Crisis-hit Sri Lanka finally strives to deal with bloated public sector

Sri Lanka is now undergoing unprecedented structural economic reforms with regard to revenue generation and cost cutting and pruning of the bloated public sector workforce on the directions of President Ranil Wickremesinghe who has rescued the country from possible economic collapse.
Undertaking economic reforms that would streamline the economy has been a long term desire on the part of the President and seen during his past stints as the Prime Minister.

During the period of 2001 to 2004, when he effectively led the government as Prime Minister and entered into the ceasefire agreement with the LTTE, he tried to implement similar economic reforms without much success due to less public support.

These radical measures were widely criticised by the opposition political parties who created  a ‘Goni billa’ , a scary man for Sri Lankans compelling to oust the then Premier Wickremesinghe who suffered defeat at the elections that followed.

Typically, the reform measures he presents is based on the ‘trickle down’ theory which was misinterpreted by selfish politicians in highly corrupt politics like in Sri Lanka ,brainwashing the minds of those who had to be satisfied with the scraps falling off the table.

Once again, President Wickremesinghe is taking up the challenge of implementing unpopular economic measures such as cutting subsidies, downsizing public sector workforce, increasing taxes and privatising state-owned enterprises.

Sri Lanka is looking at ways to trim the public sector by allowing state workers to go on leave for other jobs both locally and abroad as a worsening economic crisis compels the island nation to reduce government expenditure.

Sri Lanka has more than 1.5 million public sector employees at present, the size having doubled over the past 15 years, according to official data. Efficiency in the public service is lower compared to that of Sri Lanka’s peers in Asia, despite there being a public servant for every 14 citizens.

Most state-owned enterprises have become a dumping yard for politicians to recruit their supporters, resulting in more employees with very little to do in spite of a monthly payment and pension scheme.

There are 26,000 employees working in the state-owned Ceylon Electricity Board (CEB) alone, an institution that can be run with just 5,000 employees.

The Ceylon Petroleum Corporation (CPC) has 4,800 workers and about 3,000 of them collect overtime pay. No official has been assigned to supervise the overtime payments.

This was a classic example of heavily overstaffed state-owned strategic enterprises and there are 52 similar such institutions that need immediate restructuring.  
 
“We may either have to go for a salary cut or reduce the number of government servants by at least 30 percent as the first step,” a top government official said.

One of the most important ways that public sector productivity can help revive an economy in a downturn is by improving the efficiency and effectiveness of services.

In normal circumstances, by streamlining processes and reducing bureaucracy, the public sector can provide better services to citizens, which can help boost consumer confidence and spur economic growth.

The public sector’s inefficiency and ineffectiveness are so well known that, at a recent ceremony, none other than the country’s President publicly stated that the drawbacks of the state sector are corruption, waste, idling, and duplication.

However, the government has taken a policy decision to completely stop any further recruitments unless it’s in an extreme situation.

The entire world is aware of the dire economic situation that Sri Lanka is currently in. Regrettably, neither so-called politicians nor public servants have realised the magnitude of the depth of the abyss the country has fallen into.

While politicians of all parties are solely concerned with elections and their vote bases, public servants want their pound of flesh and to enjoy all of the benefits provided to them by the country’s taxpayers.

Neither faction shows any genuine interest in consciously contributing or making even a little sacrifice to come out of the ongoing horrific crisis.

The state sector is inundated with bureaucratic red tape that delays many important matters pertaining to the public welfare. Consecutive attempts by policymakers and academics to streamline the processes have failed for a variety of reasons.

By automating routine tasks, eliminating lengthy and unnecessary rules, and introducing even basic computer skills, productivity can be enhanced.

The skill levels of the public sector workforce are questionable. It is no secret that the recruitment processes of most public sector institutions are politically influenced. This is the reason that the public sector workforce has risen to such unbearable heights. For decades, recruitment in public institutions was based on the whims and fancies of politicians.

Lack of accountability has been a serious issue in the public service for many years. Civil servants in a democracy are accountable to the public for ensuring responsive, transparent, and honest policy implementation and service. But they have failed to fulfill their duties at present.

In the wake of the most gruesome post-independence economic and political crisis, Sri Lankan society started discussing a system change.

However, those who started and finished the protests that ousted President Gotabaya Rajapaksa and his government have given no clear indication of what they precisely expected or how they would take the country forward after ousting the then political hierarchy.

The wrath of the protesters was clearly directed at politicians, both those in power and those who are vying for power.

Unfortunately, they have not questioned the corrupted public service and the economic damage done over many decades during the entire process. The entire citizenry knows how the government sector provides its services to meet public needs.

Meanwhile, the Finance Ministry has been directed to devise strategies to limit growth in the public sector wage bill and further prune the already shrinking government workforce after a steady increase in spending on salaries via a hike of Rs. 2,500 – Rs.10,000 in 2019 and Rs 5,000 from January 2022.

At present, the public service has shrinked by 135,000 to 1.393 million by the end of 2022 from 1.528 million in 2020 by removing some of them from service or allowing them to vacate their posts or voluntary retirements.

This includes employees in ministries, departments, district secretariats, divisional secretariats, provincial council’s and SOEs.

Accordingly, the public sector employment recorded a decline in 2022 to 1.393 million compared to 1.401 million reported in 2021 due to the reduction of employment in SOEs.

Another reason was the introduction of the scheme of extending leave for a five-year period to public sector employees to travel overseas for employment. The scheme was introduced last year to tackle the economic crisis and prune government spending.

More than 2,000 public sector employees have obtained extended leave for a five-year period to work overseas and the number of job seekers for foreign employment is rapidly increasing , a finance ministry official said.

Excessive cuts to capital spending and public sector allowances and additional payments have been avoided and fiscal space for capital spending will be constrained, a senior finance ministry official disclosed.

A special “conception paper” issued by the Manpower and Employment Ministry recently has suggested extensive public sector expenditure and job cuts claiming that that more than 50 percent of government income was being used to pay salaries and allowances to 1.7 million public sector employees at that time.

The paper identified that during COVID-19 pandemic restrictions about 30 to 50 percent of public sector employees were called in to work and that only 50 percent out of its 1.7 million workforce was needed to maintain public services at that time.

This warrants the government to cut more than 850,000 public employees to increase the productivity in the public service.

Other job curtailment and budget cutting plans, which could also force a large number of public sector workers and their dependents into a tough spot, are currently being discussed by the cabinet of ministers.

According to the State Minister of Finance Ranjith Siyambalapitiya, the government has spent Rs. 956 billion on state sector salaries, while Rs. 701 billion is estimated for salary payments in 2023.

Further, Siyambalapitiya said that the government has not yet decided on the exact amount by which it will reduce the current State sector workforce of about 1.4 million, but added that new recruitments have been indefinitely suspended, adding that the government has also reduced the retirement age of the state sector to 60 from 65 in an attempt to curtail the workforce.

– Carcharodon