The cry for a Rs. 20,000 pay raise for the public sector has been on the lips of many during the last week. Most Sri Lankans have been struggling to get by over the last two years due to the soaring cost of living and unadjusted salaries. Yes, we could all do with a pay raise since the cost of living hasn’t reduced to a tangible level. The president has hinted at a possible pay hike for the bloated public sector in the coming budget for 2024. But how will the Government meet the challenge of a pay increase, even a smaller one that the Rs. 20,000 without compromising national revenue targets and undertakings given to organisations like the International Monetary Fund (IMF)?    

Yesterday(1) State Minister of Finance Ranjith Siyambalapitiya said that an “extensive analysis” is currently being carried out to decide on the rates at which the salaries will be raised. And rightfully so, Sri Lanka is not a stage where it can afford to relax government expenditure. As Siyambalapitiya pointed out, with nearly 2 million persons, 1.6 million in the public service, and nearly 600,000 drawing pensions, any pay increment is going to be a difficult pill to swallow for the State. “We need to do a serious analysis on how to do this. However, given the difficult situation that we all were in the past, the preparations to increase their salaries are very progressive,” Siyambalapitiya said. Therefore, the working of the Budget 2024 will be an extraordinary one in Sri Lankan history. It will likely be an unprecedented test of a Sri Lankan Government’s priorities and of their political will to effect change.

The call for a public sector pay hike is not unreasonable. In fact, the private sector is not immune from the request as well. It is likely that the Government will at some stage request the private sector to consider a pay increment as well. How such a request will sit with the captains of Sri Lanka’s “growth engine” remains to be seen. The industrial base, what little of it we have, has endured much over the last two years. This is not to say that there haven’t been a few business tycoons who minted much from the crisis situation. In general, the last few years have been tough for businesses too.

To make an increased payment for the state sector, as the trade unions and some political parties claim, the Government will have to take from other sectors where allocations are being made. How much of an increase the Government plans to make, and where the cuts needed to make way for the pay increase will be a signal of Wickremesinghe – SLPP Governments’ priorities and political will.

Will the Government finally muster enough courage to make substantial cuts to the defence establishment, an idea which has been spoken of but not implemented significantly in the past? Will Wickremesinghe, with little or no mandate, be bold enough to cut defence expenditure and demobilise sizable numbers to make the required savings? After all it was only the Armed Forces and the Police who had stood by him outside the SLPP during the political turmoil and civil disobedience of last year. Can the current Government afford to do that with fears of possible public disorder looming in the horizons due to tough austerity measures? If not the Police and Armed Forces, who will protect the State?

Or will the Government finally follow through on their proposed State-owned Enterprises restructuring and make overstaffed and inefficient state entities more streamlined, which will require some state employees to be let go? Neither option has seen the political will for implementation in the past.  How will the political trade unions react to such a move, and more importantly to the political calculation, how will the unionised state workforce respond at the next election to such changes? Changes they themselves have resisted for generations. Will the Government have the courage to sack employees who they themselves may have hired on a political basis?

Will the Government finally drop some of the pork barrel policies and tactics, which they usually resort to when an election is around the bend? Have our policymakers matured enough and learnt from the crisis to change behaviour?

While we all deserve a bit more, and some more than others, particularly the vulnerable groups, who have grown in rank since the crisis began, we also need to set our expectations with a sense of reality. Sri Lanka is not out of the woods yet, and we may have to face austerity for some time. How the Government manages that period, and how they will be fair to the public and to the process of recovery will depend on how much our leaders are willing to change.