Social security is a fundamental right according to Article 22 of the Universal Declaration of Human Rights (United Nations, 1948, p. 5).
‘Everyone as a member of the society has a right for a social security and is entitled to realisation, through national effort and international cooperation in
accordance with the organisation and resources of each State, of the economic, social and cultural rights indispensable for people’s dignity and the free development of the personality’.
Further, the International Labour Organisation (ILO) considers social security as a universal need (Ginneken, 2003). Social security is recognised as a basic human right by ILO Conventions and United Nations charters (such as the International Covenant on Economic, Social and Cultural Rights) as well.
The objective of a pension, retirement benefits or the social security (PR/SS) system is to protect the poor and vulnerable and to ensure that they have an acceptable standard of living. Social security may also involve smoothing consumption and reducing risk or spreading income over a life cycle (Fedlstein, 1974). Often there is a redistribution of income among groups with differing needs (Ahmad, Ehtisham, 1991). A majority of the public considers social security as the most important form of household wealth but neither theoretical nor empirical analyses give due consideration or adequate attention to the existence and growth of social security.
2.11.1 Social security in Sri Lankan history
In ancient Sri Lanka, the framework for providing PR/SS or for taking care of senior citizens was focussed on their children. Even at present, such a system is highly influential and respected according to traditional, cultural and current patterns of thinking as children are, frequently, the sole investment of parents.
After 1815, the British rulers generally started offering government employment to the educated locals in the country with lifelong retirement benefits (PR/SS) in order to present them with a reasonable life after the end of their service. From the middle of the 19th century, many schools opened throughout the island replacing religious centre based educational institutions. Many parents from the agricultural production sector directed their children towards school education with a desire to receive government employment for their children in order that they would have a civilised social life and a struggle free end section of life that included service benefits. Government departments relating to the construction industry such as the Public Works Department (PWD), the Department of Highways, the Building Department,
the Irrigation Department etc. and some other organisations such as the Department of Railways (CGR: Ceylon Government Railway), the Education Department etc. had their own construction and maintenance divisions with a bottom level operational workforce who were eligible for the government pension scheme.
2.11.2 Liquidation of prevailing social security systems in Sri Lanka
A natural death for government organisations with pensionable employees began after independence in 1948 because local politicians regarded ‘pension’ schemes as a huge liability for the government and they introduced statutory corporations and boards with the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF) and by introducing the State Engineering Corporation (SEC), the River Valleys Development Board (RVDB), the Road Development Authority etc. (Gaminiratne, 2004). These statutory corporations initially offered attractive remunerations more so than the government departments where civilians evaluated the return on the principle of ‘One Rupee today is better than the same tomorrow’, and had no thought for inflation that had less impact at that time since Sri Lanka had a stable economy.
With the collapse of both traditional and government social security systems between 1815 and 1948, working and earning became essential even after the normal retirement age for non pensionable employees in Sri Lanka.
2.11.3 Current ESBs and the constraints of the EPF system in Sri Lanka
The current End of Service Benefits’ (ESB) model in Sri Lanka are known as EPF and ETF. They are one off settlements of 20% or 25% from the entire lifetime savings with an added interest percentage at the age of 55 years (Abeynayake, 2010). In addition, an employer is liable to pay a gratuity calculated at the rate of a half time monthly salary for each year of service of the employee (the minimum eligibility requirement is a continued service of five years under the same employer). However, workers usually spend the entire ESB within a short period of retirement due to reasons such as a lack of management skills, family burdens, under duress situations such as children’s education, renovation or construction of houses, trying out trading businesses, being caught by money gamblers etc.
2.11.4 The legal system of Sri Lanka
Contractors who obtain the services of an operational workforce are liable to pay their wages, salaries, EPF, ETF etc. when it becomes due (Ministry of Employment and Labour, 2002). Default is a criminal offence. However, delaying a payment to a subcontractor is not an offence.
Therefore, many contractors have introduced alternative methods similar to the Nonstandard Employment Relations (Kalleberg, 2000) for labour recruitment such as:
Output based subcontractors. Labour supply contractors etc.
Main contractors generally pass the liabilities of labour management to another party. The secondary parties, who undertake these subcontract works, assign the duties to the operational workforce on a productivity basis in several stages of a hierarchy until it reaches to groups of 5 to 10 persons.
The aforementioned mechanisms convert workers to being contractors and mislay they lose their fundamental rights to receive their wages on, or before, the tenth day of the following month. In this subcontract mechanism, certain portions of their due payments are retained further as ‘Retention’ and many workers are unaware of receiving of retention when it becomes due, because of a lack of knowledge and time.