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Decline in labour force in 2020 first half- Part III

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Extracts from the Central Bank of Sri Lanka report, ‘Recent Economic Developments: Highlights of 2020 and Prospects for 2021’

 

Continued from yesterday

Meanwhile, several rounds of discussions were held in 2020 to determine the possibility of increasing the basic daily wage of workers in the plantation sector to Rs. 1,000.

= Nominal wages of the informal private sector employees, as measured by the informal private sector wage rate index (2012=100), increased by 3.5 per cent during the period from January to August 2020 compared to the same period of 2019. Nominal wages of employees in all sub-sectors, namely, agriculture, industry and services increased by 4.1 per cent, 2.9 per cent and 3.9 per cent, respectively, during the period from January to August 2020. However, real wages in the informal private sector declined by 2.8 per cent during the period from January to August 2020 compared to the corresponding period of the previous year.

The negative impacts of the COVID-19 pandemic amidst the persisting structural issues led the labour market indicators to deteriorate during the first half of 2020. As per the statistics reported by the Department of Census and Statistics, the working age population increased during the first half of 2020 compared to the corresponding period of the previous year, led by the significant increase in economically inactive population amidst a comparatively lesser decline in the economically active population.

Accordingly, the Labour Force Participation Rate (LFPR), which is the ratio of the labour force to the working age population, declined during the first half of 2020 compared to the same period of 2019. A considerable decline was observed in the employed population as well. The unemployment rate, which is the share of unemployed population to the labour force, increased notably during the first half of 2020 compared to the corresponding period of the previous year. Continuing the trend observed in the recent past, unemployment rates among females, youth and educationally qualified persons continued to remain at high levels during the first half of 2020.

The labour force, which is the economically active population,3 declined to 8.470 million in the first half of 2020 from 8.603 million in the corresponding period of the previous year, recording a decline of 1.5 per cent. This decline in labour force was solely driven by the significant decline of 6.0 per cent in the female labour force during the reference period. In contrast, the male labour force, which accounts for the highest share of the labour force, increased by 0.9 per cent during the first half of 2020 compared to the corresponding period of the previous year. In terms of sector wise labour force, declines were observed across all sectors namely urban, estate and rural sectors during the reference period mainly due to the considerable drops in the female labour force. Meanwhile, the male labour force in the urban and estate sectors also recorded marginal declines, though the male labour force in the rural sector recorded an increase.

In line with the decline of the labour force, LFPR declined to 50.6 per cent during the first half of 2020 from 52.6 per cent recorded in the first half of 2019. This considerable decline was mainly driven by the significant increase observed in economically inactive females during the reference period. Consequently, the female LFPR declined to 32.0 per cent in the first half of 2020 from 34.7 per cent in the corresponding period of 2019. The male LFPR also declined to 72.1 per cent in the first half of 2020 from 73.4 per cent in the first half of 2019 due to the higher increase in economically inactive males compared to the increase in economically active males. Accordingly, the gender gap in LFPRs soared to 40.1 percentage points in the first half of 2020 from 38.7 percentage points in the corresponding period of the previous year affirming the persisting issues related to low female labour force participation towards the economic growth in the country.

The employed population4 declined by 2.4 per cent to 7.998 million in the first half of 2020 compared to 8.193 million recorded in the corresponding period of 2019. This decline was led by both industry and services sectors, as an increase in employed population was observed in the agriculture sector. Within the industry sector, declines in employed population were observed across all sub-sectors namely, mining and quarrying, manufacturing and construction, electricity, gas, steam and air conditioning supply, water supply, sewerage, waste management and remediation activities, while within the services sector prominent declines in employed population were observed in wholesale and retail trade, repair of motor vehicles and motorcycles, administrative and support service activities, and public administration and defence, compulsory social security sub-sectors. These declines in employment in industry and services sectors were also reflected in the employment indices of manufacturing and services purchasing managers’ index surveys conducted by the Central Bank of Sri Lanka in the first half of 2020. Meanwhile, continuing the trend observed in the recent past, the services sector, which accounted for 46.2 per cent of the total employment, remained as the foremost employment generator followed by the industry and agriculture sectors contributing to 27.0 per cent and 26.8 per cent of the total employment, respectively, during the first half of 2020. yy In terms of the status of employment, the employed population in all categories declined during the first half of 2020 compared to the first half of 2019. With regard to employment status, the employed population is categorised into two major categories, namely, waged and salaried workers (employees) and the self-employed.

