department with distinction adroitly and they did not succumb to the political pressure and had the capacity to appraise both sides when critical labour issues arose in fairness to both parties but they relied heavily on the sustainability of the industry on a more priority basis in solving labour disputes. The Government realized that the collective bargaining process outlined in the ID Act was an impediment to the smooth implementation of the proposed wage structure. So, the government insidiously shifted from the time-tested mechanism of collective bargaining process to Wages Board to expedite the process. According to the grapevine circulating in the Labour Secretariat that three strong party acolytes were brought in as nominated members of the Minister to the Wages Board in order to ensure the easy passage of wage increment of Rs. 1,000/=.

Future Trends of the Labour Movement.

From the pattern of the signals hitherto displayed by the government that came into power in 2019, it appears that every vibrant sector would be confronted with insurmountable labour agitations. Firstly, the industry has been agitating to do away with the obnoxious requirement of paying Rs, 200,000/= in case of terminations under the Employment of Termination Act. The employers pointed out over a decade of time that it was difficult to bring in foreign investment with such a legislation. The government did a U Turn by enhancing the payment of compensation to Rs. 400,000/= instead of scrapping this piece of legislation. Secondly, the amount of workmen compensation in the event of a death of an employee due to a fatal accident was increased almost double, placing more financial burden to the employers at the instigation of the trade unions. The third scenario was the manner in which it deviated from the time-tested collective bargaining mechanism and imposed unbearable financial constraints by way of enhanced wages to the employees of the plantation industry. The industry is unaware of any other ill-logical motives to be moved in the pipe-line against the well-being of the industry in the foreseeable future. What would happen if the rest of the Wages Boards request enhanced wages quoting the unprecedented mechanism adopted by the government and the resultant chaos would be inevitable. Unlike those days, the trade unions have become more aggressive with their political affiliations with the government and the civil society too have extended their support to trade unions to win over their demands, as can be seen from the Colombo Port ECT deal. There is obviously writing on the wall that the country would be inundated with heaps of labour unrest issues with the wrong signals given by the government.

 

Financial assistance to RPCs

It is factually correct that Regional Plantation Companies (RPCs) and smallholders were resisting the wage increase proposal on the ground that the financial resources do not permit them to incur this heavy expenditure. If this is the truth, nothing but the truth and the whole truth, the government has an inalienable duty to provide some financial assistance to RPCs by resorting to unorthodox avenues to alleviate its financial suffering even on short time basis. In this regard, Dr.Janaka Ratnasiri, a regular writer to The Island newspaper has made a pragmatic proposal in his feature dated 16th February 2021. He contends that export of tea is subject to a CESS levied at Rs. 10/- per Kg which works out to LKR 2.9 billion. Out of this, Rs. One billion is collected as tea promotion levy by Sri Lanka Tea Board from the exporters. Another 1% or 2.4 billion has to be paid to Brokers for conducting the auctions and carrying out quality control checks and certifying on samples received. These brokers comprising 8 Companies deserve it because they ensure that quality tea is exported. After paying taxes, the exporters are still left with a profit marginof about 65 billion annually. Dr. Janaka Ratnasiri argues that would be more prudent to share this profit among this plantation workers. Otherwise, it could be proportionately be distributed among the RPCs so that heavy financial implications arising out of this wage commitment could be mitigated.

 

Crises in the plantation industry

Consequent to the announcement of the new wage increase given to the plantation employees, there has not been any knee-jerk reaction from the plantation companies for the last one week. Their studious silence will have to be observed with much circumspection. Both the tea and rubber industries are on the verge of collapse owing to heavy financial implications and it is not clear as to how they absorb this unforeseen expenditure. It is certain that the Regional Plantation Companies (RPCs) would continue to incur heavy losses with this wage commitment. It could be reasonably assumed that the production and its quality will be the immediate casualties and this trend, if any, does not auger well for the sustainability of the plantation industry.

It would have been the ideal opportunity for the Labour Ministry to harp on productivity-based wage model as a bargaining tool, which the ministry has pathetically failed to convince, given the sizable salary package. The word “productivity” is anathema to trade unions in Sri Lanka including that of the plantation trade unions. The ramifications arising out of this wage increase are far-reaching in character and it is advisable for the Employers Federation of Ceylon to educate the members of its broader ill effects by way of a public seminar and convey its dissatisfaction to the government.

