Cheap labour hinders investments in high-tech in SL: industrialist

•  Says technology investments in Sri Lanka have longer payback periods compared to some countries
• As a result, firms regularly delay such investments amid relatively cheaper labour

The appetite for investments in technology and automation is lacking in Sri Lanka because it still has relatively cheap labour compared to some of the regional peers, according to an industrialist. 

MAS Kreeda CEO/Managing Director Sarinda Unamboowe said technology investments in Sri Lanka have longer payback periods compared to countries such as China and as a result, such investments have been regularly delayed.

MAS is one of the three largest textile design and manufacturers in Sri Lanka.

“One of the biggest issues that you have in Sri Lanka is that labour in Sri Lanka is still relatively cheap. So, investment in technology becomes something that people put on the back burner because your return on investment tends to get lot slower when you have cheap labour,” Unamboowe said. 

Speaking on the subject of digitising and automating channels and supply chains at the Sri Lanka Retail Forum held on the theme ‘The Retail Revolution’ yesterday, in Colombo, he said a blue-collar worker in China costs about US $ 1,000 a month, whereas the cost is around US $ 300 for a Sri Lankan worker. 

This makes a clear case for a Chinese manufacturer to automate his supply chain than for a Sri Lankan manufacturer, Unamboowe added. 

He cited cases of near-fully automated warehouses in certain markets operated with no more than two employees but the appetite for such automation is absent in the Sri Lankan warehousing and logistics sector purely because the labour is cheaper than the longer waiting period from investments in automation to pay back.

In recent times, there were cases where Sri Lanka has been shunned by some investors and global businesses citing expensive labour, which makes Sri Lanka a less competitive destination for business, compared to Bangladesh and Vietnam. 

The same reason has pushed the Sri Lankan textile manufacturers also up in the value chain to more towards the design technology and building own brands from pure manufacturing over the years. 

However, Sri Lanka has better and safer working conditions for the people compared to some of the regional peers with cheap labour.

Typically, when a country migrates into a higher income bracket, it loses the advantage on cheaper labour as people’s incomes also rise in tandem with the economy, economists say.      
Meanwhile, Unamboowe said he doesn’t see a serious labour shortage in Sri Lanka as cited by many industries.  

He said the issue lies with whether the Sri Lankan companies use the right ways of attracting people and retaining them. 

“Still, as of now, even though people talk of shortage of labour, I don’t think there is a big shortage of labour. The labour is just there but we are not attracting it the right way,” said Unamboowe, who leads a highly labour-intensive industry in Sri Lanka. 

“The labour is available. The biggest issue that we face is retaining that labour. If you look at most of the industries that we are in, the labour turnover could be as high as 5 to 7 percent a month. But the labour is there.” 

Unamboowe said at MAS, flexible hours and telecommuting have been introduced for their workers, which in fact improve the quality of lives of their workers.