The employees category is further categorised into public sector and private sector, while the self-employed category is categorised into employers, own account workers and contributing family workers. Among these categories, a prominent decline was observed in private sector employees followed by public sector employees.

Nevertheless, with the government programme to provide jobs for 60,000 unemployed graduates and for 100,000 persons in the lowest strata of income earners in Sri Lanka with the objective of eradicating poverty, in line with the government policy declaration enunciated as “Saubagyaye Dakma”, public sector employment is expected to increase during the second half of the year.

In line with the decline in the employed population, the unemployed population increased significantly by 14.8 per cent to 0.471 million during the first half of 2020 compared to 0.410 million in the corresponding period of the previous year attributable to the negative impacts of the COVID-19 pandemic. This increase in the unemployed population was mainly driven by unemployed females who contributed to 58 per cent of the total increase 4 70

Accordingly, the increase in unemployed females was recorded at 16.0 per cent, while the increase in unemployed males was recorded at 13.4 per cent during the reference period. yy In line with the increase in the unemployed population,5 the unemployment rate increased to 5.6 per cent in the first half of 2020 compared to 4.8 per cent recorded in the first half of 2019. Accordingly, the unemployment rate of females increased significantly to 8.9 per cent in the first half of 2020 from 7.2 per cent in the corresponding period of the previous year.

The unemployment rate of males increased to 3.9 per cent in the first half of 2020 from 3.4 per cent in the corresponding period of the previous year. yy Unemployment rates among all age categories increased during the first half of 2020 compared to the same period of the previous year. It is noteworthy that among these age categories, youth (aged 15-24 years) unemployment, which continued to remain at a high level, increased substantially to 27.3 per cent during the first half of 2020 from 20.8 per cent in the corresponding period of the previous year. Moreover, unemployed youth contributed to 98 per cent of the total increase in the unemployed population. More than a quarter of the youth labour force being unemployed bring to the surface the issues related to underutilisation of the most productive human capital towards the economic growth of the country. 5 Persons available and/or looking for work, and who did not work and took steps to find a job during the last four weeks and are ready to accept a job given a work opportunity within next two weeks are said to be unemployed. yy In terms of education level, unemployment rates increased among all educational categories during the first half of 2020 compared to the corresponding period of the previous year.



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ADB intervention offers an oasis for Delft, but basic infrastructure remains a daily struggle

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A tour reveals the widening gap between Delft’s tourism promise and the realities of island life

By Sanath Nanayakkare

Stepping onto Neduntheevu – better known as Delft Island – can feel like slipping off the edge of the map into one of Sri Lanka’s least-explored frontiers.

For the traveller seeking an escape from the urban grid, this remote island off the Jaffna peninsula offers an alluring picture of a forgotten paradise: wild horses, coral and limestone fences, sun-bleached dwellings and a community accustomed to life at the margins.

But beneath that romantic veneer lies a far harsher reality.

For the people who live and work here, survival remains an everyday balancing act shaped by inadequate infrastructure, acute water scarcity, unreliable transport and growing frustration over what they see as years of neglect.

Some crucial lifelines, however, have begun to reach these distant shores, largely through the intervention of international development partners.

The Asian Development Bank (ADB) has played an important role in strengthening water security on Delft, through a Sea Water Reverse Osmosis (SWRO) plant designed to provide a critical source of potable water to the island.

The plant was designed with an initial capacity of about 50 cubic metres – or 50,000 litres – of potable water a day, with the potential to expand production to 100 cubic metres. At present, it supplies roughly 40% of Delft’s population.

