Friday Nov 15, 2024
Friday Nov 15, 2024
Monday, 27 October 2014 00:00 - - {{hitsCtrl.values.hits}}
Economic performance and the Gini factor
Evidently, the Sri Lankan economy has better performed than our neighbours in the SAARC region in terms of economic numbers, but in reality this prosperity has certainly not trickled down the economic chain and we have now ended up in a society where the Gini index (Standard economic measure of income inequality, based on Lorenz Curve; a society that scores 0.0 on the Gini scale has perfect equality in income distribution. Higher the number over 0, higher the inequality) is between 0.4 and 0.6 in Sri Lanka in the recent past.
This is indicating high inequality and wealth distribution and probably widening the gap irrespective of the prosperity we are gaining as a country. This situation is not healthy for a country at all where we are all discussing on how we should be escaping the middle income trap at forums.
Hardware vs. software story
When one buys the most modern high speed computer with all accessories and components, we say “top quality hardware” but we all know that this machine will not run without the “top 
quality software” and as a result the intended result would be nullified by spending money on a machine that cannot be run efficiently and time to time viruses taking control of the same.
The efforts and the speed in which the infrastructure has been developed in post war Sri Lanka must be appreciated, this clearly reflects if one analyses both the FDI and GDP growth according to the table. That is our hardware, but what about HR – the software?
Symptoms of software mismatch
The symptoms that we are now having is a mismatch of hardware and the software which is creating economic problems and real hindrance to the progress of the Sri Lankan economy.
We are building infrastructure at a rapid speed. One thing is for sure, the capacity of infrastructure or the hardware has done a lot to the country to be more attractive and competitive globally. However, as a developing country, we are displaying the lack of proper human resource intervention and systems “the software component” to manage the growth, hence the proper confidence and the message about the country is not out there in the rest of the world or in many instances within the domestic investors as well. Our Doing Business ranks from 2013 to 2014 have gone negative two slots with all the infrastructure projects going ahead in full steam. What does this mean?
Post-war Sri Lanka has not optimised its capabilities; whilst one can be very enthusiastic about the hardware development, it’s a continuous problem on the software side. Even if policies have been developed with effort, but at the implementation level they are chaotic, ad-hoc, back tracking and not adhered or followed by the people who are supposed to administer the same.
In theory the private sector is the engine of economic prosperity but at some critical points certain institutions pull them back two times the speed backwards when one tries to move forward. The few in top management in public sector who can deliver are well aware that they are fire fighting on day-to-day issues and do not have the time to go beyond.
In other words we have serious policy and systems implementation issues in the public sector. Administrative and financial capabilities of cross functional institutions/departments are questionable.
Making the country a place where capital will freely flow into projects that would really enhance economic activity such as manufacturing and value addition would need the reform agenda properly implemented through capable human resources all across the government machinery.
Public service at crossroads
In reality the industry and investors in Sri Lanka have to depend on a few at the top to address all their grievances with the Government, as a thick layer in Government are either appointed through political or personal arrangements and they are incompetent to understand the modern world and its demands. Most are not pro-reform; some who can perform are de-motivated due to many factors.
There are many who are occupying top positions without the proper knowledge and technical or administrative competencies. Institutions have lost power at the cost of these individuals. In a country where the public service is relatively large, this unproductive process with wrong attitudes towards reforms and corrupt systems in many institutions are damaging the very same intentions of our nation, which wants to become a modern hub in Asia in many aspects.
Strategic thinking and policy implementation the need of the hour
The Budget speech by the President was delivered last week. A lot has been offered to the public sector, in terms of benefits but if Sri Lanka is to progress, the human resources of the public sector needs a major overhaul and attitude changes to modernise our country is a must. The Government needs to link productivity-based incentive methods to be introduced in the public sector otherwise neither the private sector nor the country will perform as expected. Like it or not, Sri Lanka needs urgent labour reforms to be a global competitor.
The leaders must take the responsibility to appoint professionals and knowledgeable people round the administrative structure if we are to expect to be a modern and reformed developing nation and achieve hub status. Right people at the right institution will bring the biggest change we want in the short term. Of course if politics is kept away, it will bring accountability, transparency and progressive implementation of reforms. Otherwise, whatever the government tries to do will boomerang on it. Simply the hardware may crash sooner than later at a huge cost to the nation if HR issues are not fixed.
The long-term investment that would help the country is to invest in its people.
(The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, and immediate past secretary general of the Asian Shippers’ Council.)
