May 01, 1985

Article at Nadesan on Authory

THE ROLE OF GOVERNMENT IN INDUSTRIAL RELATIONS - A SRI LANKAN PERSPECTIVE *


*Nadesan Satyendra - Paper presented at Lawasia Seminar on the Role of Government in Industrial Relations, Sydney, Australia, May 1985

A report prepared for the Trilateral Commission stated in 1981:

..."The term industrial relations system includes every type of management-labour relationship in both private and public sectors of employment; it therefore includes both the unionised and non unionised manufacturing enterprises and all kinds of service activity. In short, it covers the whole spectrum of employment relationships in a modern society." [Benjamin C.Roberts, Hideaki Okamoto and George C.Lodge in a report prepared for the Trilateral Commission: Trilateral Commission Task Force Reports: 15-19 - New York University Press 1981]

In Sri Lanka, the principal enactment concerned with the settlement of disputes in the area of employment relations is named 'The Industrial Disputes Act" but the term industry is defined to include, inter alia, "any undertaking or occupation by way of trade/ business, manufacture or agriculture, and any branch or section of trade, business, manufacture or agriculture, every occupation, calling or service of workmen and every undertaking of employers.

Industry by definition includes agriculture. The way of statutory definition is one way in which terms which arose in a particular historical context are sometimes given a fresh lease of life merely because such terms have acquired a certain historical meaning. One consequence is that in other areas of usage and the law, industry continues to mean industry and does not mean any trade or business or agriculture. It is necessary, therefore, to point out at the outset that the term 'industrial relations' may tend to confuse rather than define, particularly when applied in relation to a third world economy such as Sri Lanka where industrialisation is relatively weak and where the vast majority of employees work in a non industrial environment.

some general observations...

An examination of the particular is often furthered by an understanding of the general. The employment relation does not exist in midair. It is not something that concerns the employer and employee alone. The work performed by an employee for the payment of remuneration is directed to the production of goods and the provision of services for people who use such goods and services. The employment relation constitutes an integral part of the structure of any organised society.

Organisation involves the management of natural and human resources. It implies specialisation. Everybody does not perform the same work. Neither do they exercise the same degree of power. To exercise power is to influence and direct the conduct of others. The relative power wielded by an employer and his employee is related to the nature of the power structure of a given society. And the material reward that an employee secures and the terms and conditions of the employment relation are inevitably related to the power that each party to the employment relation wields.

But, the relations which arise upon employment are not bipolar. The centres of power are not only the employer and the employee. The state and the agencies of the state are also power centres which influence the rules which constitute the law of employment relations. Again, the 'state' is not a monolithic entity. The judiciary, the executive and the legislature often act as separate centres of power. And a permanent administrative bureaucracy influences and directs in a way that is not always identical to that of a political executive. Further, the employer and the employee may each be a member of a trade union. And, except in the case of a small employer, there may be several links in the chain of command from the employer to the employee. The power centres include the manager, the enterprise trade union, the national trade union, employers federation, and the agencies of the state.

And it is a basic feature of power centres that whilst they seek to serve those whom they represent, they also seek to achieve this by perpetuating their own power. It is rarely, if ever that a power centre consciously acts in a way that erodes its own power. The interests of a power centre may therefore not always coincide with those which it seeks to represent. And this is true of managing directors, in relation to owners and employers as well as shop stewards, in relation to employees. It is also true of the state in relation to its citizens, and of trade unions in relation to its members.

Again, an employee is also a consumer, a manager is also an employee. Both employers and employees may also be voters. An employer may be a member of ruling party. Or he may be member of a political party which is in the opposition. A trade union may wield greater influence through a political party than directly on an employer. Employees who constitute an ethnic minority may wield less power than those who belong to the ruling majority, either because they do not have the right to vote and participate in the political process or because they may fear repatriation at short notice. Again, employees may constitute the parish of a well established church which may then espouse their cause, sometimes, more effectively than a trade union.

An examination of the role of government in employment relations will be furthered by recognising that the structure of an employment relations system is multipolar and that it is interpenetrated. by the matrix which constitutes the distribution of power in any given society. An employment relations system is not bipartite, nor for that matter, is it tripartite. It is multipartite and each party, often, plays more than one role.

