The myth of the sansthawa

By Shyamon Jayasinghe, Melbourne

The public corporation in Sri Lanka was born out of the socialist emotion that swept the island post- 1956. Its disastrous record through all regimes of government is epitomised in the following complaint by the present chairman of the CWE that appeared online in the Daily mirror of 23rd October 2004. Reading and studying this case would be very instructive because there are still hordes of socialists and patriots who are guarding the ‘Sansthawa’ with religious fervour and not allowing its natural extinction.

Read what the Chairman has to say:

“CWE Chairman Upali Gooneratne told the Daily Mirror that despite his protests against the appointment of Sri Lanka Nidhahas Sevaka Sangamaya representative Lasantha Lakpriya as part of the eight member CWE board he would continue to serve as Chairman until President Chandrika Kumaratunga decided otherwise.
"I have told the Minister that this union representative was interfering in the affairs of the CWE administration. He is just a canteen labourer and is in no way qualified to hold such a post," he said.
Mr. Gooneratne said the Mr. Lakpriya had also interfered in some disciplinary inquiries against four union members.
"There are 775 workers in the CWE of which 600 are labourers. About 550 of them virtually do nothing and we spend seven million rupees on salaries every month. About 300 of them SLNSS members. The CWE is responsible for the distribution of imported rice through cooperatives. But there are reports that the cooperatives were selling them to private traders," he said.” Unquote


(1)The minister has made an unsuitable appointment to the Board of Directors. The appointment is that of a canteen labourer to the Board of Directors. One does not need to have class feelings to object to such an appointment to the apex of decision-making in the Sathosa.

(2) This individual is interfering with the management in undesirable ways that would lead to the breakdown of discipline and morale

(3) The CWE is heavily overstaffed with most workers idling. Nearly 90 per cent of this staff is bottom- heavy. All governments in Sri Lanka have generally considered state corporations as vehicles for favoured political appointments and not as agencies of service to the public.

In that era, the corporation was the chosen instrument for a government to run a business enterprise, the idea being that the standard government department is too rigid a structure for enterprise decision-making. Whatever that theory may be, experience in Lanka tells us that these institutions become too politicised to take independent enterprise decisions and to run efficiently in enterprise terms and, in this way, they become unsustainable. Politicians have loved such bodies because they become a convenient vehicle to stuff their supporters and also to show off their pakum. This explains the surplus employment and the dominance of lower ranks in the employment structure. The result of such politicised situations is that the organization is guaranteed to run on red and become unmanageable. At the end of the year, the treasury comes in to reimburse the losses, which run into huge amounts. This results in deficit budgets and inflation, which then becomes a burden on the people. Furthermore, this causes an opportunity cost that prevents the treasury funds so sacrificed from being put to more productive uses like capital investment.

However, unions and socialists fight to keep institutions like this as ‘sacred cows’. The reasons are largely ideological, namely that such organs of government ‘belong to the people’ and are a ‘national asset’. However, what hold do ordinary consumers have on them? If it were a private organization, the consumer can show its discontent by avoiding buying its products. On the other hand, corporations have a survival power regardless of consumer disaffection. In other words, the corporation does not belong to the people but to its own bureaucracy.



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