SL’s pandemic-hit unemployment show need for social security: IPS


Sri Lanka needs to work on its pre-retirement social-security systems such as unemployment benefits and wage support as COVID-19 pandemic slashed 150,000 jobs in the country affecting mostly youth and middle-skilled workers, a Colombo-based think tank said.

The pandemic has reduced employment levels and worsened employment conditions in Sri Lanka, similar to the other countries.

The island nation’s unemployment rate hit 5.2 per cent in the December quarter of 2020.

In numbers, Sri Lanka had 442,000 people unemployed during this quarter.

The official Department of Census and Statistics data show the employment levels reduced by 1.8 per cent (or 150,209 jobs) mainly in private sector manufacturing and services.

“In Sri Lanka, most of the social systems are available post-retirement, but COVID-19 pandemic highlighted the importance of providing pre-retirement social protection in terms of unemployment benefits and wage support during illnesses,” Nisha Arunatilake, Research Director of Institute of Policy Studies of Sri Lanka (IPS) said in an online seminar.

“There is an urgent need to improve the coverage of social security,” she noted.

She was speaking after the release of IPS’s ‘Sri Lanka: State of Economy 2021’ report, focusing on key socio-economic issues the country is facing.

The International Labor Organization (ILO) has estimated 225 million jobs were lost globally in 2020.

Many Sri Lankan private firms cut salaries of workers instead of sacking them.

The government maintained salaries of state workers and hired 53,000 unemployed graduates, and printed money after cutting taxes, triggering a forex crisis and possible default.

A severe currency fall can destroy real wages of all workers public and private while a hit on consumption may hurt businesses and create further unemployment.

More than a third of Sri Lankan workers or 39 per cent are engaged in high-risk industries such as retail, accommodation, tourism and food and beverages that are susceptible to the pandemic, IPS says.

Sri Lanka’s unemployment rate had increased by 0.7 percent in 2020, the government data show.

In the US un-employment hit 14.7 per cent at the height of the pandemic though some economists said it was due to pre-retirement benefits – stimulus checques – which discouraged people from going back to work after lockdowns were eased.

Economists had warned that unemployment will remain high until stimulus checques run out. Due to minimum wage laws, lower skilled including coloured people see usually see the highest unemployment in the US.

The data from the Department of Census and Statistics (DCS) labour survey show that unemployment amongst the youth and middle-skilled between the ages of 15- 24 had increased by 4.5 per cent and 24–29-year-olds by 2 per cent.

The researchers also have seen a deterioration in high quality jobs that pay well and provide high-quality.

Jobs in agriculture including family labours which have low-security and low earnings have increased.

DCS data show workers in high-risk industries are medium-to-high skilled workers and women.

Sri Lanka too came up with relief measures for workers such as cash transfers, schemes to pay salaries on a pro-rata basis for employers to pay salaries, and concessions in terms of statutory payments.

“However, these relief packages provided by the government are not as big as packages provided in other parts of the world,” Arunatilake said.

A research conducted by IPS has found that employees, employers and trade unions feel that the government could have provided more reliefs using social security funds.

Another study conducted by IPS has found that Employee Trust Fund (ETF) funds in the country are sufficient to cover sickness and unemployment benefits.

Arunatilake pointed out that India and Malaysia too used their existing funds to provide more securities to workers, while Nepal and Singapore had separate pre-retirement funds to support workers.

“This is an area Sri Lanka needs to look at if we are going to have faster recoveries in the future,” she said.

IPS says there are differences in work from home models used in different industries, so it calls for more training for workers and firms.

“There is an urgent need to provide training and also digital access for firms and workers so they can benefit from this Work-from-home model,” Arunatilake also said.