Rohan Samarajiva, Tharaka Amarasinghe, and I attended a meeting with the Committee on Comprehensive Social Protection for Workers on 4 January 2024, following an invitation from the Ministry of Labour and Foreign Employment in Sri Lanka. Minister of Labour and Foreign Employment, Manusha Nanayakkara was present at the meeting, along with representatives from several agencies including the National Planning Department, Social Security Board, Employers’ Federation of Ceylon, and International Labour Organisation. During the session, we delivered a presentation to the Committee, accessible here. This article sheds light on three key points we raised, initiating meaningful discussions.
28% of workers are living in poverty
LIRNEasia’s 10,000 sample nationally representative survey conducted between August 2022 and March 2023 highlighted that 28% of the 8.3 million workers (approximately 2.3 million individuals) were living in poverty, based on the national poverty line at the time the survey was being implemented (LKR 13,977 per capita). 29% of the 4 million private sector employees (approx. 1.2 million individuals) were living in poverty. We drew on this point to highlight the need for a comprehensive, adaptive social protection system for all workers, including those employed in the private sector.
Need to grow contributory savings schemes
Furthermore, we highlighted that only 2.6 million active Employers Provident Fund (EPF) and Employers Trust Fund (EPF) files exist, the most recent publicly available data by the respective boards indicate. This indicates that 1.4 million of the private sector workers (35%) do not have active EPF/ETF files. In select cases, this may be due to companies having their own schemes. However, this statistic highlights that a significant number of private sector workers are outside the provident fund net.
We emphasised the necessity of a multipronged approach to address this gap, acknowledging the delicate balancing act that policymakers will face when tightening enforcement on the opening of EPF/ETF files. This is particularly crucial in the case of EPF, which necessitates employer contributions. Stricter enforcement might lead employers to release workers without fixed-term contracts, causing these workers to lose their existing income streams. However, we recommended streamlining the EPF and ETF schemes in a manner that reduces transaction costs for employers when making payments.
Additionally, we highlighted the importance of efforts to incentivise workers to save. This proves challenging for several reasons, including the current economic climate and people’s longstanding reluctance to engage in contributory savings schemes. To further encourage savings, we suggested increasing yields from EPF/ETF investments through more strategic investments and exploring the provision of tax incentives, as India has done. This approach may motivate them to seek more benefits from employers, ultimately improving the financial well-being of existing EPF/ETF holders.
Ensure social protection for platform workers
Finally, we raised the need to ensure that the proposed social protection scheme also took into consideration of platform workers. The number of individuals selling goods/services on platforms (including, but not limited to, those selling goods platforms, driving on ridesharing platforms, and working on microwork platforms) grew 5x between 2018 and 2021, LIRNEasia’s nationally representative surveys conducted in the two years, indicated. We highlighted several policy measures implemented by other nations, for the Committee’s review.
LIRNEasia looks forward to getting the opportunity to continue engaging with this Committee and contributing towards the development of a comprehensive social protection system in Sri Lanka.
Photos Courtesy: Ministry of Labour and Foreign Employment