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Wednesday, June 1, 2011
What a Beauty (Jim Wrren Painting"s......MUST SEE !!!!!!!!!!!!!!)
Abhimata Deta
 “Prabhu always resides in Chitrakuta alongside Sita and Lakshmana. For those who chant Shri Rama’s holy name, the Lord fulfills all their desires, says Tulsi.” (Dohavali, 4)citrakūṭa saba dina basata prabhu siya lakhana sameta| rāma nāma japa jāpakahi tulasī abhimata deta || Leave it to Goswami Tulsidas to put the reader into the best of moods. Not only is there hope for a bright future given in this verse, but the most beautiful picture, one that never has to fade away or be removed from the memory, is painted for the listener who is sincerely interested in real profit, parama-artha, a reward that never diminishes in its returns. Only through chanting the holy names of God can all desires, regardless of their nature, be fulfilled.  What if we want to do some nefarious activity or if we want something that we shouldn’t have? Can we still chant Rama’s name and be guaranteed of seeing the results that we don’t even know are harmful? Is that how God operates? To understand the secret behind chanting, familiarity with the beauty and importance of Chitrakuta and other holy places is helpful. Lord Rama along with His wife Sita Devi and younger brother Lakshmana roamed this earth many thousands of years ago. In fact, since they are direct manifestations of eternally existing divine figures, the trio is always enacting pastimes in some universe or another. Just as the sun is rising at this very second somewhere on earth, the Supreme Lord along with His closest associates is appearing on some planet at this precise moment and enacting wonderful pastimes for the pleasure of those who desperately need it, the sincere devotees who have handed over control of their emotions and happiness to the most pleasurable person and the treasure house of all good qualities.The only entity who is universally a candidate for receiving the potent emotional force capable of flowing from the soul is the Supreme Soul, who is known by many names in the Vedic tradition. Lord Vishnu is most commonly taken to be the original form of the Lord, while some texts say that Shri Krishna, often considered an incarnation of Vishnu, is actually the original form, for He is the most attractive and thus capable of engaging in rasas, or transcendental mellows, not available to devotees of other forms of Godhead. Regardless of the knowledge base or belief system present in the devotees, the non-different forms of the Lord are so powerful that devotion to them brings about tremendous bliss and simultaneous release from the cycle of birth and death. Just as a star athlete repeatedly participates in seasons and tournaments of his specific professional sport, the players engaged in material activities repeatedly take birth in the phenomenal world until their desires for material association cease. The professional athletes are helped by the fact that their abilities eventually diminish due to age; thus making them no longer able to play after a period of time.
 Within the materially manifest world, old age and disease lead to retirement in the form of death, but since the desire to play is still present, a new body is given for the next life. As such, the cycle of birth and death known as samsara continues perpetually until desires are changed. Worship of the Supreme Spirit also takes place in cycles, except that there is no misery involved and no diminution of abilities. Instead, devotional service, or the sublime engagement of connecting with God through a purified consciousness, is the only activity that continues without interruption and is not driven by any motivation. This seemingly paradoxical combination can only be understood by those who are in divine trance, or samadhi. Once that blissful state is attained, there is not even concern over whether one is behaving properly or not, for the fire of devotion rages so intensely that all unwanted influences are automatically removed.How do we reach the samadhi state? How does an individual who is eternally conditioned through playing on the field of material nature shift their desires towards service to the Supreme Lord? In order to change consciousness, behavior needs to be altered. For behavior to change, habits need to shift, i.e. routine activities need to be altered to the point that new habits are formed that help maintain a link with God in yoga. The honest skeptic will at this point question how one can know who God is with any ontological certitude. After all, weren’t there many television evangelists who urged their followers to send in money to get a better seat at the table? Simply giving away money to a specific figure will not get you a seat in heaven, and neither is the heavenly realm the ultimate destination. What we conceive heaven to be is actually just a nicer version of the playing field we are currently on. We can think of the heavenly realm as a higher professional sports league, one that has more enjoyments and state of the art venues. Yet the cycle of birth and death is still present, thus making ascension to heaven an inferior reward for the sincere spiritualist. Purifying consciousness through a shift in behavior requires a steady object of worship, a beneficiary of the service propensity of the soul. Irrespective of one’s engagement and their level of dedication to spirituality or lack thereof, the element of service is always present. The CEO is serving his senses and his customers, the worker the boss, the wife the husband, the children the parents, the politician the constituents, and so on. No one is independent, for even the most selfish person is serving their own needs. When service is offered to the only entity truly worthy of accepting it, the resulting benefits are unmatched. Not only does the consciousness of the entity offering the service change, but the love felt towards the object of service never diminishes in any way. The reason for the variety in engagements present before us is that the different worshiped objects fail to provide supreme pleasure. Each one of the previously mentioned serving relationships found in material life can be broken due to disagreements or the expiry of the intended benefits. For instance, if an ordinary worker gets another job or retires, they no longer feel the need to serve their current boss. If the husband and wife should start having strong disagreements, the loving relationship can break through divorce or separation.  