Gourevitch, Lange and Martin have focused attention on some of the issues that arise:

"What are the relationships between worker's roles as producers and as citizens? How do the ways in which these roles are institutionalised in the labour market and the political arena affect each other? How much does the distribution of power within each of these institutional contexts influence the distribution of power in the other? How does the character and intensity of conflict in one impinge on the features of conflict in the other? What impact do the terms of settlement made in one of these contexts have on settlements made in the other? What determines the variations in these relationships among different countries? Under what circumstances do changes in these relationships occur?...

...the Marxists deny the autonomy of political processes frem the underlying structure of class relationships to much the same extent as the liberal pluralists affirm the autonomy of industrial relations from politics. Both consequently beg the fundamental question of why relationships between industrial relations take varying forms with varying consequences for the operation of different political economies...

...Perhaps, it will become axiomatic that, to paraphrase Clausewitz, 'for labour, politics is the pursuit of labour market goals by other means'. We will then be able to argue about different models of the interpenetration of industrial relations and politics, not whether the two are connected..." [Industrial Relations in International Perspective: Ed Peter b.Doeringer, Macmillan Press Ltd. 1981]

the role of government...

The employment relations system, perceived as an integral part of the power structure of a given society, serves as an useful frame for a study of the role of government in employment relations. The distribution of power in a given society is partly a function of its past. It is the past which moulds the present and influences the future. And that past has both a cultural and an economic content and it would appear that it is from these factors that seme of the characteristic features of the role of government in the employment relations system of Sri Lanka spring.

the physical setting...

Geography plays a silent but basic role in the affairs of a people and Sri Lanka does not provide an exception to this rule. Sri Lanka (previously known as Ceylon) is a tropical island, about 25,000 square miles in area, situated a few hundred miles north of the equator and about twenty miles from the southern part of peninsular India . Its affairs have been influenced by its nearness to the vast land mass of the Indian sub continent and also by its relatively central location in the even iarger expanses of the Indian Ocean. Mot unnaturally, the early settlors were from the Indian sub continent. Today, Sri Lanka is a multi national unitary state with a population of around 14.6 million people. The Sinhala people constitute about 75% of the population and the Tamils constitute around 20% of the population. Most of the Sinhalese are Buddhists whilst the Tamils are predominantly Hindus. Each people speak a different language and they both trace their origins in the island to a period beyond 500 B.C. There is sane controversy as to who were the first settlors and the paucity of direct evidence is often matched by the enthusiasm of the protagonists of the differing points of views on the matter. Both Sinhala and Tamil are recognised as the national languages of Sri Lanka.

early political history...

The early political history of the people of Sri Lanka, in the centuries before the advent of the European powers, is largely a chronicle of the rise and fall of individual kingdoms. Sometimes they fought against outside invaders and sometimes they warred against each other. The society was feudal in structure. Land was the dominant means of production. Kingdoms existed. Nations were yet unborn. The loyalty of a people was to their king or chieftan and it was this which held them together. There were more than one Tamil 'kingdom' in both South India and in Sri Lanka in the same way as there were more than one Sinhala kingdom in Sri Lanka. Sometimes alliances were made to defeat a common enemy. Again, as in Europe before the Industrial Revolution, marriage was one way by which a kingdom was enlarged or strengthened and Sinhala kings often married Tamil princesses.

In Europe, the industrial revolution which brought with it the printing press and the steam engine, the growth of easier communications, and the shift from land to other means of production, led to the break up of feudalism and the birth of nation states. It was a change that was aided by the use of gun powder and the power that flowed from the barrel of the gun. The boundaries of many nation states were settled painfully, after many wars spread across more than two hundred years.

But the same industrial revolution which led to the birth of nation states in Europe, also fueled the mercantile expansion of the European powers and the colonisation of Asia. The Portuguese arrived in Sri Lanka in the 16th century and the 17th century saw the advent of the Dutch and later the British to the Indian region. The economies of India and Sri Lanka were made subservient to that of the ruler. The colonies provided raw materials to feed and accelerate the thrust of the industrial revolution in the West. One consequence was the postponement of industrialisation in the Indian region. Another consequence was that in the absence of industrialisation, land continued to be the main means of production and the breakdown of the multiplex relationships of a rural society, were slow. The colonisation process inhibited the organic growth of nations in the Indian region and state boundaries in India and Sri Lanka reflected more often than not, the power wielded by the foreign ruler. And, it was with the departure of the British that the organic growth of nations gathered momentum in the Indian region.

effect on employment relations...

