Sri Lankan Jobs

Why aren’t our millennials at work?

Originally published in Daily FT and Republic Next

By Nishtha Chadha

Today is International Youth Day; a day described as the United Nations as the “annual celebration of the role of young women and men as essential partners in change”. Everyday, we see young people across the globe emanating entrepreneurial drive and catalysing positive growth. ‘Millennials’ have become the symbol of a new world order, based on innovation and large-scale mutual exchange.

How do we create jobs that young people feel dignified doing? 

Yet, here in Sri Lanka, we see a very different story. Rather than catalysing growth, many of Sri Lanka’s talented youth languish in unemployment. Popular rhetoric often defines these young people as ‘lazy’ and ‘ungrateful’, unwilling to fill blue collar vacancies with low social repertoire and climb the ever-elusive career ‘ladder’. But with issues of unemployment pervading the youth demographic for over four decades now, despite having the highest literacy rate in the region, perhaps it is time for a new conversation. How do we create jobs that young people feel dignified doing?

Educated young people make up a third of Sri Lanka’s unemployed, while over 30% of the county’s total informal workers belong to the youth demographic. Often these numbers are attributed to the infamous ‘job-skill gap’, where tertiary-educated youth are left unequipped to acquire private sector vacancies, but over-educated to fill opportunities in labour-intensive industries. However, this hypothesis also ignores an entire socio-cultural dimension that underscores many young people’s unwillingness to settle for in-demand blue collar careers. 

According to the Department of Census and Statistics [DCS] (2017), the most difficult vacancies to fill in the job market were as follows:

  1. Sewing Machine Operators

  2. Security Guards

  3. Commercial and Sales Representatives

  4. Other Manufacturing Labourers

  5. Cleaners and Helpers in Offices, Hotels and Other Establishments

When one reviews this data it is hardly surprising that after spending 16 years in education, young people are unwilling to forego their intellectual capital and fill these vacancies. Instead, many wait in line for public sector opportunities, characterised by high social status, lifetime employment and funded by taxpayer money. The government often uses this as a vote-securing scheme, having offered 16,000 graduate roles just last month in preparation for the forthcoming election. But with an already inflated public sector, slowing growth rates and a growing toll of non-contributory pensions, this strategy has become both unsustainable and unreliable. 

Closing the gap

DCS data suggests that only 7.2% of private sector vacancies are in high-skill occupations.

While the private sector does account for the majority share of youth employment, DCS data suggests that only 7.2% of private sector vacancies are in high-skill occupations. Slow job creation has become a persistent characteristic of the Sri Lankan economy, with highly restrictive employment protection legislation and skewed bargaining power of trade unions significantly raising labour costs and impeding job creation.

Roughly 1.5 million Sri Lankans migrate internationally for work

As a result, roughly 1.5 million Sri Lankans migrate internationally for work (approximately one fifth of the domestic workforce). Over 40% of these migrants belong to the “skilled” labour category, suggesting a worrying trend of missed opportunity. Certainly, the fact that home-grown skilled labour has no place in a growing upper-middle economy is a cause for serious concern in itself.

As Sri Lanka faces up to the growing challenge of an ageing population, the country needs to create more and better jobs to sustain growth and make optimal use of its working-age population. This suggests an urgent need for structural reforms to increase competitiveness and openness to FDI, which will create more productive and higher-paying jobs as foreign firms bring in new technology and better management practices to the Sri Lankan market. Trade liberalisation can also play a critical role in producing large-scale opportunities for educated workers, particularly by plugging into regional and global supply chains. Indeed, with the right reforms in place, active engagement with foreign economies could present unparalleled opportunity to kickstart high-quality job creation in Sri Lanka and give many unemployed skilled graduates the opportunity to pursue fulfilling careers that positively contribute to the national economy. 

Moreover, as the global economy shifts increasingly towards services, personal consumption and trade in digital goods, there needs to be a concerted effort towards promoting innovation and entrepreneurship amongst the youth population and moving people away from traditional public sector careers. Sri Lankan investment in research and development (R&D) only amounts 0.07 percent of total Government expenditure (2017). As such, there is a pressing need to improve public and private funding of R&D, whilst simultaneously addressing the current fragmentation of R&D institutions, in order to create tangible outcomes within the innovation space. Improving the intellectual property rights regime and creating an ecosystem of early-stage finance and incubation facilities will be instrumental in mobilising young people and facilitating entrepreneurial growth. 

