Human Capital Summit 2024: Building future-ready public institutions

By Michelle Therese Alles

The Public Sector Capacity Pillar of the Human Capital Summit 2024 brought together an impressive roster of keynote speakers, panellists, and leaders from academia, government, and business to address the critical challenges and opportunities facing public sector organisations. 

With discussions ranging from strategic planning and innovation to human capital management and financial accountability, the summit provided a comprehensive platform for sharing best practices and formulating actionable recommendations. 

The event set the stage for in-depth discussions on modernising public sector practices to support a more efficient and responsive workforce, highlighting the importance of collaborative efforts and strategic leadership in driving the public sector towards achieving sustainable development goals.

The Mercantile Service Provident Society Non-Executive Chairman Sujeewa Mudalige, serving as Pillar Head/Chairman, commenced the panel by addressing a pressing question to Secretary to the Prime Minister of Sri Lanka Anura Dissanayake, regarding the perennial issue of overstaffing in the public sector. Mudalige highlighted the widespread public concern about the excessive number of public sector employees and the need for strategic upskilling and reskilling to integrate these individuals into Sri Lanka’s growth narrative. Emphasising his passion for education and capacity building, Mudalige sought Dissanayake’s insights on managing the burgeoning public sector workforce and aligning it with the nation’s developmental goals in the short to medium term.

Dissanayake noted that the public sector, with its 2 million employees for a population of 22 million, was unsustainable. He explained that the government had taken three key policy decisions to address this issue: reducing the retirement age from 65 to 60, suspending new recruitments, and encouraging public sector employees to take five-year unpaid leave to work overseas. These measures have significantly reduced the workforce from 2 million to 1.3 million, with a target of 1 million by 2030. Additionally, Dissanayake outlined the Government’s ambitious plan to enhance digital public infrastructure and efficiency through a unique digital ID and other initiatives, aiming to mitigate the impact of workforce reduction while maintaining effective public services.

Pillar Co-Chair, University of Buckingham Lecturer in Accounting, Business and Finance Cathrine Weerakkody, posed the next question to Central Bank of Sri Lanka Governor Dr. Nandalal Weerasinghe. She set the context by noting the high digital literacy levels, around 90%, among the youth aged 15 to 29 across urban, rural, and estate sectors, highlighting the widespread use of digital devices. Weerakkody emphasised the tech-savviness of the younger generation and asked whether the Central Bank is prepared for the fintech revolution. She inquired about the plans to modernise the regulatory technology architecture and integrate global payment platforms such as PayPal, Google Pay, and Apple Pay into the Sri Lankan financial system.

Dr. Weerasinghe addressed the usage of technology in financial regulation and supervision. He explained that the Central Bank has already initiated several processes to enhance the integration of financial technology. For instance, the introduction of the National Technology Framework and the implementation of a regulatory sandbox allows new innovative products to be submitted and assessed for feasibility while ensuring public interest and safeguarding public money. This sandbox environment enables the regulator to evaluate innovations under controlled conditions, preventing misuse and protecting financial stability. 

Adoption of digital technology in Sri Lanka remains low

He acknowledged that while progress has been made, it is not sufficient, and the adoption of digital technology in Sri Lanka remains relatively low compared to other countries like India. He emphasised that this endeavour requires a multi-stakeholder collaborative effort, involving not just the Central Bank but also institutions promoting financial services and the Ministry of Technology overseeing public digital infrastructure. The Central Bank is focused on enhancing payment systems, settlement processes, and supervisory technology to improve online reporting and data collection.

Regarding specific products like PayPal and other global payment platforms, Dr. Weerasinghe stated that the Central Bank is open to introducing these innovations, provided they comply with national regulations. He highlighted that while Sri Lanka still has certain restrictions on capital account transactions, the goal is to maintain transparency and fairness in applying these regulations. He emphasised that the Central Bank welcomes any new technology that adheres to these standards, ensuring a level playing field for all stakeholders.

