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Sri lanka News – Sri Lanka reduced the retirement age of state employees to 60 with immediate effect among many other measures to reduce state sector expenditure in a reform to cut down capital expenditure from the state coffers as the country reels from an unprecedented economic crisis.

“As a part of efficient expenditure management, I propose to rationalize the number of government employees,” President Ranil Wickremesinghe, who is also the finance minister of the country, said while presenting the interim budget for 2022.

He said it has been observed that there has been increasing unrest among unemployed youth as the government had decided to raise the mandatory retirement age of public sector employees to 65 years and that of semi-governmental employees to 62 years.

“Besides, it has also been reported that the increase in the retirement age has restricted the promotional opportunities available for many public sector and semi-governmental employees. Accordingly, it is proposed to reduce the retirement age of public sector and semi-governmental employees to 60 years.”

He declared hat those who have been employed beyond 60 years of age at present in the government and semi government sectors will be retired as of 31.12.2022.

The President’s move comes as the economic crisis-hit island nation is struggling with a bloated public sector and spending 86% of its tax revenue on state sector wages and pensions.

“From the time the Government nationalized businesses, most of the tax revenue of our country has been spent to cover their losses,” he said adding that funds are being wasted to keep these state-owned companies afloat.

Sri Lanka has 1.49 million state sector employees and the government has to bear the cost of pensions for state sector retirees in addition to those currently working.

In 2022, then Finance Minister Basil Rajapaksa raised state salaries in a ‘relief package’ and raised the
retirement age of state workers to 65, a move analysts saw as to reduce the expenditure on pensions.

Sri Lanka’s state sector does not have a contributory pension fund. The government has been forced to print more money to finance the wage and pension bills because of lower tax revenue.

Wickremesinghe also announced that the state sector is banned of purchasing fossil vehicles and they will be only allowed to buy electric vehicles.

In addition to this, a committee has been proposed to appoint to find out the efficiencies and the purpose of the various government offices and earn more from state-owned assets.

“It is important to review the activities of the project offices and project units that have been established for various purposes as these involve significant number of staff and high amounts of payments,” Wickremesinghe noted. (Colombo/Aug30/2022)

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