Public sector shrank by 135,000 workers in 2022

The Finance Ministry has been directed to devise strategies to limit growth in the public sector wage bill and further prune the already shrinking government workforce after a steady increase in spending on salaries via a hike of Rs.2,500Rs.10.000 in 2019 and Rs.5,000 from January 2022.

At present the public service has shrunk by 135,000 to 1.393 million by the end of 2022 from 1.528 million in 2020 by removing some of them from service or allowing them to vacate their posts or voluntary retirements.

This includes employees in ministries, departments, district secretariats, divisional secretariats, provincial council’s and

State Owned Enterprises (SOEs).

Accordingly, the public sector employment recorded a decline in 2022 to 1.393 million compared to 1.401 million reported in 2021 due to the reduction of employment in SOEs.

Another reason was the introduction of the scheme of extending leave for a five-year period to public sector employees to travel overseas for employment.

More than 2,000 public sector employees have obtained extended leave for a five-year period to work overseas and the number of job seekers for foreign employment is rapidly increasing, a Finance Ministry top official said.

The scheme was introduced last year to tackle the economic crisis and prune government spending.

This was indicated in the data of the Department of Management Services of the Ministry of Finance.

Excessive cuts to capital spending and public sector allowances and additional payments have been avoided and fiscal space for capital spending will be constrained, the official disclosed.

A special “conception paper” issued by the Manpower and Employment Ministry recently has suggested extensive public sector expenditure and job cuts saying that more than 50 per cent of government income was being used to pay salaries and allowances to 1.7 million public sector employees at that time.

The paper identified that during COVID-19 pandemic restrictions about 30 to 50 per cent of public sector employees were called in to work and that only 50 per cent out of its 1.7 million workforce was needed to maintain public services at that time.

This warrants the government to cut more than 850,000 public employees to increase the productivity in the public service.

Other job curtailment and budget cutting plans, which will push a large number of public sector workers and their dependents into poverty, are currently being discussed by the cabinet of ministers.

According to the State Minister of Finance Ranjith Siyambalapitiya, the government has spent Rs.956 billion on state sector salaries, while Rs.701 billion is estimated for salary payments in 2023.

Further, the State Minister said that the Government has not yet decided on the exact amount by which it will reduce the current state sector workforce of about 1.4 million, but added that new recruitments have been indefinitely suspended.