Sri Lanka has a bloated public service, with more than 1.5 million public servants including the Armed Forces. This means that the public service has nearly 10 percent of the working or employable population, which is a high ratio for a population of just 22 million. Paradoxically, even with such a high percentage of public servants, there are thousands of vacancies in crucial sectors such as education and health. This leads to the inevitable conclusion that some in the public services are freeloaders with nothing much to do.
Last week, most public servants who will be on duty at the September 21 Presidential Election (PE) were able to cast their vote via postal voting, a method that enables them to vote in advance as they cannot physically vote on polls day itself. We have argued in these spaces that this facility should be extended to other sectors such as hospital workers (public and private), port and airport workers and differently-abled persons. We will, however, leave that topic for another day.
Politicians view public servants as a sizeable voting bloc. In fact, they can make or break an election for a party or a leader. It is, therefore, not surprising that all leading candidates at this PE have given various promises to the public servants. Salary increases are a staple promise and one candidate has even promised to raise their salaries by a considerable margin every six months. Given that most public services except the Inland Revenue, Customs, RMV and Excise Departments do not earn any revenue per se, this certainly will be tall order for a country emerging from an acute economic crisis. The other candidates have promised a more nuanced approach to public servants’ salary hikes, but any option is going to cost the Exchequer heavily in the end.
Parliament was also told last week that more than 75,000 concessionary duty car permits are pending for public servants. This is a huge number and questions have rightly been raised whether Sri Lanka can afford such a gesture at this point of time. Again, no party or candidate has contested this proposal, which indicates a tacit agreement.
In our view, it is far better to have an overall rational duty structure for imported and locally assembled cars, rather than having a two-tiered system whereby MPs and public servants pay almost zero duties while the common man (who, incidentally pays both direct and indirect taxes) has to pay over 300 percent of the CIF value of the vehicle. Nowhere in the world are vehicles taxed at such high rates. If at all car permits are issued to certain segments of the population at some point in the future, only locally assembled and pure electric cars should be permitted.
Getting back to the main focus of this editorial, there is no dispute that the public service is often lethargic, inefficient, overstaffed and corrupt. There is a broad agreement that the overall public service should be pruned down drastically, while filling existing vacancies in some crucial sectors.
Fifteen years after the Northern War ended, Defence still takes the biggest share of the Budget, mainly due to the huge numbers of personnel in the Armed Forces, especially in the Army. A big Army is not needed in peacetime. The next President or Government should focus on this issue, whilst still conforming to national security imperatives.
There is also broad agreement among the candidates and parties on the need for restructuring State Owned Enterprises (SOEs), most of which are a drain on the national coffers. Even the National People’s Power (NPP) which earlier vehemently opposed any such moves, has called for Joint Venture (JV) partnerships to manage certain national enterprises such as Sri Lanka Telecom (SLT). The biggest culprits that tick all the boxes for inefficiency, corruption and lethargy are Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB) and SriLankan Airlines. Powerful trade unions of the first two institutions are resisting restructuring proposals while the Government is still looking for a partner for the latter. Regardless of who or what party comes to power at the PE, priority should be given to this issue, lest the country’s finances face further trouble.
It is also vital to change the work ethics and attitudes of public servants, who have a reputation for shirking their responsibilities or in some cases, demanding santhosam from the public for getting routine tasks done. Here too, restructuring or privatisation can help. One prime example is the remarkable transformation witnessed in the SLT itself after it was partially privatised. There was a time when it took several months, if not years, to install a landline but post-restructuring it could fulfill the same task in less than a week.
Apart from privatisation itself, the other factor that made this sea change possible was the liberalisation of the telecom sector. Similarly, the ongoing liberalisation of the retail petroleum sector (with the entry of Shell, United Petroleum and Sinopec in addition to LIOC) will hopefully propel the CPC to provide a better service to motorists and consumers. Monopolies and even duopolies are always bad for business and consumers.
The key takeaway from the PE campaigns of all leading candidates is that they broadly agree on the continuation of the present economic trajectory. The country simply cannot afford to go back to outdated socialist ideologies, which led to economic ruin from 1970 to 1977. On the other hand, unbridled capitalism too does not work. Finding the right balance between these two conflicting narratives will be the major challenge faced by the winner of the forthcoming Presidential Election.
