Flight of human capital
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A middle-aged patient got the shock of his life when he went to a nearby pharmacy to buy his meds. “Before the economic crisis, one particular tablet cost me Rs. 25. But now it costs me over Rs. 100 per tablet. How can we live like this?” he said in desperation.A few months ago, in these columns we reported how a Sri Lankan on holiday in Dubai was approached at a shopping mall by three other Sri Lankans saying they had arrived in the country on visit visas and were looking for jobs to escape the economic woes at home.
During a recent conversation at a small IT start-up, colleagues discussed their options in seeking overseas employment. “The new taxes are killing me. We get a comfortable income and have a decent lifestyle. However, the new tax regime will ruin us. I need to migrate for a better life overseas,” said one IT professional.
Reality check: If the migration of thousands of mostly young people in the past year was mainly due to the economic crisis, the emerging issues now with young Sri Lankan professionals is the high taxation and its impact on wages. And this talent is not going to West Asia for employment to return in a few years’ time, but to the West – UK, US, Germany, Australia etc – with plans of settling down in those countries.
Over the past year, the country has seen a mass exodus of university teachers, doctors, engineers, estate managers, tourism hotel managers and other categories of experienced personnel – both white collar and skilled workers – who have found jobs abroad.
The exodus has affected major sectors and businesses are scaling down or closing their operations and even worse; loss of talent at a time when Sri Lanka is trying to recover from the crisis and needs its professional and skilled workforce to remain in the country.
On the contrary, while the government is worried about the loss of talent through migration, it is also pushing a policy of encouraging more skilled and semi-skilled workers to seek overseas jobs. This is to add to the country’s precarious foreign exchange reserves. This is a push-pull policy of encouraging migration for jobs and at the same time being concerned that the cream of Sri Lanka’s talent pool is fleeting the country with jobs in their bags.
Dr. Dushni Weerakoon, Executive Director at the Institute of Policy Studies of Sri Lanka, in a recent article said: “The erosion of real wages and the introduction of higher taxes are squeezing disposable incomes, prompting exit by many to seek better living standards overseas.”
According to one report quoting official data, more than 300,000 people left the country with secured jobs overseas in 2022, the highest in history. Overseas migration for jobs has normally been in the range of 200,000-225,000 annually.
While I was discussing the travails of Sri Lanka in today’s column piece, my attention was momentarily distracted by the discussion under the margosa tree.
“Aanduwen thava viduli sera wedeemak (Another electric shock from the Government),” Kussi Amma Sera was saying.
“Aluth viduli gasthu godak janathavata balapanna
yanney. (The new power rates will affect many people),” noted Serapina.
“Kohomada janathava mae aluth milata muhuna denne (How can people afford these new rates),” asked Mabel Rasthiyadu.
Just as I returned to my column, the phone rang in the household. It was Cardboard Sando, the muscle man from the nearby petti-kade.
“I say we are in serious trouble, noh?” he said. I hadn’t spoken to Sando for several months and welcomed the call, chatting with him for many seconds on what has been happening in his life in recent times, before replying to his question: “What do you mean?” I asked.
“Cost of living has gone through the roof. Every essential item is so expensive and beyond that wage earners are having a hard time,” he said.
“That’s right. And the new taxes are resulting in more burdens for the people,” I said.
Recently opposition legislator Dr. Harsha de Silva said that it was better to follow the Indian taxation process and its taxation slabs which impose less burden on the people than the current tax slabs in Sri Lanka of 6 per cent, 12 per cent, 18 per cent, 24 per cent, 30 per cent and 36 per cent.
Dr. de Silva, who as chairman of the Parliamentary Committee on Public Finance (COPF) has raised many issues from public administrators appearing before the committee, said the tax burden, as much as 36 per cent, was now contributing to the brain drain in the country.
Queues for fuel and gas may have ended but the queues at the passport office still remain.
Returning to my conversation with Sando, I asked him how his small business was faring. “It’s a struggle. It’s difficult to sell goods at current, exorbitant prices. For example, an egg that would have cost Rs. 30 some years back is now priced at Rs. 65. Everything is expensive and running a small shop, well, it’s hard to make a living,” he said.
“So would you also be looking for an overseas job since you have some skills?” I asked. “I am discussing this with my family right now,” he replied.
The Government Medical Officers’ Association (GMOA), whose members earn two salaries – one in the government service and the other from private practice – is among groups urging the Government to revisit the new tax policy which came into effect on January 1, 2023.
As I wound up my column, Kussi Amma Sera (she has this amazing knack of knowing when I am close to finishing my column) brought in my second mug of tea. Sipping the tea (this might be my last second mug of tea in the morning given the rising cost of goods), my thoughts were on the future where Sri Lanka might be faced with a shortage of labour and professionals when the economy indeed recovers from its worst crisis in history.
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