TABLE OF CONTENT

Definition of unemployment

Different forms of unemployment

Persons entering or leaving the labour force in Sri Lanka

Reasons of the Unemployment in Sri Lanka

Underemployment

Hidden Unemployment

Foreign Employment

1. By source

2. By gender

3. By man power

4. By destination

Unemployment

1. By Gender

2. By age

3. By education

The barriers for generating effective labor market in Sri Lanka

The methods used to reduce Unemployment

Special features & tendency of Unemployment in Sri Lanka

Few general suggestion to creation employment opportunities

Suggestions to decrease the unemployment in Sri Lanka

Unemployment

Unemployment means the population which is condensed of whom don’t get a chance to provide

their labour. But they prefer to be employed for any economic advantage.

According to the definition of The Department of census and statics, people who were not

employed but willing to be employed and who were seeking for jobs for the past 7 days, are

unemployed.

In developing countries it’s obvious that there are 4 main dimensions which arise under

unemployment.

1. Educated unemployment

2. Self-unemployment

3. Female unemployment

4. Youth unemployment

How to calculate the unemployment rate

The unemployment rate in Sri Lanka in recent years

Source-annual report central bank of Sri Lanka

1990 2005 2010 2011 2012 2013

15.9 7.2 4.9 4.2 4.0 4.4

Different forms of unemployment

Seasonal Unemployment

This type of unemployment rises due to the seasonality. When there are a big number of

economic activities then the unemployment rate goes down. When there is a contraction

economic activities then the unemployment rate goes up.

Agriculture, excavation, tourist industry & festive season are examples for seasonal

unemployment

Frictional Unemployment

It is the unemployment which arises when people are changing between employments.

When an employee is attracted by a more beneficial job and stay without being employed

on his self.

Structural Unemployment

This can be occur according to immense technological changes or when the demand of a

good in the labour market is faded away forever.

Example- By introducing new machines to the garment industry the reduction of the

demand for hand looms go down and the workers become jobless..

Cyclical Unemployment

With some oscillations in business circle, this occurs.

Ex; this has taken place in European countries as Greece and Spain in result to the economic

depression.

Non Voluntary Unemployment

If one prefers to be unemployed due to his unlikeliness.

Voluntary Unemployment

If one prefers to be unemployed due to his likeliness.

PERSONS ENTERING OR LEAVING THE LABOUR FORCE

IN SRI LANKA

School Dropout at different level (Grades)

School Leavers at different exit points (ex – G.C.G (O/L), etc.)

Person “Completing”/ “Leaving without completing”

Vocational/Technical/Professional/Others such training both from the state sector

institutions, as well as private institutions

Persons “Completing”/ “Leaving without completing university education

Other persons entering the Labour Market at different points of time such as those returning

to the country after employment abroad/studies abroad, etc.

Labour Force: (Employed + Unemployed) in Sri Lanka

10 years of age & above

Persons economically not active: those who engaged in

household work; students; old/Disabled persons; retired

persons etc.

Persons leaving the country for foreign employment or for

other reasons

Persons returning to the country after completing employment abroad/studies etc.

Reasons of the Unemployment in Sri Lanka

i. Asymmetry hypothesis of capabilities :-

It means candidates should fulfil their qualifications to applying

for the jobs and capabilities, requirements of labor market with asymmetry.

ii. Awaiting for queue hypothesis :-

Sri Lankans are like for Private sector job than Government

sector jobs. Then are seeking Government sector jobs.

iii. Economical augment slowly :-

Economic growth do not rapidly increase comparative to labor

forces development.

iv. Labor Market :-

It’s seem that job generations are limited by private sector

because the law of labor is impacted.

In our analysis these types of reasons are impact for the unemployment in Sri

Lanka.

Underemployment

A measure of employment and labor utilization in the economy that looks at how well the labor

force is being utilized in terms of skills, experience and availability to work. Labor that falls under

the underemployment classification includes those workers that are highly skilled but working in

low paying jobs, workers that are highly skilled but work in low skill jobs and part-time workers

that would prefer to be full-time. This is different from unemployment in that the individual is

working but isn't working at their full capability.

There are two types of Underutilization by labor. There are:-

i. Visible Underemployment:-

Visible underemployment includes individuals who are

involuntarily working less than the normal duration of work determined for the activity,

who are seeking or available for additional work during the reference period.

ii. Invisible Underemployment:-

Invisible underemployment refers to individuals who are

working in jobs where their skills are not adequately utilized. Context: By its very nature

Invisible underemployment is difficult to measure.

Here Sri Lanka had been 2.8% in 2011 year.

Hidden Unemployment

The unemployment or underemployment of workers that is not reflected in official unemployment

statistics because of the way they are compiled. Only those who have no work but are actively

looking for work are counted as unemployed.