Ministry of Education Secretary Thilaka Jayasundara, in response to a question on the new reforms introduced into the school curriculum by the National Education Institute in line with the national growth agenda, stated that the Ministry was focusing on transformational changes rather than mere reforms. “These transformations are essential to developing future-ready human resources for Sri Lanka.” She highlighted that the Ministry of Education is implementing comprehensive policy reforms with the active participation of all stakeholders.

She outlined that the Ministry’s efforts will be concentrated on enhancing Early Childhood Education, General Education, Tertiary Education, including Higher Education, and Vocational Training, and that the curriculum development, spearheaded by the National Institute of Education (NIE), was already underway, with successful pilots for Grade 1, Grade 6, and Grade 10 highlighting the urgent need for these changes.

One significant challenge identified by Jayasundara was the need to train over 250,000 teachers to align with the new curriculum. The NIE, Department of Examinations, and other stakeholders are collaborating on this massive undertaking. Additionally, early childhood education curriculum development and teacher training are ongoing.

Starting in 2026, the new Ordinary Level (O-Level) syllabuses will be implemented, with the Department of Examinations developing the evaluation process. “Teaching will commence in January 2025, with the new syllabuses to be used in the O-Level examination in August 2026,” she explained. Similarly, Advanced Level (A-Level) curricula will be developed for the 2028 examination, focusing on enhancing STEM and STEAM education and promoting entrepreneurship opportunities.

The Ministry will also implement governance and education administration reforms with provincial education councils and ministries. However, a significant challenge will remain in securing investments and resources. “We are developing a five-year roadmap with clearly defined KPIs and a budget,” Jayasundara said. “With support from donor agencies, other organisations, and the government, we believe we can successfully implement this transformational agenda.”

In an insightful discussion with Mudalige on educational reforms, University Grants Commission of Sri Lanka (UGC) Chairman Professor Sampath Amaratunge shed light on the significant strides made in Sri Lanka’s higher education sector. Despite facing numerous challenges, including restricted funding and a substantial brain drain, the UGC managed an impressive expansion in student intake across public universities.

The UGC’s dual focus on expanding educational opportunities and promoting reconciliation reflects a broader commitment to addressing both national educational needs and nurturing harmony. “Despite the challenges we face, the progress we’ve made is a significant achievement for Sri Lanka’s higher education sector,” Professor Amaratunge concluded.

Referring to India’s economic crisis of 1991, Mudalige asked Deloitte India Human Capital Consulting Partner Prakhar Tripathi about the response of the Indian public sector and civil servants at that time. He also inquired about the lessons Sri Lanka could learn from India’s approach to navigating such challenges through effective policies and reforms, given the similarities between that crisis and Sri Lanka’s current situation.

“Following the 1991 crisis, India introduced significant reforms to enhance the effectiveness of its civil service,” Tripathi noted. “In 1994, the Indian government launched the National Training Policy, which introduced several key changes. It bifurcated recruitment and training responsibilities, establishing the Department of Personnel and Training (DoPT). This policy aimed to enhance the competencies required for effective bureaucracy,” he explained. 

Tripathi also mentioned the ongoing K Yogi program, named after the concept of ‘action without desire for results.’ “This program focuses on developing essential competencies for future policy-making,” he said. “It includes emotional intelligence, collaboration, and integrity, which are critical for bureaucrats.”

He added that digital literacy has also become a top priority. “The Government recognises that existing bureaucrats need to be proficient with digital tools to perform effectively.” 

Integration of performance measurement

Furthermore, Tripathi discussed the integration of performance measurement within the government system. “The government is working to link performance with clear outcomes, such as promotions and training opportunities,” he noted. “While it’s challenging to implement a private-sector-style reward system in the public sector, aligning performance with developmental opportunities remains a key focus.”

In response to Mudalige’s inquiry about the potential benefits of a private sector-led Project Management Office (PMO), Anura Dissanayake provided insights into the current state of project management within the Government. 

“We are currently overseeing approximately 285 major projects, including significant telecom and road infrastructure initiatives, with a total value exceeding $ 25 billion,” Dissanayake explained. “These projects are managed through Project Management Units (PMUs) that have the flexibility to engage experienced private sector professionals on a contract basis. This approach allows us to contract out project management tasks to private sector firms, which are responsible for planning and execution.”

