CBSL pay hikes

The Central Bank of Sri Lanka (CBSL) has been in the news again – this time for the wrong reason. Questions are being asked about the justification, if any, of the unprecedented salary increases they seemed to have helped themselves to when the country is in a soup both economically and socially.

Let us examine different aspects of this action to see if the CBSL could ever justify it on any grounds.

For an impartial observer, this seemed like a simple case of helping themselves to their hearts’ content just because they are allowed to so by the newly minted “rule book”, meaning the amended CBSL legislation that rightly gave them more independence and freedom from undue political influence. Not a bad idea given what happened in the past, but I believe, that freedom was intended to be exercised only in the monetary policy and governance related matters.

Such freedoms are part-and-parcel of many similar government organisations around the world that are required to be fiercely impartial and objective in their policy and operational decisions. However, it’s not a case of having unlimited freedom to do whatever they want to with their resources. With freedom comes the scrutiny of outcomes. I can quote an example from New Zealand where I currently reside to bring home this point. When it comes to impartiality and fairness, the NZ Police Force ranks amongst the best in the world. They’re completely independent of political influence as far as policy and operational matters go. However, they must work within the allocated government budget. Their freedoms don’t extend to an ability to unilaterally shower themselves with outrageous pay increases like what the CBSL has done.

Another justification the CBSL seems to be trotting out is that their staff members are a special breed of extraordinarily qualified, talented, and capable people deserving extraordinary remuneration. If not, they’ll apparently flee the Bank in no time and the whole economy will collapse (as if it hasn’t already collapsed in a heap!).

Let’s put this argument to the test starting from the bottom. It was reported that the employees at the lowest grades such as drivers and office aides are to be paid relatively fancy sums (in the Sri Lanka context) such as 200,000 to 300,000 rupees a month, apart from a host of other fringe benefits. I’d think these amounts are not only comparable with what a government doctor or a university teacher gets paid, but also are likely three- or four-times a similar category of employee could attract elsewhere. I wonder what kind of special capabilities, talents, or qualifications these pampered CBSL drivers or office aids offer that justify salaries comparable to those paid to highly qualified professionals elsewhere. I bet my bottom dollar (or rupee) that not a single employee of this category would even think of quitting their plush CBSL job even if they’re denied another pay hike.

We could simply extend that flawed justification upwards to almost all other categories of staff too. The logic and the common sense will tell us that any justification would be hard to come by.

Of course, the CBSL can tell us that they deserve this extraordinary remuneration regime because of the huge responsibility they carry in being the guardians of the monetary system of the country. Granted, but was it the lack of pay that prevented them from doing a good job so far? Or was it a case of lack of commitment, capability, and honesty?

Quoting just another example from New Zealand, the Central Bank here (known as the Reserve Bank of NZ) carries out exactly a similar remit, managing and regulating the monetary system of an economy worth $250 billion with just 400 staff. The CBSL on the other hand has close to 1,000 so-called “highly talented and indispensable” staff who seemed to have done a really bad job managing an economy worth only $75 billion!

The worst aspect of this action by the CBSL is their blatant hypocrisy in relation to what it has been preaching to the rest of the country about the need to keep the dreaded inflation in check.

Upul P, Auckland