3 October 2022 12:01 am Views - 1800
Sri Lanka’s official unemployment rate increased in the second quarter ended in June as the unprecedented economic crisis pushed many out of work amid sky-high interest rates, import restrictions, soaring inflation and other demand destruction policies implemented to arrest the situation.
The data released last week showed that the official unemployment rate had risen to 4.6 percent by the end of the second quarter from the 4.3 percent recorded in the first quarter.
However, this may not paint the full grim outlook of the local unemployment condition as the official jobless rate does not capture those who are unemployed but had given up looking for work during the survey period.
Many people who made a living out of imports, construction, consumer discretionary and durables items and the likes remain on the sidelines since the collapse of the economy.
Businesses were forced to either retrench staff to stay afloat to confront squeeze in demand coming from galloping inflation or completely close shop leaving all their staff redundant.
There were evidence of widespread layoffs, pull-backs in recruitment and hiring freezes across all sectors. The Sri Lankan economy is now officially in a recession as the country’s GDP recorded back-to-back contractions in the first and the second quarters.
The GDP shrank 8.4 percent in the second quarter, sharpest for any quarter after a mild 1.6 percent decline in the first quarter, making the island nation’s economy 4.8 percent smaller than it was a year ago.
Meanwhile, what makes the matter even worrying is the shrinking labour force participation in Sri Lanka, which now appears to have become an entrenched problem.
For instance, the so-called labour force participation rate, which measures those who are both employed and unemployed but looking for work as a percentage of the working age population, fell to 50.1 percent in the second quarter from 51.2 percent in the first quarter.
While Sri Lanka’s working age population may be falling due to record number of people going overseas, it appears that employed people have also come down quite sharply, weighing on the ratio.
Meanwhile, others who are unemployed may have also given up looking for work here in Sri Lanka as employment opportunities have dried up.
Sri Lanka risks losing its key talent and people in their prime working age due to the ongoing economic crisis, potentially prolonging the misery the people are going through in their daily lives as a weaker workforce could only do very little to help the economy’s sustained recovery.