However, Dissanayake acknowledged that the Government has faced substantial challenges since 2019, including cash flow constraints, cost escalations, and other financial difficulties. “These issues have undeniably impacted project management,” he said.

In response to these challenges, the Government has implemented several measures. “We’ve established a National Operations Room to coordinate efforts, address ongoing issues, and apply lessons learned,” Dissanayake noted. “Additionally, we have introduced new project management software and are working towards revitalising project implementation as part of our broader economic restructuring efforts.”

Weerakkody posed a critical question to Gestetner (Ceylon) PLC former Chairman, Deputy Chairman, Lake House Printers & Publishers PLC Independent Director, and Lanka IOC PLC Independent Director Professor Lakshman R. Watawala, regarding the role of professional accounting bodies in Sri Lanka. Considering the significant role they play in the local economy, she sought his view on these bodies collaborating with government agencies to upskill public sector employees, and whether such collaboration could enhance the efficiency and effectiveness of public sector projects

Professor Watawala emphasised the distinction between general accountants and professional accountants. “While many accountants exist, only those with professional qualifications possess the rigorous academic and practical training necessary for managing public finances. Professional accountants have a combination of academic knowledge and practical experience that is essential for job creation and financial management.”

He reminisced about a previous Government initiative where degree holders were awarded scholarships to gain experience in private audit firms. “This system was highly effective. Graduates received training that enabled them to return and manage public sector finances competently. Unfortunately, this system was discontinued, and the government made a mistake by eliminating these scholarships.”

Reflecting on the history of professional accounting in Sri Lanka, Professor Watawala noted, “In 1959, the Government established the Institute of Chartered Accountants of Sri Lanka with initial funding but mandated that it become self-sustaining. The Institute has maintained high standards of training at minimal costs compared to foreign qualifications, ensuring quality education for students.”

Lack of recognition for professional qualifications in Govt. recruitment

Professor Watawala expressed concern over the current lack of recognition for professional qualifications in Government recruitment. “If the Government had maintained proper financial documentation, such as balance sheets, it would have been clearer how to address financial issues. Successful private sector companies rely on such practices to gauge their financial health, and this should be applied to the public sector as well.”

He concluded with a call to action, stating, “We are ready to collaborate with the public sector to provide training and support. It is crucial to recruit qualified professionals at all levels. By leveraging the expertise of professional accounting bodies, the public sector can significantly improve its financial management and project outcomes.”

Lead Economist and Program Leader for Human Development for Sri Lanka and the Maldives Dr. Harsha Athurupane shared his insights on a pressing issue: the exodus of Sri Lankan youth due to economic and personal reasons, alongside the country’s ageing population, which comes at a time when President Ranil Wickremesinghe has set an ambitious goal of achieving a $ 12,000 per capita income by 2048. 

Dr. Athurupane emphasised that Sri Lanka’s current economic policies, which favour a pro-market, private sector-driven, and export-oriented framework, could lead to a significant demand for human capital, labour, and skills. He pointed out that the country is already experiencing shortages in these areas.

To address these challenges, Dr. Athurupane highlighted a new education framework formulated by key Government officials, including the Secretary of Education, the Secretary to the Prime Minister, and the Chairman of the University Grants Commission. While several proposals have been accepted in Parliament, some have been halted. Dr. Athurupane expressed hope that these forward-looking proposals will eventually be passed.

He argued that the education system needs to be liberalised to align with economic reforms. This includes adopting the principle of subsidiarity, where tasks are handled at the lowest possible level, whether it be schools, universities, provinces, or zones, before escalating to the ministry.

Furthermore, Dr. Athurupane called for a more favourable environment for private sector investment and participation in education. He noted that Sri Lanka’s current closed economy model in education prohibits the establishment of private universities, recognising only private higher education institutions. This, he said, hinders the progress needed to meet future demands. He concluded by highlighting the importance of liberalising both the economy and the education system to address the country’s challenges and achieve the president’s vision for 2048.

