Open labour policies to help boost economy amidst slow population growth

By Nishel Fernando
Sri Lanka needs to look at its policy mix, including open labour policies, to grow the economy beyond 5 percent over the next few years, amidst weak population growth.
For Sri Lanka to target an economic expansion in the range of even 5 to 6 percent is a challenge, primarily due to the demographics, said Rockefeller International Chairman Ruchir Sharma.
“For any country to have a faster economic growth rate, a young working population is needed. China is now facing huge manpower shortages, due to its ‘one family one child policy’ that was implemented a few decades ago,” he said.

In the absence of natural population growth, Sharma advocated that the country needs to look at adopting more open labour and trade policies, combined with measures to boost female labour force participation. The latter has been hovering at around one-third of the working age female population.
As per the projections, population growth is set at an average of around 0.1 percent over the next five years.
According to the investment advisor, at least 2 percent population growth is necessary for the island nation to achieve a sustained economic growth of 6 percent.

Further, Sharma pointed out that intra-regional trade, which remains particularly weak in South Asia, as another unexploited path to boost growth.