17 April, 2024


Economic Imperatives & Social Costs

By Uditha Devapriya

Uditha Devapriya

Sri Lanka is caught in a quagmire from which escape seems difficult, if not impossible. On every front, it’s slinking towards the edge of a precipice. Indeed, we may already be on the edge. Be it gas shortages, exploding cylinders, food inflation, fertiliser imbroglios, or lack of dollars, we are either heading for disaster or barely averting one.

Not surprisingly, while government officials strike an optimistic note, many of them are also firing warnings about the future. Hence, in the same breath, Basil Rajapaksa notes that the government has a strategy in place, while cautioning that more restrictions will be placed on imports. In what can be taken as an admission of the need for more austerity, Rajapaksa has stated that no new recruitments will be made to the public sector next year, and that the construction of new state institutions will be suspended for two years.

What is curious is that these developments have not led to the backlashes we are seeing in other countries. Elsewhere, citizens have come out into the streets, confronting the police. By contrast, protests here have been intermittent, almost tame.

Even in Europe, that bastion of civilisation, police-batons are clashing with hordes of citizens angered by the latest round of COVID-19 restrictions. Vaccine hesitancy in the Global North and vaccine deficits in the Global South have exacerbated these tensions, while the World Health Organisation speaks on behalf of the poorer nations of the world to deaf ears in the wealthier ones. Omicron may or may not lead to the next big public health crisis, yet half the world isn’t prepared and the other half isn’t bothered.

In other words, while we are going down under, we are also hanging on tighter. The government’s vaccination drive has no doubt helped there. So far, well more than half the country has been jabbed with both doses, including this writer. Army and medical officials are coordinating the entire process with each other, paving the road to recovery. Omicron is here already, but we are jabbing people with much needed booster shots. Sure, things could be better, but things could also be a lot worse.

Sri Lankans are of course a resilient lot. That is good, and needed. A pandemic of this magnitude requires infinite patience, rational planning, and careful coordination between different sectors. While the country as a whole is clearly at a tipping point, we have not yet collapsed. Our hospitals have managed better than most, certainly better than India, while our kids are back in school. Put simply, we are regaining our footing.

That is as much a tribute to Sri Lankans as to the welfare system in place from the later days of colonial rule. Far from yielding to systemic pressures, our public services are coping well. It is true that our public hospitals are nowhere near the state-of-the-art institutions you get in the private sector. But public hospitals are run on the basis of equity, not profit. One can say the same of our schools and universities: while much needs to be reformed, these have ensured access and equity for everyone. This is a point that gets lost in political debates, but one which radical activists underscore frequently.

The drive towards equality and equity that epitomises our public services, in spite of their shortcomings, can be traced back to the Donoughmore Reforms of the 1930s, which inter alia introduced universal suffrage and transformed Sri Lanka, then Ceylon, into Asia’s oldest democracy. These reforms in turn had been preceded by far-reaching changes in fields such as education and health, partly a result of radical agitation, but also a result of measures taken by enlightened colonial officials. Indeed, reforms like vernacular education were not so much an innovation of the Bandaranaike government as they were of the colonial State, and of course leftists and nationalists who campaigned for them.

In whatever form, these changes continued under the first three UNP governments that came to power after independence. Though belonging to a comprador elite, the UNP’s rank and file were very much aware that the social welfare system they had inherited could only be dismantled at an exorbitant cost, a cost that the Dudley Senanayake administration had to bear when it announced cuts to subsidies. The opprobrium which followed these cuts did not just bring down a government, it also persuaded Senanayake to never risk them again, since, as he would prophetically observe, “it is wiser to spend on welfare, than cut welfare and have to spend much more on military expenditure later.”

The biggest contribution to Sri Lanka’s social welfare system came from the three SLFP administrations of the 1950s, 1960s, and 1970s. Intermittent as their periods of rule were, the UNP of these decades did not attempt to reverse these contributions.

Led by the SLFP and coalition of Left parties, the United Front government of the 1970s ventured on an ambitious reformist drive, combining welfare measures with extensive land reforms, though these fell short of expectations, and were mild compared to what had been enacted in post-war Korea, Taiwan, and Japan.

One point that often goes unacknowledged in debates about the United Front government’s welfare drive is its prioritisation of working class mobilisation. The UF election manifesto of 1970, for instance, pledged to “make the administration more democratic” upon coming to power, through the setting up of a network of elected Employees’ Councils.

This was a promise the UF did not renege on. After assuming office, it established these Councils, ensuring greater production, efficiency, and coordination between employees and employers. By 1974, 212 Employees’ Councils had been formed, covering a workforce of 135,000 in the public sector. The labour studies scholar Gerard Kester later called them “an important innovation in social political development”, which indeed they were.

