Bloated public sector cannot boost economy

Last week, the Government announced that approval has been granted for the recruitment of 62,314 individuals into the public service over the past eight months. A special committee, chaired by the Secretary to the Prime Minister, has been tasked with overseeing this massive intake. According to the cabinet spokesperson, some of these recruitments have already been finalised, while others remain at stages such as examinations and interviews.

At first glance, this may appear to be a sign of progress; tens of thousands of jobs created and young people given “secure” employment. But beneath the surface, this announcement represents a deeply troubling continuation of one of Sri Lanka’s most destructive economic habits of using the public sector as a dumping ground for political promises and patronage.

This country already has one of the most bloated public sectors in the world. More than 1.3 million out of 8 million employed individuals are State employees. That means one out of every six workers is paid by the taxpayer. This is not a symbol of social protection but a dangerous, unsustainable burden on the economy. At a time public finances are already stretched to breaking point, the Government is adding tens of thousands more salaries to its payroll.

The result is predictable and would lead to higher Government expenditure, increased borrowing, and more pressure on already struggling taxpayers. It was precisely this sort of short-sighted populism that contributed to the 2022 economic collapse. By expanding the public sector instead of reforming it, successive Governments have kept the country trapped in a cycle of debt, inefficiency, and stagnation.

Public sector jobs have long been treated as political incentives, distributed as rewards for loyalty or as quick fixes to unemployment. But this strategy undermines the very foundations of a healthy economy. Instead of encouraging innovation, entrepreneurship, and private sector competitiveness, the State has entrenched dependency. Worse still, the Government is directly competing with and crowding out private businesses by running loss-making enterprises. The sorry tale of failed State sector enterprises ranges from airlines, utilities to retail operations. These drain the treasury while distorting markets.

The consequences are visible everywhere. State-owned enterprises, staffed far beyond their needs, are unable to innovate or operate efficiently. The private sector, saddled with excessive regulations and unfair competition from State-run entities, struggles to thrive. Meanwhile, taxpayers, many of whom receive far less in services than they pay in, carry the burden of maintaining an overstaffed and underproductive bureaucracy.

What Sri Lanka urgently needs is not more State employees, but a leaner, more efficient Government. The savings from reducing the size of the public sector can be redirected towards essential services such as healthcare and education, both of which are suffering from severe shortages of resources.

At the same time, the Government must create the conditions for individuals to thrive on their own. That means cutting back on red tape, simplifying tax structures, protecting property rights, and ensuring a stable policy environment that attracts investment. The promise of 62,314 new public sector jobs may win applause from those desperate for employment today. But in the long run, this is a recipe for further economic instability. Every additional salary paid by the State without corresponding productivity is another step backward for a country already reeling from its worst economic crisis in decades.