The Solidarity Principle: A solution for institutions running at a loss | Daily News

The Solidarity Principle: A solution for institutions running at a loss

Plantations would be an ideal case for the Solidarity Solution.
Plantations would be an ideal case for the Solidarity Solution.

There are innumerable private and government managed institutions that are run at a loss, some of them at very big loss usually to the government. Some of them, like the plantations, are running at a loss due to employer based employee problems that have an adverse impact on productivity at these workplaces, which then have an adverse impact on the Gross Domestic Product (GDP).

A solution that is gaining ground world-wide is the application of the Solidarity principle. This concept has taken root in Scandinavian countries and in many countries in Europe and in the Third World, like Argentina. On behalf of the Lanka Sama Samaja Party (LSSP) I would like to recommend that the Sri Lankan Government give it serious consideration and implement it here as well where necessary.

A typical example is the plantation economy. As a part of the trend tea production dropped by 7.1% in 2020. A major cause was the failure to give the fair worker demand of a minimum wage of Rs.1,000 per day.

The CPC and many other Govt organisations are running at a loss.

Although the present Government intervened and the matter was apparently settled to the satisfaction of both employer and employee, it now appears that the private companies are scheming to dodge paying this salary to the workers on the plantations which is based on written agreements and have been gazetted by the Government. I am informed that on the basis of new conditions the Rs.1,000 daily wage for plantation workers is not being honoured by the private companies at this moment. They have re-introduced the discarded concept of minimum output to avoid paying the Rs.1,000. They have raised the earlier daily quota requirement, before the Rs.1,000 was agreed upon, by several extra Kilograms as a prerequisite that has to be fulfilled to get the Rs.1,000. As this is unattainable, the workers will suffer a big wage cut. It is quite clear that the private owners have no desire to ever honour the Agreement and the promise given to the Government. The reason they give is that they are running at a loss. The Government must take back the estates and find an alternative solution that is profitable.

Ownership rights

The only solution is the application of the “Solidarity Principle” to each enterprise, whether private or public, which is consistently running at a loss. The principle is that instead of having an outside owner, be it a private company or the government, to establish instead a company of the employees alone as the owners of the enterprise. This is for the period of the lease, which could be renewed on the basis of their success in running the enterprise. For funds besides outside loans from special development banks which give low interest loans for those institutions that come under the solidarity principle. This has been done in several countries with success. There could be private investors to a limited extent, but without ownership rights. This has worked well in many countries. Each employee, besides his salary, is entitled to one share.

Prof. Tissa Vitarana

The profits are divided equally, or according to the wishes of the employees collectively. The Employees Council of Management recruits the management and technical personnel from among qualified professionals purely on the basis of merit, on a contract basis. The Board of Management which runs the institution has representatives from all these categories.

A good example relevant to Sri Lanka is that of Kerala, India, which could be successfully applied to revive our tea industry, which was once world famous. A member of the LSSP Agriculture Committee, Buddhi Jayasuriya, a retired General Manager of the State Plantation Corporation visited Kerala, India where 64,000 hectares of tea land owned and run by Tata’s, one of India’s leading enterprises, had been running at a loss for a long period. This land had been taken back by the Kerala Government and handed over to the workers to run on the solidarity principle. After an extensive study, Buddhi Jayasuriya reported there was an unexpected increase in the level of productivity and profits. Workers who left at 6 a.m. for work went on till even 6 p.m.

All malpractices like stealing had stopped. Unlike in the privately owned companies unsuitable relations and friends of a private owner do not occupy key positions. If the Government tries to run it the politicians and bureaucrats will invariably interfere to gain control and benefit at the expense of the workers. Increased worker dissatisfaction and further drop in productivity would be the inevitable outcome. The application of the solidarity principle, like in Kerala is the only viable solution to the loss of productivity in the plantation sector. This is also applicable to the private industries as well, and is highly developed in Europe, and even in the USA.

Reforming public sector institutions

Another major factor having an adverse effect on our GDP is the massive losses in the Public institutions like the Ceylon Petroleum Corporation. Bureaucratic inefficiency and political interference are among the main causes. Worker dissatisfaction is due to a variety of causes like unjust promotions and neglect of those who deserve promotions due to political reasons, and failure to reward or recognize merit and output. The lack of consultation by management with regard to the running of the institution or even to identify workplace problems and find solutions which are often evident to workers, while spending large sums of money to get outside expert opinion when it is not necessary. The workers are treated like cogs in the machine to carry out dull routine jobs. They are often bored and when good work is not appreciated they feel left out, the typical sense of alienation that Marx described is widespread.

Lack of planning and corruption are other adverse factors. Most Government institutions lack short, medium or long term planning, and the development of the institution is neglected. The bureaucrats are content to follow a routine. New ideas and development means more work and problems to be solved. Innovative ideas from workers are resented and generally opposed. Misuse of institutional property together with lack of maintenance lead to frequent breakdowns and work stoppages. Poor employer/employee relations often end up as strikes with considerable loss to the institution.

Positive change in attitude

Employee ownership gets rid of nearly all these problems. In many countries like Germany worker representatives play a key role in the management of the institutions. They are elected representatives of the workers, often by secret ballot, so that the best are chosen. When there is total or partial worker representation in the Board of Management they ensure that the enterprise is maintained properly and run at maximum efficiency, as then their return increases. The sense of ownership leads to a change of attitude. It becomes one of looking after their own property. The decision making process too looks after both the institution as well as the employees.

Even in Sri Lanka this positive change in attitude was visible when the Centre Left Government led by Sirimavo Bandaranaike came to power in 1970, together with Left leaders like Dr. N.M. Perera and Dr. Colvin R de Silva of the LSSP and Pieter Kueneman of the CP. Philip Gunewardena played a pioneer role when he joined the SLFP led by S.W.R.D. Bandaranaike, forming the MEP. Those progressive steps in our history would be consolidated into a move initially through worker participation and then after practical experience progression to worker management. The LSSP proposes this course of action as one that would help overcome the economic and other crises that Sri Lanka faces today.

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