The colonisation process has had important consequences for the structure of the employment relations system of Sri Lanka.

In the West it was the factories and the mines that witnessed the formation of the new relations between those who were 'freed' from the land and 'freely' sold their labour and the owners of the new means of production who bought such labour to produce 'industrial' goods. The organic growth of trade unions in the West came about in the context of an electoral system which confined the vote to the propertied classes. The employee did not have a vote and therefore did not directly participate in the legislative process. It was through trade unions and collective bargaining that employees secured better terms of employment and ensured a measure of security of service. And, it was in this way that trade unions became important power centres in the employment relations systems of the industrialised West.

In Sri Lanka, on the other hand, universal franchise came before industrialisation. Further, to a colony, national liberation was a first priority and politicization and political parties preceded the growth of trade unions. Trade unions were often established as useful adjuncts to political parties in their efforts to capture political power. Also since English was the language of administration and business, trade union leaders were more often than not 'outsiders' who had an English education and who had the capacity to negotiate with the English educated employer. Many trade union leaders were lawyers and their own horizons involved the larger political arena. And this process continued even after Sri Lanka obtained independence in 1948.

The worker himself perceived the vote as a way in which he can secure better terms of employment and reduce his cost of living, and looked upon political leaders and the elected government to ensure that this was done. The lines of separation between that which was political and that which was the concern of a trade union was often blurred. In the result, the political party and the elected Member of Parliament have become influential power centres in the employment relations system of Sri Lanka and this has resulted in a structural situation which may well be significantly different to that of today's West. Power centres tend to act in a way which perpetuate their own power and the reality of the Sri Lankan scene is that trade unions continue to be adjuncts of major political parties, rather than independent centres of power.

Again as a 'late comer' to industrialisation, Sri Lanka, like many other 'late comers' was compelled to compete in the global market with an already industrialised West. And, this 'was a structural frame which did not exist for today's industrialised world, at the time when it went through its own industrialisation process. One result was that in Sri Lanka industrialisation has often taken off from the most recent stage of development in the West and this also meant that machinery and technology which was discovered at a later stage in the West were brought into Sri Lanka at a comparatively early stage in its own industrialisation. And such technology included management methods moulded to the norms of a different place and time. A feature of the employment relations system of Sri Lanka, therefore is that it is 'dualistic' in character. A large 'informal' sector of small businesses, rural and agricultural employees exist together with a small 'formal' sector of big enterprises, expatriate corporation and state sponsored industries. It is a 'dualistic' character which the employment relations system of Sri Lanka shares with that of many other states of the Third world.

In the 'formal' sector, the constraints of development within a global structural frame which included an already industrialised West, led to the government playing an increasingly pivotal role, whether directly as an employer or indirectly by regulating the terms of the employment relation. And this has contributed to a ' corporatist' approach to employment relations, which has sought to emphasise, participation rather than confrontation. In the 'informal' sector, on the other hand, the nature of the work and the work place encouraged 'paternalism' rather than trade unions, and again it was to the political party and the local political leader that the employee turned to resolve his grievances.

In the traditional Western model, industrial relations is sometimes conceived as being basically 'bipartite' with the role of government limited to setting up procedural frames which encourage the growth of trade unions and collective bargaining. In Sri Lanka, and in many countries of the third world, the state is engaged directly in planned development in the economic field in a context where trade unions are relatively weak power centres. And given that the worker is also a voter, the reality is that the worker will seek to resolve grievances by an appeal to political leaders and to the government and its agencies. Further, political leaders themselves will see their own participation and involvement in 'trade unions' as a way of enhancing their own power.

In Sri Lanka, when trade unions are established at enterprise level, the initiating force would often be the local political leader with influence on the labour administration. Not infrequently, the trade union office would be situated in the same room as the office of the political party or the Member of Parliament. And at the national level, leaders of trade unions are often not only members of political parties but also members of parliament and hold office as Ministers in government.