The biggest casualty in the aforesaid wage episode is the gradual demise of the collective bargaining process that led to Collective Agreements and plantation companies will have to think twice whether there is any rationale in entering into Collective Agreements by giving enhanced wages and other perks, if ill-conceived mechanisms are adopted by the government to give enhanced wages through Wages Boards by ignoring time-tested collective bargaining mechanism.

 

(The views contained in this article are the professional views of the writer and he could be contacted on athularanasinghe88@yahoo.com)



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Features

Rise of Dual Power amidst Covid 

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We had so many kings in our Sinhala Balaya of many centuries. There were many questionable deals on succession by members of this royalty, and others who came to those realms. But we have yet to hear of any brother of a ruling monarch rushing abroad in the midst of what may have been a national crisis, moving to a disaster.This is the stuff of Sinhala Power in the 21st Century. It is a show of the Raja Keliya – the power game, where dual citizenship is the dominant factor. The Sri Lanka, Mawbima home, is of lesser importance than the Videsha mawbima, especially if one’s health has to be handled by foreign medical sources; even if the Videsha Mawbima is the biggest affected by the Covid pandemic.

The appointment of Task Forces to deal with important issues facing the country and the people is the substance of the current Saubhagyaye Dekma – Vision of Prosperity and Splendour. Appointing a brother to head task forces of key importance is the show of dominant family power that prevails in this country today. But brotherly feelings are certainly not important when a dual citizen thinks of the greater importance of the Videsha Mawbima. The tasks of Economic Growth, Eradicating Poverty and Assuring Food Supply, as well as the more recent Green Socio-Economy must all be pushed aside, when the call of the Videsha Mawbima for healthcare is the stuff that matters.

This is the brotherly Vision of Prosperity and Splendour, or the Sahodara Saubhabyaye Dekma.

The Covid pandemic has certainly brought much contradictory thinking, especially in the government, on how the health of the people in this country, non-dual citizens, could be assured. Minister Udaya Gammanpila, a Cabinet spokesman too, is certain that mixed vaccinations of different brands and qualities, is the means to protect the people. 

Dr. Sudarshani Fernandopulle, State Minister on the subject, thinks differently, on the lines of the WHO specialists, who have stressed there is no evidence so far to authorize mixed vaccinations. The other minister of health and vaccination issues is somewhat silent on this confusion in official thinking. Is a new pandemic syrup to be promoted by the power handlers?

Thank heavens that the Cabinet Minister of Health, Pavithra Wanniarachchi, is so far silent on this matter. She could come up with a new Sri Lankan Deshamanya scientific solution, such as throwing some of the Sinopharm and Sputnik (Chinese and Russian) into the nearby river, and using the mixed and river blended vaccine for people of the related province. She is sure to obtain the support of Ministers Udaya Gammanpila and Prasanna Ranatunga for such a crafty thinking of science, just as they shared her belief in the Charmed Pot Game or Mantara Kala Keliya to fight the Covid-19.

  We are now in the midst of what is known as a Lockdown. It is not a “Vasaa thabeema” in Sinhala, but a limit on travel – a ‘Sancharana Seemava’. The Police are very clear that anyone who breaks the lockdown rules will be arrested and brought to justice. We have seen the great joy that policemen showed in carrying non-mask wearers and other violaters of Covid safety guidelines, to be shoved into buses. How much more of such delights would follow when Covid increases its hold on Sri Lanka? What was the related Task Force, and its ceremonial uniformed head doing, when Indians were brought to Sri Lankan hotels for quarantine before travel to some Middle Easter countries? What foreigner from the Covid battered India was carried or courteously conducted to a place where lawbreakers are detained?

As we keep wearing our masks and distancing ourselves from others, there is much cause for concern, even beyond the Covid pandemic, on how persons arrested and detained by the police are killed by or in the presence of the  police. Two suspected and arrested persons have been killed while in police custody this week.  They are Melon Mabula or ‘Uru Juva’ and Tharaka Perera Wijesekera or ‘Kosgoda Tharaka’ These are persons with records of major crimes, possibly with much strong evidence, but not presented in court and any punishment order through the judicial process.

The police spokesperson, a person with a legal background, too, tells the people the details of all the terrible crimes these persons are supposed to be guilty of. It is a contemptible move to get public support for the killings. The Bar Association has raised concerns about these departures from justice. There must be much more protests, even with the Covid dangers.

One gets the impression that the prevailing dangerous situation due to Covid, is being used to carry out increasing violations of the law and the judicial process. This is certainly a major step back to the earlier years of Rajapaksa Power, when many such suspects were killed in Colombo and elsewhere, showing off police escape power. It also brings back memories of the killing and attacks on journalists by similar police and official forces of crooked power.

