Survival of the Fittest

COVID-19 has shifted the focus to staff retrenchments and salary cuts

Compiled by Ashwini Vethakan

Lockdowns, curfews and a virtual halt in business activity – and consequently, a pause in revenue generation – resulted in forecasts of a marked decline in future incomes due to the hardly vibrant global and local economic order arising from the coronavirus pandemic.

That being said, over the better part of last year, employers were faced with the daunting and unenviable task of facing the multitude of challenges before them – in all aspects of business, which included sustaining the workforce.

While many speak fearfully and in hushed tones about ‘layoffs’ and ‘salary cuts,’ most who were fortunate enough to remain employed may not have truly understood the motives behind such severe decisions.

It is easier to play the blame game and call out an employer or in some instances, the employee; but in a country where employment is rigorously protected by law, retrenchment isn’t a simple measure for employers.

This has imposed a risk on the employee-employer relationship while raising doubts as to the flexibility and applicability of labour laws in the country.

During a webinar entitled the ‘Impact of COVID-19 in the Sphere of Labour Law and Industrial Relations in Sri Lanka’ held last year, President’s Counsel Geoffrey Alagaratnam observed that the prevailing labour laws – to some extent – fail to address present-day employment and as a result, lack flexibility in given situations.

“The Commissioner General of Labour also has minimal discretion; and therefore, if industries depend on the legislature or Commissioner General of Labour, there will be no solution to this issue,” he added.

As such, the conundrum faced by businesses during the pandemic was to ensure survival without the prospect of sustainable incomes. Employers were compelled to pay their employees’ wages even though they weren’t able to report to work or participate constructively in daily operations.

Moreover, many employers may have been unable to obtain bank financing to meet their basic costs. And shareholders were faced with an additional burden of being required to make further investments without the hope of adequate returns in the foreseeable future.

Senior executives of leading businesses in Sri Lanka reportedly endured salary cuts of up to 60 percent as the coronavirus squashed sales and hit cash flows. Meanwhile, capital expenditure and recruitment were frozen by many businesses while workers were laid off by others.

But today, looking in retrospect at the severity of the decisions most companies felt compelled to make, there is one silver lining: Sri Lanka’s human resource management (HRM) roles are now more focussed and prepared for change.

Companies and even the government appear on course to seek more wholesome solutions that do not adversely affect business or employers.

For instance, at the fourth Research Symposium hosted by the Chartered Institute of Personnel Management (CIPM Sri Lanka) held in July, its President Jayantha Amerasinghe too reiterated the importance and value of research for a better understanding of HR issues that are prevalent in workplaces, and to address these matters with a more “localised solution.”