Understanding the Gender Gap in the Workforce

Originally appeared on Groundviews, Daily Mirror and Lanka Business Online

By Thathsarani Siriwardana

The issue of female labor force participation in Sri Lanka has remained a subject of discussion for several decades, yet tangible progress in improving it has been elusive. As the country grapples with its most severe economic crisis since gaining independence,it is important to take a hard look at our labour force to maximize its potential in overcoming the economic crisis. 

Sri Lanka is approaching its last stages of its demographic dividend characterized by a significant proportion of its population falling within the working age bracket (typically aged 15-64) in relation to the dependent age categories,the aged and the children. According to the Asian Development Bank, Sri Lanka's working-age population is expected to reach its peak around 2027. This presents a unique opportunity for us to strengthen our economic prospects by using the right socioeconomic policy mix, similar to how the Tiger economies like Singapore, Hong Kong etc. have harnessed their demographic dividends to advance their economic growth. 

Importantly, a substantial portion of this working-age population comprises highly educated and women who are living longer. Hence necessary interventions must be made to harness their economic potential.

Current status of the labour market

According to the 2021 Labour Force Survey, Sri Lanka's total labor force comprises 8.5 million individuals, with 65% of them being male. The overall labor force participation rate (LFPR) in Sri Lanka hovers around 50%, revealing a significant gender gap that has persisted since the early 2000s. As of 2021, the male labor force participation rate in the country stands at 71%, whereas the female labor force participation rate is considerably lower at 31.8%. This enduringly low female labor force participation rate, spanning almost a decade, necessitates increased attention and intervention from the government. It represents an untapped potential within our economy that demands harnessing for the nation's benefit.

When examining the female labor force participation, it becomes evident that a significant proportion of females are employed in the estate sector, constituting 42.6% of the female workforce. In the year 2021, a substantial majority of the economically inactive population were females, accounting for approximately 73.3%. Interestingly, among these economically inactive women, 59.4% cited engagement in household work as their primary reason for not participating in the labor force. This sheds a light on household responsibilities as the main contributing factor, preventing women from entering the workforce.

Education status of the labour market
Sri Lankan women tend to achieve higher levels of education compared to men. However, this educational advantage hasn't  translated into higher levels of participation in the labor force. To illustrate this relationship between labor force participation and education, the chart below provides a clear visual representation of the situation.

This diagram highlights two important points. Firstly, it reveals that a significant majority of women who participate in the labor force (83.2%) possess degrees or higher levels of education. This suggests that women are more likely to apply for jobs that align with their skill set and education level. 

Secondly, it underscores a distinct contrast when it comes to men. Even if men have an education level of grade 5 or below, a substantial portion (65.7%) still actively contribute to the economy. This disparity suggests that women with lower levels of education face greater challenges or barriers when it comes to workforce participation compared to their male counterparts.

This statistic also serves as a clear illustration of the traditional societal norm of men being the breadwinner, which leads to men having higher labor force participation rates, irrespective of their educational levels. On the other hand, women, despite their advanced educational qualifications, may encounter societal pressures or constraints that discourage them from seeking or maintaining employment. Unemployment remains a significant challenge in Sri Lanka, with the highest rates observed among women holding education levels at Advanced Level and above. This represents a substantial untapped pool of potential in the Sri Lankan labor market.

Reasons for low Female Labour Force Participation despite having a high education level 

The low female labor force participation rate in Sri Lanka can be attributed to a range of socioeconomic factors. 

A primary factor that discourages women from actively contributing to the economy is the significant burden of care responsibilities they bear. This care work encompasses a broad range of household tasks, from cooking and cleaning to childcare and caring for the elderly. According to the 2017 Time Use Survey, women spent nearly four hours more per day on unpaid care work and domestic services compared to men. For many decades, there has been a prevailing societal stereotype that women are primarily responsible for managing households, while men are expected to be the breadwinners outside the household. This division of labor is a key reason why women with the qualifications and capabilities to pursue employment opportunities often choose to stay at home, while men even with lower levels of education enter the labor market.

