2. Labour and the Environment
Implications for labour
Current trends in Chinese labour in Sri Lanka
Sri Lanka lacks a publicly available database on inbound migration and has limited ability to track illegal migrants due to the absence of a central data gathering system among key government agencies. There are roughly 7,500 Chinese migrant workers in Sri Lanka at present. In recent years, the number of Chinese workers has risen, albeit from a low base. According to Sri Lanka’s Department of Immigration and Emigration (Immigration Department), the number of residence visas issued to Chinese nationals rose from 4,134 in 2013 to 6,504 in 2018. While local workers are recruited, Chinese construction firms tend to bring labour over from China to work on infrastructure projects in Sri Lanka. The rise in Chinese workers reflects the increasing number of BRI projects and private projects in Sri Lanka. Yet the absolute number of Chinese workers nevertheless remains quite small. It is estimated that Chinese workers only account for roughly 0.1 per cent of Sri Lanka’s labour force in 2019.
The apparent growth in Chinese workers has also been associated with concerns of illegal migration. In 2017, it was estimated that Sri Lanka had close to 200,000 illegal migrant workers, which is equivalent to about 2.5 per cent of Sri Lanka’s workforce. However, contrary to perception, it appears that only a small proportion of illegal workers are from China. An investigation in late 2019 indicated that of 7,900 foreigners who overstayed their visas in Sri Lanka, 21 per cent were Indian, 12 per cent were Pakistani and 9 per cent were Chinese. A recent immigration raid reflected the same proportions, where out of the 136 nationals arrested, only four were Chinese. As such, the risk of illegal migrants from China is minimal in Sri Lanka.
Most BRI projects in Sri Lanka are large-scale infrastructure developments that require a sizable labour force and diverse skill sets. While the demand for skilled and unskilled labour varies by the nature and stage of the project, the perception that BRI projects are mainly staffed by Chinese workers may be unfounded. For example, the Colombo Port City has 1,637 workers, including employees from both the Chinese parent company and the local engineering, procurement and construction company. Of this number, 22.4 per cent are Chinese migrant workers. CICT, which operates a terminal of the Colombo port, has 1,350 employees, of which less than 2 per cent are Chinese. Similarly, Hambantota port now employs about 900 workers, of which only 3.3 per cent are Chinese.
Potential benefits of Chinese labour
A main benefit of Chinese labour is that it relieves local labour shortages, especially in the construction sector. The industry, valued at about $8 billion, currently faces a deepening labour shortage due to two main factors. First, local workers are increasingly migrating abroad, seeking better pay and livelihoods; and second, Sri Lankans who do not venture abroad see limited appeal in the local construction industry and unskilled labour market.
The local labour shortages have been exacerbated by the rapid increase in domestic urban development projects. The 2018 report on Migration Governance in Sri Lanka compiled by the UN International Organization for Migration (IOM) estimates that Sri Lanka needs 400,000 workers to meet the shortfall in the construction sector. This gap has not only been met by workers from China, but also by those from neighbouring countries like India and Nepal, allowing construction companies to keep their cost component low.
Skill and knowledge transfers are another benefit of foreign migration to Sri Lanka. The Hambantota International Port Group (HIPG), for example, has a strong localization policy, with 51 per cent of its employees from the Southern Province. Local workers have the opportunity to work with foreign workers, enabling the absorption of skills such as operating advanced equipment. The same company also conducts structured training sessions, which are hosted by senior management to introduce local workers to modern skills and practices in the port sector. This allows local workers to improve their skill sets and employability.
Other project companies, including CICT, organize and support formal training initiatives by partnering with local institutions. For example, in 2016, CICT closely worked with the National Apprentice and Industrial Training Authority (NAITA) to train quay crane operators. Other initiatives include sending local workers abroad for workshops and other training.
Drawbacks and concerns
Given the significant scale and demand for labour, BRI projects can provide new job opportunities to local workers. However, most local workers lack the necessary skills to benefit from the types of job created. According to a 2015 report by the International Labour Organization (ILO) on Sri Lanka’s industrial skills gap, the most recent estimates indicate that only 11 per cent of local construction workers have undertaken formal technical and vocational education and training (TVET). As a result, foreign contractors tend to find it difficult to recruit suitable workers.
BRI projects can provide new job opportunities to local workers. However, most local workers lack the necessary skills to benefit from the types of job created.
To encourage high-skilled migrant labour and skill transfer, it would be beneficial to streamline the work permit process and introduce relevant (e.g. TVET) schemes. Attracting high-skilled workers, such as at the management level, could be done through a digital fast-track service for specific visa categories. Sri Lanka should also look to increase skill transfer via new national legislation and incentives for firms investing in these practices. For instance, Sri Lanka could adopt a system akin to that followed in South Africa where a skill transfer plan must be produced for each foreign employee.
