By Working People’s Research Group
The budget-making and policy talking in Sri Lanka amidst a pandemic have uncovered the anatomy of the Sri Lankan state. It is Siamese twins, of the repressive state and the private corporate lobby. The SLPP government and President Gotabaya Rajapaksa have disposed of the poor and dispossessed working people on whom they rode to power to nurture and facilitate a corporate lobby. Instead of addressing the economic grievances and frustrations of the working people who roll the economy forward with their labour-power, the SLPP government has consolidated its repressive arms with drones, surveillance Apps, military officials and the police. The baton has replaced the carrot.
From the working people’s perspective, the budget 2021 was something to look forward to. They formed the government. Despite repetitive betrayals, there is always hope for decent jobs and housing, improved access to education and health care, right to land and freedom from debt and poverty. Besides, the 75th budget happened at a particular moment. The pandemic and the lockdown had stripped off multiple fault lines of the economy. Ordinary people’s economic activities have collapsed. Precarity in the informal sector, homelessness, lack of savings, fragile public health and education services, mounting household debt have placed enormous pressure on millions of people. The budget was supposed to bring about some form of relief. It was supposed to re-orient the national economy to one that would create decent jobs with living wages, redistribute wealth, would be environmentally sustainable and empower children of working men and women to realise their dreams.
As the budget was presented in the Parliament, stocks shot up. A small group of corporate élites have seized the moment. The government informed the working people whose side they are on. No populist government can rescue the crumbling capitalist state. It strikes a silver lining for the organized working class, students and the political left. There is an opportunity to articulate an alternative model and a different political system led by a class alliance of the left. Analysing the budget 2021 from a working-class perspective is the first step.
- Eliminate private control in agriculture market: the budget proposals nurture private sector monopoly in the agro-input market, value-addition and distribution market in the farming, fisheries, plantation and export agriculture sectors and deepen the agrarian crisis compounded with increasing indebtedness. Purchase, storage, value addition and distribution of agricultural products are controlled by intermediaries, often big traders with political connections. The budget fails to articulate how access to technology, market and credit could be expanded to farmers, fishers and smallholders without further degrading the already delipidated conditions of living.
- Zero-budget agriculture: an inter-dependent mechanism of combining dairy production, seed autonomy and agro-ecological methods of cultivation in contrast to mainstream the industrial, chemical-based monoculture provides an alternative. Budgetary allocations to import dairy cattle could be better spent by investing in zero-budget agriculture which depends on indigenous cows who provide A-grade milk. Empowering farmers’ organizations, co-operatives and women’s groups with necessary capital investments, concessionary loans instead of subsidizing agri-business companies would create broader spillovers.
- Debt cancellation and community-based credit: Commercialization of provision of credit and industrialisation of agriculture and fishing over the years has incurred massive debts, impossible to be paid back without falling below subsistent levels. Existing government mediated credit schemes such as Samurdhi has to be re-evaluated and other community-based credit mechanisms like the co-operative system have to be empowered with more financial allocations and strengthening the institutional mechanism.
- Ecological land-use practices: Cultivating all arable land as the budget proposes is a positive development. At the same time, the government should understand interconnecting factors such as access to seeds, irrigation facilities, machinery and ecological land-use technologies which will enhance farmers’ capacities to expand cultivation.
- Food sovereignty: A sound and a visionary agricultural policy, in our perspective, envisages on empowering farmers and fishers to ensure food sovereignty and also reach the export market. Community-based investments, instead of private-sector targeted investments, would have a larger outreach and would translate into real economic benefits to farmers, fishers and smallholder without exposing them to expropriating forces of the market.
The spread of the COVID-19 pandemic has completely disrupted the provision of education from the Kindergarten to the University level. Online and distance education adopted as an alternative has reproduced class privileges and revealed unequal distribution of resources across classes as well as regions.
- Increase capital investments in education: many schools lack primary infrastructure facilities leave alone digital education infrastructure. Underinvestment in education over the years has allowed structural inequalities to intervene in obstructing the right to education of children from low-income backgrounds.
- Education has multiple purposes: the government assume that the sole purpose of education is to produce an employable workforce. In contrast, a person with critical thinking and imagination will contribute broadly to the process of development.
- Weak public health system: Sri Lanka is experiencing limitations in its public health system. A budget presented amidst a global pandemic ignores priorities in the needs of the population. The public health sector needs more funding to address a health crisis. Increased funding will strengthen the primary health sectors, R&D and enable Sri Lanka to retain many of its skilled health professionals within the public service.