Entrepreneurship and opening up

Growing entrepreneurship can not only transition Sri Lanka into a more innovative and complex economy, but simultaneously create a broad range of high-quality jobs in a variety of competitive industries across domestic and international markets. Small nations such as Israel and Singapore have shown the scale of returns that investment into innovation can provide, attracting Silicon Valley’s largest players to set up incubators and accelerators in their countries. Indeed, at the heart of both nations’ technological success has been the cultivation of a targeted public-private ecosystem for innovation, as well as an absolute openness to diverse participation.

If Sri Lanka is to make the most of its youth potential, it needs to reform the very fabric of its workforce. Promotion of unconventional career paths and greater cooperation between the public and private sectors are a must. Current barriers to foreign participation must also be removed. Diversity of thought and exchange of ideas have been proven as key drivers of innovation, and these need to be promoted through people-friendly policies and the removal of burdensome mobility and investment regulations. Sri Lanka’s youth need to be given opportunities to access foreign capital and learn from global leaders in entrepreneurship if they are to form the basis of a new Sri Lankan economy. 

Moreover, by opening up migration policies and flows of labour, Sri Lanka will be able to fill its wealth of low-skill vacancies that currently plague the private sector, without foregoing its local talent. India has been enjoying the fruits of an open border policy with Nepal for over half a century, producing a mutually beneficial arrangement for both parties. Resisting globalisation is merely slowing productivity and resigning educated Sri Lankan youth to careers that they do not feel dignified doing. Youth potential should be harnessed to translate into economic growth and productivity, not heavier burdens on an already struggling economy. 

So, this International Youth Day, let’s have a new conversation about young people. Let’s remove the weight of heavy expectations, and replace it with rigorous strategies for empowerment. Young people are the future of the Sri Lankan economy – so what are we doing to help them shape it?

Is the Government responsible for graduates’ jobs?

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In this weekly column on The Sunday Morning Business titled “The Coordination Problem”, the scholars and fellows associated with Advocata attempt to explore issues around economics, public policy, the institutions that govern them and their impact on our lives and society.

Originally appeared on The Morning

By Dilshani N. Ranawaka

“We want jobs!” is the latest addition to the long list of to-dos that Sri Lankans think the Government is responsible for. The Government positively responded to the protesters and appointed 16,800 graduates as trainee development officers and positioned them across the country. What is so preposterous about this incident? Is it graduates demanding jobs or the Government handing out jobs on a silver platter?

To put this into context, these fresh graduates demanding jobs are the smallest proportion of the student population who were privileged enough to get free education for nearly 20 years while the others were limited to just 13 years. The Government bears the cost of their education in addition to the scholarships offered as financial assistance for undergraduates in need. After 23-24 years of education, they are groomed to be graduates equipped with knowledge and the knowhow to enter the world or work. But, why are they demanding jobs?

This particular problem needs to be explored through the larger lens of unemployment in the country. At the end of the first quarter in 2019, the unemployment rate rose up to 4.7%, an increase of 0.3% from last year. Unfortunately, the contribution by the unemployed graduates to the national unemployment rate is nearly 10%. Reasons for such unemployment rates can be explained through two dimensions; from the perspectives of labour supply and demand.

Labour demand theories indicate that unemployment rates persist for two reasons; demand deficiencies and structural mismatches. Demand deficiencies occur when the economy does not produce sufficient employment opportunities and structural mismatches occur when the skills of the labour force do not meet the requirements of labour demand. In Sri Lanka, studies indicate that structural mismatches are the main contribution to unemployment. But how does it explain today’s prevailing conditions of the labour market?

Entering the world of work is challenging for any graduate. The problem arises when your hard-earned bachelor’s knowledge is impractical and is rarely helpful in the related work you are hoping to do. This is the problem of mismatches of skills in the labour market. In cases where technical knowledge is not important, employees would actually prefer interns for two reasons. Graduates demand more money because of their educational qualifications and interns could be trained to suit the institution’s needs at a lower cost.

In some cases, labour without a degree could have more experience in the field even though they might not have academics. In most cases, experience in a particular field is attractive to any employer.

