Sri Lanka faces shortages of skilled labor that is hampering growth in key industries like tourism, construction, and technology. The shortage is due to younger workers being unwilling to take jobs in industries with unstable wages, poor working conditions, and a mismatch between the skills needed and those available. This labor shortage increases costs for employers and can cause delays and lower quality work. Possible solutions include retaining older workers longer, improving recruitment and benefits to attract workers, and better aligning education programs with the skills needed for the country's economic goals.

1. Labour shortage and skills
requirement in Sri Lanka
S.Thanigaseelan MSc (Econ)
Asst Director, NHRDC,
Ministry of National Policies and Economic Affairs

2. Labour force in Sri Lanka
• Sri Lanka population of 20.966 million
• Economically Active Population (EAP) is 8,566,686 (8.6 million).
• 64% of EAP is male and 36% is female.
• The number of unemployed persons reported in 2015 was approximately 383,496
(4.7% of EAP).
• 2 MN(1/4) Labour Work in Agriculture Sector- GDP Contribution -7%

3. Labour shortage
• Rapid economic growth naturally results in both an increased demand for
labour and a change in job composition.
• Basically, economic growth comes more from services and industry sectors than
from agriculture.
• This means that growing labour demand is more for skilled labour than for
unskilled labour; the country needs more professionals, managers, technicians
and others alike than manual workers and subsistence farmers
A labour shortage is an economic condition in which employers believe there are
insufficient qualified candidates (employees) to fill the marketplace demands for
employment at a wage that is mostly employer-determined.

4. Even after offering Rs. 30,000 – 40,000 a
monthly salary with other benefits such as
subsidized meals, transport and, medical
facilities it is hard to find workers.
Now there are hundreds of workers from
China and India, while the opportunities
are opening up to recruit labour from
Nepal and Myanmar as well. And they are
more hard-working and more productive
than Sri Lankan workers!
The Government estimates
roughly 200,000 foreigners
are employed illegally in the
construction sector.
http://www.ft.lk/article/610259/Sri-Lanka-
battles-labour-shortage-amid-massive-
building-boom

5. Skills Requirement
• Tourism industry can create 300,000 new jobs by 2020.
• Then the construction industry needs over 600,000 to do the Rs.65
billion worth of construction work by 2020.
• The technology sector – 100,000.
Today there are about eight million people reported as employed,
unemployment rate is as low as 4.2 per cent; it is just about 360,000

6. Factors of Skilled Labour Shortage Problem
• Younger Generation Unwilling to Take Part in Industry
• Poor participant from local youth is one of the factors of skilled labour shortage
problem.
• Wages Problem
• The skilled labour’s work can be consider as an unstable work especially in term of
income.
• Working Environment
• Local people do not interested in the construction industry mainly because of the
poor working environment at construction worksites in term of safety and health
• Economy
• During the economic recession, many skilled labour will switched to other jobs due
to the slowdown of the development.

7. Shortages due to mismatch
• Qualifications mismatch: workers do not have the necessary education,
training or experience to fill vacancies
• Preferences mismatch: they may have adequate qualifications, but do
not want to do a particular job because of inadequate pay, status or
working conditions
• Regional mismatch: they are able and in principle willing to do the job,
but are located in the wrong geographical area and are not ready to
move
• Mismatch due to information deficits: workers are not matched to jobs
because of a lack of information on existing vacancies, or inadequate
recruitment procedures on the part of employers.

8. Impacts of Skilled Labour Shortage to the
Construction Industry
• The skilled labour shortage problem has directly or indirectly brings a
lot of negative impacts to the industry. Basically, the impacts that
brings by the skilled labour shortage problem will lead to the end
results of affecting the work cost and quality.
1. Quality of the Work Affected
2. Increase in Construction Cost
3. Work Delay

9. Quality of the Work Affected
• The problem of poor quality of skills as being of a critical importance to the industry. Due to the
shortage of skilled labour, the contractor may employ the unskilled labours in order for them to
continue the works on site.
• This is due to the contractor needs to complete the project even though they cannot get the
skilled labour because delaying the project will lead to payment of the Liquidated Damages.
Increase in Construction Cost
• In order to attract the skilled workers by raising the wages, this will increase the work cost. It is a
normal case for some resources to be in high cost when the supply is less.
Shortage of skilled labour is one of the factors causing delay of project Since skilled labour is one of
the important resources that required for the industry, therefore lack of them will definitely lead to the
slow down of development and construction progress.
Project Work Delay

10. Possible Solution to Overcome the shortage of
skilled labour
• Extension Retirement Age
• Retaining the older skilled labour will help a lot in the shortage of skilled labour because they can
supervise the younger generation skilled labour and manage to pass their skills to the younger
generation in the construction industry.
• Recruitment and Retention
• with better benefits, high salaries and greater job security will attracting new employees and retain the
skilled labou
In fast-growing economies, as services and industry sectors grow more rapidly than agriculture
sectors, the country has to invest and prepare a “skilled labour force” well in advance.

11. Policy Needs
• Support higher education programmes
• Immediately identify the skills requirement to deliver the 2025 vision to
enhance the skill level of the current workforce.
• Support higher education programmes that will lead to more graduates
with degrees in technology, engineering, sciences and hospitality
programmes.
• Increase the number of students prepared to enter science, services and
technology fields, as well as the number of teachers who are proficient in
the delivery.
• Jointly identify the skills needed to support the thrust areas and develop
three-year manpower plans for each sector.

12. References
• Sri Lanka Labour force survey – Annual Bulletin 2017
• http://www.statistics.gov.lk/samplesurvey/LFS_Annual%20Bulletin_2017.pdf
• http://www.bpb.de/gesellschaft/migration/kurzdossiers/58192/labour-shortages
• http://www.dailymirror.lk/article/Labour-shortage-in-key-sectors-Govt-needs-to-
be-flexible--138677.html
• http://www.sundaytimes.lk/180311/business-times/peculiarities-of-labour-
shortage-in-sri-lanka-285426.html
• https://www.ukessays.com/essays/economics/factors-of-skilled-labour-shortage-
problem-economics-essay.php
• http://www.ft.lk/article/610259/Sri-Lanka-battles-labour-shortage-amid-massive-
building-boom