The development of the country depends on reducing unnecessary expenditure and development of export industries and agriculture, with additional labour. Thus the country’s policies should encourage idling labour towards productive employment. Accommodation of slum-dwellers in high-rise apartments is costly and the country cannot afford such
luxuries to idling families; they should be made to earn the apartment – Pic by Shehan Gunasekara
From the beginning, the Yahapalanaya Government faced serious financial problems, which they claimed were due to loans obtained by the previous Government, with payments becoming due after ending of grace periods. Today, the depreciation of the rupee against the dollar has increased problems, pushing the Government into a serious crisis.
Reasons for crash
The depreciation of the rupee is due to the country’s failure to earn sufficient foreign exchange to meet imports and settle foreign loan instalments. The economy too is under pressure as the Government’s income is insufficient to cover the expenses, loans and finance development projects.
The expensive political system, over-staffed administration and the education system ill-suited to the country’s needs have contributed to the mess. Improving foreign exchange earnings requires efficient industries, improved technological services, tourism, etc. But most suffer from labour shortages.
The Government amended the Constitution reducing the number of ministers to 30. However, within a year ministerial numbers reached nearly 100. But none challenged the default of the Constitution in courts.
Ministers and MPs are paid high salaries and allowances in addition to the vehicle permits, which they sell. With official vehicles, luxury housing and security escorts, at a heavy cost to country, they call themselves honourable. In addition, the President, PM and ministers roam the world accompanied by large staff, with costs paid by the taxpayer.
Losses due to poor management
The previous Government’s massive investments in projects mostly around Hambantota with borrowed money yielding poor returns is responsible for the financial mess. The current Government came to power faulting the previous regime continues to be careless in managing projects as Moragahakanda, Kandy Expressway, East Container Terminal and others. The President, Prime Minister and the ministers are too busy attending functions and have no time to understand projects prior to implementation.
The increasing number of ministries has resulted in the growth of offices, staff and vehicles. Ministers appoint their supporters into organisations under them, whereas with computerisation, staff numbers should have reduced. Protesting Arts graduates continue to be recruited as management assistants, but cadre does not have such a post. Now MAs are protesting regarding their future.
Education ill-suited to industry needs
Minister Harin Fernando recently called on the corporate sector to use blockchain, artificial intelligence and drone technology analysis to convert SL into a technology hub and move the country up value chain. Does the Minister imagine the current Sinhala-based education could guide students to achieve such?
In response to the rise of the dollar, the Finance Ministry announced vehicle import permits be disallowed to MPs as well as Government staff, while restricting vehicle allocation to Ministers to two. But the 225 MPs have already got down 227 vehicles, only the PM and the Speaker have not used the permit and GMOA immediately protested.
Already staff in a number of Government sectors have struck work demanding salary increases. The President managed to temporarily settle the issue by appointing a salary review committee as other staff too would be affected. The public attitude is to continue their accustomed care-free lifestyles and are unwilling to cut down expenses and will fight against price increases.
The Government is showing splits between the SLFP and UNP and cannot be expected to reduce Cabinet numbers or their allowances. So how could they reduce same of senior Government staff and others? Meanwhile the depreciation is continuing, with some experts forecasting settlement around Rs. 182.
The rising dollar will force a price increase of imported goods, also oil costs and the common man will suffer. The Opposition will encourage the public servants to protest and strike; the Government without funds would be forced to dissolve the Parliament.
The next president will have no option but to reduce own expenses, lower cabinet size and reduce salaries, allowances, staff and car permits to ministers, MPs and Government officials will be forced to bear with present salaries. Public too will be forced to lower lifestyles. But with limited money in the hands of the consumer, higher costs of imported goods, increasing price of local goods and vegetables will not be acceptable and opposition would instigate public protests.
Labour shortage not even discussed
The garment industry is the highest earners of foreign exchange, but expansion is restricted due to labour shortages, forcing some companies to venture abroad. Other industries and services too suffer from same. But the cause and possible solutions to the problem were not highlighted in newspaper articles or in public discussions.
Trained staff for high technologies
The country’s inability to advance in technological fields is limiting knowledge only to the book and absence of skills among the school leavers due to Sinhala based education. To overcome the issue OL and AL science should be taught in English medium, to enable school-leavers to join private schools offering IT and technical courses.
There are over 60,000 unemployed Arts graduates with increasing numbers each year. Most difficult would be to convert university Arts faculties into English medium practical courses for small groups of students. Meanwhile, the University of Ceylon Arts Faculty website offers an impressive range of subjects. Practical reality is unknown.
