Tuesday, May 25, 2010

The unsurprising allure of jobs in the State Sector and Overseas

The recent headlines of the fact that the vast majority of those questioned in the 15 to 29 age group, would overwhelmingly prefer a state sector job, and given a chance would opt for a job overseas, is not at all a surprising.

We must first understand why this is, and if the intention is to attract new job seekers to go for a private sector job, their virtue as compared with the state sector has to be evidenced by fact, and not mere innuendo.

As far back as a hundred years ago this was true, and people like one of my grandfathers from a poor family from Moratuwa, was able to marry an heiress, because he was a Civil Servant, who was on a trajectory to the top. To be fair he was one of Sri Lanka’s elite in academics and got his job on merit. Educated people in Civil Service were in big demand as husbands for wealthy families who were prepared to part with huge dowries to give their daughter in marriage. This ingrained culture has not subsided, and security of position, and pensionable at 55 are incredibly attractive reasons for preferring the state sector. If we are to change this, then we need to address the reasons. We must make the state sector less attractive or the private sector more attractive, in order to change this opinion. As for the allure of leaving the country there is little we can do to match the ambitious young person’s belief that they can only get ahead outside these shores.

Taking the point of making the private sector more attractive, if we are to increase the remuneration and benefits, it cannot be done without a commensurate increase in productivity as otherwise these companies could not survive.

The answer may lie in reducing some of the perks offered to government servants, such as tax free salaries and duty free cars. It is most absurd to offer govt doctors who also have thriving private practices, duty free cars, tax free salaries and who benefit from a totally free tertiary education. Similarly under stretched government servants are engaged in private work and businesses while working in the state sector using these resources to carry out other jobs. The propensity of state sector workers to also be involved in soliciting bribes for small favors which are part of their duties does not help. It is said that in Singapore state sector employees are paid salaries comparable to private industry, they are expected to be completely beyond reproach with no compromise on graft or inefficiency. In this sense they earn this higher salary. In Singapore’s case it is the private sector that determines the pay scales which the state attempts to match in order to attract the same caliber of person to run the various state entities.

In Sri Lanka, in contrast, the high rewards are set by the state sector in the first place, and the private sector finds it hard to compete with it. Often the competence of the state sector is questionable as some jobs are handed as political favors. So lets cut the duty free cars, get rid of the dead weight, make the state institutions more accountable and performance driven, and completely ban private work during working hours, with doctors still permitted to practice out of their work schedules as long as they do not clash with the priority being their state sector job.

Market forces should determine income levels, and not arbitrary scales that bear no relationship to competence or performance, rather merely to longevity and seniority. With regard to the complete imbalance of pay scales in the security forces, the standards should be raised so that educated, competent and career minded people are chosen, in place of anyone fitting the basics as is done now.

Another more important psychological fact is the entrepreneurial spirit should be encouraged and promoted at school. This ‘can do’ mentality will direct those away from the state sector. This is expecting the impossible as the teachers are state sector and their bias is naturally shown to their pupils. Most students have parents who are worse off than the teachers, so naturally they will aspire to be like a teacher, a secure job that is seemingly well paying, where they clock off at 1.30pm. Who wants to farm land into the night for no security? As a generalization, as private school parents are in higher income levels than teachers, their children are less likely to want to be teachers, so therein lies the contrast.

In investigating the allure of overseas jobs, there are enough reasons why this is preferred as the income levels expected are far ahead of what is available locally, and until this difference is bridged, by economic growth within the Island this magnet will still pull. It is of course a matter of time when this will be redressed and it is not worth placing too much credence here except in educating people on the differences of cost of living, and income levels, as well as savings rates of overseas jobs and some of the harsh realities associated with such migration.

In my opinion, the state sector allure is one that will stay as long as there is a class distinction, where some may believe that lucrative jobs are available to those with connections and not merit, and at least secure state sector jobs can be achieved without such. Therefore in my experience all those in lower paying private sector who have also applied for state sector employment, will take the latter when it is offered them, sometimes after years on the waiting list. This will change once the mindset changes, and some of the attractions of the state sector are reduced with the expected hiring freezes and cost cutting envisaged for deficit reduction.


Anonymous said...

This problem will solve it self with economic growth and a freeze on state sector salaries, or at least salary increments that are indexed to inflation.

Once SL gets its act together, there is a lot of room to eliminate inflation. Costs are so artificially high due to underinvestment, so as capital moves to SL, prices should come down.

Then economic growth should make private sector salaries MUCH more lucrative.

As firms become more profitable, talent will be paid a premium, probably a very big premium.

This significant increase in salaries for the "performers" should be the allure that brings people into the private sector.

The Government MUST hold the line on state sector salaries though. Otherwise the state sector magnet will remain too powerful.

I agree that we need to level the playing field in taxation also. Eliminate duty free cars, and also might as well eliminate income tax for all citizens as the government revenue collection from this tax can be easily offset by ending corruption/waste.

Anonymous said...

Anon above, all problems get solved in time. If we wait for your solution that is time wasted, something active has to be done now, for double digit growth.

The prob is that in SL due to this bias it will take longer to solve, so the quicker the attraction of Public Sector is diminished, the sooner growth and development can take place. It is actually a real barrier and hinderance to growth, which is in the government's power to change for the better.