Are we moving to a new sense of Dual Power — where the judiciary is ignored and official power is the Rule of the Day? Is the power of Dual Citizenry to be the dominant force once Covid puts down the people’s power?

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Should ASEAN Free Trade Area be considered model for SAFTA?

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By Dr. Srimal Fernando

Economic integration is more important today than it has ever been for South Asia’s development. When comparing the impact of South Asian Association for Regional Cooperation (SAARC)s South Asian Free Trade Area (SAFTA) and the Association of Southeast Asian Nations (ASEAN ) Free Trade Area (AFTA) in promoting trade amongst its member states, AFTA has been more effective in integrating the economies of its member states. SAFTA , on the other hand, has yet to make significant contributions to the integration of the economies of SAARC member states. The Success of ASEAN’s economic integration can be attributed to the willingness of Southeast Asian countries to embrace the tenets of regional integration. In contrast, SAARC’s model has failed to create a secure regional environment that is conducive for economic growth since its formation.

The Association of Southeast Asian Nations (ASEAN ) member states signed the AFTA agreement on 28 January 1992. After the establishment of AFTA, the member states of ASEAN succeeded in signing trading protocols within the organization. The ASEAN model succeeded in creating one of the most successful free trade areas in Asia as well as globally. The establishment of AFTA has been an important milestone in Southeast Asia as a factor that facilitated the economic integration of ASEAN member states.

In the case of the SAARC, the signing of free trade protocols under the SAFTA agreement has been faced with several tariff and non-tariff barriers. Although both SASRC and ASEAN member states face unique challenges that affect trading within these organizations, it can be said that, unlike the SAARC, the ASEAN economic integration model has been far successful in promoting trade amongst its member states. For the SAARC, the liberalization of the economies of SAFTA signatories has been a crucial challenge. On the other hand, ASEAN has made notable progress with regards to trade liberalization, policy alignments, and intra-regional trade among Southeast Asian nations.

The specific trade liberalization challenges faced by the SAARC member states include concerns over SAFTA revenue allocation from member states, restrictive rules of origin, and negative sensitive lists. The sensitive lists adopted by SAARC member states have proven to be a significant hurdle to exportation amongst SAARC member states. This has particularly made it difficult for exports from small member states of the SAARC to enter into large markets such as India and Pakistan. Having failed to grant the application of  most favored nation (MFN) status that would have seen a significant reduction in the sensitive lists maintained by both countries, trade between these two regional powers has been problematic over the years. Notably, the trading commodities that are in the sensitive lists of a majority of the SAFTA member states have high export potential. Despite the various commitments made by SAFTA member states, countries continue to maintain long sensitive lists hence the dismal performance of SAFTA. 

In the case of ASEAN, the establishment of the AFTA agreement has provided ASEAN member states with a platform to exploit their export potential. The AFTA agreement has boosted the economies of ASEAN countries through its trade liberalization policies. AFTA has also entered into several free trade agreements with regional powers such as Australia, China, South Korea, India, and Japan. The ASEAN countries are now focused on creating an Economic Community for their member states. Notably, several countries have shown interest in being a part of the proposed ASEAN Economic Community.

It should however be noted that the massive success achieved by ASEAN’S AFTA as opposed to SAARC’s SAFTA is not flawless. For example, although ASEAN has made significant steps in eliminating tariff barriers amongst AFTA member states, Non-tariff barriers are still a key challenge to the AFTA agreement. However, when analyzing the progress made by ASEAN’s AFTA since its formation, the achievements and evolution are undeniable. ASEAN was formed in an era when interstate relations amongst Southeast Asian countries were characterized by political mistrust and strained interstate relations. Years later, the organization has succeeded in unifying its member states for a common course, an aspect that the SAARC still struggles with. 

Way Forward

If SAFTA is to become more effective and emulate AFTA’s success, the myriad of issues mentioned above needs to be addressed. First, downsizing the sensitive lists of countries in a time-bound manner will be necessary. Secondly, the issue of para tariffs needs to be squarely addressed. A starting point could be to reduce and accelerate the elimination of para tariffs on items not on sensitive lists and include para tariffs in SAFTA negotiations. Also, the non-tariff barriers to trade facing SAFTA member states need to be equally addressed like the tariff barriers. Finally, strengthening economic relations can be used to reinforce improving political relations in the region, particularly between India and Pakistan. To an extent, the success of ASEAN in achieving effective economic integration and its experience can be used as an external driver of SAARC and its SAFTA agreement.

