SL’s manufacturing employment logs rare uptick

• Services sector jobs still in decline as people leave employment in droves 

Sri Lanka’s manufacturing sector has observed a rare uptick in employment in August, reversing a months-long decline in jobs in the sector, an indication that the sagging economy was trying so hard to find some footing, although near full stability is at least 18 to 24 months away from now. 

However, the services sector in the country has continued to shed jobs at a rapid pace, due to a combination of factors, including increasing resignations by people to find foreign employment, non-renewal of employment contracts and retirements. 

Despite the slight improvement seen in the manufacturing sector jobs, as shown in a monthly survey carried out by the Central Bank, many businesses have either frozen their new recruitment or are letting employees go, after their businesses were hit by a cocktail of worrying economic factors.

The monthly survey observed that the manufacturing sector had managed to reverse part of the lost jobs in August, seen continuously through July, when there were deep cuts into jobs. The August manufacturing jobs were largely driven by the textile and apparel sector, which has been suffering from a perennial labour shortage, plaguing the industry’s growth prospects.  The reversal in the trend could partly be attributed to both men and women returning to the job market, after remaining in the sidelines for months, if not years, due to the increasing hardships inflicted by the runaway inflation, which cut purchasing power by half. Sri Lanka’s export sector is largely insulated from the worst of the economic crisis, as they get uninterrupted power and energy while its dollar incomes have largely shielded themselves from the cost inflation, which was caused by the rupee depreciation and inflation at home. Sri Lanka’s official jobless rate rose to 4.6 percent in the second quarter this year, from 4.3 percent in the first quarter, reflecting the deep contraction in the economy, which gave up 8.4 percent of the output. 

However, a better reflection of the woes in the country’s labour market could be seen from the labour force participation rate, which fell to 50.1 percent, from 51.2 percent between the two quarters. This indicates loss of employed people and also the people who have given up looking for employment.