Power without responsibility

Sri Lanka’s labour unions are in the limelight for their militant actions. Who is to blame for the disruption?

Architects imagine and create form and spaces. In half a century past, the best Sri Lankan ones were at the forefront of adapting architectural practices to tropical climates and modern tastes. That Sri Lanka punches above its weight in tropical modernist architecture is widely appreciated.

However, when promoters of a new luxury city hotel had to overcome the challenge of a dense construction on a small land plot fronting Colombo’s Ward Place, they engaged a Singaporean architectural firm. The hotel, which opened to guests in 2017, makes the most of its environment and limited footprint. Its promoters’ choice of a Singaporean architectural firm experienced in designing for constrained spaces has paid off.

For decades, the falling barriers to costs of travel, communication and collaboration across borders allowed Sri Lankan businesses to benefit from overseas talent. Many of Colombo’s new high-rise buildings contract foreign firms for architecture, interior design and services design.

Sri Lankan companies were engaging Singaporean architectural firms long before a free trade agreement (FTA) between the two countries in January 2018 formalised cross-border services.

However, trade unions representing architects, doctors, engineers, etc., have protested through industrial action, with some claiming that the Singapore FTA has opened professional services for free movement of people. These and other claims are misleading at the least, and are often false. Trade union memberships, as a percentage of the working population, is probably in decline as few newcomers to the job market enter into unionized work. Unlike industrial sector jobs, those in the services sector have fewer unions. That is, unless the government provides those jobs.

Sri Lanka’s most high-profile union, fresh from its victory in a standoff to shut a non-state medical college, representing government doctors, has been the fiercest opponent to the Singapore FTA. Possibily realising they will not prevail in a standoff with the monopolistic militancy of government doctors, negotiators have excluded medical services altogether from the FTA. As a result, even a world-class Singaporean hospital that establishes a facility here cannot deploy their best talent under FTA conditions. Led by unionized doctors, who prefer staging industrial action to maintain their monopolistic stranglehold on Sri Lankan healthcare, protests and strikes have been launched in the lead up to and following the FTA’s signing. While a Singaporean FTA has been concluded, at stake are other free trade deals that can boost Sri Lanka’s competitiveness by integrating it with the rest of the world, like China, Thailand and India.

For some professions, including architecture and engineering, cross-border advisory and consultative services are now allowed under the Singapore FTA. However, these services were freely traded before the FTA anyway.

What the FTA won’t allow is for Singaporeans to freely move to Sri Lanka to work here. Sri Lanka’s FTA strategy, playing catch-up to integrate the economy to the world, is facing stiff opposition from forces – led by trade unions – portraying the choices as a zero-sum game in which global interests compete with national ones.

Since independence, Sri Lanka’s nationalism has ebbed and flowed. It also takes many forms. On some occasions nationalism has united people in pursuing a common aim that they cannot manage alone. Vanquishing the separatist Tamil Tigers in a war is an instance that is fresh in the minds of most people. That memory still resonates and attracts them to alternatives, claiming a common goal. On the contrary, ‘civic nationalism’ unites society around common values, often conciliatory and forward-looking, like the outpouring of assistance for flood victims, building a cancer hospital in the north or playing Australia in test cricket.

Unlike civic nationalism, which is based on universal values like freedom and equality, ethnic nationalism is nostalgic for a past eroded over time, when a race or social group was in a better position. Ethnic nationalism divides nations, and leads to conflict and sometimes war.

Trade unions have been taking advantage of the erosion of cosmopolitan, liberal values in favour of chauvinism to realise their own agenda. Two things are pushing trade unions into the limelight. First, they are taking advantage of the fear of the unknown to suggest that FTAs will force open borders, leading to mass joblessness and low pay. The second is the state’s own poor governance record. It now lacks the political capital for reform, which allows unions to be far bolder than they would be otherwise.

Both these factors – fear of the unknown and lack of political capital for reform –thrive on strident ethnic nationalism that Sri Lanka is prone to. Sinhala nationalism is quick to react to real or perceived insults and threats from abroad.

