Major reforms to absorb SL’s informal employees into formal sector

• New unified ‘Employment Law’ and proposed social security system are nearing final approval
• All working persons to become eligible for a pension, EPF/ETF and an unemployment insurance cover, in case of loss of employment
• Practitioner licensing system to be established for all professions

By Nishel Fernando

Sri Lanka’s estimated four million informal sector employees may soon be absorbed into the formal sector, granting them the dignity of their labour through two landmark initiatives. 

The new unified ‘Employment Law’, which includes a practitioner licensing system and the proposed social security system are nearing final approval to be tabled in Parliament.

Labour and Foreign Employment Minister Manusha Nanayakkara revealed that the draft laws for the comprehensive social security system have already been submitted for the Cabinet’s approval, extending benefits to all workers, including those in the largely neglected informal sector.

“We have come up with a unique system and submitted this for the approval of the Cabinet of Ministers. The Cabinet is expected to grant approval for this proposed social security system in the very near future. Afterwards, all working persons will become eligible for a pension, EPF/ETF as well as for an unemployment insurance cover in case of loss of employment,” he said.

He shared these remarks with journalists at a media workshop on human trafficking, organised by the Sri Lanka Foreign Employment Bureau, in Colombo.

Following extensive studies and consultations, he noted that a team of experts, who looked into the existing social security systems in Indonesia, India and Australia, came up with the proposed system.

Meanwhile, the new unified Employment Law, which is currently at the translation stage, is expected to reach the attorney general’s office for clearance and will then be submitted to the Cabinet of Ministers for approval, within a matter of days, according to Nanayakkara.

“We are trying our level best to complete this soon. This is going to send a strong signal to the employees as well as investors. With this, we will provide the informal sector employees with the dignity of labour. It’s the first instance that legislation has been brought in post-independent Sri Lanka that focused on the informal sector,” he said.

Under the proposed legislation, a practitioner licensing system is set to be established for all professions.

He noted that a national committee for each profession would be established with the professionals in each field, through the initial formation of district-wise associations.

“These boards will come up with the required standards and norms in each respective field. The Labour Minister, through the proposed Employment Act, would be empowered to gazette the standards and norms and these national committees will issue these practitioner licences to their peers. This is how your dignity can be protected,” he went on to say.

The ministry has already started this process for 20 professions, including journalism, the automobile sector, domestic workers and preschool teachers, among others.

In addition, the proposed act, which focuses on 34 points, is also set to facilitate part-time work, compressed weeks, maternity allowance, paternity leave and relaxation of legal provisions in the existing law for night work of women. It is expected to reshape the country’s labour market, resulting in an economic boost.