Economic impact on public service expenditure | Sunday Observer

Economic impact on public service expenditure

28 November, 2021

Soon after the Budget speech on the November 12, speaking to journalists at a press briefing, the Minister of Finance Basil Rajapaksa said that the public sector is an unbearable burden on the economy and that he will not be able to offer any concessions to them in the near future.


The statement was accepted as realistic by the vast majority of the general public whilst most of the public service fraternity condemned the opinion.

How accurate is this statement is the pertinent question? According to the Government sources, the current 1.5 million strong public sector workforce, that includes workers of central, semi-Government, provincial, and provincial public service.

The rising salary bills and the pensions of the public sector consume the second largest portion of the Budget. The public services, provincial councils, and local government have been allocated Rs.286 billion. Whilst, perhaps a portion of this allocation is justifiable, it is a public secret that some of the funds are misused, pilfered, and squandered.

Can anyone sane justify the allocations of public funds to the state corporations, departments, and state-owned enterprises (SOEs) that are unjustifiably wasting colossal amounts? These loss-making institutions are maintained by capital infusion from the General Treasury, year after year.

For example, no Government has solutions for some of these institutions such as SriLankan Airlines that are making many billions of rupees accumulated losses. As per the 2020 annual report, the negative net asset of the national career is a staggering Rs. 262 billion. The irony is that staff of even these state-owned institutions demand higher salaries constantly and go on trade union action when such demands are refused.


The figures provided by various sources reveal that a staggering 48 percent of the total Government revenue is spent on salaries and pension payments of government servants. Since the independence, the public service has expanded to the current ratio of one civil servant for every seventeen citizens of the country whilst, comparatively, the ratio of the developed countries stands at approximately 250 to one.

As usual, almost every Opposition party was quick to vehemently condemn the statement. Regardless of the validity of the actuality, in a clear case of political opportunism, the Opposition politicians launched a barrage of attacks on the Government at every twist and turn.

Undeniably, many public servants perceive the value of their respective duties and handle issues as challenges. However, public opinion is that the average public servant does not seem to be taking their responsibilities as a national duty. Except perhaps the public servants themselves, the general standpoint of the rest of the citizenry is that the public service is inefficient, ineffective, and lackluster.

The public service reflects the state. Common citizens measure the effectiveness of the Government through the service provided to them through the public service. Nevertheless, the general public has neither protested asking to reduce the cadre in the public sector nor have they forced Governments to stop filling vacancies although the majority is aware of inefficiencies at public offices.

A Government is compelled by duty and responsibility to govern the country through public service, in order to provide the social, economic, and cultural needs of society. However, to facilitate such needs the public service must be independent of political manipulations. Regrettably, in Sri Lanka, historically, during most of the post-independence period, the public service was influenced by the politics of the ruling party.


The efficiency and excellence in the public sector are key ingredients of the growth of a country. Every citizen in the country, from birth to death obtains services from the Government offices. Hence, there is no argument on the importance of public service.

Nevertheless, the service delivery of most of the public institutions is unsatisfactory at large. Lack of institutional leadership, corruption, negligence, and procrastination exists in many Government offices. It is no secret that getting things done from a public office is a tough row to hoe.

The expenditure on the sections of public welfare in the Government service such as education, health, petroleum, and electricity, and so on,is justifiable as the Government is compelled to provide such provisions. However, other public institutions that can earn revenue for the government was mostly ineffective during the past many decades.

One of the main reasons for such inefficiency is the policy of almost every past Government since independence to provide employments to fulfill political pledges at pre-election campaigns. Most often, the excessive recruitments to the public sector were done on power politics rather than economic, social welfare, or national administrative requirements.

Successive Governments, as a practice, recruit cadres to the public service whenever there is a regime change. On one hand, such political pledges attracted voters in general, and also it was good bait to draw close supporters for propaganda campaigners.

Even the present Government recruited 61,000 graduates and another 100,000 from poor families in the rural areas to the Government service. According to Central Bank data, the public service represents 19 percent of the total workforce of the country. Although the move seems humane, the question arises whether the state can afford the additional expense.

It is no secret that some of these recruits allocated to various public institutions are not assigned specific duties or responsibilities. The majority of the graduates are not even provided with reasonable work environments. Perhaps, as an educated fraternity, instead of employing more from outside, the Government must utilise the currently available positions.


However, the education system is such that there is no method to make them aware of the contribution they can make or educate them about the opportunities available outside public service. In the absence of career guidance programs at school or university levels, passing out graduates and school leavers demand Government jobs.

The decision to increase the retirement age to 65 years also came into criticism of some people, as a likely gap will be created for new public service recruitments where youth is deprived of opportunities. However, the critical decision was taken, perhaps, considering the expenditure incurred on pension where the payments are made to retirees without any active contribution to the economy.

In this regard, the Government should have a system to monitor and maintain both their mental and physical capacity after the age of 55 years. Suggestions for such movements are not discussed by anyone at this point. Another viewpoint to consider is that the expenditure the government incurs on senior government servants who are in the service for a prolonged period is considerably higher than a new recruit. Weighing the difference between the two factors is required.

The responsibility of the Government is to maintain the number of state employees at optimal levels. Unfortunately, consecutive Governments have willfully ignored this salient fact. As a result, taxpayers are forced to fund the unnecessarily and unjustifiably over-stretched public service, not only by way of salaries but also many other benefits they enjoy.

The outcome of recent teacher-principal union actions may have given a signal to other public service sectors who are vying for salary increases and other demands.


After the near three-month controversy, the Government was compelled to agree to their demands. Already several public service unions have indicated that they also will go on union actions from January next year.

The Opposition political parties will customarily attempt to manipulate these anti-Government activities and provide political protection to anyone who protests against the Government. Hence, the burden to the Government on public service salary issues and anomalies seems never-ending.

At this crucial juncture where the country is in a dire economic crisis, the statement by the Finance Minister is controversially important. The Government must consider a complete blockage on new public service recruitments, unless in technically important situations.

The general opinion is that there are more than adequate cadres in the public sector and most of them are under-utilised. Therefore, the public service efficiency must be enhanced through the existing cadre rather than bringing in more of them.