Serving the public or burdening the republic?

We all pay the price for a cumbersome public service riddled with inefficiency

A section of immigration and emigration officers launched trade union action in March in response to “failure of the government to provide a resolution to demands.” As part of the protests, they displayed banners and distributed pamphlets to “raise awareness” of the “union’s grievances” at the immigration counters of the departure terminals in the Katunayake airport. A photo published by newspapers showed an officer sitting behind two banners–one stating, “Struggle for Justice” and the other, “We hope you had a pleasant stay in our paradise island.”

We never see highly-paid private sector executives as a burden. They, on the other hand – except in rare occasions – see no reason to interrupt our daily lives. The transaction, even without any conscious effort, is well balanced

Whether we like it or not, Sri Lanka’s rank in the list of preferred tourist destinations is not that high. Communal riots in early 2018 reduced tourist arrivals for two weeks. Room cancellations were estimated at between 800-1,000. Some Western nations issued unfavourable travel advisories. Against this backdrop, having a section of government officers making their own negative contribution towards the country’s image could have been a disaster. Perhaps they didn’t truly comprehend the gravity of their actions. On second thought, perhaps they did. The average citizen of Sri Lanka too frequently finds herself at the receiving end of conflicts between the state and public sector employees. Rarely does the individual have anything to do with these incidents. A young mother may suddenly find no doctors to treat her severely ill child of two months. A clerk finds his usual homebound evening train cancelled due to a strike by engine drivers. An executive misses an important business meeting due to heavy traffic caused by protesting state bank workers. These are individual citizens. They are not responsible for not conferring ‘demands’ whatever they are and whether they are reasonable or not. Sadly, they pay the price for living in a society with an ineffective system of governance. A system that has little or no control over deliberate attempts by state sector workers to muddle day-to-day operations. So the question: Is the so-called ‘Public Servant’, whose salary and pension is paid by public money, deliberately or not, involved in a plot against his masters?

Let us start by comparing the ‘Public Servant’ (a term borrowed from our colonial occupiers) to ‘others’ – who either work in the private sector or are self-employed. The latter’s survival depends on one thing – making money. Irrespective of everything else they do, by not making money, they risk their very survival. The only way to make money, and make more of it, is to keep customers happy. So the system eventually makes everybody content. We never see highly-paid private sector executives as a burden. They, on the other hand – except in rare occasions – see no reason to interrupt our daily lives. The transaction, even without any conscious effort, is well balanced.

With public servants, there is no direct relationship. She does not directly serve a customer that pays her, but an intermediary who is chosen (elected) by the customer to collectively manage the finances. In a perfect world, that relationship too should result in the customer getting the best. Sadly, she does not for multiple reasons. Firstly, the customer, unlike in the previous case, does not have direct control over the process. Secondly and most importantly, the ‘public servants’ play a dual role. They are not just workers. They too constitute part of the community that elects representatives. This gives them too much power over the process – particularly when government is bigger than it need be.

Sri Lanka is perhaps at an extreme. In 2015, the government directly employed 11.2% of the workforce, while semi-government institutes employed another 3.1%, accounting for one of every seven employed. Numerically it is close to 1.4 million. This includes employees in ministries, departments (including the police, armed forces and the Civil Security Department), district secretariats, divisional secretariats, provincial councils and semi-government institutions. This is not only too large, but also grows fast. According to the Census and Statistics Department, the growth of the state sector workforce since 2006 has been as high as 30%.

This sizable workforce costs the treasury dearly. In 2016, salaries and wages for the state sector constituted 33% of government recurrent expenditure (Rs576.5 billion). Another 10% went for pensions. Taken together, this was the largest recurrent expenditure item, even more than interest payments, which stood at 35%. State sector salaries, wages and pensions together were nearly 6.5% of GDP. At international comparison, this may not appear too high. Many developed countries spent more than this to maintain their state sector. The difference in those countries under state capitalism is that the equally high revenue balances expenditure. What we observe here is inflation without corresponding earnings.

Then, as we all know, the post-independence expansion of the public sector has rarely been out of necessity but for sheer political reasons. The so-called ‘nationalization’ of ports, transport services,insur ance sector, banking sector, etc., in the ’50s and ‘60s was just to create ‘jobs for the boys’ so that the political masters and mistresses could build vote banks they control.

For example, Sri Lanka Transport Board made a loss of Rs1 billion in 2016 running 450 million km. The private sector that ran 1,030 million km – more than twice that of the state sector – did so at a profit. Same fares. The financial loss to the nation was more for creating employment above feasible limits rather than for the typical excuse of serving remote areas.

Creating artificial ‘jobs for the boys’ results in more issues than the colossal cost to the public. It makes life harder for the private sector. The natural choice of any typical rural youth is a state sector job rather than a private sector one, which involves hard work.

When government absorbs the available human resources on a mass scale, HR managers in the private sector have to dig deeper or increase their offerings. Currently they do both, not because they can afford these, but because they are forced to. They frequently and continuously reach extremely rural areas to find workers. They have also made considerable changes to compensation packages. These developments are good from the perspective of workers. On the other hand, they boost production costs and can finally make Sri Lanka a non-viable destination for  manufacturing. Industry professionals know the risks. Public servants are also the only category of workers to get annual ‘bonus’ irrespective of performance. In the private sector all incentive payments are directly linked to performance. You work more and get paid more. State sector employees enjoy additional benefits even when their institutions make losses. Ceylon Electricity Board is a good example – all employees are entitled to an annual bonus equivalent to two months’ salary, by an agreement reached with the unions, irrespective of the top or bottom lines. Extreme measures to satisfy public servants may push the country further down the road to an economic abyss. And they don’t necessarily serve the public. The term could be a misnomer soon.