Example for: - Housewife and someone who has done social welfare to society these all are Hidden

unemployment.

Foreign Employment

Due to unemployment and less living standards employees of our nation left mother nation for job

opportunities, although foreign employment opportunities, being major source of employment and

the foremost earner of foreign exchange for the country, following are some data’s related to

foreign employment.

1. By source

By source 2011 2012 2013

Licensed agents 55.6 62.0 61.6

Other 44.4 38.0 38.4

Most departures for foreign job opportunities are arranged through agents and other sources, 61.6

percent is arranged through licensed agents in Sri Lanka, balanced 38.4 is arranged through other

agents.

2. By gender

By gender 2011 2012 2013

Male 51.8 51.0 59.7

Female 48.2 49.0 40.3

Both the number and the share of males leaving for foreign employment continued to

increase in 2013, following the trend observed over the last few years. The number of

males going abroad for employment increased significantly by21.4 per cent against a

14.6 per cent decline of female departures in 2013. As a result, the ratio of male and

female departures stood at 60:40 in 2013 compared to 51:49 in 2012. The widening gap

between relative share of males and females in the total departures for foreign

employment reflects the effectiveness of the proposals implemented by authorities to

promote the migration of skilled male workers, while discouraging female worker

migration as housemaids.

3. By man power

By Man

power

category

2011 2012 2013

Professional

1.5 1.6 1.7

Middle level 2.3 3.3 5.6

Clerical &

related

3.8 5.7 9.1

Skilled

labor

25.8 23.8 25.1

Semi-

skilled

labor

1.6 1.2 1.2

Un-skilled

labor

24.1 22.3 24.2

House-maid 40.9 42.1 33.1

In here we can identify house-maids are the large amount that is dominated man power category

compared to other categories where its 40.9, 42.1, 33.1 in 2011-2013, secondary its skilled labor

and tertiary its un-skilled labor according to the central bank figures.

Under the housemaid category, both the number and the share in total migration declined

significantly in 2013. Sri Lanka’s migrant labor force is typically biased towards the categories of

housemaid and lower skilled workers, with high geographical concentration in the Middle-East.

Approximately one third of total departures and 82.1 per cent of female departures are housemaids.

Nevertheless, departures under the housemaid category recorded a decline in2013, due to the strict

adherence to regulations imposed by authorities. These regulations include preventing departures

of mothers with children younger than 5 years of age and imposing minimum age requirements

for females in order to minimize the social cost of female departures, which is far more detrimenta l

to the country than the economic benefit. As a result, the relative share of housemaids in total

departures declined to 33.1per cent in 2013 from 42.1 per cent in 2012. During2013, around 98

per cent of housemaids migrated to Middle Eastern countries, of which, more than 71per cent was

absorbed to Saudi Arabia and Kuwait.

4. Foreign employment departures by destination

country 2012 2013 Change

Saudi Arabia 97,364 34.7 80,836 27.6 -17.088 -17.5

Qatar 57,504 20.3 80,724 27.5 23,220 40.4

Kuwait 44,244 15.7 42,739 14.6 -1,505 -3.4

UAE 38,297 13.6 48,486 16.6 10,189 26.6

Other 44,438 15.7 40,320 13.7 -4,118 -9.3

Total 282,447 100.0 293,105 100.0 10,658 3.8

In here we can identified that most of the employees travel to Saudi Arabia for employment

opportunities, it is 80,836 in 2013. Most of the employees are house-maids, Also workers from the

middle eastern countries earn contribute to a large share of workers remittance earnings for the

country, destinations other than the middle east absorbed 6.1 percent of total departures,

accounting for 17,781 workers. Malaysia, Seashells, Mauritius, Hong Kong and Singapore

increasingly attract migrant workers from Sri Lanka

Measures taken by Government to protect foreign employees

The Sri Lanka Bureau of Foreign employment (SLBFE) implemented a number of

programs and schemes in order to ensure dignity, security and equity for Sri Lankan

nationals seeking employment overseas. E.g. -insurance schemes, scholarships for

children of migrant workers, repatriation; medical facilities, financial assistance for

migrant workers, distressed migrant workers and their family members.

Several measures were introduced with the objective of minimizing the social cost as a

result of mothers leaving the country for foreign employment

E.g Submission of a Family Background Report on female workers through the relevant

Divisional Secretariat was made compulsory which consist of age, marital status, guardians

of the children etc.

SLBFE has taken several measures to improve efficiency and provide ease

of access of services to people around the country

E.g-Web-based Recruitment System (WRS) was introduced to facilitate agencies to

make the recruitment process more efficient.

