News

Sri Lanka caught in low-productivity trap: IPS

Published

1 year ago

2024/10/20

ECONOMYNEXT —Six consecutive quarters of negative economic growth in Sri Lanka has led to lower wage rates and discouraged workforce participation and skill development, lowering productivity levels and creating a low productivity trap, the Institute of Policy Studies (IPS) said.

Real wages also decreased after high inflation following the 2022 currency crisis.

At a recent discussion, IPS researchers said the negative growth recorded up to the third quarter of 2023 which had a direct impact on the labour market and the resultant “low productivity trap” has hampered further economic recovery.

The discussion held at the launch of the institute’s State of the Economy 2024 report focused on issues within three key aspects of Sri Lanka’s economy: the education sector, labour market, and public sector.

IPS Research Officer Suresh Ranasinghe noted that, between 2018 and 2023, Sri Lanka’s labour force participation rate fell from 51.8 percent to 48.6 percent, while the employment-to-population ratio dropped from 49.5 percent to 46.3 percent. According to Ranasignhe, some of the main issues within Sri Lanka’s labour market include rising labour market inactivity, declining labour productivity and employment growth, and declining high-skilled employment.

“While all three sectors – agriculture, industry, and services – observed negative average labour productivity from 2018 to 2023, the ICT sector stands out, with the highest output per worker.”

IPS said in a statement on Tuesday October 15 that the discussion had focused on the need to invest in technology, infrastructure, and skill development, particularly within the agriculture sector. Given the ICT sector’s high productivity, recommendations included offering VAT exemptions and bridging the existing skill gap within the sector through targeted interventions.

“Only 20 percent of the total workers held high-skilled jobs in 2023, a decline from 23 percent in 2018, mainly due to a decrease in the share of Managers, Senior Officials, and Legislators,” said Ranasinghe.

One potential reason for this decline was the emigration of high-skilled workers during the pandemic and economic crisis, as they sought better wages abroad due to declining real wages in Sri Lanka. To retain the remaining high-skilled workers, the importance of providing competitive salaries and benefits was pointed out by speakers at the event.

“In the long term, expanding knowledge-based industries, supporting persistent professional development, and revising public sector policies are important to foster high-skilled employment.”

Rationalising public sector employment was also a point of discussion at the event.

Sri Lanka’s public sector accounts for 15 percent of total employment and 35 percent of formal employment, while it consumes 26 percent of public expenditure and 5 percent of GDP, said IPS. Notably, public sector employment has increased by about 60 percent since 2005. However, “Sri Lanka’s government performance is considered ‘poor’ as per the Worldwide Governance Index (WGI), with the government effectiveness being negative 0.65.”

“The rise in inactivity, particularly among youth, is likely linked to education disruptions. To tackle this, the session highlighted the importance of promoting and improving the quality of Technical and Vocational Education and Training (TVET), focusing on access for vulnerable youth and improving public perceptions, as well as supporting entrepreneurship initiatives to create sustainable employment opportunities,” IPS said in its statement.

IPS Research Fellow Lakmini Fernando discussed the importance of improving public sector efficiency. She noted how government expenditure has a declining trend (47 percent decline from 1990 to 2023) while spending on wages remains stable (5 percent). While high government expenditure crowds out investments, it lowers prospects for growth. Fernando recommended introducing a new public management approach, which provides an immediate pay rise while ensuring the right size of the public sector. An effective public sector is essential for improving education planning and enabling strategic interventions in the labour market, she said.

Overall, Fernando noted that improving administrative operations, downsizing the sector, and addressing barriers that lead to policy failures were important. A debate ensued during the Q&A session on downsizing the sector and whether or not the public sector deserves a pay rise. “The minimum monthly wages of all types of public employee levels are below the expenditure benchmark of LKR 68,056,” said Fernando, suggesting that to ensure successful policy implementation, the government needs to create an environment that supports adopting changes.

