After the Welfare State – What Next


by Rajeewa Jayaweera

Now with the euphoria over the sweeping concessions for the people announced in the welfare oriented mini budget making good election promises beginning to fade away as is the case with most such concessions, a time will soon come when difficulties in implementing proposed taxation in order to collect additional revenues to balance revenue and expenditure will have to be faced.

Sri Lanka has by and large been a welfare state since independence. The Treasury has been footing the bill for both free education and free health care since independence. It was with great difficulty that the free measure of rice originally introduced for political reasons was done away with. Whereas a minority of our people opt for both private health care and education, the majority without the means to afford either are heavily reliant on state provided services. As promised in President Sirisena’s election campaign, the recent mini budget saw allocations for health and education rise to 3% and 6% of GDP respectively which is to be applauded. Other key concessions announced were a monthly salary increase of Rs 10,000 for 1.3 mil Government Servants, a monthly increase of Rs 1,000 for over half a million pensioners, a 200% increase in Samurdhi payments, a Rs 20,000 payment to pregnant mothers, 50% waiver of agricultural loans up to Rs 100,000, reduction in petrol, diesel, kerosene, gas and 13 food items, guaranteed price levels for paddy, potatoes, green tea leaf, rubber, fresh milk, concessions for city dwellers requiring relocation and 15% interest on fixed deposits of senior citizens up to a maximum of Rs 1 mil. Even hardened critics will agree that relief granted was substantial.

Otto von Bismarck, the first Chancellor of Germany created the first modern welfare state based on a tradition of welfare programs in Prussia and Saxony. He did so with the support of German industry. The objective of these programs supported by industrialists was to stem the flow of immigrants to the United States where wages were much higher but welfare non-existent. German workers were needed by the German Empire. In the United Kingdom, Liberal welfare reforms began to emerge with the 1906 – 1914 Liberal government of Prime Minister Herbert Asquith who introduced Old Age Pensions Act, Free School meals and Labour Exchanges Act. These are from a bygone era when imperial treasuries were lavishly supplemented by regular contributions from distant colonies.

The Sociologist TM Marshall defined the Welfare State as "a distinctive combination of democracy, welfare and capitalism". Tom G Palmer a Senior Fellow at the Cato Institute headquartered in Washington DC in his book ‘After the Welfare State’ says ‘The welfare state is bankrupt. It’s not just the ballooning government debt. It’s the unfunded liabilities – trillions and trillions and trillions of dollars. It’s the crumbling currencies of governments intent on "stimulating" their way to collapse. It’s the erosion of moral capital – of personal responsibility, planning for the future, work, and savings. Now is the time to awake the sleeping generation, the ones who are being handed the bill for generations of irresponsibility. It’s time to prepare young people for After the Welfare State’. He further states ‘"Free services" come at a price. When you give up your independence, you lose your freedom. Someone has to propose, not only "reforming" welfare states, but getting rid of them. It’s time to challenge directly Otto von Bismarck’s most lasting and poisonous legacy’.

In Sri Lanka, we need to do some serious thinking as to where we are and where are we headed. It is customary for all political parties and politicians to make promises to voters in order to get elected. Each political party attempts to outdo the opposing party with no consideration what so ever if such promises can be kept or not and the costs involved in making good such promises. The general practice is to leave the succeeding government with a debt larger than what they themselves took over. On the other hand, the general populace who are busy making ends meet does not seem to mind the status quo and wait for the next election for another round of concessions.

The area I wish to touch upon is productivity in this country in general and 1.3 mil government servants in particular which has been in decline for some considerable time notwithstanding automation and computerization or simply stated, returns for these concessions. The number of days if takes for a letter sent by ordinary mail to reach its destination which was two days some decades ago now takes several days if not weeks notwithstanding the overtime (OT) paid to Postal Dept. staff. OT in some establishments has become a regular allowance and any attempt to reduce or eliminate it will be met with violent objections and industrial action.

It is indeed a rare sight to see all staff at their appointed work place at the appointed time, be it a Ministry, Govt. Dept., Statutory Board or any other govt. establishment. Once in office, it is breakfast time. Most staff get down to work closer to 9 am if not later. Similarly staff will be preparing to go home from 3.30 pm with short leave and casual leave available as well as personal errands to be run in between. Considerable damage is done to productivity by the number of Pubic / Bank / Mercantile holidays. According to the Gazette Notification of 28 October 2014, 26 holidays have been announced for 2015. It drops to 24 due to two Poya holidays falling on Sunday. However with days given off for Presidential Elections, Pope’s visit and forthcoming Parliamentary Elections the total will exceed 30 days besides 52 Saturdays and 52 Sundays.

Another extremely destabilizing practice is the combining of public holidays with weekends and one or two days of annual leave thus resulting in the concerned staff being away from work for over a week on occasion. In most instances no acting arrangements are in place. Trade Unions in our country seem to have gone horribly wrong. Case in point are the Ceylon Electricity Board and National Water Supply & Drainage Board with around 40 different unions in each establishment and around 15 different unions in the RDA. The apathy encountered by the general public when dealing with staff in these institutions, especially the CEB and NWS&DB, may be directly linked to difficulties faced by CEB and NWS&DB managements in effectively managing these establishments. This situation prevails in practically every government institution. Driving past Dehiwala-Mount Lavinia MC recently, I witnessed laborers protesting against reduction of OT rates, introduction of finger print machines and the interdiction of an individual suspected of a Rs 6 mil theft. They were attempting to storm the MC office through the main entrance.

Unfortunately, concessions given in the past and present are one sided with no returns stipulated. Further, there is no mechanism to hold recipients of government concessions accountable. There is no clawing back in the form of enhanced productivity for concessions/increases granted. The mindset of our biggest labor force i.e. the 1.3 mil strong government servants needs a radical transformation. Seeking of government jobs on the misguided believe of job security and not being dismissible must be discouraged.

It will only be a politician inclined towards political harakiri who will link such issues to election promises. President Sirisena on the other hand has declared his intention not to contest another Presidential Election. He does not need to worry of being reelected and hence in an advantageous position to bring about some much needed changes in getting our 1.3 mil government servants to improve their work ethics and productivity in return for the substantial concessions granted. In addition to the change in political culture, this country is also in need of a change in work culture. A good start point would be in the reduction of public holidays in a given year. It is hoped that President Sirisena along with his new government post Parliamentary Elections will at least attempt to address this issue for the sake of future generations.

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