For residents and local businesses, the plant has provided much-needed relief. Yet operational constraints mean that it currently runs for only about 20 minutes a day, limiting the volume of water available and forcing households and businesses to find additional sources simply to meet their daily needs.

Few understand that struggle better than Vithushan Arul Ranjan, affectionately known as Tommy, a young Energy and Environmental Technology graduate of the University of Sri Jayewardenepura. In 2021, Vithushan launched Delft Village Stay on family land as a community-based tourism venture. It has since grown into an award-winning eco-retreat accommodating up to 25 guests in eco-huts and traditional rooms.

His enterprise has received recognition at both regional and international levels, including the Northern Province Tourism Award 2025 and a recommendation in the 2025 edition of the Lonely Planet Guide.

His business is built around responsible tourism, with an emphasis on bringing economic benefits to the local community. But operating an eco-retreat on one of Sri Lanka’s most isolated islands comes at a considerable cost.

“It is almost impossible to focus on the business when we are constantly in survival mode,” Vithushan says.

Georgie Unsworth, a UK/Belgium visitor turned team member at Delft Village Stay, highlights the stark contrast between Neduntheevu’s magical appeal and the harsh realities locals face regarding basic infrastructure and rights. While tourists want to support sustainable growth and prioritise resident needs – fearing a repeat of southern Sri Lanka’s over-tourism – they are often distressed by severe plastic pollution and a lack of recycling facilities. Ultimately, Unsworth emphasises that visitors prefer authentic, responsible experiences over luxury amenities like AC boats and swimming pools, urging that fundamental local needs be addressed before expanding tourism.

One of his biggest challenges is something most tourism businesses take for granted: drinking water. Because Delft’s groundwater is severely affected by salinity, Delft Village Stay has to transport drinking water from across the Jaffna peninsula. The business spends around Rs. 35,000 a month just to bring in enough water to meet the basic requirements of its guests.

The problem extends well beyond the tourism sector. Residents say Delft’s fragile connection with the mainland remains heavily dependent on a small fleet of vessels – two government ferries and one private boat – that are vulnerable to breakdowns, overcrowding and unpredictable schedules.

The consequences can be severe.

Recently, a month-long interruption to regular boat services effectively isolated the island, disrupting the supply of essentials including cooking gas and drinking water.

The island’s tourism ambitions have also exposed the gap between policy aspirations and ground realities.

Government plans to develop Delft as an eco-tourism destination have encouraged a growing flow of visitors, but residents and tourism operators argue that visitor numbers cannot be increased sustainably without first strengthening the island’s basic infrastructure.

The dangers became starkly apparent when an unofficial private boat carrying tourists capsized with 10 people on board. A potentially fatal tragedy was reportedly averted only after local fishermen and Navy personnel rushed to the rescue.

The incident offered a sobering reminder that tourism development in remote locations requires more than branding a destination as an ecological paradise.

For policymakers and development planners looking towards Sri Lanka’s north, Delft offers a clear lesson. Ambitions for zero-emission, community-based and environmentally sustainable tourism cannot move faster than the basic needs of the people who live there.

Reliable maritime transport, expanded water and wastewater management, proper waste disposal and functioning public amenities are not optional extras. They are the foundations upon which any sustainable tourism economy must be built.

The ADB-supported water infrastructure offers a glimpse of what targeted investment can achieve. But Delft’s experience also shows that a single intervention, however important, cannot resolve a much wider infrastructure deficit.

The island may have wild horses, coral walls, ancient ruins and a growing reputation among international travellers.

But before Delft can truly become the eco-tourism showcase policymakers envision, it must first become a place where its residents can reliably secure something as fundamental as water.

“That is the real test of whether the island’s tourism promise can translate into sustainable development – or whether the Lonely Planet image of Delft will remain little more than a façade over the daily hardships of its people,” says Vithushan Arul Ranjan.

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Systemic questions linger over NDB fraud inquiry

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By Sanath Nanayakkare

The unfolding developments surrounding the massive internal financial irregularity at the National Development Bank PLC (NDB), valued at approximately LKR 13.2 billion, continue to demand rigorous public scrutiny.

