Labour potential

Economic growth is deeply tied to employment and productivity. According to a recent survey by the Census and Statistics Department, Sri Lanka had an estimated 200,000 unutilised labour potential as an economically inactive group. This group, despite showing some interest in employment, had nonetheless remained unemployed, which underscores the challenge in driving productivity and equitable development.  

The estimated 201,403, which is categorised as a potential labour force, accounted for 2.6% of inactive population in 2018. Fortunately, the potential labour force has declined from a high of 230,908 recorded in 2017. The potential labour force consisted of estimated 77,288 males and 124,115 females in 2018. 

The potential labour force includes inactive persons who actively seek employment, but who are excluded from unemployment as jobs are not immediately available; persons who are not seeking employment due to indefinite lay-offs or discouragement; and persons facing a variety of obstacles in seeking employment, including personal and family-related factors in addition to the socioeconomic context.

Sri Lanka also had 82,131 discouraged job seekers accounting for 1.1% of the economically inactive group in 2018. Inability to find suitable employment, failure to find any work, lack of training and skills required for the employment and personal difficulties were cited as reasons for discouragement. Over 50% or 41,468 of discouraged job seekers were males and remaining 40,663 were females.

There are deeply entrenched reasons as to why labour remains in spaces where they are unable to find work and many are due to practical reasons. Prospective job seekers who usually move to urban areas looking for work find that they can save very little from their salary once rent, food, utilities and transport are covered. One area in Sri Lanka that has a low productive labour force is farming, which despite contributing only about 7% of GDP still holds about 28% of the workforce. During drought and other times of stress, members of farmer families travel to nearby towns to find jobs as construction workers and return once their home economic situation improves. There is little incentive, especially for women, to remain in centres of economic activity for a prolonged period of time.

Lack of jobs in provinces also makes it challenging and making endless recruitments to the public sector is fiscally unfeasible. Sri Lanka’s policymakers have the unenviable task of trying to bridge aspiration with existing economic realities. The brutal truth is that workers want well-paying socially acceptable jobs. Some even prefer security and respect above cash, which is why public sector jobs are in high demand. Working in trades or industries does not tick the aspirational box even though it may pay well.   The situation is worsened by the lack of a mechanism to match prospective employees with jobs and provide them with the required skills essential to work in the private sector.  The situation is not helped by a blue collar brain drain where technically skilled labour seeps out of the country for better paying jobs overseas.

Policies to tackle these issues demand long-term strategies that are inherently complicated. As technology improves, some jobs will disappear while most others will change. In a world where the value of labour is shifting rapidly, policymakers need to at least understand the complexity of the challenge they face and find ways of addressing it to ensure economic benefits reach as many as possible.