TOUGH DECISIONS ON EMPLOYMENT
Q: What is the outlook for jobs and employment in the medium term? And how should the authorities address the prospect of rising unemployment?
A: The COVID-19 coronavirus pandemic has affected Sri Lankan businesses across all sectors except perhaps agriculture, which has faced a minimal impact. Export oriented industries (many of which survive on revenue earned from the USA and Europe), tourism, apparel and labourers who rely on remittances from abroad are suddenly faced with grim prospects, in terms of expenditure, profitability and ultimately employee retention.
Without a consistent flow of revenue, several businesses will be compelled to make tough decisions and it is likely that our unemployment rate of 4.5% will increase in the short term.
COVID-19 has demonstrated that companies can operate on a lean workforce with many employees working from home. Others like drivers and support staff have unfortunately become inconsequential to continuing business operations. It has become apparent to many that office spaces are redundant and meetings via Zoom calls are more effective than those that have needed physical spaces.
As corporate leaders gradually realise that a leaner staff cadre does not affect productivity, it is possible this too will exacerbate unemployment.
As such, the government must undertake two separate missions: firstly, it must look to maintain the current level of employment through competent legal and policy frameworks; and secondly, it has to encourage enterprises to generate new opportunities for employment.
Q: What lessons have we – the business community – learnt from this crisis?
A: Firstly, COVID-19 has shattered the myth of economies being resilient and solid enough to endure any hardship. Giants like the US and Europe are still reeling from the pandemic and the very fundamentals of economics have been challenged.
We have learned painfully that global economies haven’t maintained the right priorities. Several global powerhouses like China, the US and the EU have been so focussed on expanding their economic clout that they’ve neglected social, environmental and cultural wellbeing. FTAs and schemes like the One Belt One Road Initiative saw massive economic expansion but not one of them could build the necessary infrastructures to weather COVID-19.
Unsustainable practices have dominated the globe and now businesses across the world do not know how to continue with an interrupted supply chain. In Sri Lanka in particular, we have learned that making all exports and industries reliant on only a few markets is a bad idea.
The business community will have to shift to non-conventional local manufacturing and help steer the economy away from an import reliant economy. I say non-conventional as we need to rely less on foreign labour remittances, rubber and tea, and diversify. COVID-19 has given us both a wake-up call and an opportunity to realign the national economy, and chart a new course.
Q: How do you see the ‘new normal’ for business panning out?
A: Was there ever a ‘normal’ before COVID-19? The past century has seen several unsustainable and condemnable actions in the name of ‘the economy.’ There are four pillars we should build on – namely the economic, social, environmental and cultural pillars. We’ve prioritised the economy for so long that we neglected the other three whereas all are equally important.
Social pillars (which encompass health and housing) and environmental pillars (they preserve and sustain our natural resources) have been ignored in the name of economic expansion. Even last year’s Easter Sunday attacks can be attributed to having neglected the cultural pillar, which allowed extremism. Therefore, was there ever a ‘normal’?
The new normal should champion these four fronts. In a strange way, this virus has compelled us to value the other pillars; families have been under lockdown, we have reviewed our social and cultural values, our economies are now learning the need for sustainability, and politicians are realising the importance of public health and poverty eradication.
ABOUT LMD’S A LISTERS
BOOST TO REAL ESTATE INVESTMENT
Q: What are your expectations of the business environment in the next 12 months or so? A: With the reduction in interest rates and increase in money circulation, people have a greater tendency to invest in real estate over the money market amidst the pandemic. We have seen similar patterns even in developed markets such…
EMERGENCE OF A NEW ECONOMY
Q: How did the pandemic necessitate a digital economy? A: Countries were not prepared for the COVID-19 pandemic’s impact on the economy and people, but it has resulted in the emergence of a new economy and way of life. It is technology, and the spirit of humans to survive and push past boundaries that have…
PRIORITISING CRUCIAL SECTORS
Q: What are your expectations of the business environment in the next 12 months or so? A: I believe that business is not likely to pick up until at least mid-next year for the hospitality sector. Business was nonexistent and as a measure to prevent exorbitant losses, we converted our hotel into a quarantine centre…
A POSITIVE AND FLEXIBLE PATHWAY
Q: Do you expect the national economy to pick up this year? A: If the third wave of the pandemic is brought under control as soon as possible, then we can expect the national economy to pick up towards the second half of the year. To ensure this happens, the vaccine must be sourced in…
RELIABLE PARTNERS IN A CRISIS
Q: In brief, what are the main challenges confronting corporates at this time? A: I think corporates today are besieged with a plethora of problems caused by the prevailing situation. First and foremost is the challenge in keeping their workers safe from COVID-19, and flowing from that is the inability to keep production cycles running…
IN A STATE OF DELEVERAGING
Q: How do you perceive the economic climate at present? A: I would like to really think about the state that the country’s economy is in. Our debt repayments are much higher than our income and this puts Sri Lanka in a state of deleveraging. This recently manifested itself in a 14.2 percent increase in…
EVER EVOLVING EXPECTATIONS
Q: What modern-day challenges do businesses face? A: Information overload – in the new world we live in, there’s never a lack of information. About 2.5 quintillion data bytes are added every day; more data is created in a single day than the combined amount generated over 99 percent of human history. Previous generations of…
EXPANDING CREDIT FACILITIES
Q: What is the bank’s corporate strategy for 2021/22? A: DFCC Bank’s 2021/22 plan is based on our five year strategy for 2020-2025 with the aim of making it one of the most customer centric and digitally enabled banks by 2025. Our lending plans will align with the government’s budget proposals to facilitate the growth…
REMAINING IN THE SPOTLIGHT
Q: What are Sri Lanka Tourism Development Authority’s (SLTDA) priorities for 2021/22? A: The global tourism industry will continue to experience a huge shift in the way of doing business. Our innovative bio-bubble concept launch in January was recognised at ITB Berlin. We hope this will boost traveller confidence. Therapeutic destinations and experiential travelling are…
