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Inclusivity for growth


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Much discussion is taking place on how to fix Sri Lanka’s economy. Among larger issues such as corruption and mismanagement is also the need for structural reforms, including rectifying imbalances in the local workforce. Encouraging more women to enter into the formal workforce can boost growth and provide wider socioeconomic benefits. 

Last year the International Monetary Fund (IMF) released a report that said Sri Lanka could raise its GDP by as much as 20% by closing the gender gap in the workforce, but it would take strong long-term measures to achieve such a goal. 

In Sri Lanka, female participation in the formal labour force at 35% is significantly lower than for men. Unemployment rates are also significantly higher for women. There is also a large gender gap in the share of women who are unpaid family workers, who account for 20.4% of women compared to 3% of men.

Key measures include labour law reforms to support flexible work arrangements such as part-time work, telework, working from home, and night work. Effective gender budgeting to actively target gender equality, with a focus on vocational training, safe transportation, and child care support, are also important.

Greater financial inclusion through access to microfinance institutions and formal financial institutions to promote entrepreneurship among women are other measures. Enhancing female labour force participation is estimated to boost incomes significantly.  SMEs contribute about 45% of Sri Lanka’s gross domestic product and provide about half of the country’s jobs. Yet, among SMEs, only 25% of entrepreneurs are women. Their lower capacity contributes to a $ 350 million gender credit gap, according to the ADB. Capitalising on entrepreneurship to economically empower women and generate inclusive growth in Sri Lanka will require reducing various bottlenecks, especially access to finance. Women face additional hurdles – gender-related and costly – outside the investment environment. So far, much has been spent on advocating women’s access to finance (with emphasis on microfinance), building capacity for entrepreneurship, and organising and strengthening women’s business associations. 

These activities are necessary and useful, but reducing the barriers for all investors to open, operate and close firms, and addressing social norms and gender-based differential treatment under the law is also essential.

Levelling the playing field requires building an environment for these skilled women to create their own opportunities. This means addressing social norms about working women and promoting an environment where women can balance work and family.  Progress on both fronts is an urgent need. The degree of job segregation remains high. Most jobs are still in male-dominated sectors that may be seen as inappropriate for women. It also means addressing gender-based differential treatment under the law, which the Government has pledged to tackle but is likely to find a hard and long road. 

Mentoring is another aspect that needs desperate attention. Indebtedness created in some parts of Sri Lanka, particularly in the North, is largely due to female entrepreneurs being lured into making bad financial decisions in limited ventures. 

For example, handing out sewing machines and chickens would provide little assistance unless they have market access, capital, skills and a way to understand how to run their businesses and expand. In fact, in studies done on successful female entrepreneurs, mentorship has been ranked above capital in importance. 

Successive governments have struggled with this challenge but it is an important element of building an inclusive economy.  


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