Another significant factor is the existing legal barriers in Sri Lanka. The two prominent legal constraints are restrictions on night-time work and the absence of recognition for part-time employment. While these legal provisions may have initially aimed to protect women, they inadvertently discriminate by limiting their employment opportunities and earning potential. For example IT/BPM sector employment is affected by the 1954 Act which only permits women over the age of 18, to work till 8 pm. The current statutory regimes governing employee rights fail to recognize part time-work. This oversight leads to a reluctance by employers to hire part-time workers as they are entitled to the same benefits as full time workers.

Moreover, the absence of adequate social infrastructure, such as quality child care centers and comprehensive parental leave policies, contributes significantly to the low female labor force participation rate. Presently, in Sri Lanka, approximately 80% of child care centers are privately operated. This situation creates a barrier to accessing quality and affordable child care facilities, making it financially challenging for skilled women to participate in the labor force, as many opt to stay at home to care for their children due to these constraints.

As highlighted in an ILO report the presence of skill mismatch in Sri Lanka's labor market since the early 1970s contributes as another reason. This skill mismatch exists because the country's education system does not adequately prepare graduates with the skills required by the job market. There is a notable disconnect between the courses offered by universities and the competencies needed by the private sector. 

This mismatch also contributes as a reason for the high levels of youth unemployment and the prevalent issue of arts degree holders struggling to find employment. A staggering 43.9% of unemployed graduates possess degrees in the arts. Notably, the majority of arts degree holders are women. This situation underscores a disconnect between the demand and supply within the labor market. It suggests that the current education system is not adequately preparing graduates with the skills and qualifications needed to meet the demands of available job opportunities.

Addressing these barriers are vital to improving the labor force participation rates, especially among women.

Policy Recommendations

• Recognise part time work under the existing statutes and provide needed benefits such as annual leave and remove provisions which restricts women from working at night.

• Utilize local government mandates via by-laws to enact local legislation to set up standardized and regularized day care centers while encouraging Public-Private partnerships in providing care for children by utilizing existing infrastructure.   

• Introduce more courses and degrees which are required by the private sector. This should be specially done by focusing on arts graduates. 

The effectiveness of the aforementioned policies would be limited if we do not address the need for a shift in people's mindsets. While Sri Lanka has made progress in challenging gender stereotypes there is still much work to be done. Initiating change, particularly within the education system, presents a promising starting point. The prevailing patriarchal system can be challenged and dismantled through education, which has the power to instill in both men and women the belief that predefined gender roles are unnecessary.

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.

Sexual harassment in the workplace: High time to address labour laws

Originally appeared on the Morning

By Akhila Randeniya and Chantal Dassanayake

In light of the economic crisis, increasing the female labour force participation is one way to unlock growth potential. We witnessed during the pandemic how economic conditions necessitated women to pursue additional means of income, from engaging in sex work to migrating in droves to engage in low-skilled labor.

There exist a multitude of reasons that prevent women from entering the workforce; the dual burden of care work and employment, harassment while travelling, and labour laws that discriminate based on gender are a few. Yet sexual harassment is something that is rarely discussed – let’s have the uncomfortable conversation that is usually brushed under the rug.

Multiple surveys highlight that a majority of women face sexual harassment in their workplaces, which could lead to a loss of working days, resulting in companies making massive losses. A survey conducted by International Finance Corporation (IFC) on nine Sri Lankan businesses show that almost 68% of the women who participated in the survey have experienced some form of workplace violence or harassment.

In addition, a survey conducted among garment factory workers highlights that almost 80% of women faced workplace harassment. A questionnaire administered by the International Labour Organization (ILO) in 2016 among 500 women, the majority of whom were unemployed, discovered that three-fifths of women would be willing to work if they were assured that they would not be vulnerable to sexual harassment in the workplace.