Now, this takes us back to the main problem. Do these graduates have the right to demand for jobs from the Government?

As a fresh graduate myself, I believe we “do” have the right to work, but the State is not necessarily bound to provide graduates with jobs. These protestors who were provided free education for nearly 20 years should be the drivers of the economy. Unfortunately, such expectations are reversed in the context of Sri Lanka. What should the State’s stance be on such occasions to prevent this from happening in the future?

The present Government responded by offering positions of development officers and teachers funded by the State. This particular stance of the Government is problematic for two reasons.

This sets a bad precedent for younger generations, giving the impression that it is the Government’s responsibility to provide jobs for them. This removes any incentive for future unemployed state graduates to be creative, think outside the box, and achieve the potential they are capable of. Instead, they would be forever dependent on the State, demanding more of everything.

Increasing job opportunities expands the public sector. Larger states would result in higher expenditures and these expenditures are financed mainly through taxes and loans. When these protesters are given jobs, the Government needs to finance these expenses through the imposition of taxes; increasing the cost of living for everyone.

Given these positions, what should the State’s role be in addressing the problem? And what should the graduates expect from the State?

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Handing out jobs has so far been the strategy of governments. However, one could question if such quick fixes are effective even in the short term. A more productive approach would be to identify and implement strategies which address the question of “why” unemployment among graduates is common.
The European Union (EU) had identified two approaches to address structural mismatches within a labour market.

Addressing skills mismatch among unemployed

“Springboard” is an instrument implemented by Ireland which focuses on empowering the unemployed with skills. After offering the unemployed graduates six months of training, direct links with the labour market increases their chances of employment. A few of the key features of this instrument is that this mechanism is monitored by an “expert group on future skills needs”, a board that comprises employers, and focuses on training skills which are customised to suit the skills required for Ireland labour market dynamics and sectors such as ICT, finance, trade, and manufacturing.

Addressing skills mismatch to prevent unemployment

The “curriculum teams” initiated in Luxembourg acts as the bridge between labour market requirements and education institutions. Their role is to shape the national education curriculum in a manner to suit future labour market trends. The key takeaway from these policy instruments is the focus on addressing the core of the unemployment problem – “skills mismatch”.

This particular incident is one demonstration of a deep-rooted issue within the country; the free-rider mindset within each and every one of us. Moving from “it’s the government’s responsibility to do so” to “it’s up to the individual” is going to be extremely difficult as expectations of welfare from the government have been deep-rooted within our system. Which option would really empower an individual? Providing jobs or providing skills to strengthen and expand their capabilities?

Abuse of Sri Lanka's migrant workers: Is a ban on migrant labour the best solution?

By Ravi Ratnasabapathy

Reports of abuse of migrant workers have prompted calls to ban the outflow of labour, is this a solution?  There are some real concerns that need to be addressed but the economic consequence of a complete ban would be dire as foreign employment, is, by far, the dominant sub-economy of Sri Lanka. Remittances reached US$ 7,018 m in 2014, accounting for 39% of all foreign exchange earnings. The estimated 1.9 million foreign workers form 25% of our labour force.

To put things in context it is worth examining the history of migrant labour.

The oil boom in the 1970’s resulted in labour shortages in the Middle East. Fortuitously, the Non-Aligned Conference held in Colombo in 1976 opened up employment opportunities for Sri Lankans in the Gulf. By 1976 unemployment had reached almost 25 percent of the labour force, leaving 1.5 million unemployed in a population of 15 million. Migration was a solution to a problem of severe unemployment.   

It is ironic that even today, migrant labour absorbs 25% of the labour force. Hypothetically if there was no overseas employment Sri Lanka should have an unemployment rate of around 29%, far worse than that of 1976.

Overseas employment is therefore a solution to economic problems faced at home. A report by the UN states that out-migration in Sri Lanka is driven by low per capita income, unemployment and/or underemployment, high inflation, indebtedness and lack of access to resources. A long term solution needs to address these fundamental problems, most crucially the creation of employment. If there are sufficient well-paying jobs at home there is no need to seek work overseas. The steady increase in total departures testifies that Sri Lankan workers are making a choice, that it is better to risk abuse abroad than suffer poverty at home.

The abuse stems from weaknesses in the legal system in host countries. Fear of being overwhelmed by migrant workers may be one reason why host-country legal systems offer scant protection to temporary workers.

