Saturday, March 28, 2015

The drag of Govt. Employment to Sri Lanka’s development!

It should come as NO SECRET to the people of Sri Lanka, that what seems to the people to be a great and wonderful policy of the 10 years of Mahinda Rajapakse rule to stuff an already bloated state sector with 600,000 new jobs (yes 600K) has been one of the greatest tragedies of Sri Lankan Govt. policy, more so than the 30 year war that cost 100,000 lives.

To carry this deadweight in public sector, NOT ONLY means we have to pay salaries, pensions and other benefits to people in State Service, but we DEPRIVE the private sector of workforce.

There is always the added attraction for those NOT in state service to go overseas too, due to the remuneration levels offered and the false incentives given to people who look at income over social upheaval and family destruction.

Due to this anomaly the Private Sector suffers from a double whammy, and I would say triple whammy due to inflexible employment laws, that prevent increasing the carder in the private sector as the ENGINE of the Economic Growth we so want to see for Sri Lanka.

200,000 jobs going abegging is not something to sniff at, as it is a serious labor shortage in Sri Lanka. Companies are leaving our shores to build factories in Bangladesh and India where labor is less costly, and with the added problem of labor immobility, and high price required to be paid for mobility, creates further labor market inflexibility.

Of course the MR Govt. made a huge political miscalculation in that it believed the people who got jobs in the MR Public sector, would be faithful voters for him. Further their greed showed, that when they were offered Rs10,000 increase by the new Govt. they were lured to that lucre, even though the new Govt. must regret making this offer, as it hugely expensive to keep! This further affecting the Private Sector ability to compete, and immense pressure the Private Sector now finds itself with their labor for wage increases that could bankrupt many a company.

So what are the alternatives or options available that are politically acceptable to the people? Therein lies the rub. The New Prime Minister, has said he is setting policies such that 1M jobs will be created in his administration, by encouraging the creation of employment in the private sector, though he has NOT mentioned this due to our aversion to work in that sector.

I distinctly recall him saying he wants 500,000 more entrepreneurs or self employment jobs created, using the innate talent of our people to build their own businesses, if they are shown the way, and SME loans are freely given for this.

Sri Lanka is a middle income country now. However many of the benefits have NOT reached at least 50% of the population. This can only be done, if huge productivity improvements are made in the agricultural sector, and Universities churn out skilled graduates in sectors of vacancies and NOT surpluses. Then the pressure on the Public sector would diminish, and within 5 years 500,000 state jobs can simply disappear out of normal attrition, and in a population that is NOT growing anymore, we can absorb the new entrants into the workforce into the private sector, with the Public sector savings, achieve the goals we set ourselves.   

No comments: