Effects of unemployment in sri lanka
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Published: Mon, 5 Dec 2016
1. Many researchers have been conducted regarding unemployment in Sri Lanka, among them are unemployment and crimes, unemployment due to skills mismatch, and unemployment due to existing education system and so on. But after reading those studies it is evident that among the graduates of the country, Arts graduates face this problem seriously due to their skills mismatch with the current job markets.
2. The word ‘mismatch’ is used normally in earlier research about the Sri Lankan unemployment problem, and it is important to explain the different contexts in which this term exists. There were some troubles to make a distinction between them. There exists a mismatch on the labour market where the demand for educated labour is less than the supply of it. This is a practical fact, since this mismatch is reflected in the high rate of unemployed educated youth. In other words, there are fewer jobs with educational requirements than the supply of educated workers. The logical outcome of this is unemployment. There are, however, different kinds of hypothesises developed to explain this 15 kind of mismatch and one of them is called the mismatch theory. Here will try to give a brief summary of the different explanations below. The high rate of unemployment in Sri Lanka has concerned researchers, policymakers and the international community for a long time, which has resulted in a lot of researches and literature in the topic. Several explanations have been proposed and the most accepted explanation though is the skills mismatch theory hypothesis. It was first spoken by the International Labour Organization (ILO) in the 1970s and was further researched by Glewwe(1987) and Dickens and Lang (1996) .This theory suggests that the educational system of Sri Lanka does not produce the skills that are valued by the employers. At the same time it raises the expectations of those who acquire them. This means that the unemployed are not interested in the available jobs. At the same time the employers will not hire them since they lack the skills needed. This hypothesis argues that the reason for the high rate of unemployment among the first job seekers is that this group has just finished schooling, and has therefore not developed the skills needed out of earlier work experiences. This theory suggests that in order to defeat the unemployment problem, the educational system needs to be reformed through skills development and vocational training with more connection to the labour market. Another explanation to the unemployment problem is the queuing hypothesis linked to public sector employment and wage policies. This theory is also suggested by Glewwe (1987), and was developed by Bowen (1990) and Dickens and Lang (1996). They argue that public sector workers have a lower wage than those in the private sector in a well functioning labour market. This is so because of compensation for greater stability, attractive benefits and prestige and lower work efforts that exists in the public sector. This is not the case in SriLanka though, were the public servants both get all the mentioned benefits and a higher pay. As a consequence, the fresh graduates prefer to wait for the jobs in the public sector and hereby choose to stay unemployed for a while instead of taking jobs outside the public sector. This hypothesis can therefore be seen as a Mismatch between expectation and available jobs. The solution to this type of problem is to reform the way the public sector recruits their staff and establish wage policies to stop this queuing behaviour. They also find that there is substantial evidence of labour market segmentation which provides a rationale for the unemployed to wait for so-called “good” jobs. The third explanation is that the labour market regulations create a wage. This explanation is connected with Rama (1994) and suggests that the labour market regulations discourage employers to hire new staff in their enterprises since they make it very hard to terminate unwanted workers. The Termination of Workmen Act (TEWA) is regulating enterprises with at least 15 employees and provides life long tenure. Small firms with less than 15 workers have on the other hand no job security at all. The same goes for the Export Processing Zones (EPZs). This is a duality that means that the unemployed prefer to wait for the regulated jobs. The solution would be to reduce the wedge between TEWA protected and the unprotected jobs.
LITERATURE RELATED TO THE STUDY
What exactly is a Bachelor of Arts Degree?
3. “The Bachelor of Arts degree (B.A) is distinguished by its humanistic emphasis. Students who complete a B.A may satisfy the degree requirements by taking courses that advance their understanding of human culture through analysis of ideas, perception of differences, appreciation of art and creative products through understanding art forms, beauty and symmetry, knowledge of theories and principles of form, substance, argument and philosophy, understanding of the interaction between language”
Why is a Bachelor of Arts Degree Valuable?
4. The demand for applicants possessing Bachelor of Arts Degree can only go up. As globalization spreads, businesses now spend a lot of time working with cultures very different from our own. China, India, Southeast Asia, and Africa all offer an enormous amount of business Opportunities for business and employers able to adapt. Tangible skills are great in global economy. Engineers, for example, will always be needed to build bridges or study to structure of buildings. However, there are certain skills inborn to a Bachelor of Arts Degree that makes it valuable commodity in today’s market.
a. Critical thinking skills: The ability to solve problems using information at-hand and to generalize information
b. Argument skills: The ability to use logic and facts to persuade others.
c. Communication skills: The ability to express one’s views clearly in oral and written presentations.
d. Information Management: The ability to sort and interpret data.
e. Designing and Planning Skills: The ability to look critically at a problem from different perspectives and identify alternative solutions.
f. Research and investigation skills: The ability to find and formulate information.
g. Management and Administration Skills: The ability to analyze tasks, set priorities, and communicate goals to others.