For instance, today, the President of the largest trade union in Sri Lanka is also Minister of Rural Development, and the President of the second largest trade union is also the Minister for Mahaweli Development. Both these trade unions have a predominant membership amongst plantation workers and since 1971 all plantations of more than 50 acres are owned by the State and function under other Ministers of the same government. Again the President of the third largest trade union, the Jathika Sevaka Sangamaya, with a considerable membership amongst employees in government owned corporations, was, until recently, the Minister of Industries. And by far the largest number of government corporations function under the Ministry of Industries.

The role of 'government' in employment relations in Sri Lanka should therefore be viewed in the context of the inter penetration of the political power structure with the traditional 'institutions' of the employment relations system.

culture, and the role of government...

Culture is the distilled essence of the way of life a people and afortiori it must have something to do with the way in which people deal with one another, whether within an employment relations system or elsewhere. The ' corporatist' participative approach finds seme resonance in the indigenous culture of the people of Sri Lanka. The same colonisation process which inhibited industrialisation, also had the effect leaving intact the way of life of large sections of the people of Sri Lanka. Even in urban areas, apart from the hours that are spent at the workplace, the employee goes back to a home and a background which retains the outlook and the traditions of the past. In 500 B.C., long before the industrial revolution, Prince Siddhartha in India renounced everything and walked out his palace to become the Enlightened One, and today the Buddha is revered and seen by many in Sri Lanka as an example to follow. The inward culture of the Indian region is a consequence of the outward thrust of the early civilisations. It is possible to read too much into matters of culture and tradition, but clearly the attitude of employees of Sri Lanka and the Indian region cannot be understood on the same basis as that of their counterparts in the West. In the case of another late comer, Japan, which has had its own industrial revolution, the result has been 'different' to that of the industrialised West and this rather suggests that it will be 'different' in the case of other 'late comers' as well.

early legislation...

The chronology of labour legislation in Sri Lanka, provides an useful guide to the interventionist role of the Sri Lankan government in the area of employment relations. During the period from the beginnings from British rule in 1833 till about a hundred years later, the intervention of the government through legislative enactment was minimal. And where it did intervene, it was largely in relation to immigrant Indian labour which was recruited to work on the tea and rubber plantations and the legislation, for instance, rendered it a criminal offence for an immigrant labourer to break his contract of service. In 1927, the Minimum Wages (Indian Labour) Ordinance made provision for the establishment of Wages Boards for the determination of wages for Indian immigrant labour, but it was not until 1941 that similar Boards were set up for other workers. Again given the emphasis on trade and the absence of industrialisation, the Shops Ordinance in 1938 came some years before the Factories Ordinance in 1942.

Industrial Disputes Act...

However, it was after independence in 1948, that the role of government in industrial relations became increasingly significant. A separate Ministry of Labour was constituted and today, the major legislative frame for government intervention is provided by the Industrial Disputes Act and the Termination of Employment of Workmen (Special Provisions) Act.

The Industrial Disputes Act is concerned with the prevention and settlement of industrial disputes. It applies to all workmen including those employed by government owned corporations. It does not apply to those directly employed by the state or by local government bodies. The Act gives statutory force to all collective agreements which are duly registered under the Act. Any violation of the terms of a collective agreement is an offence under the Industrial Disputes Act. The Minister of Labour may extend the operation of the collective agreement to employers and employees not originally covered by it.

The Act also entitles the Minister of Labour to compulsorily refer any industrial dispute for settlement either to an arbitrator or to an industrial court. The term 'industrial dispute' is defined to include not only disputes concerning terms and conditions of employment but also an individual dispute concerning termination of employment. Once a reference is made, any strike or lockout in that industry is rendered unlawful. The award of the arbitrator and the industrial court is made binding on the parties and non compliance of the terms of the award is a criminal offence.

The Industrial Disputes Act also established permanent Labour Tribunals to which any workman whose employment is terminated may apply for redress or relief in respect of such termination. The application may be made directly by the workman or by the trade union to which the workman belongs. The Tribunal is empowered to make such order as it may consider 'just and equitable' notwithstanding the terms of the contract of employment. The Tribunal may, and in fact does order reinstatement in certain cases. The existence of Labour Tribunals with such wide powers has played a contributory role in preventing the growth of trade unions. Workers do not see trade unions as a necessary instrumentality in securing them against arbitrary dismissal.