The survey conducted by the IFC on nine Sri Lankan companies stated that workplace violence and harassment towards men and women led to a loss of six working days each, resulting in a loss of $ 1.7 million in work hours. Given the present status of the economy, Sri Lankan businesses can no longer ignore this issue that disproportionately affects women.

Protections currently available to women

Unfortunately, sexual harassment in the workplace is not addressed under the existing labour laws in Sri Lanka. Several statutes do cover the offence indirectly, yet it seems to be insufficient as the cases only increase. The matter can be addressed either through criminal law or civil law proceedings in Sri Lanka.

Sexual harassment is criminalised under Section 345 of the Penal Code (Amendment) Act No.22 1995. It explains sexual harassment in the workplace to be words or actions used by a person in authority. The Penal Code requires victims to report cases of sexual harassment to the Police by way of a complaint. Such complaints are potentially followed by lengthy court proceedings, which require a high burden of proof.

It is estimated that the average time taken to conclude a High Court proceeding to be 10.2 years from the date of the crime. Untimely and lengthy procedures have been said to cause under-reporting of crimes, which suggests that realistically, the number of incidents could be worse than imagined. Hence why this is something that needs to be changed.

Addressing sexual harassment via criminal law alone is ineffective as the burden of proof is largely on the complainant. This is where civil law comes into play.

The Industrial Disputes Act No.43 of 1950 (IDA) allows for the private sector to take up cases of sexual harassment through civil law. The act provides swifter mechanisms to resolve work-related disputes which do not involve the Police and court proceedings. Under this act, work-related disputes can be expansively interpreted to include sexual harassment in the workplace, thereby allowing victims to seek justice.

Workers in the public sector have several avenues of redress when experiencing sexual harassment in the workplace. The courts have attempted to combat sexual harassment in the public sector in limited circumstances.

Pelaketiya v. Gunasekera ruled that sexual harassment within the public sector was a violation of the fundamental right to equality. Republic of Sri Lanka v. Abdul Rashak Kuthubdeen criminalised the demand of sexual activity as a bribe in exchange for public service.

Policy recommendations

The move to introduce a new bill criminalising sexual assault and all other forms of harassment by the Minister of Justice late last year was a commendable step, but the existence of laws was never the issue. It is the incredibly complicated and gendered mechanisms for reporting and redressing any sort of complaint that need to be changed.

On the other hand, slapping on a criminal offence rarely seems to prevent a social wrong. Perhaps rehabilitation and educating perpetrators and society to shift the narrative from blaming women should be considered.

While legal barriers do exist, the root of all this evil can be boiled down to power structures that allow perpetrators to continue their behaviour in the workplace. Clear and coherent communication channels need to be established for victims to voice out their truth.

Limiting this to the workplace however is not enough. Conversations on harassment cannot exist in the vacuum of the workplace. Women face it in all avenues of life, from walking home at night to worrying about taking public transport.

If we want the women of our country to take part in the workforce, the least we can do is ensure that they are protected while working. The current legislation is clearly insufficient to provide any form of protection that is meaningful.

It is imperative that the existing labour law regimes are improved upon to include avenues of complaint and timely resolution of such complaints. A unified system needs to be implemented so that victims from both private and public sectors can enjoy equal protection.

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.

Why it takes so long to recover from an economic crisis

Originally appeared on The Morning

By Dhananath Fernando

I have been reflecting on the last few years of public policy and discussion, which I can broadly divide into three main chapters:

Chapter 1 – Denial

Chapter 2 – Realisation

Chapter 3 - Recovery

Chapter 1 – Denial

There was a time when even respected businessmen thought an economic crisis was a distant scenario. Many politicians, across all party lines, failed to consider a situation of 12-hour power cuts and long fuel lines, and viewed debt restructuring and accessing the International Monetary Fund (IMF) as taboo conversations.

We relied on a $ 3.6 billion bailout from an unknown Omani fund and thought China and the Port City would bail us out as a last resort. Some even thought the discovery of a sapphire cluster might be the breakthrough Sri Lanka needed. Sri Lankans believed we were a special nation with a magical power that would rescue us in some other way.

Despite our strategic location, beautiful weather, and natural beauty being undeniable assets, they do not guarantee a rescue from our own bad policies. Our denial was so strong that an international institution titled their report on the Sri Lankan economy as ‘Denial is Not a Strategy’.

Chapter 2 – Realisation

The moment of truth came, but we were too late to respond. None of our bailout expectations materialised and the international financial architecture found it difficult to save us. Our debt is unsustainable and the IMF requires a commitment from our creditors before providing us financial assistance.

We are struggling due to global geopolitics and our poor diplomatic service and lack of professionalism doesn’t allow us to be taken seriously. We hurt all our friendly nations as well as India, China, Japan, and the US. Islamic countries too were concerned and unhappy with us over different issues.

People only realised the depth of the crisis when medicine was in short supply and their loved ones considered leaving the country. Inflation skyrocketed, prices increased, and poverty affected about 30% of the population.

Chapter 3 – Recovery

The moment people realised the severity of the crisis, they started asking about when we would recover. The simple answer is that it takes a long time and now many of us understand why. Overcoming a crisis of this scale, which in itself is a combination of multiple crises, cannot be done easily.

Simultaneously, we face a balance of payment crisis, a debt crisis, a financial crisis, a humanitarian crisis, and a political crisis. The cost of delaying a response to the crisis and mismanagement has to be shared by us all, with mounting tax increases and high inflation pressure from the grassroots.

As a result, we can see constant protests and interruptions to public life, further worsening the situation. At the same time, this opens a new political space where any political party can make unrealistic promises and auction for votes. This vicious cycle is why recovery from the economic crisis takes a long time.

The specifics of debt restructuring are still a mystery to us. We don’t know how the restructuring will be carried out or the impact it will have on the banking industry. It is also unclear how the markets will respond.

Without domestic debt restructuring, even if we apply a 50% haircut on International Sovereign Bonds (ISBs) and Sri Lanka Development Bonds (SLDBs), our debt to GDP ratio after 10 years will be 136%, according to a Verité Research study published in October 2022. Cost of servicing new debt and the cost of rolling over previous debt at a high yield curve will not bring down our debt to GDP ratio.

Nevertheless, it is still possible for domestic debt to be restructured and banking recapitalisation is necessary. According to the same document, investments in Government securities, primarily Treasury bills and Treasury bonds, account for more than 30% of the interest revenue for the total banking industry.

Hence, changing the interest rates on these securities will affect the stability of banks. On the other hand, 82% of the money in the EPF and ETF has been put into Government securities.

As the required changes take place, no one will be happy, so people and opinion leaders will react in different ways. The changes will go back and forth and recovery will be prolonged. Elections will come and decision-making authorities will change and policy decisions will also go back and forth.

All this is why it takes so long to recover from an economic crisis.

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.

Our only saviour is reforms

Originally appeared on The Morning

By Dhananath Fernando

Whether we will be able to receive International Monetary Fund (IMF) Executive Board approval is now a topic of discussion even amongst the most economically-illiterate person. Let us first set the context.

The Sri Lankan Government and the IMF came to a Staff-Level Agreement in early September 2022. One of the key milestones we have to pass through is to get to some level of negotiation with our creditors. Our credit portfolio is diverse. We have multilateral senior creditors followed by bilateral creditors, including members of the Paris Club, mainly Japan.

On the other hand, there are two main creditors who are non-Paris Club members; India and China.

Paris Club members agree on equal treatment in debt restructuring. In simple words, all member countries of the Paris Club will be treated equally when it comes to restructuring. India has also agreed to assist Sri Lanka in the debt restructuring plan and has provided a letter to the IMF. However, according to the IMF, letters provided by China are not adequate. It has indicated a two-year moratorium, but given the financial needs expected by the IMF, Sri Lanka will not be on a sustainable debt path after a two-year moratorium alone.

