It's probably lesser in modern society than earlier, but it still poses a barrier to genuine competition.
May I add that it's no different in India?
The problem atleast in my state has to do with the people who select various teams. Now somehow coaches of certain schools/ colleges manage to be on the selection committees. This means that people interested in cricket are asked to make 'sacrifices' from day one. They need to decide between a school close to home, that gives good quality education and where most of their friends go, and a 'cricket school', one in which the authorities don't care whether or not you attend classes if you are in sports. The way they decide on these schools is thus: they look up who's on the selection committee of the league they are shooting for, and see which school they coach in. That's it. This is the case right from school level.
It's happened, for instance, that the team that wins the University level competition (inter collegiate), doesn't have more than a single member in the University eleven team (I've also heard about cases where the top two teams didnt have representation). Getting to play for, say, Madras University is quite a significant achievement.
At this level, there are certain colleges that are 'cricket colleges' - the ones that have traditionally contributed to the team. People in engineering schools for instance won't get anyone in the Univ team. Even amongst the teams that get to dominate representation in the Univ team, fortunes fluctuate depending on which side the sun's shining.
Ofcourse, it's not ALL bad! These things are probably the kind of problems that can't really be sorted out. There are always going to be good players that are in the wrong place at the wrong time. Things are better, they say, nowadays. That has come down from reforms in state level and national level selection, where people are shedding their earlier parochial attitudes.
And then there's another problem (probably specific to India and a few other countries)- giving out false ages. This happens quite a lot in various age group competitions. This malady can often be sighted in various interschool competitions where students who have graduated are sneaked in to try and better the team's chances of victory.
All these things are usually ironed out where it comes to national representation. But forgery of birth certificates and the such at the domestic level must also be curtailed. That's one of the many problems with having so many teams in the circuit.
