State sector absorbs more people while private firms scramble to find workers amid shrinking labour force

Sri Lanka absorbed more people to the inefficient public sector while the labour force or the economically active population in the country contracted, giving more headaches to the private sector, which remains hamstrung with shortages of manpower to power their industries. 

The state sector gave 61,313 new jobs to people, under its programme to provide employment for 60,000 unemployed graduates and 100,000 persons in the lowest income category, while the total labour force and the people who actually worked shrunk by 125,000 and 182,000, respectively, in 2020. 

Making matters worse, 115,138 people migrated to low productive agriculture from industries and services, when the former received massive state patronage by way of subsidies and guaranteed prices, which eventually made the end consumers the biggest losers, as they now pay sky-high prices for their staples. 

The bloating public sector, which is the hotbed for inefficiency amid a shrinking labour force and labour migration into agriculture, is making a toxic recipe for economic regression, as it develops no employable skills, aggravates income inequality, fosters an entitlement culture for generations and a population, which can easily be manipulated by politicians. 

On the other hand, the onus of such a setting will befall on the private sector, which is already hamstrung, due to the dearth of labour, as they will be forced to sustain the rest of the unproductive economy through higher taxes. 
The businessmen and economic analysts point out that the current low interest rates, low taxes and low inflation climate, will go to waste, if the structural problems in the economy such as lack of a skilled workforce, state sector inefficiency, bureaucracy and corruption and poor rule of law are dealt with in earnest.

With these changes in the labour mix, Sri Lanka has a labour force of 8.467 million people by end-2020, down from 8.592 million in 2019, while the people who actually work declined to 7.999 million, from 8.181 million between 2020 and 2019. 

This is while the public sector employment rose to 1.528 million people, from 1.467 million and unemployment rising to 468,000 people, from 411,000 people. The coming port city could mean only very little, if Sri Lanka fails to develop a skilled labour force, who can take up jobs, if and when global multinationals decide to set up their service operations there.  

Closures of schools for more than a year and the sudden closure of vocational training institutes in the country, citing COVID-19, have dealt a massive blow to those aspirations, as Sri Lanka lags in generating the required employable skills when investors want to set up operations in the country.