Do current unemployment figures show a true picture or is there more to it?

Sri Lanka boasts low unemployment rates. It seems Sri Lanka to be in a comfortable place when it comes to unemployment. If you check the statistics, unemployment has fallen YOY from 2016 to 2017 from 4.6% to 4.5%. Daily newspapers are full ofadvertisements seeking personnel to the hotel industry, construction, banking and mostly service sector related job requirements.

Does rosy unemployment figures reflect the true picture of the labour market in Sri Lanka? Any housewife would complain that she cannot find a maid to do household work or a day labourer to pluck coconuts or move the lawn. Similarly apparel manufacturers are short of garment workers and the construction industry has a shortage of construction workers and bemoan that they have to seek expat workers from China, India Nepal and Bangladesh. 

Certainly there seems to be a shortage of workers on the surface but is it a true picture or a structural problem or labour market inefficiencies in the Sri Lankan labour market that require acro economic adjustments?

Youth unemployment

Unemployment is defined as “a person who is willing to work and seeking employment but unable to secure a job”. Some definitions on unemployment has a time frame where a person who is seeking employment and not found such employment in four weeks are considered unemployed. 

However, in Sri Lanka many youth are unemployed but cannot be classified as unemployed because they are not seeking employment or voluntary unemployment, where they choose not to take a job at the salary offered.In this instance these youth could be considered unemployed because they are still seeking employment but declined due to higher wage expectations and other reasons.

Many Sri Lankan rural youth continue to seek employment in the government sector with a lifetime job security and a pension. They continue to stay underemployed while waiting for this elusive job.

The Sri Lankan youth population classified between 15-29 years is 4,926,000 with a literacy rates of 97.7% for males and 98.6% for females. According to the 2016 Sri Lanka Labour force survey 22.2% of males and 45.1% of females in this age group are unemployed.

Another reason is lack of career guidance to school leavers. Most school leavers accept low skill or casual jobs. They stay in jobs that does not increase human capital skills and after few years they continue to stay entrenched in the unskilled sector. In the past during the armed conflict with the LTTE, the youth joined the armed forces and some were able to acquire marketable skills. Now during peace time such military employment are limited.

Why are our youth unemployed or not seeking work when there are jobs in tourism, IT, construction, agriculture and many manufacturing sectors? One main reason is the lack of skills and the English language. English literacy is 22% among the age 15 and above population. Modern business requires a reasonable command of English. Many youth who excel in their GCE Ordinary Level and Advanced Level are deficient in English. This has been a barrier to higher studies in IT, engineering and many areas of the service sector including tourism. 

In 2016 there were 258,193 candidates who sat for the GCE A/L exam, only 18% of those who passed the Advance Levelare eligible to enter local universities. Of this 52% are in the Arts and education stream. Only about 3% entered vocational schools. 

The educational system requires adaptability to current labourmarket requirements. What is produced and what is needed has been the bane of the local labour market. This mismatch has cost Sri Lanka dearly in her economic progress. The quality of education must be improved. For this to happen the teachers must be better trained and the curriculum improved to suit private sector requirements.

Policy makers are concerned about the status of the rest of the Advanced Level students who did not enter local or foreign universities, vocational schools or secured a job. There are 4,926,000 youth in the age group 15-29 of which 67.3% are still schooling and unemployed of which 45.1% are females. This is very troubling to policymakers because this category of unemployed youth are under the radar. This is a group that has no voice and proper representation. 

Analysingthe figures, female participation in the work force is low. What are the causes of youth unemployment? The current low growth economy doesn’t help. Entrepreneurs are not willing to pay the salary expected by the youth, stating that the demands are not realistic with their skills. The majority of the youth has the education but not job skills.

Another reason is that most youth are not willing to relocate to areas where there are jobs. It is said that “human baggage is the hardest to move”. Another main reason that many youth stay unemployed is because they are discouraged. These discouraged youth are in limbo without work and a future. They stay away from the work force and are not counted as unemployed.

These discouraged youth are a dangerous latent force to be reckoned. Such untapped resources stay dormant to possible youth rebellion, which we saw in 1971 and 1988-1990. The State must address this social issue immediately

Female unemployment

Any person above 15 years can be considered as working age population. In 2016 Sri Lanka’s economically active work force was 8,310,682 out of which 75.1% were males and 35.9% were females. In contrast to regional countries the female labour force participation rate is low; in Sri Lanka,despite a literacy rate of 98.6% for females in the age group of 15-24 years,females are reluctant to enter the work force. 

The unemployment rate for females in this group with GCE Advance Level and higher is 11.9%. It seems the higher the educational achievement of the Sri Lankan female, the higher the unemployment rate. This said, the employment rate for women with higher post graduate degrees was equivalent to men according to a study by Institute of Policy Studies.

An Asian Development Bank study done in 2015 found the following reasons which can be comparable to Sri Lanka:

1.Women in Asia are on average 70% less likely than men to be in the labour force, with the country-to-country percentage varying anywhere from 3% to 80%. This gap persists despite economic growth, decreasing fertility rates, and increasing education.

2.The presence of women in the workforce can have a significant benefits for economic growth and welfare, but neither economic growth nor increasing education appears sufficient to pull women into the labourforce.

3.Women face a labour market that offers them lower wages and lower quality jobs than those for their male counterparts, a disparity largely influenced by how women allocate their time between market and nonmarket activities.

4.Surveys suggest that, relative to men, women are often perceived to have lower skills for the labour market.

5.In some countries, social norms that emphasise domestic work as the primary responsibility of women constitute a significant constraint to their social activities and mobility.

What can be done?

Currently the Government has implemented drastic changes on how we educate our youth. Great priorities are given for vocational training in every district. The mentality of securing “Government jobs” must be discouraged. 

The Government is undertaking with international agencies to identify the resources needed to create a conducive environment for the youth to undertake skills training. 

The higher education institutes need to have a dialogue with the private sector and change the curriculum to meet required demand forskills for the local and international market.

Peace Corp from the USA has agreed to help teach English to the students and teachers.

Improved teaching skills and methodology for the present teachers.

Teach students and teachers soft skills.

To change the attitude of the youth that a job in hand is more respectful than staying unemployed.

To teach parents to send their children for skills-based education and not let them stay at home aimlessly.

The technical schools must have career guidance counsellors to visit schools to create an awareness campaign that there are many technical and vocational training options available at very nominal fees or totally free.

To remove GCE O/L and A/L qualification requirements to enter vocational schools. A simple aptitude test will be sufficient to channel the training stream.

Make the vocational course short and get the private sector to support by giving industrial on the job training. 

To return to vocational school after industrial training for further skills learning. This practice has been implemented since the 1970s by the then Ceylon Hotels School, now known as SLITHM. 

In a period of five years the current labour shortage will be reduced, the skills gap of the youth bridged, and foreign expat workers’ requirement to be drastically reduced.

Sri Lanka with its capable youth requires direction from the top to be productive and be a contributor to the development of the nation. Current labour mismatches and shortages have been due to wrong policies of the past. Rectifying and remedial measures in education, attitudes, skills training opportunities, and English language in the classroom will turn around the current problem. It’s not late and now is the time to change direction to solve this issue.

(Sun Lai Yung has worked in USA, Singapore, Afghanistan, and the Middle East. He is currently employed as a consultant at a leading global company. He has a Master’s degree in Economics from Northeastern University Boston. He can be contacted at [email protected].)