Meeting the Growing Demands for Higher Education in Sri Lanka
5. Hon. Dr. Sarath Amunugama, Minister of Public Administration and Home Affairs and Deputy Minister of Finance highlighted that the higher education in Sri Lanka face challenges due to mismatch of the education system and employment opportunities. Sri Lanka being a middle income country has a demographic boom due to investments in social welfare, health and education. The elimination of malaria, improved maternal and child healthcare and other health sector services led to a population boom. This leads to high demands for education. According to him approximately 20,000 enter the Universities in the country and another 10,000 go abroad for study. This cause a financial burden and stress to the public. Even though Sri Lanka is classified as a middle income country, according to Dr. Amunugama, if the population was halved then it could be classified as an upper middle country. In this backdrop the future of higher education must be considered. The low percentages of Science and Commerce streams in schools were indicated as a critical issue. He also noted that 150,000 youth found jobs in forces and another one million youth were working abroad. He stated that there exists a severe mismatch of education and employment. Because the graduates, especially in arts and humanities, are unemployable as they demand government jobs. In the graduate employment scheme, 44,000 graduates were given employment. Approximately 10,000 who were then already employed in the private sector jobs preferred the government jobs offered by the scheme. He pointed out that rapid growth of the private sector is crucial to overcome the scenario. The graduates have to be absorbed to the private sector or they should seek employment abroad. He also noted that the government institutions have too many employees. He highlighted that we should focus on areas that has opportunities. Demand and supply situation should be considered in areas of higher education. He stressed the importance of teaching IT to meet the requirement of the job market.
UNIVERSITY EDUCATION 2004-2009
6. Details of university education from year 2004 to 2009 show the following table.
No of Universities
No of Students
No of lecturers
New Admission for Basic Degree
No of Graduates,
Art &Oriental Studies(B.A &B.A Special)
Commerce &Mgt .Studies( B.Sc/B.Com/B.B.A
Dental Surgery B.D.S.
Veterinary Science B.V.Sc.
Architecture and Quantity Surveying B.Sc.
Computer Science IT/ICT/MIT
Expenditure on Higher Education, Rs. Mn.
Source: University Grants Commission Table: 2-1
LOCAL LABOUR MARKET CONDITIONS
7. Available information on the demand and supply conditions of the domestic labour market reveals an overall labour shortage, while mixed conditions are observed among different categories of jobs.
Source: Statistics Department Report -2008 Figure: i
The available data indicate a mismatch between overall demand and the supply in the reference period where the number of vacancies available exceeds the number of revealed preferences to provide labour. Contrary to the overall estimated unemployment of around 6 per cent of the labour force (Table 2-2), the data indicate a labour shortage. The information of Jobs Net may not reflect the overall situation, as all on both sides of the labour market do not have access to or not aware of Job Net. However, information available from different sources indicates both formal and informal sectors in the economy suffer from shortage of labour.
According to the Job Net information the prevailing labour shortage is around 10 per cent of the revealed demand. However, this situation varies among different job categories. The job categories of Clerical/Administrative and Management have relatively high excess supply, where the supply is around 9 times higher than the demand in the former category and around 4 times higher in the latter. Among Professionals too there is excess supply. However, it is marginal. In contrast, the categories of Craftsman, Elementary, Technicians, Sales/Marketing and Manufacturing have shortage of labour. Further examination of the data reveals that the excess supply is associated more with the Services sector, while excess demand is associated more with Industrial Sector. This is an unhealthy trend, as the strength of the Industry sector provides impetus for Services sector to expand and sustain, unless the Services sector focuses its expansion based on the foreign demand.
The information on demand and supply conditions reveals that there is an excess demand for almost all categories of jobs. Except for elementary jobs other jobs need minimum levels of skills acceptable to the employers. Lack of skills and qualifications could be the main reasons for the observed situation. Despite excess supply of Clerical and Administrative category of job aspirants in the local market at very high levels, the foreign market suffers from shortages of supply in the same category. That suggests that it is possibly the lack of required skills and qualifications that give rise to the two contrasting situations related to the same category of jobs. The other glaring observation is the shortage of labour in Technical, Craftsman and Elementary categories of jobs. The categories of Technical, Craftsman and Elementary jobs suffer shortages and have failed to meet the demand emanating from both the local market and the foreign market.
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