Pay vs. performance

Tuesday, 18 February 2020 00:00 -     - {{hitsCtrl.values.hits}}

President Gotabaya Rajapaksa has appointed a National Salaries Commission to formulate and implement a national salaries policy that will encompass both the private and public sectors.   

The commission aims to advise and assist the Government in the formulation and implementation of a national wage policy by revisiting all remuneration structures including salaries and wages in the public sector as well as the private sector to facilitate due fulfillment of manpower requirements in order to maintain continued sustainability of salaries. 

The policy of the Government is to recruit employees with skills that can effectively serve the public sector, facilitate the development process and regulate when necessary, taking into consideration the private sector and its role in achieving the Government’s development goals and aspirations.

The ultimate aim of the policy is to have an efficient public service that can work in tandem with the private sector. This is a crucial but complicated process in Sri Lanka because over the decades, insular policymaking has resulted in the system essentially calcifying in such a way that it does not serve employee or employer interests. This is largely because competitiveness and shifts in the way earnings are structured have changed but policies have not evolved in parallel. 

Sri Lanka’s economy is in a crisis and the only way out of it is to have stronger exports and investment. In order for this change to take place, the economy has to link up with international value chains, which it has failed to do for too long. As a result, the competitiveness, knowledge transfer and innovation that could have taken place has also been limited. Therefore, incentivising the economy is to some extent dependent on bridging this gap by fixing well-meant but outdated policies that may be limiting the public and private sector. 

One such instance is the public sector having a non-contributory pension system. The private sector makes contributions to the Employees’ Provident Fund (EPF) and there is no reason why the high-earning public worker segment cannot do the same. This would also assist in creating job fluidity between the public and private sector where talented and efficient workers can move between both segments and be productive without having to worry about their retirement benefits. 

This could also encourage the public sector to increase its competitiveness and also engage more with the private sector because there is strong incentive to do so. In most other countries there is seamless movement between the public and private sectors and while this can create conflicts of interests it can be handled at an institutional level. 

In addition, there has to be acknowledgement of wages versus total earnings. In many private sector companies the wages may be lower but workers could also be given meals, transport, health insurance and training opportunities that improve their capacity. This needs to be taken into consideration at the policy level so the focus is not only on wages but the overall human resource development of the job. Careers are built on more than just a monthly wage. 

There is no question that competitiveness is driven partly on remuneration. For Sri Lanka’s exports to move up the value chain and become globally competitive, it is imperative that the country’s human resources are built on long-term policies. The cycle of unproductive workers getting higher salaries because they are the only ones who can strike must end and holistic approaches need to be taken.