ECONOMYNEXT – Sri Lanka’s current government has no intention of laying off state sector employees yet, however, the public are concerned about the efficiency of a few workers in the government sector, State Finance Minister Shehan Semasinghe said.
However, analysts have said if the government needs to achieve the International Monetary Fund’s (IMF) fiscal targets, it will inevitably have to reduce the wage and pension bill for the public sector. This means the government will have no choice, but to lay off employees in the government sector.
Sri Lanka is facing a tough task in managing the state sector to achieve fiscal discipline in line with IMF reforms in return for a $2.9 billion loan.
Top government officials who are aware of the IMF discussions for the loan have said the global lender has not directly asked to reduce the size of the state sector but asked to reduce the fiscal deficit by either raising taxes or reducing state spending.
A large chunk of government expenditure goes to public sector wages and pensions, the official data show.
“Government has no intention of laying off (public sector) employees. But the general public of Sri Lanka who are paying taxes are concerned about the efficiency of this minimum number of people in the state sector,” Minister Semasinghe told EconomyNext in an interview on Wednesday.
“The majority are efficient, but there is a minimum number who are inefficient and they have taken the entire state sector for ransom. So, even now what we could see is the entire population of 22 million are being held on ransom by this limited number of people,” he said referring to those who are leading protests against tax hike.
President Ranil Wickremesinghe has been stubborn on going back on taxes and has refused to revise down the personal income taxes despite repeated threats for continuous protests by state-sector trade unions.
Government officials have said most of the government sector employees are misled and participate in protests demanding to cut taxes of high earning employees who have not paid any levies to the government until the new tax reforms were implemented in January.
“We can see teachers on strike, but they don’t fall into the bracket. We can see postal workers are on strike and they don’t fall into the bracket. So, most of the people who do not fall into the PAYE tax bracket are on the road for trusting misleading comments,” the minister said.
“It is very unfortunate and it’s a pathetic situation. So far, to see the names of those who are behind these disruptions, are the same people who have been disrupting the throughout every government,” Semasinghe said referring to trade union leaders who were behind the recent protests.
The government has already frozen public sector recruitment, reduced the retirement age, allowed voluntary retirement schemes, and permitted public sector workers for leave to work abroad or in the private sector.
Sri Lanka has one public sector employee for every 14 people in the country with 22 million population.
The number of public sector employees has doubled since 2000 due to politicians dumping their supporters in state-owned enterprises without a proper process and qualification. (Colombo/March16/2023)