Employment in agriculture sector falls to all-time low

• Severe drought believed to be among key reasons 
• Historically around 30% of labour pool has been in agriculture

By Chandeepa Wettasinghe

Sri Lankans have been fleeing the weather-stricken agriculture sector for nine months in a row, according to the data released by the Census and Statistics Department last week.

The employed population level in the agriculture sector fell to 24.3 percent, an all-time low, in the third quarter of 2017 (3Q17), from an 18-month high of 27.6 percent experienced during the fourth quarter of 2016.

The figures had last slipped to the lowest level of 25.1 percent during the second quarter of 2016, when the landslides caused by torrential rain had disrupted activities in the tea, rubber and oil palm plantation economy and paddy cultivation in the wet zone in the central and south western parts of the island.

Since then, the country had experienced one of the worst droughts in the last four decades, from late 2016 to mid-2017.

When inquired on the gradual fall in the employment share in agriculture last year, Institute of Policy Studies Research Director Dr. Nisha Arunatilake said that fluctuations are normal, especially in the seasonal agriculture sector.

“One would need to observe employment trends over a long time before making predictions on whether employment is rising or falling. This is especially the case for agriculture employment,” she said.

However, it is undeniable that more Sri Lankans are shunning the agriculture sector over the long term, since just five years ago, during the third quarter of 2012 (3Q12), the employment share in the sector had been 30.9 percent.

Politicians and academics have recently said that many in the younger generations are moving away from agriculture in favour of more cosmopolitan activities, which garner greater recognition among their generations.

This is compared to the older generations, who hold on to the belief illustrated by a Sinhala proverb, which roughly translates to: ‘farmers are fit to be royalty once they wash away the mud’. The shift in the labour market has been favouring the industrial sector, which absorbed 25.5 percent of the labour pool in 3Q12, increased to 29.1 percent in 3Q17. The same period also saw the employment share in the services sector increase from 43 percent to 46.6 percent. A Census and Statistics Department survey published this month on labour demand showed that most of the half a million vacancies available in the country are in the industry and services sectors.  Central Bank Governor Dr. Indrajit Coomaraswamy recently said that there is no shortage of labour to fill the vacancies in the industry and service sectors but that too many Sri Lankans are trapped in the agriculture sector, with government subsidies provided for water and fertilizer.

Although historically, around 30 percent of the labour pool had been in agriculture, the sector had contributed less than 10 percent to gross domestic product (GDP).
Dr. Coomaraswamy had said that the employment share in agriculture should fall to around 15 percent, in line with the countries at a similar development level as Sri Lanka. He had said that since most farms are around two acres in size, it also hampers economies of scale available from large-scale mechanization, which requires large land plots.

At the extreme end of this is the US, where an average farm size is 442 acres, with farmers—who too are subsidized and are increasingly being university educated—employing a handful of employees and heavy mechanization.

The Sri Lankan government has been pushing for modernization of the agriculture industry with several initiatives being deployed to foster processing and value-adding in agriculture for exports to increase its contribution to the country’s GDP.

Unemployment rate at 4.2% in 3Q

Sri Lanka experienced benign unemployment during the third quarter of 2017 (3Q17), continuing a level below 5 percent experienced since the fourth quarter of 2015, according to the Census and Statistics Department (DCS). 

The data indicated that unemployment during 3Q17 was 4.2 percent, slightly better than the 4.5 percent unemployment experienced both a year earlier, as well as in the second quarter of 2017.  

The DCS said that there was no statistically significant drop in the figures in 3Q17.

Unemployment was highest among the youth between the ages of 15 and 24, where 18.3 percent of those in the labour pool unemployed, while 9.8 percent of those in the labour pool between the ages of 25 and 29 were unemployed. Female unemployment in these age groups was disproportionately higher. The country’s labour force was 8.5 million in 3Q17, with 63.1 percent of the male population above the age of 15 or 5.4 million individuals, participating in economic activities. Female labour force participation meanwhile was 36.9 percent.

The low level of females participating in the labour force has been a problem for policymakers, since it hampers the potential for economic growth. However, the participation level in 3Q17 was higher compared to 36.5 percent in 3Q16 and 35.6 percent in 2Q17. The recent DCS survey on labour demand showed that the most number of individuals who had left employment in 2016 and 2017 were females and that many employers are unwilling to hire females due to this, as well as females lacking vocational/professional qualifications and females having family constraints and commitments. 

However, 60 percent of Sri Lanka’s university graduates are women. Policymakers are attempting to introduce female-friendly policies at the work place and the 2018 budget proposed flexible working hours and daycare facilities at government offices as solutions.