Firms resume hiring staff after months-long contraction

Companies, representing both the manufacturing and services sectors, have resumed their recruiting activities, ending months-long streak of hiring freezes and layoffs caused due to the deep contraction in the economy through the first half of this year.
According to the monthly survey conducted by the Central Bank, manufacturing sector firms in particular broke the prolonged decline in employment in November as they hired to support their production lines amid gradual increase in orders.

The Sri Lankan economy snapped nearly two year-long contraction in the third quarter logging a 1.6 percent growth, while the Purchasing Managers’ Index (PMI) for manufacturing flipped back into the expansionary territory in November after eight months of persistent decline, lifting all sub-variables including, ‘employment.’
While the services sector staffing wavered between growths and contractions between months during the year due to changing conditions in the economy, the services sector too added employment towards the latter part of the year, some of which were aimed at meeting the seasonal demand.
As the economy collapsed after running out of foreign currency early last year, many employed in sectors such as manufacturing and construction in particular lost their employment with the adaptation of demand destruction policies by raising interest rates and taxes to combat runaway inflation.

In fact, the construction sector is still reeling from the ripple effects and as a result employment in the sector hasn’t budged.
“Employment remained contracted since the companies operate with limited staff under current circumstances,” said the Central Bank releasing its construction sector PMI for October a few weeks ago.

Nevertheless the sector appeared to have hit the lowest point in the third quarter and is widely expected to either further slow its decline or return to growth from the fourth quarter onwards, adding some of the jobs lost in the process.
Sri Lanka’s jobless rate rose to 5.2 percent by the end of the second quarter this year, perhaps indicating the peak unemployment rate.
Meanwhile, the labour force participation rate or the rate which captures those who are both employed and are looking for work as a percentage of the working age population slipped to 48.6 percent from 49.9 percent in the first quarter.