By Dhammika Herath –

Prof. Dhammika Herath

The main issue that I try to address in this opinion piece is whether the government can go for a rationalization of state workers’ salaries so that every state worker gets a decent/acceptable take-home salary and there is no space irrationality or absolute greed in sharing the consolidated fund. How can we retain a level of humanness in salary structures but at the same time make sure that the top professionals with high levels of education do not leave the state services or the country? It is only human and ethical that everyone in the state service gets a decent/acceptable salary so that everyone can fulfill their basic and secondary needs. But at the same time, how do we guarantee that the best professionals stay in the country? A school teacher’s starting salary is around 40000.00 month which for me is an ‘indecent’ salary as a teacher cannot maintain his/her wellbeing with such a salary. Recently, I saw an advertisement from the Water Board to recruit electricians (Viduli karmika) with a starting salary of 72000.00 plus allowances. Sri Lankan customs officials, who also take home more than 50% of the fines imposed on fraudsters, are now threatening a strike over some concerns. University non-academics, among whom, the office assistants (with O/L education) earn more than school teachers (with Masters degrees), are on strike for more than 60 days asking the government treat them in the same way the government treats the academics of whom close to 50% have left the country. Why do we see such irrationality driving the public services and how do we stop this? Is there any sector now, which is not on strike or which is not threatening a strike? It is a game of the survival of the fittest.

The attempted salary hike by the Central Bank of Sri Lanka (CBSL) by astronomic proportions raised the eyebrows of many Sri Lankan citizens of all walks of life and it. This attempted salary hike was not seen as justifiable because the economic conditions of the country did not permit such as exorbitant increase of salaries while the population had been subjected to multiple forms of suffering, not least the aggravation of poverty and malnutrition. Further, such an increase of salaries and allowance of epic proportions would have seriously upset the already shaky balance in the state services by creating new anomalies.

It is important to understand that all state expenses are born with the funds available in the treasury supplemented by loans obtained by the government. Therefore, the total sum of money available for a government to perform all the functions can be compared to a pot of money. The government spends on state workers’ salaries, health, education, defense, welfare, and everything with the money available in this pot. The pot remains the same in the short to medium term and will only expand in the long-term if there is an expansion of the economy. This is almost like a “Paroto-Optimum”: a situation where expenditure for one heading cannot be increased without decreasing the expenditure for another heading. Hence, when the government increases salaries for any state service, it must reduce the funding for another expenditure item and very often such decreases happen in the social welfare expenditures. Governments do not usually cut down expenditure on defense or allocations for members of parliament.

What the central bank fiasco highlighted is the issue of adopting Western models without concomitant western values and ethics. The Central Banks in Europe also have central Bank independence but top officials in Western systems are deeply constrained in doing so by the ethics, accountability mechanisms, and democratic governance whereas in the case of Sri Lanka, barely, a few months after the central bank independence Act, the officials of the CBSL thought it fit to increase their salaries and allowance with scant regard for the austerity policies they were advocating for the general public.

Special categories in state services and brain drain 

The balancing act between paying everyone a descent/acceptable salaries and retention of high caliber staff is not an easy one. The current economic crisis has had a profound impact on the tendency for brain drain. Academics, medical doctors, and engineers have been among the most mobile professionals but around 5000 school teachers, nurses, IT professionals, etc have also left the country. The brain drain is effectively affecting many sectors in different intensity. The imminent threat to the stability of the state universities and the hospitals persuaded the government to provide some increases in the allowances to paid to these categories. Given that the CBSL requires professionals of the highest caliber, the brain drain should definitely be an issue for the institution. However, one must also note that only three out of 13 senior officials in CBSL have PhDs and this raises the questions about the meritocracy in the CBSL.

