By: Staff Writer
September 23, Colombo (LNW): Sri Lanka’s public sector, long criticized for its inefficiency, excess size, and politicized recruitment, finds itself at a crossroads.
A recent World Bank review has highlighted the urgent need for gradual but well-planned rightsizing, noting that the country employs far more public servants than comparable economies, even as compensation remains uncompetitive.
Yet the more immediate problem lies not only in numbers but in a growing climate of fear among top officials, who are increasingly reluctant to take policy decisions under the government’s sweeping anti-corruption drive.
According to the World Bank’s Sri Lanka Public Finance Review, the country’s public sector headcount peaked at 1.27 million civil servants in 2020 before declining marginally to 1.21 million in 2023 due to a hiring freeze.
State-owned enterprises and government-funded institutions employ an additional 212,000, bringing the total size of the workforce to levels far higher than regional peers. Notably, the security sector remains disproportionately large, with armed forces personnel per capita triple the South Asian average.
Despite its size, productivity is abysmally low. Real wages have eroded by over 30% in the last three years, and allowances rather than performance-based pay dominate compensation.
Highly skilled workers now earn between 8% and 22% less than their private sector counterparts, undermining morale and encouraging brain drain.
Meanwhile, wage costs, though reduced from 7.2% of GDP in 2020 to 5.0% in 2023, still weigh heavily on strained public finances.
The World Bank recommends a gradual workforce reduction through attrition, ensuring frontline education and health services remain protected while eliminating overstaffing in other sectors.
It also calls for modern payroll management systems, transparent pay commissions, and functional reviews to restructure bloated cadres.
However, translating these prescriptions into action requires political courage and administrative leadership qualities in short supply today.
A deeper malaise now haunts the public administration. The new government’s aggressive anti-corruption campaign, initially welcomed as a step toward accountability, has evolved into what critics call a tool to suppress dissent and intimidate officials.
Senior bureaucrats, wary of being targeted or falsely implicated, increasingly avoid taking bold policy decisions. This “fear psychosis” has paralyzed decision-making, delaying critical reforms in finance, energy, and state enterprise restructuring.
Even moderate officials, who were not part of past corrupt networks, are hesitant to act lest they draw political scrutiny.
The result is a vicious cycle: an oversized, underpaid, and demoralized workforce trapped in a culture of inertia, overseen by senior administrators unwilling to make the decisions necessary for reform.
While the World Bank’s roadmap offers a practical framework for rationalizing the workforce, its success hinges on restoring confidence among civil servants. Without safeguarding professional independence and insulating officials from political vendettas, even the best-designed reforms will stagnate.
Sri Lanka’s public sector dilemma is thus twofold quantitative inefficiency and qualitative paralysis. Rightsizing the workforce may ease the fiscal burden, but unless the climate of fear is lifted, efficiency will remain elusive.
At a time when the country urgently needs competent policy execution to attract investment, boost growth, and rebuild public trust, a demoralized bureaucracy is the last thing it can afford.