As working people who create value in the Sri Lankan economy the budget is of primary importance to us. We underscore that the economic crisis is caused by a crisis in the mode of production and not by a crisis in the labour force. Therefore, we refuse any form of labour reforms enacted in the pretext of combatting the crisis.
The budget 2021 is partial to employers as it proposes,
- Curtail 8-hour workday: a second job discredits the long struggle of working people and neglects the need for living wages and wage incentives on time. Working multiple jobs will pressure working people with a drastic impact on their health, particularly women who bear the double burden of wage work on top of household care work.
- Flexible labour laws: an insurance scheme to cover temporary loss of livelihoods will create an adverse situation where the employers would find it profitable to terminate employment without having to pay full compensation as stipulated in the labour laws.
- Affect pension benefits: The proposal to extend the retirement age to 60 for the working people in the private sector would also affect their claim to pension funds in the EPF.
- Privatising social security: instead of promoting contributory pensions, the government should strengthen labour laws to incorporate retirement benefits to the collective bargaining agreements and take legal action against employers for violating EPF and ETF payments.
State-Owned Enterprises (SOEs)
Experiences of the developmental states like Japan, South Korea and Singapore illustrate how the SOEs led economic growth. As a developing country, Sri Lanka should be mindful of our assets and use innovative thinking to mitigate issues within the SOEs.
- Discredit SOEs: As much as the government touts that SOEs will not be privatized, romanticising the private sector in terms of advanced “commercial status”, productivity and “management freedom” will only contribute towards discrediting the public sector and justifying privatization in future.
- Ignores politicisation and systematic attack on SOEs: Any form of reform executed on the public sector without acknowledging and addressing inherent disadvantage that the public sector is subjected to due to political appointments, corruptions and abuse is driven by ulterior motives and contribute to the systematic attack on the public sector over the years.
Rising public debt is an utmost concern for working people.
- Austerity hurts people: restraining public expenditure harms the basic human rights of our working people and future generations.
- Unequal agreements: unpayable debt forces the government into unequal relations with other governments which will be harmful to sovereign rights of the Sri Lankan people to the land, natural resources and important ports, and ocean resources.
- Roll out of neoliberal policies: debt is an instrument of multilateral lending organizations push labour forms, land reforms, the commodification of water and agriculture modernization which harm the interests of the working people.
Tax holidays and concessions provided to private companies/ individuals
We notice that the government is proposing a flexible tax rate and interested in keeping direct taxes on the rich and the corporate sector low assuming that such policies will incentivise investments and proactive contribution towards economic development.
- Vacuum up instead of trickle-down: contrary to the claim in the budget, we would like to underscore that a majority of the tax revenue in Sri Lanka are derived from indirect taxes paid by the meagre salaried working people. Flexible policy on direct taxes over the years has resulted in polarised inequality among income groups.
- Free rider trick: government appears is getting tricked into the myth of trickle-down whereas history shows that the private sector has been free riding. They invest in extractive sectors: banking, financial and highly profitable insurance and real estate sectors.
- Direct government investments attract the private sector: the literature on the political economy also illustrates that low taxes/ tax breaks are inadequate to attract sound investments. Pfizer, the Pharmaceutical company claiming to have made a vaccine to COVID-19 virus, moved to Boston from Kent in 2011 because of the high level of public investments by National Institutes of Health in expanding the knowledge bases through R&D.
- Negative externalities of private investments: pollution and dispossession (land) have a huge social cost not accounted in the tax concessions. Hayleys caused groundwater pollution in Rathupaswala and reckless profit-seeking behaviour of Brandix, Minuwangoda risking the health of workers are examples.
- No plan to generate revenue: the private sector lobbying and partiality to class interests have affected government revenue. Post-budget decisions to increase import tariffs on essential goods, increase VAT, reintroduce NBT will deteriorate the quality of life of working people and contribute to vacuum up their measly wealth.
As people labouring to drive the national economy, the working class has to seize the moment. To decide whether to be co-opted, to be pitted against each other or to unite in solidarity, to strengthen and nurture anti-capitalist struggles in the medium term. Ideas of inclusivity, equity and social justice might be deemed utopian, however, reiterating the utopian possibilities to struggle for is also the way to prevent the dystopian future.
Amali Wedagedara, Kalpa Rajapakshe, Charmi Basnayaka, Chintaka Rajapaksa & Ramindu Perera