Productivity niches

The only solution to Sri Lanka’s slow economic growth is to increase productivity. But there is a challenge in finding where that productivity should come from. Given the population dynamics of Sri Lanka and the aspirations of people, improving productivity requires deep structural changes in the economy. 

One point that has been highlighted many times is encouraging more women to enter into the formal workforce. This can be done is several ways. Currently only about 34% of women are in the formal workforce in Sri Lanka, despite comparatively higher levels of education. This ceiling has not changed in about 20 years, showing there are deep seated economic and social reasons why women chose to leave work, or rather shift their focus to different types of care giving activities. 

Reducing responsibilities of childcare and care for the elderly from women would not only allow them to remain part of the formal workforce but also generate fresh jobs in those sectors that would provide employment to other women with fewer skills. This would increase productivity and also create more employment options within the country. Experts have also suggested that employers should be discouraged from putting age limits on jobs so that even women in their 40s can be allowed to return to the workforce once their childcare and other responsibilities change. 

Dissecting the data on women’s employment also shows that the longer a women studies and the more qualified she is the more likely she will remain in the formal workforce. Since Sri Lanka is also targeting becoming a knowledge economy and services related jobs are much sought after it makes sense to encourage women to become more educated. The social benefits of women being more educated are also well documented, which means there can be multiple benefits from this effort. Given that Sri Lanka has more women than men, development is anyway becoming feminized and as such greater investment in women is key to development.  

Recent data suggests that young people tend to spend longer in getting an education and enter the labour force at a later point. This would explain why unemployment in Sri Lanka is higher for youth while national average is low. This also means that even though younger people enter the workforce at a later date they are likely to remain in the workforce for longer. One of the ways to make the most of a working population is to allow them to keep working for a longer amount of time. It is estimated that Sri Lanka has about three million elderly people or people above the age of 60. However, less than 25% of them are employed. Since lifespans are getting longer if a person is healthy and willing to work there should be opportunities created that would allow them remain productive, even possibly into their seventies.

The third point where productivity can be increased is by taking people out of unproductive or underproductive sectors and encouraging them to move into productive sectors. The public sector is a huge area where large amounts of already trained people can be retrenched into private sector jobs. Sectors such as agriculture can either be made more productive or labour can be attracted to other jobs. Right now most of them coalesce into construction or self-employment but if they are given skills to move beyond those options Sri Lanka may see a way to stronger growth.