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Q+A-Sri Lanka's outbreak of union protests
June 3, 2011 / 2:08 PM / 6 years ago

Q+A-Sri Lanka's outbreak of union protests

COLOMBO, June 3 (Reuters) - Thousands of Sri Lankan workers went on strike on Friday, the latest stoppage in five days of labour unrest supported by the Marxist opposition that has seen clashes between strikers and police that killed one and wounded at least 200 this week.

The strikes, which have been mostly peaceful, have presented President Mahinda Rajapaksa with his first significant organised labour challenge since he took office in late 2005. For the main story click on [ID:nL3E7H30EX]

Following are some questions and answers:

WHY ARE THE WORKERS PROTESTING?

Workers in one of Sri Lanka’s 12 free trade zones, which house 265 companies and account for 13 percent of the Indian Ocean nation’s annual $8 billion exports, on Monday protested over a government proposal for a private pension scheme.

Employees and employers alike dislike the proposed plan, which would result in a 2 percent deduction from salaries.

Unlike the current social security scheme, it would take longer before workers’ savings vest, and it would not follow them if they changed employers. The government says its plan is misunderstood, but has temporarily shelved it.

IS THERE A POLITICAL ELEMENT BEHIND THE STRIKES?

There is now. Although the strike was started by the workers themselves, the Marxist Janatha Vimukthi Peramuna (JVP) party quickly seized on the discontent to help harden up opposition to a government it has been hard-pressed to challenge.

Other opposition parties have also condemned Monday’s violence, while the government has criticised the police for employing too much force and blamed the JVP for sparking the violence.

HOW INFLUENTIAL IS ORGANISED LABOUR IN SRI LANKA?

Traditionally it has been powerful and a bellwether of public and political discontent. Nearly every president since independence from Britain in 1948 has had to deal with a serious labour challenge.

Although the big political parties have affiliated unions, the JVP has the closest ties, including among student unions.

The fact that Rajapaksa’s government -- with a two-thirds parliamentary majority and no effective opposition -- quickly backed down and took publicly visible steps to condemn Monday’s violence is a good indicator of unions’ influence.

WHAT IMPACT COULD THIS HAVE ON FOREIGN INVESTMENT?

Although the strike threats appear to have been dialled down to token actions, they could cripple Sri Lanka’s $50 billion economy if they gained scale, since unions have a presence in nearly every industry.

Sustained action in the free trade zones, one of the flagship enticements offered by the state’s Board of Investment to foreign companies, would certainly not help Sri Lanka’s message that it is a good place for foreign investors.

HOW HAS RAJAPAKSA AVOIDED UNION TROUBLE SO FAR?

Rajapaksa kept unions at bay by asking them to hold off on any demands until the government forces defeated the separatist Tamil Tigers and ended a 25-year civil war.

That worked, but the war has been over now for two years and union patience is running out.

He has yet to give many state workers promised pay hikes and Sri Lanka has agreed to trim its massive wage bill under terms of a $2.6 billion International Monetary Fund loan. So he is between the proverbial rock and a hard place.

Already, university lecturers are locked in an increasingly bitter fight for higher wages, and it is only a matter of time before other unions, including those in the state-run power and oil companies, step into the fray.

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