May 17 (LBO) – Expensive telephone calls and tough labour laws could scare off multinational companies eyeing Sri Lanka as a possible destination to outsource business. South Asia has some of the highest firing costs in the region and Sri Lanka stays on top for rigid labour laws and high severance pay, a World Bank report on off shoring to Sri Lanka, released Wednesday, shows.
“The Sri Lankan system places undue discretionary powers in the hands of the Labour Commissioner, who has traditionally been prone to base severance payments on the ability of the employer to pay thus effectively penalizing multinationals with deep pockets, the very firms the country is trying to attract with an outsourcing strategy,” the report says.
Sri Lanka’s Commissioner of Labour has the final word on termination of employment, and to date has never consented to non-voluntary dismissal of employees.
Difficulties in laying off staff such as during restructuring, ups costs significantly the Bank says, though Sri Lanka boasts some of the cheapest labour in the region.
Sri Lanka’s labour costs per hour is less than 0.50 dollars a