Maximising human resource potential

Each year over 100,000 qualified students find themselves without opportunities to pursue university education and thousands of others enter the job market without relevant vocational training. This dearth has a severe trickle-down effect on the economy. To exacerbate this, Sri Lanka is also experiencing a drop in fertility and rise in life expectancy, which has resulted in ageing and the decreased growth of the labour force. The State of the Economy 2012 report, the Institute of Policy Studies’ annual flagship publication, explores these issues and their eventual impact on the human resource pool of the country, while exploring the steps Sri Lanka should take to minimise such impacts. The following, is an abstract from the report.

Sri Lanka’s current policy framework aims to reposition the country in the global arena as a knowledge-based, middle income country with better and improved living standards. Since the end of the conflict, the economy has grown at more than eight per cent. However, sustaining this growth momentum will critically depend, among other factors, on the availability of a skilled, productive and flexible workforce.

The Educational Stalemate

Presently, Sri Lanka’s tertiary education system caters to only a very small proportion of the population. Due to the limited number of placements in state-funded universities, only 17% of those who qualify for university education gain admission to state universities. Each year, more than 100,000 qualified students are forced to abandon their ambitions to enter university. Compared to other similar countries, the number of students enrolled in tertiary education is extremely low in Sri Lanka. For example, the average tertiary enrolment rates for lower middle income countries and upper middle income countries are around 23% and 43%, respectively.

The main provider of tertiary and vocational training in the country at present is the public sector. Lack of resources has limited the expansion of the tertiary and vocational education sector and held back improvements to its relevance and quality. At the same time, the scope of university education in the country is very limited. The options for improving resources in the higher education sector include either increasing public investments in the sector or encouraging private participation in the sector. Given the current budget constraints facing the Government, large increases in public investments to higher education are unlikely. Further, an increase in public investments alone will not make the universities dynamic centres of teaching and learning that react to changes in the market in a timely manner. Unless these issues in improving access to better quality education in the country are addressed, Sri Lanka will soon face a severe talent shortage.

The foundation for more productive tertiary education in S&T related subjects and relevant competencies in general skills such as ICT and English language, are laid at the general education level. Available data indicate that the education outcomes in these vital subject areas are lacking in the country. Part of the problem in promoting necessary competencies are resource disparities for more demanding subjects such as Science, English and IT. Only 10% of secondary schools have facilities to teach A-Level Science streams. Schools offering science subjects in A-Levels are not rationally located and a majority of these are to be found in urban areas. On the other hand, in rural schools there is a deficit of teachers for more demanding subjects such as English and IT. Only half the schools have at least one primary English teacher in the school, while only one-fourth of secondary schools have an IT teacher in the school.

Coping with ageing

Decreasing fertility rates and increasing life expectancy has resulted in a rapid ageing of the population. These demographic changes have created new challenges to the labour market. The country’s labour force is stagnating and growing older. Studies for other countries show that a stagnant labour force can dampen economic growth.

For example, declining workforces are estimated to reduce per annum growth rates of France and Germany by 0.2 to 0.5 per cent and that of Japan by 0.8 per cent. Along with population ageing, the dependent population of a country, children and the elderly who are typically not employed in relation to the working population will increase. This increasing economic dependency is estimated to slow growth (compared to growth that would have taken place given the present age structure) by another 0.2 to 0.3 per cent in France, Germany and Japan.

Sri Lanka’s labour force is ageing and its growth is slowing down. The labour force is estimated to start reducing by 2030. At present, the skill development in the country is mainly geared towards entrants to the labour market. However, as demonstrated above, demographic changes have increased the need for extending training to mid-career workers as well.

Health as wealth

Improving the health of the population will be critical in making best use of available human resources. The importance of nutrition for reducing health care costs, morbidity and mortality, and increasing productivity is well documented in the literature. Studies also show that well-nourished children are more likely to succeed in education.

Along with nutrition, diseases that are more prevalent amongst the productive age population, such as Non-Communicable Diseases (NCDs), also influence work life and consequent productivity. Encouraging the labour force participation of older workers will partly depend on preventing and better managing the diseases that are more prevalent amongst the elderly, such as NCDs.

The country’s labour market is experiencing new changes. On one hand it is experiencing shortages for skilled workers, and on the other hand it is expecting a decline in growth.

To overcome these challenges the country needs to, address issues in improving access to better quality education at all levels of education and make better use of existing labour resources.

In addition, the country needs to make better use of existing labour resources by improving the health and productivity of the population.