Professor Amaratunge noted that only public universities are permitted to use the title ‘university,’ a restriction imposed by the existing Higher Education Act. However, significant progress has been made towards reforming this system.

“We have completed a new act after conducting over 30 stakeholder meetings, including discussions with former and current Vice Chancellors, Deans, and representatives from the non-state sector,” Sampath explained. “We have meticulously studied the bottlenecks hindering the expansion of higher education in the country and had all red tape cleared. The new act is now ready.”

Despite the completion of the act, further steps remain. The Higher Education Ministry emphasised the importance of public consultation before finalising the legislation. “We are planning to discuss these changes with the general public soon,” Sampath added. “Once this task is completed, the act will be ready for Parliament’s approval.” This new legislation aims to pave the way for a more inclusive and expansive higher education system in Sri Lanka, addressing long-standing barriers and giving rise to greater opportunities for both public and private institutions.

In response to a query about the capabilities and competencies the global marketplace sought from Sri Lankans, CPA Australia Head of Global Growth and Brand Strategy Ann-Marie T., provided an insightful global perspective. 

Developing leadership competencies 

She expressed admiration for the high quality of accountants graduating from Sri Lanka, noting the impressive initiatives aimed at advancing the country beyond the accounting profession. “From a technical and functional expertise standpoint, Sri Lanka is exceptional,” Ann Marie stated. “The challenge now is developing leadership competencies and nurturing responsible leadership in various fields.”

Ann Marie emphasised the importance of sustainable financing and effective business management, especially in the accounting sector. “We need to focus on cost control and embracing future technologies such as AI and ESG. Sri Lanka, with its rich natural resources, is uniquely positioned to lead in ESG initiatives.”

She highlighted the potential for Sri Lankan accountants to play a crucial role globally, noting that branding Sri Lanka’s human capital is essential. “Sri Lankans abroad have already showcased the country’s talent effectively. Now, it’s about increasing visibility and demonstrating what Sri Lanka can offer from a human capital standpoint.”

Ann Marie concluded by stating that it is an exciting time for Sri Lanka, both for those looking to invest in the country and for the global marketplace recognising the talent emerging from this region.

McKinsey Associate Partner Timothy Yap was asked about the firm’s experience in driving performance culture within the public sector. He provided three key observations that highlight the challenges and opportunities in public sector transformations.

“Transformations are difficult; 70% of them fail, whether in the public or private sector,” Yap stated. “In the public sector, the complexities make these transformations even harder.” He emphasised that successful transformations hinge on three main factors: leadership support, buy-in from all levels, and robust, sustained processes.

He highlighted the transformative power of technology in the public sector. “Technology today enables transformations in ways that were not possible before,” he explained. “In the past, implementing policies transparently and consistently required training a generation of civil servants. Now, technology allows countries to leapfrog and implement policies more consistently and disseminate them faster.”

He cited an example from India to illustrate this point. “Just four months after ChatGPT was launched in 2022, the Digital India Corporation, in collaboration with Microsoft Azure, integrated Bharat AI into government services,” Yap said. “This system allows illiterate citizens to send a voice message to WhatsApp, which is then converted to text using AI, translated into English, queried in government databases, and the response is delivered back in the native Indic language. This revolutionises access to information, allowing even an illiterate farmer to get government policy information without visiting an office.”

He concluded with the optimistic outlook that while transformations are hard, especially in the public sector, there’s an unparalleled opportunity today for government transformations to succeed through the use of technology. These advancements can be disseminated to ordinary people faster than ever before.

The Public Sector Capacity Pillar of the Human Capital Summit 2024 emphasised the urgent need for modernising public sector practices through strategic leadership, collaborative efforts, and innovative technologies. The insights shared by key figures and other distinguished speakers provided a roadmap for leveraging human capital and technological advancements to create a more efficient, responsive, and future-ready public sector. As Sri Lanka navigates its path towards sustainable development, collective expertise and forward-thinking strategies will be instrumental in shaping a resilient and dynamic public sector capable of meeting the evolving needs of its citizens.

pix by upul abeysekara