Labour force participation
According to the Labour Department, Labour Force Participation Rate in 2018 is 51.1%. The Labour Force Participation Rate is the number of persons who are employed plus unemployed looking for jobs divided by the total working age population. Sri Lanka ranks among the lowest rate holders in the world. Currently about eight million people are employed and unemployment rate is low 4.2%. The question remains, why don’t people seek employment?
Why do people refuse employment?
Most companies, factories and shops offer lower employees a salary between Rs. 25,000 to Rs. 40,000 a month. They expect daily attendance, discipline and an honest day’s work. Few large factories offer transport from home and meals. In others the worker has to bear the costs.
In casual employment daily wage is around Rs. 1,500 to 2,000. One or two days’ work a week would yield almost half the factory salary with lots of freedom with possibilities of side-incomes, distracting workers from regular employment.
Role of Samurdhi officials
The so-called poor are paid a monthly stipend referred to as Samurdhi, a living support. The officials are expected to guide the recipients out of poverty. Recently an elderly couple in their ’70s committed suicide as they were unable to survive. Samurdhi has become so politicised that Government recently decided to award Samurdhi benefits to a further 10,000 families.
People encroaching in public lands
A large number of people reside in encroached properties, in cities on road-sides, low-lying lands, by the railway, the sea, on reservations, by streams and rivers, etc. Some run small boutiques in urban road-sides and sea-sides with small eateries. Central hillsides are encroached by villagers for housing and cultivation, some growing tea.
They clear jungle on hill-sides and level land for housing, resulting in soil erosion and earth-slips. Grasslands at the edge of Sinharaja were encroached, depriving elephants of grass. Dry-zone forests are encroached by nearby villagers into wildlife reserves and State lands. Most above earn only for basic survival, but enjoy their freedom and are unwilling to be employed.
Encroachers expect apartments
With the Government relocating slum dwellers in apartments, encroachment of State lands continues with greater vigour. Recent floods in Heen Ela (originating near Parliament joining Dematagoda Canal and discharging to Kelani River) inundated houses on canal banks. When interviewed by media, the residents informed their willingness to move over to high-rise apartments if provided.
The shanty dwellers between the railway and the sea, near Wellawatte and Dehiwala (who were evicted after tsunami), battered by the recent heavy winds and rising waves held demonstrations demanding apartments.
Recently, media reported an attempt to clear 350 acres by a foreign company to cultivate sugar-cane. The attempt was resisted by the locals, presumably illegal occupiers of the land. One protestor informed the media: “They expect us to be their slaves in their factory, we value our freedom, we will not allow the factory to be built,” showing their mentality towards work.
Relocating slum dwellers
The 2001 survey by Colombo Municipal Council identified a total of 77,612 families living in the city scattered over 900 acres. The Minister for Megapolis expects to move half of them to apartments by 2023.
During the past, slum dwellers were relocated into high-rise apartments provided as a subsidised loan by the UDA. The 400 sq.ft. two bed-roomed apartments, valued at Rs. 5 million, were offered at only one million, with an advance payment of Rs. 50,000 and balance payable monthly at Rs. 3,960.00 over 20 years. The one million loan with interest at 0.4% per annum without capital payment.
About two million people, or nearly one-fourth of the employed, are supposed to be engaged in agriculture, contributing 7% to GDP, working in plantations and general agriculture. Majority in paddy cultivation, while others cultivate potato and onions replacing imports, also vegetables and fruits. The common factor in all is the small labour component and high profit margins.
Local rice, potatoes and onions are more expensive than imported even with transport, taxes, shipping and wholesalers margins. High vegetable prices come down drastically during February and March when harvests from the north arrive after rains in November/December, indicating unfair high prices charged by locals.
Rice prices up and down
After the Government increased salaries of Government staff by Rs. 10,000 a month, rice prices too were raised during May/June. By then Maha cultivation was over and produced paddy was with the millers, who made a profit of Rs. 25-28 from a kilo of rice. A few days ago the Government announced Rs. 10 per kilo reduction in rice prices, possibly from higher profits from millers. How the benefit will be passed over to the consumer is to be seen.
Potato and onion cultivations
Currently, potatoes are cultivated in Welimada and Nuwara Eliya areas, also possible in Jaffna and Puttalam Districts. Most farmers cultivate in 15 to 20 perch former paddy lands and expect a sufficient income to live. But manual harvesting results in heavy damages to the crop.
An acre of potato needs 16-20 kg of seed potatoes, imported from Holland, Germany and Denmark. Some years ago CIC produced seedlings through tissue-culture and were sent to up country plantations, where tiny plants were planted in small containers, by school children in the afternoons, producing high quality young plants. But further progress is unknown.