Now, let me get back the salaries question and to an old formular which is important in the determination of the salary structure: the magical 1:4 ratio which determines the difference between the highest and the lowest salary in state services with regard to the basic salaries. The fact that the formula excludes the allowances makes it meaningless right from the beginning. In order to circumvent the barriers imposed by this formula, certain categories such as Central Bank staff and Judicial officers have been designated as ‘Special Categories’. However, history is an important factor in the state services: for instance, in the past, the universities and the CBSL had more or less the same salary structure. The governments after independence considered the universities as focal points for the future development of the country. However, in the 1980s and afterwards, after the introduction of special categories, the CBSL was able to significantly increase the salaries for its staff, while the universities stagnated making it more and more difficult to attract the best talents to the universities. After 2000s, other institutions with powerful trade unions, such as the Ceylon Electricity Board, was able to tremendously increases the salaries for its engineering cadre so that an engineer would earn twice or thrice the salary of a professor in electrical engineering. The salaries of the judicial sector have also had a significant increase. When a government changes the historically established balance in the salary structure of state services, it creates anomalies and leads to a perpetual conflict between different sectors. In the university sector, at present, there are perpetual vacancies which can never be filled. There are many degree programmes in the University of Peradeniya where the academic staff is below 50% of the required staff. For instance, the molecular biology has eight cadre positions but it has only there academics at present. Even if the vacancies are advertised annually, there are no takers as academics with a PhDs in in many of these fields have limitless opportunities in the world. The brain drain disastrous impact on many disciplines in the university sector not only in natural sciences but also in some social sciences and humanities. A potential danger is that some of the disciplines would not have sufficient lecturers and the universities would be forced to discontinue these degree programs. This will have a massive impact on the free education of Sri Lanka. If Sri Lanka wishes to embrace a knowledge economy, can it do so by humiliating school teachers and the university academics? I should add that, upto about 1970s, the difference in the starting salary for school teachers and Sri Lanka administrative services was around 10-20% but now about 40%. Further, school teachers with a starting salary of 40000.00 get absolutely no allowances other than the basic salary. Why have we degraded the profession of teaching so much? Is this purely the power of trade unionism? On the other hand, once illustrious and powerful ‘Disapathi’ service has also been reduced to nothing with a starting salary of just 77000.00 rupees.

Rationalization of state workers’ salaries

The most important question that I want to raise in this piece of opinion is “Can we bring in some Rationalization in state service?” What I mean by rationalization is a rearrangement of the salary structure including the allowances based on certain acceptable criteria rather than the place of work or the power of the trade union. For example, the service of an office assistant does differ based on the place of work. When the CBCL proposed a massive salary increase to all its staff, it massively backfired. People asked “how an office assistant at the CBSL can receive three times that of a salary of a school teacher or four times that of a school office assistant? If the CBSL salary hike went ahead, an office assistant there, would get a gross salary of 183000.00 which is more than the starting salary of a university lecturer or a medical officer. A deputy governor at the CBSL would earn 1700000.00 which is roughly three times the salary of a Vice Chancellor of a state university. Obviously, something was terribly wrong at the CBSL.

Sri Lanka needs a rearrangement of state salaries and allowances based on a set of criteria preferably through an Act of Parliament. It does not have to be reiterated that, the government should engage in wide consultation before deciding on the criteria and subsequent rearrangements. I propose to look at the following but there can be various other criteria as well.

a) Educational qualifications

b) Professional qualifications

c) Shortage of labor in the field of expertise or the tendency towards outmigration

d) Risk to life

e) Exceptional talents of global scale

f) Minor factors such as location

g) Others

What would rationalization involve? Creating Island wide services in which the salaries would not change based on the place of work or the power of trade unions. For example, an electrical engineer would receive the same salary irrespective of whether he works at CEB or Railway but electrical engineer would receive a salary which is different from a civil engineer. An office assistant would receive the same salary irrespective of whether he or she works at the university, school, CBSL or habour. It is acceptable to have minor variations (let us say 10-20%) based on the place of work and conditions of work but without radical deviations.

A key issue in a potential rationalization is pension benefits. Currently, only those in public services are entitled to a government pension which is non-contributory. Those in statutory boards (including universities), government companies, etc are not entitled for a pension and have contributory pension schemes which do not burden the treasury and the tax payers. The issue with a contributory pension is that it does not increases time to time. For example, if an academic retires at the age 65 and lives until 85 years, she or he would have to live with the same pension for 20 years. I know retired professors who struggle to make ends meet. Can we bring homogeneity and a government guaranteed mandatory contributory pension scheme for all state employees and for formal private sector workers? Should pensions be a human right as we become elders at some point? If the formal and informal private sector too can be included in a mandatory government contributory pension scheme, this will massively relieve the craving for state jobs.

Should employees of profit making institutions be paid more than non-profit institutions?