According to the Middle East Institute, a think tank, foreigners make up an estimated 37-43% of the population of the Gulf Cooperation Council (GCC) countries and constitute 70% of the workforce, with workforce numbers rising significantly higher in the UAE (90%), Kuwait (82%), and Qatar (90%).

The high percentage of guest workers worries government officials in host countries. Accordingly, governments have legislated to minimise the perceived threat. Restrictions on length of stay, strict regulations about changing jobs, hurdles imposed by the sponsorship system, difficult-to-meet criteria for bringing in family members, the inability to own land and businesses, the near-impossibility of obtaining citizenship, and the absence of legal rights all work to keep guest workers’ stays short, temporary, or informal.

Unfortunately, this is what enables the abuse. According to Human Rights Watch, workers typically have their passports confiscated and are forced to work under the highly exploitative kafala system of sponsorship-based employment, which prevents them from leaving employers. Migrants often have limited information about their rights and channels to seek help, and face discrimination and obstacles to redress. Domestic workers are worst off because labour laws in the Gulf exclude domestic workers from even the basic protections guaranteed other workers such as a weekly rest day, limits to hours of work, and compensation in case of work-related injury. Restrictive immigration rules make it difficult for domestic workers to escape from abusive employers.

Worker remittances have become a mainstay both for the national economy and for the households which receive them. Domestic workers, the category most vulnerable to abuse, are generally unskilled and drawn from the poorest sections of society. Many are below the poverty line or just above it, working overseas represents an opportunity to escape from poverty.

Therefore what the Government needs to do is to work with GCC countries to improving the system so that abuses are minimised.

Some work is being done, eleven Asian countries set up the Colombo Process in 2003, a regional consultative process to address the needs of contractual migrant workers employed overseas. In 2012, participating governments, including South Asian countries and all six GCC countries, adopted a Framework of Regional Collaboration committing to prevent abuse and foster greater benefits from migration. These include reducing recruitment costs, developing standard employment contracts, and making recruiting agencies responsible for the activities of local-level labour brokers. It also recommends pre-departure and post-arrival information seminars for migrant workers and government action to enforce labour laws.

Charities such as Helvitas are implementing projects to educate workers, provide guidance, support and access to legal advice. The Helvitas Labour Migration project works along 4 main threads:

  • Access to Information: Migrants and their families are empowered to take an informed decision, based on safe migration knowledge. This includes the ability to follow the legal process or to detect fraudulent practices of sub-agents.

    At the same time, local government officials are supported to increasingly provide safe migration messages to the community and guide a decision-making process.

  • Access to psycho-social support: By raising awareness on migrants'psycho-social issues with counsellors, midwives, and other relevant officers, the migrants are increasingly able to access services to mitigate their psycho-social hardships. Individual counselling and psycho-education sessions are provided for caregivers, migrants'children and returnees.

  • Access to justice: Together with The Centre for Human Rights and Development (CHRD) Sri Lanka, migrants are provided free legal assistance and access to legal redress mechanisms provided by the Sri Lankan Bureau of Foreign Employment.

  • Remittances management: Migration can only be successful when remittances are managed sustainably. Financial literacy and knowledge about productive investments is key for migrants and their families. Therefore, they are sensitised on access to loans, budgeting, savings, formal banking and remittances transfer systems in order to maximise the financial benefits of migration.

The Government should partner with such organisations to ensure wide dissemination of these programmes.

Not all abuse takes place overseas, some local recruitment agencies have been known to be guilty of poor practices including failure to observe blacklists of employers/overseas recruitment firms compiled by the Sri Lanka Bureau of Foreign Employment (SLBFE), excessive fees, double-charging migrants for fees already paid by the employer and misrepresentation of pay or working conditions. More seriously some employment agencies have been accused of theft of wages and refusal to assist in mediation and repatriation. The SLBFE monitoring and enforcement functions also need to be strengthened to limit any local malpractices.  

Banning overseas employment is not a solution, although Nepal did experiment with one, temporarily banning women under the age of 30 from working in Gulf countries. The danger with a ban is that it may push workers into irregular migration channels with heightened risk of exploitation and trafficking. Instead, the Government needs to work in partnership with international agencies and other countries to strengthen the system so abuse is minimised.