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Sri Lanka construction industry fears 100,000 jobs losses after Covid-19 crisis, stalled payments

ECONOMYNEXT – Sri Lanka’s construction industry is struggling with tens of thousands of workers yet to return to work after going home during Coronavirus lockdown and over a 100 billion rupees of payments outstanding, an industry official said.

Sri Lanka has also decided to halt new government projects in 2020 after the government revenues were hit by tax cuts and the Covid-19 crisis and efforts are being made to get the budget deficit back on track.

Sri Lanka’s economy is expected to sharply slowdown or contract up to 3 percent in 2020, according to forecasts made by lending agencies.

“When the economy goes down like that, one of the main industries that will get affected is the construction industry,” Nissanka Wijeratne, Secretary of the Sri Lanka Chamber of Construction Industry told EconomyNext.

“The government has also decided not to start any new projects. Therefore, we predict at least 100,000 people will be unemployed if the work did not resume quickly.”

At the moment however many workers who left for home villages during Coroanvirus curfews imposed in late March are yet to come back to work.

Sri Lanka has controlled the Coronavirus epidemic with aggressive contact tracing despite some gaps in testing and has since largely opened economic activities to resume subject to health guidelines and social distancing.

“We have around 650,000 people in this industry,” Wijeratne said. “Out of that I don’t think at least 200,000 people have started working yet.”

He said the employees under large construction companies got 50 percent of their salaries during the lock down period however, but those working for sub-cont sub-contractors had more difficulties.

Wijeratne said firms were struggling with delayed payments.

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Sri Lanka’s large contractors have about 600 billion rupees worth of projects. Some of the biggest projects in Sri Lanka include the Chinese-funded expressways, the Port City and the Shangri-La Apartments project.

“But not even 50 percent of the projects have started yet,” Wijeratne said. “Companies are struggling because there are some outstanding payments that needs to be done. It is about 100 billion rupees.

“These companies needs to be paid otherwise they won’t be able to function.”

Before the crisis started, many of the larger projects had labour shortages and were using foreign workers. Some larger local projects also used foreign labour largely because their productivity was higher.

Many foreign workers are also yet to return.

Many of the Chinese who went home for their New Year in January have been unable to return due to the travel banned imposed by the Chinese government earlier this year. Many Chinese funded projects slowed down from January due to worker issues.

Chinese construction workers are paid around 1,000 US dollars per month while an Indian worker gets 300-450 US dollars.

Wijeratne said the industry follows the guidelines issued by the health authorities.

However, the guidelines themselves, especially social distancing were making things more difficult.

“We are following health ministry’s guidelines,” Wijeratne said. “We have instructed all the sites to check temperature of every one and wash hands at every time possible.

“But guidelines like social distancing are not very practical in these industries.” (Colombo/June15/2020)