FOR LEANER, MORE ROBUST, EFFICIENT AND GREENER PUBLIC SERVICE
Posted on October 31st, 2022

Sasanka De Silva Pannipitiya.

According to official data, Sri Lanka’s public sector now employs more than 1.5 million people, doubling in size over the previous 15 years.

Despite having one public servant for every 14 inhabitants, efficiency in the public sector is lower than that of Sri Lanka’s Asian counterparts.

The need for staff reductions in public services has been going on for some time now and there are many suggestions from various corners already percolating in the media.

A reduction drive should have to have a multi-prong approach to be successful.

The first one is to cut down on the cost of maintaining excessive staff.

The second one is to determine the optimum numbers needed to be efficient and accountable. 

The third is to create a safety net to avoid retrenchment staff not becoming a burden to the system a few years down the line. 

The fourth goal is to encourage and provide incentives for individuals to advance in a new and useful vocation on their own by obtaining additional education and training. 

The fifth will be to level the playing field for budding entrepreneurs. 

Therefore, the first step is the formation of a panel of experts assembled with local talents to assess and recommend the optimum numbers required in each field. 

If any financial and or further expert assistance is needed in this venture, we should seek experts assistance from world-renowned lending agencies for support for the drive.

Unless a very safe and attractive safety net is created first, voluntary retirement and or enticing staff to accept the so-called Golden Handshake will not be possible.

Taking up training in other useful fields can be facilitated with institutes like the Open University of Sri Lanka, vocational training institutes and other state universities.

Creating a fair playing field for budding entrepreneurs means cutting down on bureaucracy and red tape in business registrations, export/import licensing, and obtaining funds from leading banks and other financial institutes.

My recommendations for a golden handshake are as below.

·        Pay a lump sum equal to 60 times (five years’ salary) the net pay. 

·        Transfer the amount to one of his or her designated bank accounts,

·        Either a fixed or fluctuating interest payment is agreed upon based on the prevailing rates.

o   Currently, one can easily obtain up to 20–25 per cent, depending on the institute.

·         Hold the deposit as a 60-month deposit while receiving a monthly interest payment,

·         Encourage financial institutes to extend loan facilities up to a maximum of 40% against the capital sum deposited on self-employment,

·         Allow depositors the freedom to negotiate further interest rates with the respective institutes after the 60-month holding period has expired. 

Assuming an individual’s monthly take-home pay is LKR 35,000.00.

35,000 x 60 = 2,100,000

The interest is assuming 20% per annum (with monthly withdrawals),

Per Annum,

LKR 420,000

(20/100 x 2,100,000 = 420,000),

Or monthly,

LKR 35,000

(420,000 / 12 = 35,000).

Those who avail themselves of the golden handshake opportunity will get the same amount of money each month as interest payment and without even having to work, which will be a bonus as most of their other hidden expenditures will be drastically reduced due to having to stop working, such as transportation, clothes, and other maintenance requirements.

Further, there are many indirect social benefits as well. Being able to spend more time with his or her family will improve both mental health and physical health as well.

The unit of the family will be bonded together.

Further, lesser environmental degradation.

Even the financial institutions will be in a better position with a load of cash in their care to disburse without having to raise further capital to meet regulatory requirements from time to time.

Even if 50% of them opted for reemployment in the private sector, it would be a boost to the current flagrant manpower shortages, plus the market gene pool would be healthier and more competitive too.

The digitalization of state sector activities will go hand in hand with these reforms for better and healthier outputs. 

Assuming the panel of experts’ recommendation is to let go at least 60% of the current total, that means that 900,000 must be removed.

Now the next question is how to raise such a large sum of money for the project.

Naturally from the local money supply market issuing an attractive government bond to mature in five years.

Even if the rate is slightly higher than the current market rate, with the money saved on non-paying salaries, it will be a big blessing for the country in the long run.

Sasanka De Silva Pannipitiya.

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