Love for God, the all-attractive spiritual powerhouse, doesn’t follow the same pattern. The Vedas, the ancient scriptures of India, kindly enumerate some of the more important incarnations, or expansions, of the original Lord to appear on earth. Each form has specific features that attract worshipers, and since these incarnations are like candles lit from the original person, they are equally as capable of providing spiritual benefits. Though the tendency for those who are not familiar with the Vedic tradition will be to take Rama, Krishna and Vishnu to be sectarian figures or mythological characters, the truths of the Vedas are revealed to whoever is fortunate enough to sincerely adopt the recommended practices, especially those pertaining tobhagavata-dharma, or devotional service. The Vedas prove to be enough of an authority for millions around the world to accept vishnu-bhakti as a legitimate spiritual practice, but even one who is skeptical can still take to chanting the Lord’s names found in the maha-mantra, “Hare Krishna Hare Krishna, Krishna Krishna, Hare Hare, Hare Rama Hare Rama, Rama Rama, Hare Hare”, and see for themselves what all the fuss is about.Goswami Tulsidas, a prolific writer and an absolute sweetheart, was especially devoted to Lord Rama, the warrior prince incarnation of God. They say that Lord Krishna, the Supreme Personality of Godhead, always resides in Vrindavana, the holy land that is always filled with Krishna’s most dear devotees like the gopis, Mother Yashoda, Nanda Maharaja, and the sacredtulasi plant. Even though Krishna sometimes leaves Vrindavana when He appears on earth, the higher authority figures reveal the secret that Krishna actually never leaves His favorite land; other expansions or forms of the Lord are who exit and take part in pastimes elsewhere. As such, anyone who is fortunate enough to go to Vrindavana will be blessed with Krishna’s presence.  In a similar manner, Tulsidas says that Shri Rama along with Lakshmana and Sita is always in Chitrakuta, the remote forest that played an integral role in a specific time period of Rama’s life. As the eldest son of a king, Rama was the rightful heir to the throne of Ayodhya, but due to a series of unfortunate events, for which Rama was not to be blamed, the throne was passed on to Rama’s younger brother Bharata. To add insult to injury, Rama was ordered to leave the kingdom and not return for fourteen years. He would have to roam the forests in the garb of an ascetic, thus not having ties to anything, royal or otherwise.Rama kindly agreed to the requests, as this would ensure the good name of His father, King Dasharatha. The Lord then embarked on His journey taking Sita and Lakshmana with Him, for they refused to remain at home without their beloved for such an extended period of time. Early on in their travels, the group visited the hermitage of the illustrious sage and poet, MaharishiValmiki. After humbly offering His obeisances, Rama asked Valmiki if he knew of a good place to set up camp. Valmiki used this question as an opportunity to describe the sublime qualities of Rama’s devotees, stating that Sita and Rama should reside in the hearts of such individuals. After finishing his description, Valmiki informed Rama of the nice area known as Chitrakuta.  Based on the sage’s recommendation and the way in which it was presented, we can understand that Chitrakuta is full of good qualities. After all, Valmiki stated that Sita, Rama and Lakshmana should always reside in the hearts of those who never tire of hearing of the Lord’s pastimes. Those who attribute all of their bad traits to themselves and all of their good fortunes to Rama, who worship the guru, the brahmanas and the cows as their life and soul, and who always chant Rama’s names forever have Sita and Rama residing within their heart. Indeed, the devotees take to devotional practices and don’t ask for anything except undying devotion to Rama’s feet.Whichever place Rama chooses to live will have the properties mentioned by Valmiki, even if the area seems to be an inanimate land that is not capable of thought or worship. Chitrakuta is Tulsidas’ favorite holy spot because Sita, Rama and Lakshmana live there in pure happiness without any hint of the material opulence found in royal kingdoms. There is nothing wrong with wealth, jewels and pompous worship when they involve God, but the most elevated saints, those who are always in divine trance through chanting and remembering, prefer to worship the Lord in a more intimate mood, one that is stripped of any reverence that inhibits the full expression of transcendental love. When God is worshiped as the greatest order supplier and the richest entity, the mood of the devotee tends to be one of fear and respect. In the mood of pure love, however, such a closeness is established that the fears pertaining to God and His punishments are completely removed. Rama in Chitrakuta represents the most endearing form of the Lord, one that can only be worshiped in a loving attitude. Those who are afraid of God and those who are steeply entrenched in the mindset of respect worship images of Sita, Rama and Lakshmana in other settings like the kingdom of Ayodhya.  To those who chant His name on a regular basis, Shri Rama, as the benevolent Lord, grants whatever is desired, abhimata deta. First the proper scene is set, that of Rama in Chitrakuta, and then the chanting takes place. With this combination the mind remains focused on God in a bliss-evoking mood; thus making the desires of the chanter quite obvious to decipher. In the topmost stage of devotion, there is still an interest, even though the behavior of the bhakta is described as unmotivated,ahaituki. One who goes to a demigod or saintly personality may be granted whatever they want, but with Vishnu-worship, the effect of the desired fruit is taken into consideration by the benefactor, the Supreme Lord. Nevertheless, this discrimination doesn’t contradict Tulsidas’ assertion in any way. If one understands that Sita, Rama and Lakshmana always reside in Chitrakuta and then they take to chanting Rama’s name, naturally their desires will be focused on just one thing: the continuation of bhakti. Rama will always grant this wish, as the ability to chant God’s name just one time without offense is considered the greatest boon, one that is available only to those who sins have been completely washed away.
 Chanting God’s names is the only recommended dharma, or system of religion, for the current age. Even if one is full of selfish desires, plans for self-destruction or other tainted motives, chanting Rama’s name will always prove to be a benefit. At their core everyone desires to love God, even if they are unaware of it. So by remembering the forms of the Lord that are the most bliss-evoking, the dormant desire for a pure loving relationship with the undying Supreme Spirit can be awakened. Service to any entity besides God will not fulfill all desires, for the rewards received will expire at some point, thus causing new desires to sprout up. Only the bhaktas steadily engaged in service are akama, or without desire, because their primary wish in life, eternal association with the Supreme Lord, remains forever fulfilled |
Private sector HR better than public sector - HRP President
| Private sector HR better than public sector - HRP President |
| The Sri Lankan private sector implements Human Resource Management (HRM) practices in a more advanced way in comparison to the public sector, due to more investment in HRM by corporates, according to the President of the Association Human Resource Professionals (HRP), Isuru Tillakawardana. Speaking at the launch of the fourth bi-annual "HRM Awards - Super 10", Mr. Tillakawardana also noted that public sector organisations would particularly benefit from entering HRP's competition because of its intensive, five-month long judging process whch is known to encourage self discovery and learning, and ultimately lead to self improvement and more value for citizens. Interestingly, the last HRM Awards in 2007 featured participation by approximately 75 entries. Only two of these, a government hospital in Ampara and Sri Lanka Telecom, were from the public sector, according to HRP official, Pradeepa Kekulawala. While, in 2010, it is anticipated that approximately 130 entries will be received. Meanwhile, according to an HRP statement, 2007's Gold award winners included, "Ceylon Tobacco Company PLC, Commercial Bank of Ceylon Ltd, DFCC Bank, Hatton National Bank, HSBC, Keells Hotel Management Services Limited, MAS Intimates Slimline (Pvt) Ltd, Sampath Bank Limited, Sri Lankan Airlines Limited, Virtusa (Pvt) Limited". Further, entries for 2010 are due in by February 15 with entry forms available online at www.hrp.lk. While entries will be short listed using a questionnaire and company visits by HRP technical partner, international HR practice Hewitt Associates; the final winners will be selected by a judging panel made up of a mix business personalities and academics who are unaffiliated with HRP or Hewitt and "revealed" at an international learning conference and awards evening to be held in May 2010. |
Human resources challenges for Sri Lanka
Human resources challenges for Sri Lanka
By Dinesh Weerakkody
The recent Employers’ Federation seminar on “a more pragmatic approach to management rewards” highlighted the current state of play of executive compensation in the private sector and the need to move away from fixed pay towards short term and long-term incentives to drive superior performance and to retain top performers.
Today the Indian sub continent is becoming an employee market, with job seekers having the power of choice. Candidates are increasingly selective and know their market value. It is a candidates’ market as more of them are turning job offers or negotiating salaries aggressively.
Take Sri Lanka because of a short supply of good talent an open war for talent is being fought in our corporate corridors by companies to recruit the right candidates for their companies despite the number of CVs being received by them have increased drastically compared to five years ago. Good jobs are going begging and compensation skyrocketing due to the shortage of right people with the required financial sophistication. The brain drain too has added to this problem and made it difficult for companies to fill critical short-term talent gaps.
The demand for vertical skills and companies looking for a closer fit is putting pressure on recruitment consultants to move the limited talent from one company to another at a much faster pace causing much anxiety to HR managers. Companies to prevent their business objectives languishing in the face of shortage of the right talent are willing to pay big bucks to prospective candidates; these companies have thus been involuntary contributors to a big increase in salary levels. In today’s context a talented employee can be as valuable and hard to replace as a loyal customer.
Even more so in companies where value is created by knowledge and information. In fact Lee Kuan Yew argued some years ago that “trained talent is the yeast that transforms a society and makes it rise.” Brainpower as we all know is today the foundation of value creation, therefore injecting an endless stream of top talent into the veins of the business and building the best team in the industry would become the key to ensure that organizations excel in the new global market place, deliver constantly superior products and services and set standards that others can follow.
Talent at all levels
Companies now need to build talent at all levels, people who can make a huge difference in organizational performance and continuously find people who make a difference, Jim Collins in his book ‘Good to Great’ says “we’re not going to figure out where to drive this bus until we’ve figured out who should be on the bus, who should be off the bus, and who should be in what seats. Then we’ll turn our attention to where we’re going to drive the bus”. So the challenge for any company is to first get the right people on the bus, the wrong people off the bus, the right people into the right seats- then figure out where to drive the bus.
Companies now need to build talent at all levels, people who can make a huge difference in organizational performance and continuously find people who make a difference, Jim Collins in his book ‘Good to Great’ says “we’re not going to figure out where to drive this bus until we’ve figured out who should be on the bus, who should be off the bus, and who should be in what seats. Then we’ll turn our attention to where we’re going to drive the bus”. So the challenge for any company is to first get the right people on the bus, the wrong people off the bus, the right people into the right seats- then figure out where to drive the bus.
The key talent in a business is the company's most important asset and a source of competitive advantage--everything else can be replicated. Companies then need to build talent at all levels that can make a difference in organizational performance and continuously find people who make a difference.
This is leading to more pressure on HR managers from the top to shift from being a personal administrator to being a strategic business partner in recruiting, motivating and retaining top talent. Then, it is time the human resources department--the traditional keeper of the people function-is considered the company's most valuable strategic function.
HR professionals should strongly position HR departments to take on the role of a strategic business partner, and ensure HR is viewed on equal terms with other business partners, such as finance or sales. Today there is ample evidence to support this argument. For example in researching what drives corporate value, the Forbes/Ernst & Young Value Creation Index found this to be one of the top key factors in a firm’s ability to attract and manage talented employees.
So companies need to make sure they are getting the best people and have the competence to inspire and motivate employees to release their discretionary effort beyond the call of duty. In today’s context companies have to work very hard to find good talent because there is a short supply of good talent. So when they find the right talent with the right profile they would have to make sure that they are not only offering very competitive compensation package, but also the kind of culture, development and other benefits that makes the company the kind of company that people want to work for.
Maxim
Companies are fond of the maxim employees are our most important asset, yet beneath the rhetoric too many CEOs still regard – and –manage – employees as costs. This is dangerous because for many companies the people are the only source of long- term competitive advantage. Therefore companies that fail to invest in employees jeopardize their own success and survival. If the CEO is expected to build and motivate talent it calls upon competencies of character more than technical expertise among CEOs. It relies upon on higher order abilities to create unity and harmony, to instill trust, to create hope and optimism and to work from a base of shared values and interdependence.
Companies are fond of the maxim employees are our most important asset, yet beneath the rhetoric too many CEOs still regard – and –manage – employees as costs. This is dangerous because for many companies the people are the only source of long- term competitive advantage. Therefore companies that fail to invest in employees jeopardize their own success and survival. If the CEO is expected to build and motivate talent it calls upon competencies of character more than technical expertise among CEOs. It relies upon on higher order abilities to create unity and harmony, to instill trust, to create hope and optimism and to work from a base of shared values and interdependence.
Leadership of this type is often indirect and behind the scene versus from the front and top down. Today motivating people is very different to what it was some years ago, because nowadays, oversees assignments, stock options, casual dress and free gyms are just as important to attracting and retaining talented employees as salaries, job security and careers once were. A happy workforce can reward a company through better profits, better productivity and lower staff turnover. Also there is no special magic in being a good employer.
It does not necessarily take money, size, or market to become an employer of choice. Rather, its enlightened HR policy and leadership that is committed to its staff. It is organizational capabilities that create products and services that result in a customer taking money out of their wallets and putting it into ours instead of giving it to their competitors.
Government’s role
Churchill many years ago observed that ‘the empires of the future will be empires of the mind.” In many of the developed world our immigrants tend to get criticized unfairly by the press. Many top economies of the world would be lost without our qualified professionals, and many governments would still be very happy to attract our best talent. The most mobile people are not our political refugees, but the educated, and they are being sought after as never before.
Churchill many years ago observed that ‘the empires of the future will be empires of the mind.” In many of the developed world our immigrants tend to get criticized unfairly by the press. Many top economies of the world would be lost without our qualified professionals, and many governments would still be very happy to attract our best talent. The most mobile people are not our political refugees, but the educated, and they are being sought after as never before.
Most governments are easing restrictions on the entry of qualified people. One of the best programmes for drawing in good human capital was initiated in the ‘80s by the Singapore government. The initiative helped Singapore to attract some of our best brains and even today continues to go out of its way to attract and import foreign talent. For a start the government should focus on wooing our professionals working abroad by making it very attractive for them to come back. But the government’s effort will all depend on whether the country is backed up by a vibrant economy and also managed professionally.
A combination of sensible government policies and economic liberalization could work wonders for us. Our best bet would therefore be to woo back some of our top expatriates who have gone abroad to make their money but still feel the tug of their home country. We need to introduce attractive incentives that can entice them to return and also to retain our existing talent. However, despite the incentives they will not return until and unless we improve our governance record and manage the economy professionally. In addition to this the government should initiate a programme in consultation with the private sector to equip our university graduates with the required skills set.
Opportunity
Globalization has left only one true path to profitability for firms operating in high wage markets, to base their competitive strategy on exceptional human resource management. Any benefits that historically have been associated with superior technology and access to capital are now too fleeting to provide sustainable advantage.
Globalization has left only one true path to profitability for firms operating in high wage markets, to base their competitive strategy on exceptional human resource management. Any benefits that historically have been associated with superior technology and access to capital are now too fleeting to provide sustainable advantage.
As this former source of advantage become less relevant, managing human resources by instinct and intuition becomes not only inadequate but also dangerous. The most successful countries in the future will be those that manage their people like the assets they are.
In the future the global demand for talent is only likely to intensify further, we are already struggling to find enough good quality engineers, technicians, doctors, HR, marketing and even English teachers. The talent shortage may seem like a crisis to many of us, but like any crisis it’s also an opportunity. So for a change the government and the private sector need to be more imaginative about attracting, developing and retaining our best talent in Sri Lanka and abroad.
Sri Lankan MIT award recipient proof of power of volunteerism
| Sri Lankan MIT award recipient proof of power of volunteerism | ||||||
| By Jagdish Hathiramani | ||||||
Ask Chamindra de Silva what drives him and he will probably attribute his commitment to his strong Christian values and his aim to make a difference in his lifetime, especially in bettering the lot of all Sri Lankans. What further differentiates him from others who may have similar goals is that he has already made significant strides toward achieving this ambition. Mr. de Silva is one of those rare individuals proving that not only can one directly improve one’s own community but they can also inspire others to do the same. What makes him so special? Mr. de Silva recently became one of only two Sri Lankans recognised in the 5-year history of the Globus Indus Technovator Award (GITA), an honour awarded annually by the prestigious Massachusetts Institute of Technology (MIT), where he joins fellow Sri Lankan Prasanga Lokuge as GITA’s 2007 recipients in the Grass Roots / Developmental category. Both are part of a select group of only seven awarded this year, resulting from a pool of over 110 distinguished achievers across 10 countries who were nominated for exemplary personal achievements. What does this award mean to him? More than anything else he felt ‘surprise’ when notified of this award. He also notes that, like many of his peers in the developmental field, he does not work for awards, stating that “the best reward is being able to make a difference for those in need.”
To understand why Mr. de Silva is deserving of this honour it is important to make note of the accomplishments for which he was singled out: A former Global Research & Development Manager at Virtusa, Mr. de Silva took a ‘sabbatical’ in 2005 to take on the challenging role of project leader for Sahana, a global disaster management tool that grew out of the 2004 Asian tsunami disaster. This suite of web-based applications which address different problems by disseminating information required for post-disaster management, such as locating missing people, coordinating different aid groups, managing aid resources, etc. Because of Sahana’s wide potential for use in the disaster recovery process, this application has been used to manage several large scale disasters in recent years, including the earthquake in Northern Pakistan in 2005, the Guinsaugon landslide in the Philippines and the earthquake in Yogjakarta, Indonesia, both in 2006. Although dubbed a ‘technovator’ by MIT, Mr. de Silva does not lend a lot of credence to this term … “I believe technology can be used as a conduit for either good [or] bad”, he explains. However, he does advocate a careful assessment of technology and its fit to the environment it will be introduced into, especially if the model is to prove sustainable. For example, he suggests Sahana may not always make sense, especially if users are not computer literate. It may then prove to be more of a ‘bottleneck’ than an effective tool for disaster recovery coordination. Meanwhile, his pride in Sahana is plain for all to see. Crediting the success of this project to its Free and Open Source Software (FOSS) platform, he notes that it has helped to improve disaster management systems in the aftermath of a large scale disaster, offering functions like tracking missing people, ‘who is doing what where’, aid management, volunteer management, shelter tracking, etc. As the software is Open Source, it has the added benefit of being a global public utility that anyone can download and use without the need for express permission.
A wholly Sri Lankan initiative, Sahana proved ultimately to be a massive project initiated by the Sri Lankan IT industry and the country’s FOSS community, as well as coordinated by the R&D Open Source organization, Lanka Software Foundation (LSF). In what has since become an example for exemplary community activism, hundreds of volunteers from the Sri Lankan IT industry and open source community came together to help their fellow countrymen and help the organisations like the Centre of National Operations (CNO) by addressing the coordination issues they were facing. In commenting on what attributes he felt had led to his success, Mr. de Silva notes the need for “personal perseverance and passion to handle the ups and downs of a project and to make anything worthwhile”. He also suggests that with the right degree of passion and motivation, any goal can be achieved. Finally, he observes that success is not just about technology innovation, but it also had to do with a good understanding of the domain and learning how to collaborate and present ideas effectively to diverse groups of people. His final recommendation: Volunteer… He advises volunteering in some socially conscious way, and adds that being a volunteer has the double advantage of not only being good for those helped, but it is also good for one’s own personal development as it often leads people to see a whole new perspective of the world. His last piece of advice: “You do not have to do big things, as the little things you can do add up and there is plenty of opportunity around you for that.” |
Does Wage Growth Retard Economic Growth?
Does Wage Growth Retard Economic Growth?
By Dr. O.G Dayaratna-Banda
Department of Economics and Statistics
University of Peradeniya
Department of Economics and Statistics
University of Peradeniya
Adoring the discarded neo-liberalism
The Secretary to the Treasury of Sri Lanka has seemingly informed the Vice Chancellors of the Universities at a meeting held at the UGC that the “increase of the salaries of university academics or any other public sector workers would seriously undermine economic growth”.Similar sentiments have been expressed by those who hold key positions at the Ministry of Higher Education. This appears to be the official stance of the government. Apart from intellectual paucity and empirical invalidity, this statement discredits the intellectual consciousness of the university academics.
The Treasury of Sri Lanka has surrendered to a very peculiar theory that “salary growth negatively causes economic growth”. This argument is arising from the textbook neo-liberalism, a doctrine that started to influence the policy making process of developing countries in various forms since the 1970s. This doctrine advocated profit-led growth policy in diverse forms. The profit-led export promotion growth model in most countries was associated with suppressing wage costs and domestic consumption in order to remain internationally competitive and to achieve growing shares of world markets as far as possible. However, recent global experience suggests that this growth model does not generate sustainable growth outcomes.
Neo-liberal theoreticians got the rich nations to embed this doctrine in the policies, agendas and strategies of the multilateral institutions such as the IMF and the World Bank. The policy agenda of the neo-liberal theory promotes various policy adjustments including the following in order to promote export and curtail domestic demand through wage-suppression. According to this doctrine, developing countries should:
a. adopt a balanced budget policy since expansionary fiscal or monetary policies are detrimental to economic growth,
b. reduce the size of the public sector and control public sector wage growth,
c. control wage growth to create export competitiveness,
d. remove minimum wage regulations,
e. adopt a policy of suppressing trade unions and others to reduce cost of labour so that profits accumulated by the afflu- ent class will be reinvested, which, in turn will foster economic growth,
f. adopt profit-led and export-promotion growth policies through various arrangements to contain domestic demand including wage-suppression.
By the 1990s, most developing countries abandoned economic neo-liberalism which had generated serious negative consequences for growth and social policies. Developing countries, in fact, switched to a mixed economic policy regime in which both state and markets play a complementary bigger role. The Neo-liberal agenda may work in economies that have already reached full-employment levels or those which have achieved developed economy status, and not in growing underdeveloped economies. In full employment economies, stabilization is the central issue for which neo-liberal prescriptions may work. After the global financial crisis of 2007-2008, most economists realized that neo-liberal policy prescriptions are not even able to stabilise developed economies. However, the political leadership of the present government has seemingly been misguided by the bureaucrats to surrender to this discarded doctrine of economic neo-liberalism.
Empirical evidence suggests that domestic demand-led growth policies appear to foster economic growth in developing economies. As against the theory presented by the Treasury of Sri Lanka, I would like to emphasize the success of the domestic demand-led or wage-led growth in developing countries.
b. reduce the size of the public sector and control public sector wage growth,
c. control wage growth to create export competitiveness,
d. remove minimum wage regulations,
e. adopt a policy of suppressing trade unions and others to reduce cost of labour so that profits accumulated by the afflu- ent class will be reinvested, which, in turn will foster economic growth,
f. adopt profit-led and export-promotion growth policies through various arrangements to contain domestic demand including wage-suppression.
By the 1990s, most developing countries abandoned economic neo-liberalism which had generated serious negative consequences for growth and social policies. Developing countries, in fact, switched to a mixed economic policy regime in which both state and markets play a complementary bigger role. The Neo-liberal agenda may work in economies that have already reached full-employment levels or those which have achieved developed economy status, and not in growing underdeveloped economies. In full employment economies, stabilization is the central issue for which neo-liberal prescriptions may work. After the global financial crisis of 2007-2008, most economists realized that neo-liberal policy prescriptions are not even able to stabilise developed economies. However, the political leadership of the present government has seemingly been misguided by the bureaucrats to surrender to this discarded doctrine of economic neo-liberalism.
Empirical evidence suggests that domestic demand-led growth policies appear to foster economic growth in developing economies. As against the theory presented by the Treasury of Sri Lanka, I would like to emphasize the success of the domestic demand-led or wage-led growth in developing countries.
Wage-led cum domestic demand-led growth
One can argue that there is a mutually reinforcing feedback between wage growth and economic growth as depicted in the diagram. It means “economic growth tends to stimulate wage growth and wage growth in turn stimulates economic growth”.
No sustained economic growth without real wage growth
No sustained economic growth without real wage growth
There is a considerable amount of empirical evidence from various countries that economic growth needs to accompany higher wages. A recent publication (2009) titled “no sustained economic growth without real wage growth” emphasized that “Americans have somehow survived despite this stagnation (of wages) by resorting to a small bag of budgeting tricks. But now those tricks are not going to work any more. Simply put, from here on in, we are not going to have any sustained economic growth until real wages finally grow too”. The study, therefore, recommends that wage growth is essential to facilitate faster economic growth because it is the growth of wages that can create additional demand for the additional output created through the growth process. The study went on to say that “… we are not going to see any sustained recovery in the American economy until average Americans see a real and sustained increase in their compensation for labor…”
Realising the tragedy of profit-led growth and merits of wage-led growth
In a recent high level academic conference held in the United Kingdom, growth economists emphasised the importance of shifting from the profit-led growth model to a wage-led growth model. The summary of the arguments presented there is following. “Neo-liberalism has led to a polarization in the distribution of income and given rise to a finance-led growth model that collapsed in the worst crisis since the 1930s (occurred in 2007-2008). Wage-led growth aims to link wage growth to productivity growth and inflation.” Growing wages could then generate higher demand by fuelling consumption. But such a strategy could also ignite the growth of the capital stock if consumption demand has second round effects on investment, and if wage growth induces technological change and productivity growth.
For the last three decades, most countries in the European Union have practiced a profit-led growth strategy seriously increasing the income inequality prior to the global financial crisis of 2007-2008. Thorsten Schulten in his article titled A European Minimum Wage Policy for a More Sustainable Wage-Led Growth Model argues that “compressing the wage structure from the lower end would lead to a more egalitarian distribution of income and stabilise the wage share.” He argues that the rapid increase in income inequality led to a situation where private demand from wage income lagged systematically behind the overall economic development and thereby dampened economic growth. Two growth models practiced by many countries have contributed to the global imbalances and financial crisis of 2007-2008. The first was a credit-based growth model typified by the United States and some others. In these countries growth was driven by private consumption but it was based on household borrowing rather than wage income growth. A second strategy was followed by countries such as Germany, Japan and China which adopted an export-led growth model that sought to offset a lack of domestic demand by export surpluses. The global financial crisis has now shown that neither growth model is sustainable. Schulten asserts that “the development of a new post-crisis growth model has to shift the focus again to a more wage-led growth strategy and a much more equal development of incomes. While trade unions have to do their own job to regain their organisational power, policymakers could promote a more equal income distribution essentially through two channels, the first being a more progressive tax policy with an emphasis on higher taxes for top income earners and the second a re-regulation of labour market institutions in order to re-balance the power relations between capital and labour and to strengthen trade unions’ structural and institutional power.”
Henry Liu (2010) explains how to achieve economic development through wage-led growth. He states that stagnant worker wage income leads to overcapacity in the economy resulting in slow economic growth and economic stagnation. In the economics of development, there is an iron-clad rule that “income is all”. The rule states that the effectiveness of developmental policies, programs and measures should be evaluated by their effect on raising the wage income of workers; and that a low-wage economy is an underdeveloped economy because it keeps aggregate consumer demand below its optimum level, thus causing overcapacity in the economy that needs to be absorbed by export.” No growth of wages means that developmental policies, programmes, and measures have failed. Growth of income of workers is the key factor in generating national wealth in a country.
Economic growth experience of Taiwan and Singapore in 1970s and 1980s also points to a wage-led growth. James, Naya, and Meier (1989) discuss the role of wage-led growth in East Asian rapid development. Taiwan and Singapore adopted high wage policy to accelerate economic growth. For instance, during the rapid growth period from mid 1970s to early 1990s Singapore reported about 70% real wage growth. The idea of this high wage policy is to promote skill intensive economic activities and to move workers from unskilled to skilled worker categories. This wage-led growth policy has significantly contributed to accelerating economic growth in Singapore and Taiwan. This policy has also significantly contributed to reducing poverty and income inequality in those countries.
For the last three decades, most countries in the European Union have practiced a profit-led growth strategy seriously increasing the income inequality prior to the global financial crisis of 2007-2008. Thorsten Schulten in his article titled A European Minimum Wage Policy for a More Sustainable Wage-Led Growth Model argues that “compressing the wage structure from the lower end would lead to a more egalitarian distribution of income and stabilise the wage share.” He argues that the rapid increase in income inequality led to a situation where private demand from wage income lagged systematically behind the overall economic development and thereby dampened economic growth. Two growth models practiced by many countries have contributed to the global imbalances and financial crisis of 2007-2008. The first was a credit-based growth model typified by the United States and some others. In these countries growth was driven by private consumption but it was based on household borrowing rather than wage income growth. A second strategy was followed by countries such as Germany, Japan and China which adopted an export-led growth model that sought to offset a lack of domestic demand by export surpluses. The global financial crisis has now shown that neither growth model is sustainable. Schulten asserts that “the development of a new post-crisis growth model has to shift the focus again to a more wage-led growth strategy and a much more equal development of incomes. While trade unions have to do their own job to regain their organisational power, policymakers could promote a more equal income distribution essentially through two channels, the first being a more progressive tax policy with an emphasis on higher taxes for top income earners and the second a re-regulation of labour market institutions in order to re-balance the power relations between capital and labour and to strengthen trade unions’ structural and institutional power.”
Henry Liu (2010) explains how to achieve economic development through wage-led growth. He states that stagnant worker wage income leads to overcapacity in the economy resulting in slow economic growth and economic stagnation. In the economics of development, there is an iron-clad rule that “income is all”. The rule states that the effectiveness of developmental policies, programs and measures should be evaluated by their effect on raising the wage income of workers; and that a low-wage economy is an underdeveloped economy because it keeps aggregate consumer demand below its optimum level, thus causing overcapacity in the economy that needs to be absorbed by export.” No growth of wages means that developmental policies, programmes, and measures have failed. Growth of income of workers is the key factor in generating national wealth in a country.
Economic growth experience of Taiwan and Singapore in 1970s and 1980s also points to a wage-led growth. James, Naya, and Meier (1989) discuss the role of wage-led growth in East Asian rapid development. Taiwan and Singapore adopted high wage policy to accelerate economic growth. For instance, during the rapid growth period from mid 1970s to early 1990s Singapore reported about 70% real wage growth. The idea of this high wage policy is to promote skill intensive economic activities and to move workers from unskilled to skilled worker categories. This wage-led growth policy has significantly contributed to accelerating economic growth in Singapore and Taiwan. This policy has also significantly contributed to reducing poverty and income inequality in those countries.
Role of Trade Unions in Wage-led Growth
What is the role of Trade Unions in the wage-led and domestic demand-led growth? Lingens Jorg (2004) in his book titled Union Wage Bargaining and Economic Growth emphasized that trade unions might foster economic growth. Trade unions would stimulate economic growth by signaling the policy makers that there is a shortage of domestic private demand and that raising wages is essential to fill the demand-supply gap. If policy makers do not positively respond to these signals by raising wages, sooner or later, higher growth will not be sustained because of the lack of aggregate demand.
A recent article appeared in an official e-news channel reported that wages in China have nearly doubled over the past four years, outpacing the rate of growth of the economy. This rapid growth of wages occurred because the Government of China and the private corporate leadership have recognised the fact that it is the growth of domestic demand from the Chinese people that can make the rapid economic growth more sustainable.
A recent article appeared in an official e-news channel reported that wages in China have nearly doubled over the past four years, outpacing the rate of growth of the economy. This rapid growth of wages occurred because the Government of China and the private corporate leadership have recognised the fact that it is the growth of domestic demand from the Chinese people that can make the rapid economic growth more sustainable.
What can the middle class do in wage-led growth?
The importance of the middle class in fostering economic growth through wage-led growth should also be recognised. A study titled Exiting from the Crisis: Towards a Model of More Equitable and Sustainable Growth , a group of leading economists including Nobel Economics Laureate Joseph Stiglitz (2010) showed the complete failure of the profit-led export promotion growth model. The book emphasized that “too often, we think of good jobs or boosting incomes for middle-class families as the outcome of growth. But a key lesson from the past few years is that placing the incomes of the middle class at the center of our growth framework may be the only path to sustainable growth.” This is diametrically opposed to the most common neo-liberal theory that growth comes only through sustained focus on the need of business to see reduced costs, regardless of the implications for employment and wages. Professor Joseph Stiglitz and associates emphasized that a policy of constant wage growth for middle class would stimulate economic growth. The path to growth runs though the middle class. It is the expansion of the middle class and their incomes that can create stronger domestic demand for the goods and services created through the growth process. Expansion of middle class also means reducing the poor segments of the society.
Who benefitted from the doubled income in Sri Lanka?
The Budget Speech 2011 states that the per capita income of Sri Lanka has doubled in 2010 compared to 2005. It also says that the economy has recorded a higher rate of growth during this period. If this information is correct, then, a pertinent question to ask is as to whose income has doubled since 2005. Since the income of the fixed income earners, including public sector workers, have not doubled in real terms since 2005 because their salaries/wages did not double, one may wonder that the variable income earners including the affluent class of the country might have received a bigger share of the doubled income. Then, again, the government is saying that the income disparity has narrowed since 2005. If the income disparity has narrowed, the income of most people should have almost doubled as a consequent to the doubled per capita income of the country. This has not happened with regard to most public sector workers including university academics. Another point is that if the economy’s per capita income has doubled since 2005, it is the responsibility of the government to raise the wages of the fixed income earners working in the public sector including university academics so that they would also benefit from that growth. If there is no growth of wages, one may wonder as to what is the use of having higher economic growth. Does that rapid growth and doubled income mean to help the crony capitalist class in the country who can later smuggle that wealth to whichever country they want to migrate?
Wage growth and inflation
A main argument presented by the political leadership and bureaucrats when there are demands for salary hikes is that wage increases create inflation through raising cost of production. This argument is not true for developing countries which operate at well below the full employment levels along with strong shortages of effective aggregate demand. One needs to recognise the fact that economic growth is the central issue in countries like ours, not the stabilisation. For a growing economy, periods of excess money supply stemming from expansionary fiscal policies are required. For this to happen, a certain level of inflation has to be tolerated by the society. Reducing inflation to very small rates through fiscal and monetary disciplining by undertaking credit market repression and wage repression is extremely detrimental to economic and social progress of countries like ours. It is well known that, in countries like ours which operate at well below the full employment levels, policies to promote aggregate demand will not be detrimental to economic growth. In a recent in-depth and rigorous empirical study with reference to Sri Lanka, we found that expansion of government spending through deficit budget policies since the 1980s have not negatively affected private investment and have, in fact, positively contributed to economic growth (Priyadarshanee and Dayaratna-Banda 2010). Apart from this, any sensible person would realise that a huge amount of public funds are spent on various wasteful activities which can easily be diverted to raise wages in order raise demand to facilitate economic growth.
Elusive quest for sustainable growth through wage-repression
A careful analysis of the policy response of the present government regarding the salary hike demands of university academics and others leads to the conclusion that UPFA political leadership has surrendered to the neo-liberal agenda of the bureaucrats and multilateral institutions. They have completely disregarded the fact that wage repression and profit promotion has generated dismal consequences in most countries. Wage-repression will not generate prosperity. It will, in fact, generate economic misery. It is still not too late for the UPFA political leadership to realise that it is a wage-led cum domestic demand-led growth policy that would promote growth and make the already achieved rapid economic growth more sustainable. Such a growth strategy will also create a more egalitarian and humane society.
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