Sri Lanka’s burdensome public sector workforce

Speaking at a seminar organised by the OPA last month, State-Owned Enterprises Restructuring Unit (SOERU) Head Suresh Shah pointed out that the public sector can be smoothly run with a workforce as low as 200,000 persons through digitalisation, against the current public sector workforce of 1.3 million. Although there could be reservations about his claim of 200,000 employees being adequate, it is universally acknowledged that the island’s public sector cadre is grossly overstaffed while being a huge burden to the economy.

It has been pointed out, Sri Lanka, which is ranked 58 according to the size of its population, has the 17th largest military in the world. Whenever the need to rationalise the public sector cadre comes up for discussion, people are quick to allude to the country’s oversized military. Currently, the military is manned by around 340,000 personnel, which is substantially higher than the military workforces of countries whose populations are higher than that of Sri Lanka. Nevertheless, it must be borne in mind that the tri-forces members made a tremendous sacrifice to rescue the country from terrorism, and it would be unethical to fire a large portion of the armed forces rapidly. The Government intends to reduce the size of the military to 135,000 army personnel by 2024 and to 100,000 by 2030. No doubt, the military should be downsized, but it needs to be done in a gradual manner.

Unfortunately, Sri Lanka has a bloated public sector and public servant salaries and pensions represented roughly 55% of the tax revenue during the first four months of the year 2023. Private sector employees who bear the burden of PAYE tax are furious that their hard-earned income has to be sacrificed to finance the salaries of the bloated public sector.

Who is responsible for the massive public sector cadre? During the short-lived Ranil Wickremesinghe premiership from 2002 to 2004, the public sector was envisaged to be scaled down in a phased-out manner as per the Regaining Sri Lanka policy framework. However, when the Wickremesinghe administration was replaced by the JVP-inspired UPFA coalition, instead of downsizing the public sector, steps were taken to enlarge the State sector cadre. One key aspect was the recruitment of graduates to jobs in the public service as Development Officers with no clearly defined roles. 

In the backdrop of enormous money spent on the salaries of public servants, the role of so called Development Officers needs to be scrutinised. The scheme of recruiting graduates began in 2004 during the UPFA Government headed by former President Chandrika Kumaratunge. Ironically, the prominent NPP advocates like Anura Kumara Dissanayake and Sunil Hadunnetti were the leading advocates of recruiting graduates to the public service during the time they were holding Ministerial portfolios in the UPFA administration from 2004 to 2005. Graduates from State universities (particularly, unemployed) represent a core element of the JVP/NPP vote base.

The taxpayers have the right to know the duties and functions performed by Development Officers, as there is a perception within the society that the amount of work performed by them is not commensurate with their pay levels. It is alleged these officers idle in Divisional Secretariats without doing justice to what they receive from taxpayers. Unlike others in the public service, Development Officers have no clearly designated duties and responsibilities; hence, this practice of recruiting graduates as Development Officers must be discontinued immediately, considering the need to cut down on unnecessary public expenditure.

Shrinking the public sector is of utmost priority. But it should be carried out in a meticulous manner. Digitalisation would greatly reduce the need for labour in the future. It is also critical to examine the social impact associated with downsizing the public sector. Large-scale retrenchment of jobs could result in widespread poverty and unemployment. The nation should be ready for a scaled-down State sector going forward. Less Government but more Governance is the way to go.