I also want to contest the notion that some categories of state employees generate profit. As a unitary whole, there is no possibility for state employees to make profits or losses. From a limited and shallow perspective, a clerk in a state bank generates profits as a Bank is engaged in business. An employee of the habour, or Ceylon Electricity Board in a similar way earns profits and there is a false notion that since these institutions generate profits, employees are entitled for higher and better salaries and end of the year bonuses. However, a school teacher, a doctor, a nurse, can never claim a bonus as the schools or hospitals can never generate profits. Yet, a clerk in the bank and the CEB may have children and they also get sick: therefore, the clerk needs a school and a hospital. The bank clerk can work in the bank, only as long as there is a school for her kids and a hospital to get treated when she falls ill. Harbors, electricity board, waterboard, schools, hospitals, road development authorities, tax offices etc…they are all part of the state apparatus and all of them are equally important for functioning of society and functioning of the government. Secondly, a person does not get to choose whether one works in a Bank, hospital or school. Other than educational qualifications, one’s employment depends on factors beyond a person’s control such as opportunities available. Hence, it is imperative that, under a process of rationalization, all bonuses and perks given to so-called profit-making bodies must be critically reevaluated other than those benefits which would compromise the integrity of services.

‘Free’ food and ‘free’ health insurance

Special privileges given to special categories can also be critically reviewed. Is it necessary for some state employees to be fed with state funds while others must feed themselves using their salaries? The answer is obviously no. Then, why does the state coffers spends billions every year to feed some categories such as parliamentary staff and staff of the ports or some staff of the hospitals using treasury funds? All such feeding schemes can be critically reviewed and discontinued as the tax payers ultimately bear the cost. There are many other unaccountable benefits: for example, employees of some state banks get unlimited health insurance coverage for themselves and family members both during and after retirement. This is not only absurd but also an appalling abuse of treasury funds. Is it only bank employees who get sick after retirement or can a Grama Niladari also get sick? While the former is well looked after by the state-paid insurance the latter has no such benefit.

I think any rationalization of state services salaries will have to abolish all previous service agreements. For example, employees of the CEB, water board, Banks etc have service agreements which entitle employees to a salary revision every three years while there is no such revision for employees of other state institutions.

What should we do?

Sri Lankan economy cannot forward when every service resort to strikes based on salaries and other perks. This should not be understood as an impingement on labour rights but the salaries and perks need some kind of rational reorganization and semi-permanent fixing on a long term basis through an act of Parliament so that whenever there is an increase of salaries or allowances, it goes to every state employee rather than to particular categories of staff.

Such a semi-permanent arrangement also needs some flexibility in order to respond to sudden brain drains. For example, 400 medical specialists have left during the last two years and universities have lost over 30%-50%  of its academic staff. The government, while trying to find a permanent arrangement of salaries and perks through a new salaries Act, should keep some flexibility to respond to sudden labor shortages and out-migration of professionals in relevant sectors. For professionals of the highest caliber there is a global market. While fixing the salaries for the great majority of staff, the government needs to develop a forward salary map which makes possible future salary increases for sectors affected by brain drain and such a salary map can be embedded into a new salaries Act. For instance, if the state believes that the salary of a Professor or medical specialist should be equal to that of a senior electrical engineer then, the forward salary map can already mention that in five years time (or whatever) the medical specialist and professor would have an annual increment until that reaches the level of an electrical engineer at the CEB, while the salary of the electrical engineer would be kept constant. Once they are equal, there will be no future increases other than a general increase for the entire state services except periodical changes based parliamentary approval.

Possible resistance from trade unions can be overcome by making existing perks and privileges personal to holder so that any future recruits to government service will be recruited under the new salaries Act. The salaries Act should be subject to review every five years which means that every government elected to office can have the opportunity for sensible and rational revisions. To make the state service responsive to the service seekers, the allowances can also be linked to performance.  For instance, any increases in allowances to university academics can be linked to high quality research, publications and new scientific discoveries and for medical specialists based on performance. There can also be special allowance systems for very special circumstances like difficult and very difficult service stations such as schools or hospitals in very remote areas.

I believe that Sri Lanka’s salary anomalies in the state sector and severe brain drain needs strong response from the government and Sri Lankan cannot afford to have incessant strikes which cripples the government and inconvenience the public. Obviously, we will need to face the reality and offer some higher benefits to sectors which suffer from brain drain but we need to guarantee that such benefits do not come due to the power of trade unions or just greed. We need a rationalization of salaries and allowances which gives a decent/acceptable salary to everyone but also works to retain the best professionals in the country. Although there are ethical and practical issues in paying some sectors higher than others, pragmatic considerations would force the government to adopt such an stance.

*Writer is a Professor in Sociology at the University of Peradeniya and the views expressed in this opinion piece are personal in nature; contact; dhammikaherath@arts.pdn.ac.lk