Promoting Employment Intensive Growth in Sri Lanka Seminar on National Employment Policy October 2011 Prof. Sunil Chandrasiri Dean Faculty of Graduate Studies University of Colombo

Promoting Employment Intensive Growth in Sri Lanka 1. Why employment intensive growth is important? 2. Macro level evidence 3. Priority Sectors 4. Policy implications

Stages of Development Innovation Driven  Business Sophistication  Innovativeness Efficiency Driven  Labour Market Efficiency  Goods market efficiency  Technological Readiness Sri Lanka 52 out of 142 countries Factor Driven * Health & primary education

Employment Intensity of Growth Primary sector Secondary Tertiary sector All sectors

Sub-sector experience- Elasticity Sub-sector Agriculture Manufacturing Construction Wholesale and retail trade Hotels and Restaurants Transport and Communication Banking, insurance and real estate Private services 0.07

Growth of Real Value Added and Employment – Manufacturing; 3. Construction: 5. Hotels and Restaurants 6. Transport, Storage and Communication; 7.Banking: 1. Agriculture; 4.Wholesale and Retail; 8.Private services

Priority Sectors- Employment Intensity Sub-sector Tea Rubber Coconut Textiles and Garments Jewelry Hotels and Restaurants ICT 1.41 Note: Health & Gem sectors: not estimated No data

Growth Implications of Priority Sectors SectorGrowth of Exports % Employment Elasticity Female Employnt % 1. Tea Rubber Coconut Textiles & Gmts Food & Bevgs Gem & Jewelry ICT Tourism

Government Policy Support Sources: Key policy documents at national and Ministry level National Level 1.Promote Investment 2.Control Inflation 3.Promote employment 4.Fiscal and monetary policy 5.No mention about wage policy Sub-sector level 1.Productivity enhancement 2.Tax incentives 3.Skills development 4.Technology support 5.Export promotion 6.Value addition

Government Policy Support contd 1.Sub-sector specific policy support system is comprehensive and action oriented 2.Both national and sub-sector specific policies do not cover wage policies, employee welfare, quality of employment, and industrial labour relations 3.Priority sectors have the capacity to promote job-rich growth

Summary -Overall 1.Employment intensity in secondary sector is hi gher 2.Presence of medium and long-term development targets 3.Influence of institutional factors on growth of employment 4.Presence of low-productivity and low –pay policy

Summary – Sector specific 1.Policy support for export oriented-growth in promoting employment 2.Emphasis on productivity, skills development and R & D orientation 3.Influence of institutional factors on growth of employment

Recommendations – National level 1.Application of sub-sector approach to promote growth and employment should be continued 2.The wage levels and employee welfare should also be included in policy documents 3.High-productivity and high-wages policy needs to be promoted at national level 4.Export oriented growth promoting employment should be further strengthened

Recommendations – Sub-sectoral level 1.Agriculture- Application of sub-sector approach to promote growth and employment should be continued 2.The wage levels and employee welfare should also be included in policy documents 3.High-productivity and high-wages policy needs to be promoted at national level 4.Export oriented growth promoting employment should be further strengthened

Conclusion The small open economy of Sri Lanka is well poised to make a transition from factor driven to efficiency driven stage. Policy support for job-rich growth would promote Sri Lanka as one of the key investment centers in Asia.