Friday, 7 March 2014 00:56
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INEQUALITY took centre stage in Parliament recently when it was pointed out through Census and Statistics Department reports the difficulties faced by poor and lower middle income sections of society.
According to the Household Income & Expenditure Survey 2012/13 report, Rs. 40,887 is needed by an average family in Sri Lanka to meet their monthly household expenses while an urban household with less than four family members needs Rs. 59,001. However, the Central Bank says per capita income was recorded at US$ 3,000, which allows for a monthly income of Rs. 32,500.
Yet the new report has stated the average per capita income is Rs. 11,932 per month. More than 50% of Sri Lanka’s households make an income of less than Rs. 35,000 and while these could be supplemented by migrant worker remittances, it shows a deepening level of inequality. The Gini coefficient, which is used to measure the distribution of a nation’s wealth, is near the five point mark, underscoring the high levels of inequality.
On the surface, Sri Lanka has achieved good employment growth and economic growth. But this is only on the surface and if considered carefully there are some concerns and a lot of work needs to be done. At present the Government estimates 500,000 families are on Samurdhi and this is excluding the north and east while 43% of Colombo’s population alone live in shanties. Examples of inequality can be seen everywhere if one decides to look with empathy.
Despite the strong economic growth, there is concern that formal sector employment is showing very little growth while Sri Lanka’s informal sector continues to be large. A phenomenon of jobless growth has been observed by local think tanks. This means that the country’s employment growth is not really coming from the formal sector and this is a concern because it leads to the question as to whether economic growth is creating enough quality jobs.
Underemployment is a significant problem in Sri Lanka and not only does inequality undermine sustainable growth, but it also means that the technological transition to a knowledge economy is not happening in Sri Lanka. Though unemployment numbers continue to be low, it is doubtful if crucial industrial and technologically-advanced job creation is happening.
Ultimately, this boils down to development. Unless Sri Lanka can graduate to higher formal sector employment including better levels of exports and other sectors, there will be little room for real growth. Investment, particularly foreign and capital investment, will not happen unless there is a strong impetus from human resource development. Without better jobs in larger number, inequality ratios will only continue to grow.
In a recent report released by the Asian Development Bank, analysts point out that if the inequality ratio in Asia remained the same as in the 1980s during the last two decades, more than 250 million people would have been lifted out of poverty. This alone shows the debilitating power of inequality, especially for a country in a post-war environment. The growth of the US economy is based on the number of jobs because that is the true indication of economic development. It is a pity that equal opportunities are not the backbone of Sri Lanka’s economy.
