By W.A. Wijewardena –

The ominous closure of State universities

The closure of the Sri Lanka’s State university system by the country’s higher education authorities recently is not quite an unexpected move.

When the strike action by the academics of the State university system had paralysed most of the universities and all attempts at bringing the striking academics within the Government’s solution-frame had failed, the only course of action available to authorities has been to seek guidance from history.

On all such occasions in the past, the reaction of the authorities to protracted university issues has been the same: Close the universities and show the trouble making students, academics or non-academics that the Government holds the final answer to the issue. It also conveys an ominous message.
That message is that the authorities are prepared to keep the country’s university system closed until sanity returns to trouble makers and express willingness to start negotiations afresh once again. Such second round negotiations have always been successful in taming the warring parties and pushing them toward a solution which the authorities feel is the best for the country’s education system.

University academics armed with two demands

This time, the academics have resorted to strike action making two important demands. The first is that the authorities should settle their salary issues promptly, not by words as they had done in the past, but by deeds that are tangible and could be felt by academics as a real solution.

The second does not relate to salary issues directly but concerns itself about the future of the free education system in the country. Under this second demand, the university academics have demanded that the Government should increase its outlays on education to an internationally acceptable level by raising them to at least six per cent of the country’s total output, known as the Gross Domestic Product or GDP.

The academics have all the reasons to fight for both demands because the first one benefits them directly and the second one indirectly. If the salary issues are settled, it will immediately improve their living conditions to some extent and therefore they are directly benefited. If the Government agrees to increase its outlays on education, the academics will be indirectly benefited by having better teaching and research facilities and improved prospects for future salary increases.

Thus, it is not unusual for all the academics to rally round the current strike action by its main trade union body, namely, the Federation of University Teachers Associations or FUTA.

The crippling of State universities

Sri Lanka’s State university system is marred with interruptions to its smooth functioning from time to time. The agitations by all those who have a stake within the university system have in fact caused the system to break down on many an occasion in the past.

However, in this year, the university education has been interrupted on three occasions due to the trade union action by the academic and non-academic staff on two occasions and the intervention of authorities to close the universities on the third. The result has been to keep the students away from learning for no fault of theirs.
Yet, the private institutions that offer degree programmes of foreign universities have continued their work uninterrupted facilitating students to complete their degrees on time as scheduled.

From the point of view of all those who have a stake in higher education – authorities, students, parents and employers – it is essential that the students complete their study programmes according to a predetermined time plan. Any unwarranted elongation of the time plan will entail costs on all the parties by way of lost time, money and opportunities.

When the universities resume their work once again after arriving at some form of settlement with the striking academics, crash programmes will be implemented by university authorities, as has been done in the past, to pass the students out of the universities as quickly as possible by giving them a degree certificate.

However, it would raise serious issues regarding the quality of the graduates who complete their degrees without going through the pre-planned study programmes. Eventually, the prospective employers and through them the national economy will suffer because of the apparently sub-standard products that are produced by the university system in the form of graduates.

At that stage, the economy will have to allocate more resources to train these graduates to make them fit for the jobs they are required to handle. This is on top of the current closer to two per cent of GDP which the nation spends on its education. How did the State university system get paralysed on three occasions within a short spell of time this year?

Authorities should promptly settle university crises

First, it was the nearly one month long strike action by the non-academic staff of the State universities that kept both students and lecturers away from classes. The causes that had led to this trade union action were not addressed by way of a permanent solution, but the authorities got a ‘temporary win’ by forcing the striking non-academics to resume work presumably in the belief that the problem would go away automatically with the passage of time.

Within a week of the non-academic staff returning to work, the academics went into strike action because, according to them, they too had not been granted a permanent solution to their problems as agreed by the authorities in the previous year.

Then, there were serious confrontations between the striking academics and authorities on the one hand and the striking and non-striking academics on the other. These confrontations have vaporised fully even the tiniest possibility of reaching an acceptable solution by the two warring parties.
Then, when the strike action was protracted, the authorities in fact officially crippled the students’ learning ambitions by closing the universities indefinitely, a move resorted to by higher education authorities every time they were faced with an unsolvable university issue.

But, the non-academic staff which returned to work on the basis of the promises given by authorities earlier is threatening to strike work again because, as they have claimed, their demands too have not yet been granted by the authorities.

The eternal battle between the university staff and university authorities about the funding of universities and salary hikes has been explained by the public sector economists as a common failure in the public sector expenditure programmes.

Economic theory of bureaucracy

It was the American economist William A Niskanen who was an assistant director at the Office of Management of Budget at the US Treasury at that time and later Professor of Economics at the University of California at Berkley who first presented this theory in the style of an economic theory of bureaucracy in the early 1970s.
According to Niskanen, the issue arises because of the common problem known as the principal – agent problem that is typical of any organisation where ownership has been separated from management. In this case, owners have one goal to attain and managers have another goal to attain and if both goals are not identical, the organisation becomes a failure with respect to attaining its main objectives.

This problem is typical of the limited liability companies where management has been separated from ownership in order to run the company concerned as a more efficient outfit. However, quite contrary to this objective, the principal-agent problem leads to inefficiency in the company concerned.