The country’s potatoes, B onions and most vegetables are cultivated by rural growers in small plots of land. Over the years consumption and living styles of farmers moved up. Most have mobile phones, houses with subsidised electricity. The cultivators demand a price for their product or labour that will satisfy their expenditure requirements.
In India, retail price of onions are INR10 per kg, fresh potatoes, packaging type in jute bags sell at INR12 per kg. Purchase price of rice has been raised to INR14.70 per kg. With INR costing SLR 2.43, prices would be onions SLR.24, potatoes Rs.29 and rice Rs.35.70 per kg shows the high cost of local produce.
But what cannot be understood is when high quality potatoes are available at INR.12 or Rs. 29 per kilo, the Government levies an import duty of Rs. 40 per kg. Imported potatoes available in the local market are lower than third grade and sell at nearly half the local potato price, which needs investigation.
President unaware of fruit exports
Recently the President made a public statement deploring fruit imports. The President may not be aware that Sri Lanka exports nearly 60,000 metric tons of fresh fruits and vegetables annually, 90% to Middle East and Maldives earning an income of $ 69.1 million in 2014. In 2016 banana exports alone earned the country $ 16.6 million.
The Ministry Agriculture had signed an agreement with China in 2016 to export 10,000 tons of bananas in Ambun, Ambul and Kolikuttu varieties. But after two years failed to export even a kilo. Apparently Ministry officials have not heard of shelf-life of fruits.
Meanwhile, CIC produces, exports and sells locally about 3,000 tons of Cavendish banana a year. To meet the increasing demand the company collaborates with out-growers and contracted orchards. CIC, while managing over 10,000 acres of its own farm land, works directly with over 40,000 rural out-grower farmers.
The Government funds large enterprises with low interest loans. If they could follow CIC’s example and bring small farmers under the wings of large cultivators, it would result in a win-win situation.
A couple of months ago supermarkets offered bright yellow TJC mango, around Rs. 300 to 500 a kilo. The locally-developed mango was accepted by the Ministry of Agriculture as a new variety. But it took over 12 years to reach the market. Currently nearly 10,000 acres of TJC mango plantations are underway with some already being exported. The tree, less than 10 feet tall, produces a tasty fruit with no fibre, yielding fruits over eight months of the year, it could become a major export.
Possible way forward
The next president’s only option is a simple lifestyle with reduced foreign travel and public meetings. The Cabinet be reduced to a maximum of 20 ministers plus 20 deputies and no others. Ministers’ and MPs’ salaries and allowances, privileges including foreign travel, vehicles, luxury quarters, security and pensions enjoyed be reduced, making them truly honourable.
When MPs’ privileges are reduced sharply, State employees too would be forced to accept reduced privileges. Various allowances enjoyed by Government and corporation staff should be made open and rationalised.
When privileges of MPs’ and others are reduced, others enjoying unfair benefits needs to end. Thus the current payment of Rs. 3,960 for a 400 sq.ft. apartment is extremely low and in future relocations should reach 25% of two persons’ salary around Rs. 12,500 a month. To encourage more to work, families with more than two employed could be offered larger size apartments (say 600sq.ft).
Encroachers in the city are reluctant to be employed, with some involved in unlawful activities, but expect accommodation in apartments. If Samurdhi officials maintain files on slum-dwellers as family details, owned property, skills, etc., people could be guided for jobs by bringing prospective employers and employees together. Samurdhi staff need to visit slum areas regularly and evict newcomers. If staff insists at least two persons from each family be employed, or being evicted, most will accept employment.
Outside the city, all encroachers occupying marshy lands, railway reservations, sea-sides could be allowed to stay, on condition if two members are employed, but no small businesses. With additional income from employment some may leave the shanties. But those occupying hill-sides and the dry-zone reservations need be evicted. Earth-slips and elephant attacks on villages are a result of encroachments hills and forest reservations.
In agriculture forcing farmers to work hard would not practical, but encouraging joining with large-scale plantations as out-growers would reduce costs and force others to produce more efficiently.
Although the war ended the food production of north is not significant. After the rains in November/December vegetables from north enter markets in south during February/March. If Moragahakanda water is sent to the north early, supply of vegetables and fruits at lower prices would increase, lowering market prices.
The development of the country depends on reducing unnecessary expenditure and development of export industries and agriculture, with additional labour. Thus the country’s policies should encourage idling labour towards productive employment. Accommodation of slum-dwellers in high-rise apartments is costly and the country cannot afford such luxuries to idling families; they should be made to earn the apartment.
The human-elephant conflict is extremely unfair by wildlife and if the current process is allowed to continue, elephants will shortly disappear. Thus all encroachers in the dry-zone need to be removed urgently and further encroachments prevented.