With a new Government at its helm, Sri Lanka has to quickly ‘get down to business’ and begin addressing key issues which impact the Indian Ocean island’s economy which remains in a crisis. While the situation in the country has improved since the bleakest period in 2022, some issues which contribute to the crisis remain unchanged. 

In 2022, Sri Lanka was exploring ways to trim its massive public sector by allowing State workers to go on leave for other jobs both locally and abroad as the economic crisis was worsening. The massive wage bill of the public sector is one of the largest expenditures for the State. Last year, Sri Lanka had more than 1.5 million public sector employees. The size of the sector had nearly 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. However, with the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) now in government, it remains to be seen if the new administration, which has long had the support and organised a bulk of the State sector trade union movement, will act on ‘trimming the fat’ of the public sector. 

PublicFinance.lk is a platform run by the think tank Verité Research, which yesterday pointed out that Sri Lanka’s public sector employment levels are highest among countries in the South and Southeast Asia region. “In 2023, 15% of the total 8 million workforce (1.16 million people) were employed in the public sector, including central government, subnational units, and the military. Notably, defence and public security alone account for one-third of all government employees. In comparison, countries in the same region with similar economic structures employ far fewer public workers. For instance, India employs 9%, Vietnam 8%, and Bangladesh only 5% of their workforce in the public sector,” the platform for public finance-related information said. It added that, “This has resulted in high costs, despite the low wages paid to the public sector. In 2023, the Sri Lankan Government spent LKR 940 billion – 20% of its recurrent budget and 31% of its revenue – on public sector salaries. Over the past decade, an average of 23% of government spending has gone to salaries, leaving limited funds for vital areas like healthcare, education, and infrastructure.” The previous Government froze recruitment for many public sector enterprises, and moved to restructure them and the large defence establishment.

Just last weekend, The Ceylon Electricity Board Workers' Union (CEBWU) via a letter requested the Ceylon Electrify Board (CEB) to distribute annual bonuses equally among all 23,000 employees, based on the actual income/profit status rather than the previous systems. CEBWU General Secretary Ranjan Jayalal, a long-standing JVP-backed trade unionist, lamented that the CEB employees did not get paid a bonus for 2022 and 2023. Noting that the CEB had made profits in the recent past, he said that a part of it should be passed on to the consumer and the rest to the employees. "We did not receive bonuses last year (2023), and the year before (2022), but we did not keep the people in the dark. With or without bonuses, we worked and we will continue to work. However, there should be some support for us as employees. If we fulfil our responsibility, we should receive fair benefits," Jayalal said. This, even though the CEB had become an overstaffed, loss-making State-owned Enterprise (SOE), which had wracked up hundreds of millions of dollars in debts. The Sunday Morning and The Daily Morning have in the past, written about the outrageous staff benefits schemes which the trade unions and officials of SOEs such as the CEB and the Ceylon Petroleum Corporation (CPC) had enjoyed over decades, with some being paid salaries, which were triple its normal structure, due to highly irregular ‘over time allocations’ which had been in practice. 

As such, with public sector reforms half done, it is now the responsibility of the incumbent Government to ensure that Sri Lanka does not roll back on measures taken to streamline and make efficient the bloated public sector, which is also a living remnant of the decaying political culture which was at the helm of Sri Lanka in the past. How the new Government goes about doing so, will likely be indicative of how they frame their policy priorities.