Such advances in welfare were not destroyed under J. R. Jayewardene, only reversed. The UNP administration made the mistake of going ahead with economic liberalisation without cushioning the social and political costs of dismantling the welfare state. This only led to the inevitable: a wave of discontent among the working class and peasantry.

Indeed, after the disastrous encounters of the 1980 strike, the 1983 riots, the 1987 Indian fallout, and the insurrection, Jayewardene himself came to realise his errors: responding to why he did not go ahead with currency devaluation, he admitted that it would lead to price hikes in imported food, a prospect he was not willing to face up to. By then, he had come to realise that neoliberal prognostications were simply not working as planned.

It would seem that decades of welfare expansion have been preparing us for what we are undergoing now. The virus is the litmus test, in other words. Yet the massive contribution of our public services to the country has not, I think, been appreciated, least of all by our ever ubiquitous left-liberal columnists. While some bemoan the excesses of the Sri Lankan State, almost none of them acknowledge that without an expansive or, in the words of free market advocates, a “bloated” public sector, Sri Lankans would feel alienated from the State, which can in the long term fuel disenchantment, resentment, and rebellion.

I am also yet to come across reform plans which outline how the government should handle the consequences of pruning these services. In this I am not belittling their concerns. They are valid, and they should certainly be debated. Yet in none of these recommendations do their authors note how the State can manage the unrest and the deterioration into anarchy that are sure to accompany any restructuring of the public sector.

So far, only Duminda Nagamuwa, in a speech criticising those from the Opposition urging the SLPP to go to the IMF, appears to have highlighted this. The JVP seems more interested in why the regime is not willing to talk with the IMF than the social repercussions of going there. Ironically, Colombo’s think-tanks themselves admit that going for the kill, so to speak, would “impose significant burdens on the people.” The IPS’s Dushni Weerakoon, in a saner take on the matter, has observed that while the IMF option may have to be exercised, debt restructuring will not be as easy as those promoting that option think.

This is a debate which needs to be carried forward. We badly need a consensus. The timing can’t be more urgent, more relevant. Since 1931, Sri Lanka has enjoyed substantial advances in health and education. While I will not say that restructuring will reverse advances in these fields automatically, I am curious to know whether enforcing these reforms would chip away at our welfare state. That is a point very few have raised. It needs to be, right away.

*The writer can be reached at udakdev1@gmail.com

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Latest comments

  • 5

    The problem with Sri Lanka is that it operates a welfare state on borrowed finances. The state sector, especially the security forces, are indeed bloated. They pay no taxes. Any IMF package will demand deep cuts. It will be suicidal for any politician to agree. This was inevitable, given the profligate and unnecessary spending that the Rajapaksas indulged in. Just think, if we didn’t have all those fancy highways, towers, ports and airports, would we be on the brink of bankruptcy today?

    • 3

      “IMF Admits That Program With Argentina Failed Its Objectives”
      This is the second time that IMF screwed it up in Argentina, this time initiated by a rightist president.

    • 1

      The State Sector, oc, is to give “rassavas” to unemployable graduates, many of them (in fields other than Medicine and Engineering) supposedly having done English medium degrees.
      To quote a guy who has done a good Engineering degree: “Those who have done Engineering and Medicine think themselves so important that they can talk about any subject under the sun”.
      See this; I cant stop here, must add more material there:
      As for the “armed forces” – what are they for, but to shoot us when the need arises. But will they shoot Sinhalese people?
      The Tamils have certainly demonstrated their “resilience”, Uditha: I don’t know about us. We only know to vote like idiots, and never take a stand: my choice: the NPP!
      Panini Edirisinhe (NIC 483111 444V)

      • 1

        “But will they shoot Sinhalese people?”
        Certainly, and burn them too for no extra charge. Remember 1989?

    • 2

      Hi OC,

      “The problem with Sri Lanka is that it operates a welfare state on borrowed finances”

      This is exactly the truth.
      One Japanese professor questioned me how SLGO maintains a welfare state while it is struggling to become next Spore in the region.
      Free education, Free health, Free so many other things, but on borrowed finances.
      The bastards repeat today, by the time, they were defeated by end of 2014, economic growth was 7% …. and they were given an economy of 3% by end of 2019, but the truth as it is, no progress was made to SL economy but the total of taken loans were seen as economic growth (fake growth) by doctoring the documents for the benefits of political crooks. That led to even drop GSP plus concession which was then regained by good governance govt.

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