Concerns have also been expressed about deficiencies in the regulatory framework governing foreign workers. While Sri Lanka has a national strategy and laws for outward migration, the UN IOM 2018 country report notes that it lacks adequate laws on inward migration. Existing frameworks such as the 2008 National Labour Migration Policy focus on protecting and empowering outgoing migrant workers. Other challenges include ensuring that Sri Lanka is not overly reliant on workers from China or any other country in a particular sector, and that foreign workers are protected and have redress against discriminatory practices. The outbreak of the COVID-19 virus underscored these issues. Early evidence indicates shortages of Chinese construction workers in Sri Lanka after the lunar New Year, and that Chinese workers in Sri Lanka suffered from racial discrimination.
Underpinning these issues is a need for regularly collated information on foreign labour in Sri Lanka and more information-sharing and coordination among the regulatory agencies. For instance, Sri Lanka does not issue an occupational shortage list, like those released by the UK and Canada, to maximize the benefits of inward migration. Without any firm criteria for selection, or monitoring mechanisms of inward migrant workers, Sri Lanka may not be recruiting the labour it needs most.
The Sri Lankan government is taking some initial measures to address the above concerns, which should be accelerated. The National Human Resource Development Council (NHRDC), which is under the purview of the Ministry of National Policy and Planning, is presently working on improving policies and mechanisms to regulate inward migration. There should be better coordination under a framework agreement that operates across all the relevant agencies, including the Immigration Department and the Department of Labour. The agreement should also incorporate a centralized mechanism to collect data across these agencies, which can continually feed into the policymaking process led by the NHRDC.
Implications for the environment
Environmental successes and progress
Case studies of the CICT terminal of the Colombo port, and for the Colombo Port City, show that recent Chinese investment in Sri Lanka has made progress on environmental issues.
The CICT terminal of the Colombo port, for example, explicitly prioritizes green technology, having switched to using electric cranes, and pledging to reduce overall carbon dioxide emission levels by 45 per cent and diesel consumption levels by 95 per cent. The crane engines emit zero carbon dioxide and minimal greenhouse gases. Over 80 per cent of the electricity used in the operations of the CICT terminal is reportedly generated using solar technology. The fact that the CICT terminal is the most profitable of the four operational terminals of the Colombo port, contributing over 70 per cent of the port’s cargo volume, demonstrates that there is no need to compromise commercial success when reducing environmental damage.
The Colombo Port City represents another development guided by international green standards. The project is guided by a sustainability master plan, which aims to ensure the overall design for construction and operations is in line with international best practices and benchmarks, including climate change adaption and more specifically LEED, BREEAMand Green Mark standards, while also ensuring that they meet green certifications from the Sri Lankan Green Building Council.
The project has promised independently validated compliance with all sustainability requirements of relevant authorities. An early such requirement was an ISO 9001:2015 certification for the quality management system (QMS), which the project recently obtained. Continuing with such best practices in line with international standards would serve to reduce the risk of environmental damage from major infrastructure development projects in Sri Lanka.
Environmental challenges in Sri Lanka
Notwithstanding the positives described above, Chinese investment projects in Sri Lanka have faced several environmental challenges in their design, implementation and operation. Earlier infrastructure projects have caused significant pollution and affected the ecological landscape and biodiversity of Sri Lanka. The Norocholai power station, for instance, has been criticized for flouting domestic environmental norms; while other projects like the Hambantota port have met environmental challenges during the construction phase,or been criticized for not studying all environmental risks that come with infrastructure development. For example, it was reported that studies of the Hambantota port failed to detect a rock on the seabed that impeded the access of ships to the harbour. The position and size of the rock reportedly caused major delays and additional expenses of $40 million to remove.
Pollution and challenges to ecological landscapes
The construction and ongoing operations of the Norocholai power station have led to significant carbon emissions. Civil society organizations in Sri Lanka have noted their impact on the livelihoods and health of nearby residents. Fine ash particles emitted from the Norocholai power station, which are linked to chronic illness in humans and animals, have been found in Colombo, 145 km away. The Norocholai power station is located in the Kalpitiya peninsula, an area home to a variety of marine life including dolphins and whales. It is also 50 km from Wilpattu National Park, the country’s largest national park, which is home to Sri Lankan elephants and leopards, among other diverse fauna and flora.
Port activities release harmful pollutants including carbon and non-carbon varieties, greenhouse gases, smog and soot-causing nitrogen oxides. Operational activities from the Hambantota port including the arrival of ships, the loading and unloading of cargo, and land-based transport are likely to release air pollutants that significantly elevate environmental risks and challenges, given the port’s ecologically sensitive surroundings.
It has been reported that animal habitats were affected by the dredging of 40,000 m3 of sand from the Karagan Lewaya Lagoon for the Hambantota port’s construction, and that this dredging destroyed the ecology of the lagoon and surrounding habitats. The Bundala National Park, which is located less than 40 km from the Hambantota port, spans 4,000 hectares and is a habitat for migratory birds and elephants. The local marine environment is also at risk from the release of chemical and physical waste, oil pollution, ballast water and other discharges from cargo ships.
