Labour challenges

As weather improved in the last few months, Sri Lanka’s labour survey for the fourth quarter of 2017 showed agriculture employment had picked up from 24.3% in the previous quarter to 27%, with services and industries showing a marginal decline.   

The Department of Census and Statistics (DCS), releasing the labour force survey for the fourth quarter of 2017 this week, said industries had reduced from 29.1% in the third quarter of 2017 to 28.3% while services had contracted from 46.6% to 44.7% in the same period. 

In the fourth quarter of 2016 agriculture was 27.6%, suggesting that the agriculture sector recovered from bad weather earlier in the year. A corresponding increase in GDP numbers also reflected the upturn in the least quarter of 2017. However, this provides a challenge to the labour distribution of Sri Lanka where an uptick of agriculture could result in labour slipping away from more productive sectors such as services and industries. 

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 allows them to seep into from gainful areas such as industries. 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 that can be maintained outside of the public service and provide equitable retirement benefits for employers 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.