Generally, credit assistance provided by multilateral donor agencies such as the World Bank and the Asian Development Bank is not restructured, provided it has been given with very long maturity periods and very low interest rates. Therefore, restructuring those loans has not been the practice. That is how the global financial architecture is designed, given their assistance in eradicating poverty and the IMF being the lender of last resort. 

However, over the last few years, there has been a request by private creditors, bondholders, and some stakeholders that the credit of multilateral donor agencies should also be restructured and China is one party that has made this request. Unfortunately, Sri Lanka is too negligible an economy to make that request or challenge the global financial architecture. .

Given the delays, there is now an emerging conversation on whether we have any other alternative options if the IMF agreement is further delayed. In fact, I asked this question at the meeting convened by the National Council Sub-Committee on identifying short- and medium-term programmes related to economic stabilisation, on whether alternative options were being considered in the likelihood of a delay. According to its Chair MP Patali Champika Ranawaka, the committee has not considered it, but he has an aim of being prepared for the worst-case scenario.  

As we have been saying over the years, we have come to this situation through our own policy errors and with our bad reputation, we do not have many choices in hand. Therefore, finding a solution without the IMF is a major challenge, but we, as a country, cannot avoid the consequences should this agreement get further delayed; social discussion is needed on what we can do to get it soon and on the available alternatives. 

Managing with what we have

One option is to drastically cut down our consumption, including essentials such as food and medicine, and face the situation with what we have. That option can trigger some level of social unrest because ‘a hungry man is an angry man’. 

Even at this level of consumption contraction, our poverty rate has increased above 30% according to a Parliament committee. Out of about five million households, about 1.7 million receive Samurdhi and another 1.1 million are on the waiting list. Of course, Samurdhi is not a good indication, as some people who should receive Samurdhi benefits are not recipients, while others who should not be in the programme are included. However, managing with what we have is one available option that comes with its own consequences. 

Moving ahead with debt restructuring without China?

The next option is to move ahead with debt restructuring without China. This option has a significant limitation because IMF confirmation is required even to restructure the debt of bilateral creditors. Without the IMF, it will be difficult to get Paris Club members and other stakeholders to a debt negotiation table. The more we delay and if China takes a very hard stance, which is likely, we have to request the IMF to move ahead with those who have agreed and hold China’s debt payments until we come to some level of agreement.

We have to understand China’s point of view and geopolitics as well. Our crisis has also become a tug of war between two economic powerhouses. On one hand, China does not want to align or agree with a US-led programme. On the other hand, the relief measures given to Sri Lanka have to be provided to all other countries making similar requests in future.

Pakistan and many African countries and emerging economies are expected to face debt distress in the coming years. China’s growth predictions are low, impacting global economic growth. Hence, the more we delay opening up Sri Lanka to geopolitical sensitivities, the more we will be pushed to align with certain superpowers. If we were to depend on China or India for continuous relief measures, it would be extremely difficult to avoid becoming a geopolitical pawn.

Possible reforms and opportunities 

In this context, it is clear that all available options (with the IMF or without the IMF), will result in extremely difficult times. However, in a crisis, there will be winners as well. Regardless of any of the aforementioned options, there are basic levels of reforms we have to undertake in any scenario. 

State-Owned Enterprise (SOE) reforms must be at the forefront. Without this, we have no future. One good opportunity is to capture the drive within the Indian market. Even if Sri Lanka does nothing, there will be spillover effects from India. The Indian economy, especially the North Indian economy, is growing very fast and we have to connect to their market. If we had played our cards right, we could have become a good connection point for trade between India and China. Instead, we made enemies all over. However, there is still potential. 

The more we delay reforms, it will further exacerbate the problem. As such, reforms are the only saviour in any scenario. It is sad to see how we are distancing ourselves from reforms, with political developments triggering another round of economic and political uncertainty which will lead to social uncertainty. Let us hope reforms move forward fast. 

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.

Sri Lanka’s biggest insecurity: Fear of competition

Originally appeared on The Morning.