About the author:

Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O.P. Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union’

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Ramazan spirit endures amid pandemic

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This will be a sombre Ramazan, indeed, with the country under a lockdown. But the spirit of Ramazan lives on in all Muslims. Ramadan, also referred to as Ramazan, Ramzan, or Ramadhan, in some countries, is the ninth month of the Islamic calendar, and Muslims the world over dedicate this holy month for fasting, prayer, reflection and community.

Although most non-Muslims associate Ramazan, solely with fasting, it is believed to bring Muslims closer to God and inculcate in them qualities such as patience, spirituality, and humility. Those of the Islamic faith believe that fasting redirects one away from worldly activities, cleanses the inner soul and free it from harm. It also teaches self-discipline, self-control, sacrifice, and empathy for those who are less fortunate and encourage actions of generosity and charity. It is a time of self-examination and increased religious devotion.

Ramazan is a commemoration of Prophet Muhammad’s first revelation, and the annual observance of Ramazan is regarded as one of the Five Pillars of Islam. The Five Pillars are basic acts, considered mandatory by Muslims, namely Muslim life, prayer, concern for the needy, self-purification, and the pilgrimage. Prophet Muhammad’s first revelation is believed to have taken place in 610 AD, in a cave called Hira, located near Mecca, where Muhammad was visited by the angel Jibrīl, who revealed to him the beginnings of what would later become the Qur’an. The visitation occurred on Ramazan.

Ramazan lasts from one sighting of the crescent moon to the next and the local religious authority is tasked with announcing the date. The Colombo Grand Mosque announced on Wednesday (12) that Sri Lankan Muslims will celebrate Ramazan on Friday (14). Because the Muslims follow a lunar calendar, the start of Ramazan moves backwards by about 11 days, each year, in the Gregorian calendar. Fasting from dawn to sunset is considered fard (obligatory) for all adult Muslims who are not acutely, or chronically, ill, travelling, elderly, breastfeeding, diabetic, or menstruating.

During this month, Muslims refrain not only from partaking of meals, but also tobacco products, sexual relations, and sinful behaviour, devoting themselves to prayer or salat and recitation of the Quran. The pre-dawn meal is referred to as suhur, and the nightly feast that breaks fast is referred to as iftar. During Ramazan, Muslims wake up well before dawn to eat the pre-dawn meal. This is considered the most important meal, during Ramazan, since it has to sustain one until sunset. This means eating lots of high-protein food and drinking as much water as possible, right up until dawn, after which one cannot eat or drink anything. The day of fasting ends at sunset, the exact minute of which is signalled by the fourth call to prayer, at dusk.

It is believed that spiritual rewards, or thawab, of fasting multiply during Ramazan. Muslims do not Fast on Eid, but Sri Lankan Muslims believe that observing the six days of optional fasting, that follows Eid, multiplies spiritual rewards.

Eid-Ul-Fitr is the Festival of Breaking the Fast, also simply referred to as Eid, and marks the end of the month-long dawn-to-sunset fasting of Ramadan, as well as the return to a more natural disposition of eating, drinking, and marital intimacy. In Sri Lanka, this Festival of Breaking the Fast is also referred to, colloquially, as Ramazan. Eid begins at sunset, on the night of the first sighting of the crescent moon. Muslims hand out money, to the poor and needy, as an obligatory act of charity, before performing the Eid prayer.

Globally, the Eid prayer is generally performed in open areas, like fields, community centres, or mosques in congregation. In Sri Lanka, the prayer is performed annually in Galle Face Green and mosques. The Eid prayer is followed by the sermon and then a supplication asking for Allah’s forgiveness, mercy, peace and blessings for all living beings across the world. The sermon encourages Muslims to engage in the rituals of Eid, such as zakat, almsgiving to other fellow Muslims. After the prayers, Muslims visit relatives, friends, and acquaintances, or hold large communal celebrations.

After prayer, Muslims celebrate Eid, with food being the central theme. Sri Lankans celebrate Ramazan with watalappam, falooda, samosa, gulab jamun and other national and regional dishes. The festivals were said to have initiated in Medina, after the migration of Muhammad from Mecca.

This year, as well as last year, Sri Lankan Muslims will have to forgo the custom of communal prayers, and celebrations, due to the ongoing pandemic, and will have to settle for private prayers and celebrations of Ramazan during this period of curfew. While these preventive measures are in place, during this year’s Ramazan, the principles of this holy month remain the same. Devout Muslims all over the world, will still be honouring this pillar of Islam, albeit from the security of their homes.

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