Similarly, the land reclamation of 269 hectares for the Colombo Port City and its subsequent development plans have also raised environmental issues, including disruptions to marine habitats and resulting economic challenges to the local fishing industry, with a reported 20 per cent decrease in fish catches. An environmental advocacy organization in Sri Lanka has contended that the Port City will have a ‘severe and highly detrimental’ effect on the surrounding coastline, fish stocks and marine biodiversity. However, the second and latest environmental impact assessment (EIA) on the Port City, released in 2017, noted that sand dredging would not cause any erosion to the coastline. To curb these adverse environmental and ecological effects, Sri Lanka could introduce incentives for projects that meet criteria on green, innovative or energy-saving technology. Domestic standards for foreign investment-led infrastructure projects should be raised to match international standards and ensure that Sustainable Development Goals (SDGs) are taken into account. Sri Lanka should look to innovative partners in green technology and green financing systems and seek projects and investors that prioritize environmental protection in their investment. A long-term investment strategy for reducing risks of environmental damage would be beneficial.
Challenges with domestic legislation
Sri Lanka has wide-ranging environmental laws. The National Environmental Protection Law of 1980 covers standards on pollution, waste disposal and management, and other environmental concerns. It ensures that an environmental protection licence must be issued for certain industrial activities, and the legislation sets out levels of acceptable air pollutants and their maximum permissible levels throughout the country. The National Environmental Noise Control Regulations regulate the level of noise emitted during industrial and construction activities and stipulate zoning restrictions on urban, rural, residential, commercial and industrial areas.
Sri Lanka has several laws governing EIAs necessary for large development projects. However, the most recent update to EIA legislation was in 2004, indicating that local EIA standards may not be current with international standards.
While Sri Lanka’s environmental laws appear largely comprehensive on paper, there are questions about the extent to which they are enforced.
While Sri Lanka’s environmental laws appear largely comprehensive on paper, there are questions about the extent to which they are enforced. Though EIAs have been undertaken for major Chinese investments in Sri Lanka – indeed, they are now standard for development projects in Sri Lanka – there is a lack of clarity about the process. It is unclear, for example, who signs off on the EIAs and what relevant expertise they must have in the field.
The experience of the Norocholai power station, for instance, highlights gaps in the regulatory process. The project began in 2006 despite strong protests from civil society and environmental organizations, who were concerned about the negative health and environmental impacts of coal power generation. They contended that the project had not received the necessary environmental approvals. Yet the Norocholai power station was able to continue operating for 12 years until renewed public protests in 2018. There is currently legal action in Sri Lanka’s Supreme Court relating to a fundamental rights application about the environmental damage caused by the Norocholai power station. The project, built with Chinese funding but state-run in Sri Lanka, highlights the recipient country’s responsibility to ensure the implementation of environmental laws and standards.
The EIA process would benefit from increased transparency and improved local stakeholder consultation. Members of civil society, the general public and media should have access to the same data used in any given EIA and be given ample opportunity to comment on the outcomes of that EIA. Large-scale infrastructure projects must be continuously monitored and evaluated with regard to the environmental commitments made at the EIA stage. More formal mechanisms are also required to ensure that issues raised during the EIA are not just flagged but resolved.
Data gaps, transparency and accountability
Some Chinese investments in Sri Lanka, including the Hambantota port and CICT, reveal concerns about the lack of independently gathered and published data, leaving questions around transparency. For instance, the Sri Lanka Ports Authority does not collect data on specific pollution indicators, including carbon and non-carbon emissions, or issue standards for ships on fuel efficiency and fuel sulphur levels or regulate waste-water dumping and the pollution of marine water in Hambantota port operations. If levels of carbon and non-carbon emissions are left unchecked, they are likely to cause damage to nearby wildlife habitats in the long term. In the short term, they are expected to cause health and respiratory challenges for the surrounding population.
In addition to the lack of data being collected and monitored, an absence of information and relevant documentation relating to Chinese investments in Sri Lanka has disrupted any comprehensive analysis of the environmental impacts of such investments. In the course of this study, for instance, the EIA for the Hambantota port could not be obtained. The agreements signed between the Sri Lankan government and their Chinese counterparts for several projects considered in this paper were also elusive, to the extent that it was not possible to fully evaluate the environmental concerns and effects.
Chinese investments in Sri Lanka have had various implications for the local labour market and environment. In terms of labour, the absolute number of Chinese workers appears to be relatively small and, contrary to perception, the risk of illegal workers is minimal. However, to reap the benefits of Chinese migrant labour, greater efforts need to be made to attract more highly skilled workers who have the ability to upskill local workers, and to regulate the inward migration of unskilled workers based on market demand. Schemes and incentives should be put in place to encourage skill transfers as well.
As for the environmental implications of Chinese investments, the evidence is mixed. Earlier projects lacked proper oversight and have had a greater negative environmental impact, but recently commissioned projects appear to be making progress in adapting to environmental needs and standards. To make further progress, Sri Lanka should improve its domestic environmental laws in regard to stakeholder consultations and the capacity of the relevant agencies to enforce regulations. Partnering with investors that prioritize green investments would also be beneficial along with introducing a comprehensive incentive scheme that encourages green investment and financing.