By Dhananath Fernando

If we were to take some collective responsibility for the sad state of our country and attribute it to any cause, I believe it is due to our ‘fear of competition’. 

From top to bottom, Sri Lankans have been fearful of competing. Over a period of time, we have become very reluctant to compete and our fear has grown into incompetence. The fear of competition syndrome is spread across all sections of society, from the top executives to people below the poverty line. 

Sadly, as a country, we have not understood the meaning of ‘competition’. In our vocabulary, competition is where winners are selected and losers are ridiculed. However, competition is actually where the winner and the loser both win – when the winner wins, the loser also wins. How can this be?

A winner is defined as an individual who takes the leap to utilise the resources available to their maximum potential. Even in a 100 m race, the winner is the person who covers the distance within the shortest time span.

The recipe for the title of a winner is determined by the effort endured by any individual to go that extra mile and maximise the resources available. Once that formula is found, even the loser can use the formula of the winning person without wasting their resources further. Losers can ask the winners to run on their behalf next time so that the losers can better use their skills elsewhere.

This is how we all use so many consumable goods. Let us take computers as an example: most of us have lost the race of manufacturing computers while many have not even tried. But someone found the computer formula, so now we can all use the winning formula, which helps many of us save our valuable resources. Thus, losers have also benefited. This is why competition makes winners win and losers also win. It is much more than simply picking a winner – it is about the allocation of resources.  

In the Sri Lankan context, the fear of competition is what mainly led to the misallocation of resources. From top to bottom, not only are Sri Lankans fearful, but we also instigate fear in others. 

It was recently reported that a driver who was providing a taxi service using a mobile app had been threatened by some other drivers who were not using the app-based taxi service. The threat had taken place while the service was being provided to foreigners. The underlying reason for this is the fear of competing with mobile app-based technology.  

Fear of competing with private medical schools

While our tuk-tuk drivers have fear of competition regarding app-based solutions, our doctors have a fear of competition regarding private medical schools. They do not want someone capable with a better service in the market because they are fearful that someone else will overtake them. 

Fear of competition in furniture manufacturing 

Our furniture manufacturers are fearful of competing with other furniture manufacturers in the region. Not only are they fearful, they even ask the Government to support some of these industries with taxpayer money.

Fear of competition in the construction industry

Our bathware and tile manufacturers are reluctant to compete with the same category of products overseas. As a result, our cost of construction is about 25-40% higher than the region due to our widespread fear of competition. Most of our construction materials have a tariff of nearly 100% to avoid competition. Even the private sector is suffering from the fear of competition, which is one of the main reasons Sri Lanka lacks big industries and innovation in the system.

University students’ and the labour force’s fear of competition 

Our university students and teachers do not want to compete with international students. As a result, resistance is high against the entrance of any type of private university to the market. Rankings of our universities and colleges have been deteriorating over the years, but we still remain reluctant to compete. Not only do university students want to avoid competition, but they also want to be dependent on the Government.

Our Government servants and entire labour force are fearful that if we open the job market, foreigners with better skills will replace them. Although we are not competitive, we want to maintain our stake.

Across the board, Sri Lankans are deeply fearful of competing with the world. We lack the courage to admit the truth that our competitors can produce high quality products with high efficiency and productivity. If we are so afraid to compete with the world, there is little reason to claim that we have to improve exports. Exporting would mean competing with the world on an uneven playing field with different tariffs imposed in different regions.

Hasn’t our fear of competition not only made the country worse, but also contributed greatly to our economic crisis? Not just politicians, but all Sri Lankans have promoted fear among our fellow citizens. There are no innovations, inventions, or new technologies without competition. That is the sad truth. We have unfortunately become victims of our own actions.

For once, we should admit that we are the problem without absolving ourselves and instead blaming our political elites. While the poor decision-making of politicians is definitely a problem, if we are reluctant to compete, they can easily say that they simply represented our worldview and opinion.

The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute or anyone affiliated with the institute.