Multiple crises have worsened worrisome features in Sri Lanka’s labour market: ILO

• More than 200,000 jobs lost due to the pandemic between 4Q19 and 2Q21
• Extensive job losses among employers augured ill for the vigorous regeneration of jobs
• Decline in household income due to job losses  likely to have increased incidence of poverty
• Negative developments expected to have worsened in 2022 as economic crisis intensified

The multiple crises in Sri Lanka have intensified long-standing worrisome features of the country’s labour market, a report by the International Labour Organisation (ILO) revealed.

The high frequency of crisis in the last three years has resulted in the expansion of unemployment, widened gender gaps in labour force participation, and given rise to job insecurity, uncertainty, and hardship, the recently published ILO report titled ‘The labour market implications of Sri Lanka’s multiple crises’ highlighted.

Sri Lanka lost more than 200,000 jobs to the pandemic between the fourth quarter of 2019 and the second quarter of 2021 and its own account workers made up half of all job losses. The employment share of the informal sector increased because formal sector employment contracted more sharply. 

Although some recovery during the second half of 2021, extensive job losses among employers augured ill for the vigorous regeneration of jobs. 

“The fragile economic recovery of the last quarter of 2021 is likely to have been snuffed out in the first quarter of 2022, due to the shortages in imported raw materials and constraints on power generation and transport which manifested in January 2022,” the report stated.

Unemployment has always been significantly higher among women relative to males in Sri Lanka, while unemployment rates among young people, high at the best of times, rose to 30 percent of the 20-24 age cohort by the middle of 2021 and dropped to 24 percent by the end of the year. 

The ILO pointed out that as the economic crises multiplied and worsened at the beginning of 2022, these indicators would have again regressed. 

The pandemic also impacted the skills development sector. Efforts to provide education and training online were constrained mainly due to problems of infrastructure access particularly outside of Western Province. 

Enrolment and completion of TVET courses in 2020 relative to 2019 declined by 50 and 57 percent respectively. However, the imposition of power cuts in 2022 will likely have disrupted even these limited measures. 

Furthermore, the decline in household income due to job losses is likely to have increased the incidence of poverty, with COVID-19 estimated as having pushed over 500,000 people into poverty.

The ILO shared that the pandemic also saw the emergence of the new poor - those who fell into poverty because of the pandemic – among the more educated and employed in industry and service sectors, particularly in urban areas and Western Province. 

The agency added that these negative developments would have worsened in 2022 as the economic crises intensified.