Unemployment in Different Categories

Unemployment Rate (Percentage of the Labor Force by Gender)

Gender

Male Female

2012 2.9 6.2

2013 3.2 6.6

The unemployment rate increased in 2013, with the entry of new job seekers into the labour

market. The unemployment rate, which was at 4.6 per cent during the first quarter of the year

followed a declining trend to reach 4.1 per cent in the fourth quarter of 2013, resulting in an annual

unemployment rate of 4.4 per cent during the year, compared to 4.0 per cent in the previous year.

The total number of unemployed persons increased to 0.384 million from 0.336 million in 2012.

In the context of increased employment, this could be credited to the increase in labour force

participation, bolstered by the entry of rural sector females into the labour force. Male

unemployment rate had been increased gradually. According to the Sri Lankan context we know

that most of the time men is going to work, women try to look the house activities. This is the main

reason behind to this increment. Moreover to that reason most of the employers are workers such

as constructors. So women cannot perform such work according to the Sri Lankan situation. More

women than men are employed in the financial service industry, but the gap is narrowing.

Reasons for high female unemployment

There are no sufficient jobs for females.

There is a high number of children.

Most women relatively prefer the government jobs.

Educated females don’t like to do jobs below their educational status.

Harshness in labour market.

(Example: Women’s’ inability to employ themselves in flexible and part time jobs.

Unemployment Rate (Percentage of the Labor Force by Age)

BY AGE GROUP

15-19 18.9 18.7

20-24 16.8 19.2

25-29 6.7 7.5

30-39 2.5 2.7

40 and above 0.8 1.0

Youth unemployment continued to remain high in 2013. The unemployment rate for the age group

between 15-19 years declined gradually in 2013, from the previous year, although it remained at

18.7 per cent. Age group between 20-24 years have high unemployment of 19.2 per cent, which

was an increase from 16.8 per cent recorded in 2012. This could be due to the mismatch between

the demand and supply of labor, encouraged by aspirations and perceptions of youth, their

knowledge and skills and available job opportunities in the market. The facility of vocational and

technical training, along with opportunities for internships would be instrumental in enhancing

employability amongst youth. In addition, the expansion of awareness in financial literacy,

developing managerial skills and the provision of financial and technical support to improve

entrepreneurial ability will help create self and multiple employment opportunities, easing the

unemployment rate in the economy.

Unemployment Rate (Unemployed as a percentage of Educational Level)

2012 2013

Grade 4/Year 5 and below -- --

Grade 5-9/Year 6-10 3.2 3.4

GCE (O/L) 6.0 5.9

GCE (A/L) and above 7.5 8.6

Unemployment among GCE O/L qualified persons declined marginally to 5.9 per cent in

2013 from 6.0 per cent in 2012. However, unemployment among the Grade 5-9 qualified category

and the GCE (A/L) and above qualified category increased during the year. The highest

unemployment rate of 8.6 percent was recorded among the GCE (A/L) and above qualified

persons, is a matter of concern. It largely reflects the mismatch between competencies and job

requirements in the market, caused by the supply of educationally more qualified persons.

Although the country has a reputable tertiary education system, curriculum of these institut ions

are heavily focused on nontechnical disciplines that do not generate skills required by a modern

economy. This indicates the need for reforms in the education and vocational training system.

Some suggestions to correct the issues.

Universities should take in students who qualified to enter as soon as possible, without

having to wait for a long period, after they sit for the G.C.E. (A/L) examination. Each

year’s delay could have adverse effects on their future carrier and the country is losing their

services because many tend to idle during this period.

English language should be taught, throughout the University carrier and not just at the

beginning of the course as being done at present. There should be more qualified staff in

the universities to teach English. Language laboratories should be introduced in the

universities using modern technology to learn English using self-study courses, like in

foreign universities.

In addition to the formal subjects, the students may choose for their degree, special modules

should also be introduced, which will improve the skills in different subject areas, which

are currently in demand, which will equip them for private sector jobs.

Private sector should be encouraged to recruit more graduates. Incentives should be given

to private sector organizations, which recruit a specified number of graduates, each year.

Private sector should be encourage to provide on the job training to undergraduates (may

be during the University vacations) so that the students could have some experience in

different areas in which they may be interested in and also to get an idea on what the private

sector would expect from them, if they are to be employed in the private sector.

It is absolutely essential to encourage the private sector to absorb graduates, as much as possible,

as there is no way for the state sector to absorb all of them. It is a waste of valuable resources and

skilled manpower if they are to be recruited to lower level positions in the state sector for which a

degree is not a requirement. In addition to this they will be frustrated throughout their carrier,

Which neither be beneficial to the organization, to the country, nor to the individual. Out of the

total around 350,000 children entering the schools each year only 2 to 3 percent, who are supposed

to be the best, enter the universities. It is a crime to waste the talents of these young men and

women who have spent more than 20 years on education. Some say that graduates the universit ies

are producing are not employable, which is totally incorrect. Everything depends on how

efficiently we make use of their talents, how we treat them, how we give them responsibilities.