The principal-agent problem in public bureaus

In the case of public sector organisations, according to Niskanen, the problem is much more complex than the private sector companies. That is because, in democracies, the voters are the owners of public sector bodies which Niskanen has branded as bureaus.

Bureaus are run by public servants and they are created and supervised by politicians on behalf of the voters. Here, the voters as owners would want to get the best out of public bureaus. Quite contrary to that, the politicians want to get the best out of bureaus for themselves. The public servants on the other hand want to get the best for themselves. The three parties involved in the production of services by public bureaus have three divergent objectives which are in conflict with each other.

Politicians and public servants seek to maximise perks

Since voters have to finance public bureaus by paying taxes or paying interest on borrowings or accepting high inflation, they have the desire to spend the least on public bureaus and get the maximum out of their services.
The politicians, on the other hand, want to get the maximum perks for themselves by way of large personal budgets, staff, vehicles, new communication gadgets and ability to make a show off by spending lavishly on their personal matters. When they get the bigger portion, they can leave only a pittance for the public servants.
The public servants too, like politicians, want to get the maximum for themselves by way of equally attractive perks. Their shopping list includes higher salaries, better office facilities, frequent foreign trips and concessions like duty free vehicles, facilities to educate their children in the best educational institutions etc.

The freakish public offices

So, it is a freak model where two parties fight with each other to get the maximum perks for themselves and one party seeks to pay the least. But given the political structures in countries today, the voters have no say about the public expenditure programmes. The politicians are also smart in the game because they never say about the costs of public expenditure programmes to voters but simply highlight on the projects and their services.
When economists pinpoint the folly of large government sectors and the danger of continuously running budget deficits, their voices are muzzled by politicians by counter-arguing that such public expenditure programmes are needed to make nations prosperous and wealthy in the future. Thus, it is large budget programmes exclusively created and run by politicians without allowing a say to those who actually finance the same.
So, according to the economic theory of bureaucracy, public bureaus continue to grow without applying brakes to stop them from growing. The bold politicians who take the risk of applying brakes by introducing expenditure cut programmes, known as austerity programmes, are voted out of power by the voters who are unwilling to pay higher taxes.

Fight between politicians and academics for better perks

In the case of the current university crisis, the voters are completely outside the battleground. Hence, it is a fight between the politicians and university academics to get the larger share of public spending for themselves. Since it is politicians who decide on the level and nature of public expenditure programmes, the academics are simply fighting to get the share presently enjoyed by politicians without any competition diverted to their purses.

Since both parties have a personal interest in the matter, there is no possibility for them to reach any settlement. In other words, politicians who presently enjoy the lion’s share without competitors do not want to share the same with academics. The academics, on the other hand, do not want to allow politicians to enjoy it alone. Hence, both parties bring about their own arguments to support their case. The final result is the State university system getting dragged on a crisis for which no party wants to have a permanent solution.

Students are not victims

The apparent victims are students, but the ultimate victims are the employers and the national economy. This is because in the economic education model, the students are simply a ‘throughput’ which goes through the educational system and come out as a human capital unit with a given set of talents and skills. Therefore, they are not in a position to make the judgment whether the state university educational system is good or bad.
They simply want a certificate which they can produce to a prospective employer in order to secure a job. Their parents who finance the State university education system do not have a say about the money they spend on education. Hence, quite contrary to what it seems like, the students and their parents are not victims of the university crisis.

Employers and national economy are real victims

The real victims of the university crisis are the employers who have to make use of the talent pool which the graduates bring to their work places. As this writer has mentioned in this article previously, the approach of the university authorities is to pass the graduates out of universities as fast as possible by giving them a certificate by resorting to crash programmes once the crisis is settled with the striking academics.

Since these graduates pass out of universities without following the required study programmes, the talent pool which they bring to their prospective employers is of a sub-standard. The result is that employers have to spend more money to make these graduates employable in private sector institutions. As a result, there is a general aversion by private sector employers to hire the graduates passing out from local universities.

Governments victimise taxpayers through graduate employment programmes

When the graduates are unable to find jobs on their own and graduates’ unemployment problem becomes critical, the politicians hire them in the public sector through special graduate employment programmes. There again, the State sector has to spend more money to train them and make them fit to hold public sector offices. The politicians have no qualm about it because such expenditure programmes are funded not by them but by a country’s voters as taxpayers.

Hence, it is the national economy which suffers ultimately as a result of the low quality graduates produced by the State university system. It leads to an erosion of the young human capital base of a country. Such an erosion is not a good sign for the continued prosperity and wealth creation in a country.

Hence, the two warring parties, university authorities led by politicians and university academics who have resorted to strike action, have to collaborate with each other to produce good quality graduates. To do this, university crises have to be settled as quickly as possible.
In that sense, the need of the day is not confrontation but cooperation.

(Writer is a former Deputy Governor – Central Bank of Sri Lanka and teaches Development Economics at the University of Sri Jayewardenepura. This article first appeared in Daily FT  – W.A. Wijewardena can be reached at waw1949@gmail.com )