As months have passed since the initial disclosure of the fraud in early 2026, questions regarding institutional accountability, regulatory oversight, and corporate governance remain central to discussions concerning the stability and transparency of Sri Lanka’s financial sector.

First coming to light through corporate disclosures and subsequent regulatory reviews, the LKR 13.2 billion incident represents one of the largest internal fraud cases recorded within a major commercial institution in recent times. Because NDB is a systemically important institution – with major state-backed shareholding through entities such as the Employees’ Provident Fund (EPF), the Employees’ Trust Fund (ETF), Sri Lanka Insurance Corporation (SLIC), and the Bank of Ceylon (BOC) – the implications extend far beyond normal corporate missteps.

Public interest advocates and financial analysts have repeatedly emphasised that any major lapse in a bank of this magnitude warrants total transparency to maintain public confidence. Although the Central Bank of Sri Lanka (CBSL) and bank management have publicly assured stakeholders that customer deposits remain secure and day-to-day operations unaffected, the broader governance questions regarding how such significant vulnerabilities went undetected remain a subject of intense public debate.

A focal point of concern among financial analysts and governance watchdogs is the framework surrounding the independent forensic audit commissioned to investigate the transactions.

Entrusted to international expertise via Deloitte Touche Tohmatsu India LLP, the audit’s mandate includes examining the circumstances of the fraudulent operations as well as evaluating historical lapses in internal controls, oversight, and compliance.

However, critics, including public interest figures, have raised questions regarding the timeline for the finalisation and release of these findings.

Parliamentary oversight bodies, such as the Committee on Public Finance (CoPF), have previously engaged with regulatory authorities to review the matter.

Observers point out that timely public access to comprehensive audit findings – without compromising ongoing criminal investigations by entities like the Criminal Investigation Department (CID) – is vital to ensuring that systemic gaps are permanently closed.

The NDB case has also cast a sharp spotlight on broader corporate governance norms in Sri Lanka, bringing elements such as board oversight, the role of external auditors, and potential conflict-of-interest perceptions into sharper focus.

Critics argue that maintaining public trust requires strict adherence to ethical standards at every level of corporate leadership, from commercial bank directors to regulatory supervisors.

“As the country seeks to attract sustainable foreign direct investment, establishing an uncompromised standard of accountability is paramount. For the memory of this financial fraud to serve a constructive purpose, institutional watchdogs, lawmakers, and regulators must ensure that investigations are brought to a transparent, logical, and publicly accountable conclusion, ensuring that public resources and systemic financial integrity are robustly safeguarded,” keen observers of this massive brank fraud say.

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‘ASEAN must leverage trust and governance alongside cost competitiveness’

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Dato’ Sri Vijay Eswaran

Trust and regulatory clarity are fast becoming ASEAN’s next major competitive advantages, according to Dato’ Sri Vijay Eswaran, Executive Chairman of the QI Group of Companies.

Writing in The Business Times Insights: ASEAN Intelligence 2026, Eswaran noted that while cost competitiveness remains central to the region’s economic appeal, geopolitical uncertainty, shifting supply chains, and rapid technological advancements mean cost is no longer the sole deciding factor for investors. Global companies are increasingly prioritizing stability, predictable policies, and reliable institutions.

Eswaran emphasized that sustainable growth depends on pairing the region’s traditional strengths—such as strategic manufacturing, a growing talent pool, and regional connectivity—with strong institutional governance. Pointing to the OECD’s Asia Capital Markets Report 2026, he highlighted that transparency and institutional maturity are key drivers of investor confidence.

Addressing the rapid integration of artificial intelligence, Eswaran argued that clear guardrails are essential to prevent business hesitation. He commended regional initiatives balancing innovation with oversight, including Malaysia’s AI infrastructure developments, Singapore’s AI Verify framework, Indonesia’s formalization of its National Artificial Intelligence Strategy, the Philippines’ National AI Strategy Roadmap 2.0, and Vietnam’s new risk-based legal framework.

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