Unemployment among other Educated Youth:

Statistics shows that around 50 percent of the unemployed, are either G.C.E. (O/L)

Qualified (around 27 percent) or G.C.E. (A/L) qualified (around 20 percent). As majority of them

are below 25 years of age, their skills could be developed easily to suit the present demand. Few

suggestions are given below.

Skills development strategies should be demand driven. It is necessary to study the types

of skills, which are in demand currently as well as in the future and the training facilit ies

provided by Technical Colleges, Vocational Training Institutes etc., should be geared to

meet such demand.

Incentives should be given to Industrialists especially in ‘High-tech’ industries, who create

specified number of job opportunities, for educated youth.

An information system should be developed and maintained to provide guidance and

advice the youth on type of jobs that are available and skills required for such jobs, so that

they could equip themselves for the jobs they may be interested in.

The barriers for generating effective labor market in Sri Lanka

Massive irregular employment sectors.

Illegal oversea jobs.

Less labor productivity.

Applicable jobs are not available.

Minors labor problems.

Appropriate jobs are not available for Woman.

Jobs inflexibility.

Legally does not cover the informal sectors.

The methods used to reduce Unemployment

To Strengthening the generate jobs in private sector.

Should match the labor demand and labor supply.

Should develop the capabilities and supplying quality jobs.

Should establish the information system.

Should introduce new technologies into the agriculture.

Should introduce new jobs for irregular sector employments.

Special features & tendency of Unemployment in Sri Lanka

Source-annual report central bank of Sri Lanka

1. In Sri Lanka the overall unemployment rate is low.

(2012 = 4.0% 2013 = 4.4%)

2. In Sri Lanka the female unemployment rate is relatively high.

(2012 .2% 2013 = 6.6%)

3. In Sri Lanka there is a high level of youth unemployment.

(Example: According to the age groups 15-19 (18.7%)

& 20-29 (19.2%) the youth unemployment rate is high.)

4. Unemployment is high among A/L qualified and above that.

Category 2012 2013

Overall 4.0 4.4

By Gender

Male 2.8 3.2

Female 6.2 6.6

By Educational Status

Grade 4/ 5 and below - -

Grade 5-9/Grade 6-10 3.2 3.4

GCE O/L 6.0 5.9

GCE A/L and above 7.5 8.6

By age group

15-19 18.9 18.7

20-24 16.8 19.2

25-29 6.7 7.5

30-39 2.5 2.7

40 and above 0.8 1.0

Conclusions aroused from that

If one become more educated the more risk of facing the unemployment.

In Sri Lanka there are no sufficient jobs for high educated peoples.

The Opportunity cost of high educated people is high.

There’s a high rate to the brain drain

There’s a high amount of under employment rate

5. Regarding to provincial unemployment the highest unemployment rate is in

Sabaragamuwa province (5.8%) & the lowest unemployment rate is in Uva province

(2.0%).

6. Regarding to district unemployment there is the highest unemployment rate is in

Kilinochchi district (7.9%) & the lowest unemployment rate is in Colombo district (3.0%).

Few general suggestion to creation employment opportunities:

Improve infra-structure facilities like Electricity, Transport and Communication, to

disadvantaged areas, so that more job opportunities could be created in those areas. Proper

roads, electricity and communication facilities are essential to improve industries and

service activities in these areas. In-depth analysis on poverty shows that there is a very high

link between rate of poverty and non-availability of proper road network.

Marketing facilities should be improved to assist those who are engaged in self-

employment, so that they could find suitable markets for their produce, without having to

sell their produce at very low prices, to traders, who try to exploit from their helplessness.

Suggestions to decrease the unemployment in Sri Lanka

Economic should rapidly growth :-

This more importance of unemployment. Any countries may have strong economic

definitely their unemployment is less than comparative to other poverty countries.

The law of labor should flexible :-

Especially private sector organizations are not like the labor laws because they have got

decisions in emergency situation but labor law is against for some sort of thing. So that the

labor law should have flexibility for this type of circumstances.

Should give the professional training :-

In our country most of candidates have not professional qualifications comparative to

education qualifications. Here government or private sectors should give them to

professional training it may help to decrease to unemployment.

Should increase the overseas jobs :-

Daily increase the overseas jobs definitely our currency value will be increase. It may be

help to decrease to unemployment and increase in economic growth.

Foreign and local inverters to investment should broaden :-

In these kind of investors give them more chances to invest their capital in country.

Therefore they establish new organization. So that many people have more jobs. In this

circumstance unemployment rate will be decrease.

In these sort of suggestions would be help to decrease the unemployment rate and in

addition to these kind of projects may be help to decrease unemployment.