Employment quandaries

President Gotabaya Rajapaksa’s encounter with unemployed graduates as well as the Government’s attempt to provide 60,000 new jobs has sparked much public discussion. On one hand Sri Lanka already has a bloated public sector that already takes up significant amounts of public funds but on the other structural and systemic issues discourage people from alternative sources of employment.  

Even though some industries such as construction are faced with labour shortages, pundits feel that there is sufficient labour in Sri Lanka. However, the challenge is moving labour out of unproductive segments such as agriculture, and allowing them to seep into more gainful areas such as industries and services. But there are deeply entrenched reasons as to why labour remains in unproductive areas, supported by subsidies in the agri sector, and perks such as a non-contributory pension in the public sector.

There are also 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.

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 soft 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. One option to encourage workers out of the public sector may be to offer transferable pensions which can be maintained outside of the public service, and provide equitable retirement benefits for employees in both sectors.  

Policies to tackle these issues demand long-term strategies that are inherently complicated. As technology improves, some of these 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. 

One other problem in Sri Lanka is that many service jobs are concentrated in the Western Province, and there is little aspirational employment in other urban centres. Public jobs also provide security and relatively better work environments that their private sector counterparts do not give, especially for women. There is also a school of thought that students from a humanities background prefer to gain public employment, as they may not be competitive in providing technical skills needed by the private sector. 

The fiscal responsibility alone will be daunting for the Government further down the road, unless employment outside the public sector is made more attractive. Sri Lanka’s free education system is a boon to many and should not be dismissed simply because of a handful of protesting graduates.