Govt. on right path to restructuring SOEs

The Government is pushing ahead with its decision to restructure Government-owned enterprises with Cabinet approval to appoint a four-member ministerial committee to review the ‘State Commercial Enterprises Management Draft Bill’ which will enable the liquidation of some of the loss-making bodies and restructuring of others.

The Government has said that these State enterprises should be restructured and maintained with proper administration with the assistance of local or foreign investments without being a continuous burden to the General Treasury and the country’s economy.

Earlier a Cabinet appointed committee headed by Prime Minister Harini Amarasuriya that looked into reforming State-owned non-commercial institutions recommended the liquidation of 12 non-commercial states, amalgamation of several others as well as the restructuring of some others.

Among the recommendations was that the three State-owned media institutions, namely the Sri Lanka Broadcasting Corporation, the Rupavahini Corporation and the Independent Television Network, be placed under a single management so as to improve efficiency and make them commercially viable.

Other institutes recommended for amalgamation are the Sri Lanka Tea Board and the Tea Small Holdings Development Authority, as well as the Coconut Cultivation Board, Coconut Development Authority and the Palmyra Development Board.

It is long known that State-owned entities, both commercial and non-commercial, are a burden to the Treasury. For years they have become places where politicians find it easiest to give employment to their supporters. It’s the rule more than the exception for politicians to influence appointments to government jobs and nowhere is it easier to plant their supporters than in State owned Enterprise (SOE)s.

Already thousands of workers are employed in these institutions, many with nothing to do. One has only to visit one of these offices to witness the lethargy and disinterest most have in their work. They are assured of a salary at the end of the month, low interest loans along with many other perks of being a Government employee as well as a lifelong pension but stagnation in the same place is also the reality. Many will spend 30 or even more years attached to such an office, self-satisfied they have a Government job.

In Sri Lanka, State sector jobs are still much sought-after given the job security they represent. With each change in Government, politicians are under pressure to give jobs to their supporters or their family members and hence it’s become a vicious circle with many offices being overstaffed, in some with new recruits having no work to do or a place to sit in. Given the permanent nature of these jobs, it’s next to impossible to lay them off while no political party wants to take such an unpopular step which in future elections could cost them heavily.

The JVP-led Government which has in the past always villainised the private sector and spoke for more State sector jobs now faces the harsh reality of surviving under an IMF austerity program which includes reducing State sector jobs and restructuring lossmaking bodies. With a draft bill in hand, the Government seems serious to push ahead with the reforms which will be deeply unpopular but has to be done.

Knowing the tough task ahead, the Government has announced it will give 30,000 new State sector jobs this year, the majority to be appointed as teachers and to other sectors which have a dearth of staff. This will need to be balanced by laying off some staff which would need to be done by offering attractive severance packages so that the workers leave willingly.

Whichever side of the political divide one is on, all will agree that the country’s State sector is way too bloated and needs to be cut down. The new bill is a good way to reduce the burden on the Treasury and the economy by lossmaking State entities and should be supported by all parties.