The Minister of Labour may however refer a termination dispute that is pending before a Labour Tribunal, to an arbitrator nominated by him and in such an event, the proceedings before the Labour Tribunal would be terminated, and the employee would be bound by the award made by the arbitrator. It is not unknown for a Minister of Labour, faced with applications made by ex employees of say, a government owned corporation to a Labour Tribunal, to refer the disputes to an arbitrator nominated by him, and thereby remove the dispute from the hands of the independent Labour Tribunal. Again, although the Industrial Disputes Act, on the face of it applies to employees of government owned corporations, a Cabinet Minute of 1971 directs the labour administration to first secure the agreement of the Minister under whom the particular corporation functions, before intervening in any dispute concerning such corporation. The overarching powers of the Minister of Labour has led to a strengthening of the political power centres in relation to their role in the employment relations system.

Again, the Termination of Employment of Workmen (Special Provisions) Act, although it does not apply to workmen employed by the state or by state owned corporations, does impose a statutory bar on the termination of employment of other workmen on any ground other than disciplinary grounds. It enacts that no employer shall terminate the employment of any employee, except by way of punishment for misconduct, without first obtaining the prior written approval of the Commissioner of Labour. The Commissioner of Labour is the head of the labour administration and functions under the Minister of Labour. The discretion he exercises is quasi judicial but he is not required to give reasons for his decision. It should not therefore be a matter for surprise that both employers and employees in the private sector should seek to influence decision making by recourse to political power centres. Employees may well take the view that their chances of success, in respect of an application made to terminate their employment, may be bettered if they were members of a trade union whose leader was a Minister in the government. Again, an employee may take the view that his Member of Parliament may be able to help, to either directly influence the public official concerned, or indirectly influence the decision by, say, speaking to the Minister of Labour. At the best, the case may be presented on the basis of the justice of the cause, but even so, the effective instrumentality is seen as the appropriate political power centre or some trade union which is an adjunct of such centre,

legislation in respect of wages...

Even apart from intervention in the area of dispute settlement and termination of employment, government has intervened directly by legislating salary increases for employees in the private sector. The Budgetary Relief Allowance of Workers Law of 1978, as the name indicates, served to give relief to workers from the impact of the government's budgetary policies by enacting that all employers shall give, in effect, a 25% increase in salary or wages. In 1979, the government enacted the Supplementary Allowance of Workers Act which required employers to grant specified increases in the salary payable to their employees. These were instances of wage increases which were the consequence not of collective bargaining but of direct legislative action. They constitute an open manifestation of the central role of government in the area of employment relations in Sri Lanka.

employees councils in public sector corporations...

And in 1979, the government enacted the employees Council Act which provided the frame for the establishment of elected Employees Councils in government owned corporations. The members of the Councils were to be elected directly by employees and the Councils would have the right of consultation with the management. The elections to the Councils were held in 1981 and were fought largely on party political lines. And perhaps not surprisingly, the nominees of the trade union affiliated to the ruling party won in nearly all the government owned corporations.

conclusion...

The role of government in Sri Lanka in recent years has tended to emphasise the 'corporatist' approach to employment relations. It is a tendency which is in accordance with a power structure which has evolved in response to the colonisation process. And it is unlikely that existing power centres would encourage the development of new centres of power based on 'independent' trade unions. Such a development would be seen as a threat to the existing centres of power and this is particularly so in an economy which is in crisis, and in a state where general elections were postponed by resort to a referendum in December 1982. The danger may be that the 'corporatist' approach to employment relations may lead to a 'corporatist’ one party state.

At the same time, in a broader perspective, even in the Western world, with increasing automation, for instance, the power of trade unions to cause loss to an employer may be curtailed and this may result in a movement away from collective bargaining and confrontation to participation, conciliation and arbitration. And the inter penetration of the institutions of the employment relations system by the political power structure is likely to increase rather than decrease. The computer revolution may have increasing impact on the way in which goods are manufactured and services provided and afortiori on the nature of the working environment and the content of the employment relations system itself. And the challenge for both the industrialised world and for the third world would be to secure an open and porous political power structure in a society where trade unions as we have known them in the past may well have become obsolete.