Over the last few weeks, Sri Lanka’s slow and cumbersome state sector has staged their annual roaring. Hibernation has ended, with the arrival of the election season, and it is timely for the taxpayer-funded giant to take to the streets. 

Yes, the last few years have been hard on us all, and all except a few of the elite have not gone unscathed. We have all made sacrifices and many have been pushed below the poverty line. It must be acknowledged that some in the public sector are poorly paid. This has been the case in the education sector for a long time, and the public health sector also has many grievances. There are nearly 1.3 million state employees who are paid by the taxpayer. Given that our population is only around 22 million, the ratio of state employee’s vs. citizens is too high. According to the State Minister of Finance, to provide what the trade unionists demand; increasing public sector salaries by Rs. 20,000 monthly, at an annual cost of Rs. 275 billion (1% of GDP) – presents a significant fiscal challenge. “To offset this expenditure, implementing other fiscal adjustments is crucial. One potential approach is to increase VAT by 4%, raising it to nearly 22%, or elevating the corporate tax rate to 42%. Such an increase could strain the economy further, potentially increasing the primary budget deficit, jeopardising debt restructuring efforts, and derailing the IMF programme. This could lead to a return to the severe economic and social conditions experienced in 2022. 

“The path to economic recovery and growth requires cooperation of every individual, community, and institution. With your continued support, we can navigate these challenges and work towards a more robust economy,” State Minister Semasinghe explained on social media.

Collectively speaking, the question has to be asked, do we, the taxpayer, get what we should from the state sector we uphold? Many would argue that we don’t. It is learnt that the lowest paid public employee takes home around Rs. 44,000, while the highest ranking officials take home north of a million rupees.  According to the Government, the minimum expenditure for a person for basic needs is around Rs 16,300. This is the national poverty line. As such, basic needs of a family of four, are calculated by the State at Rs. 65, 000.  With 1.3 million government employees, the State is struggling to keep afloat a bloated public sector. Meanwhile, more Sri Lankans are struggling to stay afloat above the poverty line. Fundamentally, Sri Lanka is not creating enough wealth to distribute, or enough to effectively trickle down to everyone. 

With elections around the bend, the trade unions will likely continue to flex their muscle to get the benefits they want. However, this exercise, one which has plagued Sri Lanka for decades, will only continue to squeeze the taxpayer. Why should the citizenry continue to be heavily taxed, while receiving sub-standard, have to navigate the enormous bureaucracy, and also be at the receiving end of disruptions by the state sector? They should not.

It is time for the Government of the day, to push forward with well-planned and effective state sector reforms, and trim the fat, making the state sector smaller and more efficient. It is imperative that a future government carefully monitor the implementation of ongoing reforms, as backsliding has been commonplace historically. It also has to properly communicate the need and possible outcomes of reforms to the people.

Sri Lanka needs to reduce its expenditure, and the State has responded by cutting capital expenditure. However, neither the Government, nor the Opposition has had the political will to stand firm on reducing the public sector workforce. The Sri Lanka political class still remains short sighted, with their aim being to ‘survive’ or ‘win’ at the next election. Even after all the suffering Sri Lanka has endured at their hands, few are interested in doing the ‘right thing’ for the country over, the right thing for themselves. To date, not one political party has come out with a policy stance which advocates how and when they will be trimming the public sector. With nearly 1.3 million in the state sector, the political class of Sri Lanka, still views them as voters first, and are happy to pass on their burden to the taxpaying masses. 

However, this bitter pill of public sector restructuring and reducing its number of employees has to be taken soon. Sri Lanka cannot afford another economic crisis. It is high time for political parties and politicians to put the country first and take the bitter pill. The sooner it is done, the better.