A blog, ‘Fact checking #fakenews about the Singapore-Sri Lanka FTA’ at The Nerdage blog (thenerdageblog.wordpress.com) outlines the circulating myths. Myths perpetuated by trade unions and politicians include: Singaporean citizens and permanent residents can enter Sri Lanka’s job market freely; citizens of other countries can come through the SL-Singapore FTA to work here; unqualified people will be sent to Sri Lanka by Singaporean companies; Singapore’s workers are more productive so this is not a fair agreement for Sri Lankans; Sri Lanka has no shortage of high skilled workers; professional services like architecture, medicine and engineering have been fully liberalized; and the government didn’t consult and include the views of professional associations.

The Singapore FTA doesn’t grant Mode 4 services liberalisation, which allows professionals to freely cross the border and offer services. Liberalisation is limited to Mode 3 and that too in selected sectors. Only a Singaporean citizen or permanent resident who has worked at a Singaporean company for over a year can take a job in the Sri Lankan unit of that same company.

In addition, she must have at least five years professional experience and meet specific criteria that recognizes her as a manager, executive or specialist. Regulatory standards to be compliant with Sri Lankan law must also be met before a work visa is stamped.

The fear that Sri Lanka will somehow be swamped with labour is unreal. Other fears are misrepresentations, poor understanding of commerce or untruths aimed at deceiving.

Citizens of other countries cannot use the Singapore FTA to obtain jobs here. A company based there, which seconds an employee to its Sri Lankan unit, must have some economic motivation to do so. If it can as easily hire someone of similar skill here, it has reasons to do so, as it will make more economic sense.

Singapore, a developed country, has a high per capita income. Its high economic efficiency is reflected in the productivity of its workers. If that same worker were transplanted here, she would bring new skills and become a productivity benchmark. Not a bad thing for a business or an economy looking for an edge in the global market.

Trade unions also bemoan the lack of consultation. However, unions appear to be confusing being heard with getting what they want. During one and a half years of negations with Singapore, the government consulted stakeholders widely. Trade unions are just one set of stakeholders, and these consultations extended to trade chambers, trade associations, public departments and professional bodies. Over 20 stakeholder consultations were conducted in an 18-month period. These informed the government-to-government negotiations with Singapore. For any trade agreement to be relevant, it must include providing a higher level of access to each country’s goods, services and investments than already exists.

Any negotiating team must put offers the other side values to gain access to benefit its own economy. Sometimes this does lead to some level of disruption, an inevitable outcome of becoming open to competition. Unions variously claim that safeguards are inadequate for Sri Lankan workers. How a country can deal with this is twofold. It can take some measures like adopting anti-dumping and countervailing duties laws, which has already been done. But the only real safeguard is to build an economic model that’s competitive.

Besides the fiction over trade in services, fabrications about the goods trade also abound, like the idea that other countries will dump goods here though Singapore. The FTA requires 35% value addition for goods to qualify for preferential tariffs.

Trade union muscle-flexing is also rising due to the perceived weakness of the government. Scandal tainted, bumbling and confused about policy, the lot controlling executive and legislative power haven’t been so hapless in decades.

To counter the preachers of chauvinism – like a former minister who, since joining the opposition, criticizes the Singapore FTA as one negotiated by a controversial former Central Bank governor – the government’s own essential backers must be aligned. Governments don’t rule by themselves. They need supporters – even trade unions – who keep them there. Longevity is a matter of how many supporters a government has and how big the pool is from which these supporters can be drawn. Trade unions with nationalist backing are taking advantage of the fear of change and the lack of political capital and support for reform.

Unions wield more power now than at any time in the recent past due to their own deft maneuvering and the eroding position of political power.

Their resurgence goes against the economic structural change that should lead to diminishing union power as younger workers and more self-employed and part-time workers join the labour force. Emboldened, they are ready for more industrial action.

Their own memberships may be polarized between moderates arguing for their need to win public support and militants determined to push home the advantage.

Nationalism is a slippery concept, one that can be easily manipulated by politicians and trade unions. It can also unite a country around common civic values. However, the nationalism now abounding is driven by fear, a zero-sum attitude and intolerance.

The power has shifted to trade unions. Responsibility is elusive.

Tagged as: