Reflections on Labour Productivity of the Sri Lanka Transport Board: An Analysis of Patterns and Evolution

Abstract

The predominant reliance on buses, particularly by low-income commuters, has made the bus transportation industry one of the most pivotal contributors to the domestic economy. Therefore, as the single largest public bus transportation service provider in Sri Lanka, SLTB’s ability to generate higher volumes of output by employing fewer inputs is increasingly crucial. However, SLTB is a state-owned enterprise that has been criticised for its inefficient factor productivity for a long time. Such allegations against the leading transport service provider of the country would raise serious economic concerns. Thus, this study attempted to examine SLTB’s labour productivity in its physical dimensions as reflected through the elasticity of output on labour inputs to determine the underlying causes for any inefficiency in the utilisation of labour in the organisation. The scale and evolution of elasticities of output of SLTB’s operations on labour inputs between 2011 and 2019 were subject to econometric scrutiny in this study. The results of the study revealed that the SLTB’s elasticity of output on labour inputs has been negative at the overall national level. However, a favourable evolution of the elasticity of output on labour could be observed over the years. The results also revealed the presence of significant differences in region-specific effects on the elasticity of output on labour inputs compared to the national level, indicating that different regions have different labour productivity levels.