It affected us finally – Source [ AP ]

Global recession hits Lanka: Companies cut workforce

Global recession which had taken a stranglehold on the world economy has spread its tentacles in Sri Lanka too forcing 16 leading business ventures to lay off their entire workforce while 29 companies have retrenched part of the staff, Inter Company Employees Union said.

Among the companies which had laid off their entire work force are several garment factories and manufacturers of aluminum products and tiles. Companies located in remote areas such as Anuradhapura had also been forced to close down because of the global economic downturn

Some manufacturers of apparels, cement, cloth, plywood and bags have reduced their workforce while the others have warned of possible retrenchment after the Sinhala-Hindu New Year in April.

ICEU President Wasantha Samarasinghe, a former JVP parliamentarian told Daily Mirror the export volumes of some companies had dwindled by 80 per cent, and as a result were compelled to suspend their business operations.

Mr. Samarasinghe said his union identified the business ventures which stopped the overtime work of their employees or sent them home on compulsory leave following the financial crisis.

He said a leading cement manufacturer had curtailed its production by 40 per cent while the export earnings of a ceramic product manufacturing plant had come down by 30 per cent.

The International Labor Organization has predicted that more than 50 million workers will lose their jobs worldwide due to the recession. In Sri Lanka, 50,000 private sector employees are expected to lose jobs this year. Sadly though, the government has not worked out any plan to ensure the welfare of those who may be pushed to the streets, he said.

Mr. Samarasinghe said that though a Compensation Formula was introduced, there was no fund to compensate those losing employment in the present circumstances.

We are proposing the establishment of a safety net for these people. If this down trend continues, the government will also lose its revenue in terms of taxes levied on exports and imports, he said.

UNP parliamentarian Kabir Hashim said the absence of a proper macro-economic policy had resulted in the present economic crisis effecting Sri Lanka.

Mr. Hashim said inflation had increased because of the government had printed money despite the warnings by opposition parties, and this had resulted in increasing interest rates leaving businessmen in the lurch.

Today, our garment manufacturers have to obtain loans at an interest rate of 12 or 13 per cent. However, it is only two or three percent in countries such as Vietnam and India. So, some of our leading manufacturers have started factories in those countries while closing down their plants here, Mr. Samarasinghe said.

However, Consumer Affairs Minister Bandula Gunawardane admitted that Sri Lanka had begun to feel the pinch of the global recession, and it was beyond the government s control.

In the United States, 2.6 million people have lost their employment. A similar situation prevails in countries such as Singapore, Britain and Dubai. We have not felt the crisis to that extent, he said.

Rubber exports contribute only 1.8 per cent to the economy. From tea, we get around 16 per cent. There is a notable impact on the garment industry. The Board of Investment has made arrangements to provide employment to those losing jobs in other industries. There will be no problem for skilled workers, he said.

Minister Gunawardena said the Labor Ministry had worked out a programme to train the unskilled workers so that they could be absorbed into areas where job security prevails.

When asked whether the government would be able to guarantee an income to all workers losing their jobs, the Minister said no government in the world could do it.

Good Article about our Economy – Source [Asian Tribune]

How the Global Economic Crisis Affects Sri Lanka.

We too have now begun to feel the heat of ill-effects of the world economic recession despite various optimistic statements made by politicians and the top brass at high echelons in the government. Hundreds of private sector establishments in a number of fields have been shut down and employees are facing challenges they never ever thought could be realities.

Even BOI companies with foreign investments are steering in the direction of scaling down operations and retrenching employees. Naturally and obviously, when the country after country even in the highly developed world have begun to feel the heat of the global meltdown at their doorway, an already ailing economy like ours cannot conceal from the after effects of the chaos in the global financial markets.

At a time when the whole world is tumbling in an ocean of economic recession and financial catastrophe there is no chance of survival for a smaller economy like ours. Of course the only possibility is that a direct impact of the global situation might not affect us straight away, but yet it's off spins might create a significant brunt. However, such off spins could be quite capable of totally devastating a diminutive economy like ours if the issues are not addressed in the right perspective at the right time.

Around one million expatriate workers distended all over the world mainly in the Middle East, remit increasing amounts of Dollars to inject strength into our ailing economy. This top foreign exchange earner of our country is facing the risk of slamming the brakes on worker remittances as a result of the global financial crisis which would rigorously intensify our economic wretchedness.

Moreover, apart from the uncertain labor market, we have reached the brink of falling world prices and demand on our main exports. Tea, rubber, cinnamon, coconut, garments, gems and a number of other commodities have faced the quandary of loosing demand in the international market thus experiencing sharp falls in prices as well as demand. Gem and jewelry industry can no longer attract overseas buyers for some time. Tourism is operating at grave losses.

Also we do not possess adequate foreign assets to brag. Of course extension of GSP+ concession to the garment exporters by a couple of years has given some sigh of relief to that industry. Nevertheless, with the added effect of synthetically held local currency, the situation has dramatically worsened. Needless to say that by artificially holding the local currency in order to lower import costs doesn't at all compensate for the losses the economy suffers through reduced export income.

Strongest economy on earth with ubiquitous assets and gigantic martial command escorting the economic, political, intellectual and military supremacy over all other nations is where the tribulation set in motion. Financial, trading, service and production sectors in the US market are in ruins; banking institutions, investment companies, insurance and other asset management companies have crashed. Even Europe, Japan and Australia are going through the same fate.

At the rate the financial crisis is swallowing up the world in full bloom and the credit crunch is munching the global markets in style, frail economies such as ours have no chance of standing alone. Most disturbing question is how long can we stand this situation? With all the efforts the world high powers are putting in, recuperation of the global trade and industry is at least a couple of years away. When the global financial crisis hit on the head, our economy was already burning in turmoil.

War, inefficiency, bribery, corruption , extortion, fraud, nepotism, cronyism, terrorism, frittering away public funds by the politicians and high ranking public servants, high energy costs, high inflation, uncontainable exchange rates, attitude problems are some of the factors that made things worse for our country. However, though the recent global crunch only added just one more factor to the hit list, the blow it can turn about could be severe due to its rapid and swift augmentation throughout. In every probability, there is no way Sri Lanka can keep away from the effects of economic recession but certainly the authorities could think and act sensibly towards finding ways of minimizing the impact by adopting proper policies. Most of all, the important thing is to adopt proactive policies.

It is a film that is extremely close to my heart.

John Q is a 2002 film starring Denzel Washington as John Quincy Archibald, a father and husband whose son is diagnosed with an enlarged heart and then finds out he cannot receive a transplant because HMO insurance will not cover it. Therefore, he decides to take a hospital full of patients hostage until the hospital puts his son's name on the donor's list. The film was directed by Nick Cassavetes.

John Q is a protest against the policies and hidden procedures of many insurance companies at that time. The film also stars Kimberly Elise, Anne Heche, James Woods, Ray Liotta, Eddie Griffin and Robert Duvall, among others.

Hello World !!!

This is my fist Blog post. I had an idea from long time to create a blog but it didn’t happen due to my busy schedule. Finally, in 2008 January I managed to create my first blog . Same time I registered my domain also under GoDaddy.com™. My domain name is http://www.arachchi.com and hosted on Google Apps™. Site is still under construction because I am facing difficulties on how to handle the tools provided by Google Apps™.