Pay hikes, swings and roundabouts

Wednesday 1st November, 2023

Trade unions usually go into overdrive to secure pay hikes in the run-up to the annual national budget. This time around, they have become desperate beyond measure for obvious reasons. They are demanding a substantial pay hike commensurate with the soaring cost of living. They have held several street demonstrations recently to pressure the government to grant them a 20,000-rupee salary increase from Budget 2024. They have even threatened to launch a strike unless the government considers their demand favourably.

Cabinet Spokesman and Minister Bandula Gunawardena has said a pay hike for state employees is in the pipeline. Ironically, he has also announced that the Value Added Tax (VAT) will be increased from 15% to 18%. Upward revisions of indirect taxes lead to increases in the prices of goods and services, affecting all citizens. Thus, the government will give with one hand and take away with the other.

If the government resorts to excessive money printing by any chance to appease protesting state employees, inflation will increase, eroding the value of money and causing a decrease in real income across the board. It is, therefore, likely to be a case of swings and roundabouts for the state workers if they succeed in securing a pay hike, while others will be in a far worse situation without any means of cushioning the impact of the VAT increase on the cards.

The people are desperate for relief, and it is only natural that state employees are demanding a pay hike. In fact, they deserve what they are asking for, but obtaining salary increases at this juncture could be likened to drinking seawater to quench thirst. The protesting trade unions ought to take cognisance of this harsh reality when they make demands. An increase in the public sector salary bill will drive the government to boost its revenue at the expense of everyone.

Sri Lanka’s state sector is terribly overstaffed and inefficient. It has more than 1.5 million employees, whereas the country can manage with half that number. It is said that there is a public employee for every 14 Sri Lankans! Successive governments have blundered by using the state sector to provide employment to their supporters. The number of public sector workers has more than doubled during the past 15 years or so, as a result, according to media reports. The state is now struggling to pay their salaries, allowances, pensions, etc. Unless the number of state employees is brought down to a manageable level, the public will continue to bear the cost of maintaining excess workers.

Teachers are prominent among the state employees demanding a pay hike. The people maintain public schools and, at the same time, pay for their children’s private tuition. The growth of shadow education is such that one wonders whether it has rendered the state-run school system redundant. The Education Ministry has made attendance mandatory for students to apply for the GCE A/L as school candidates. But for this rule, the A/L classes in most government schools will be empty, with students opting for private tuition during school hours. There are some schools where teachers work conscientiously and students can sit competitive examinations confidently even without private coaching, but they are the exception that proves the rule.

The warring trade unions must be mindful of their duties and obligations while making various demands. The state sector consists of many shirkers and corrupt elements. Those characters also benefit from successful trade union battles. Trade unions do not seem concerned about this problem at all.

Trade unionists have a pivotal role to play in enhancing national productivity; they must ensure that their members earn their keep without being a burden on the public. It is with the help of trade unions that countries such as Japan have achieved their development goals.

Let the government and protesting trade unions be urged to act responsibly and fairly, heeding the interests of the public.