The institute also noted that education equips individuals with the knowledge and skills necessary for a productive and competitive workforce and fosters creativity and problem-solving abilities essential for driving innovation and technological advancements.

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Financial contributions received for ‘Rebuilding Sri Lanka’ Fund

Published

22 hours ago

2025/12/22

Priyan

The Government’s ‘Rebuilding Sri Lanka’ Fund, established to provide relief and support to communities affected by Cyclone Ditwah, continues to receive financial contributions on a daily basis.

Accordingly, the Containers Transport Owners Association made a financial contribution of Rs. 1.5 million, while the Association of SriLankan Airlines Licensed Aircraft Engineers contributed Rs. 1.35 million to the Fund.

The respective cheques were formally presented to the Secretary to the President, Dr. Nandika Sanath Kumanayake, at the Presidential Secretariat on Friday (19).

The occasion was attended by W. M. S. K. Manjula, Chairman of the Containers Transport Owners Association, together with Dilip Nihal Anslem Perera and Jayantha Karunadhipathi.

Representing the Association of SriLankan Airlines Licensed Aircraft Engineers were Deshan Rajapaksa, Samudika Perera and Devshan Rodrigo handed over the cheque.

News

UNICEF representatives and PM discuss rebuilding schools affected by the Disaster

Published

22 hours ago

2025/12/22

Priyan

A meeting between Prime Minister Dr. Harini Amarasuriya and a delegation of UNICEF representatives was held on Saturday, (December 20) at the Prime Minister’s Office.

During the meeting, the Prime Minister explained the measures taken by the Government to ensure the protection of the affected student community and to restore the damaged school system, as well as the challenges encountered in this process.

The Prime Minister stated that reopening schools located in landslide-prone areas would be extremely dangerous. Accordingly, the Government is focusing on identifying such schools and relocating them to suitable locations based on scientific assessments.

The Prime Minister further noted that financial assistance has been provided to students affected by the disaster, enabling parents to send their children back to school without an additional financial burden. Emphasizing that school is the safest place for children after their homes, the Prime Minister expressed confidence that the school environment would help restore and improve students’ mental well-being

The Prime Minister also highlighted that attention has been given to several key areas, including the relocation of disaster-affected schools, restoration of school infrastructure, merging and operating certain schools jointly, facilitating teaching and learning through digital and technological strategies, and providing special transportation facilities. She emphasized that the Government is examining these issues and is committed to finding long-term solutions.

The UNICEF representatives commended the Government’s commitment and the initiatives undertaken to restore the education sector and assured their support to the Government. Both parties also discussed working together collaboratively on future initiatives.

The meeting was attended by the UNICEF representatives to Sri Lanka Emma Brigham, Lakshmi Sureshkumar, Nishantha Subash, and Yashinka Jayasinghe, along with Secretary to the Ministry of Education Nalaka Kaluwewa, Director of Education Dakshina Kasturiarachchi, Deputy Directors Kasun Gunarathne and Udara Dikkumbura.

(Prime Minister’s Media Division)

News

NMRA laboratory lacks SLAB accreditation

Published

23 hours ago

2025/12/22

Thilina Walpola

Dr. Sanjeewa

Drug controversy:

“Setting up state-of-the-art drug testing facility will cost Rs 5 billion”

Activists call for legal action against politicians, bureaucrats

Serious questions have been raised over Sri Lanka’s drug regulatory system following revelations that the National Medicines Regulatory Authority’s (NMRA) quality control laboratory is not accredited by the Sri Lanka Accreditation Board (SLAB), casting doubt on both the reliability of local test results and the adequacy of oversight of imported medicines.

Medical and civil rights groups warn that the issue points to a systemic regulatory failure rather than an isolated lapse, with potential political and financial consequences for the State.

Chairman of the Federation of Medical and Civil Rights Professional Associations, Specialist Dr. Chamal Sanjeewa, said the controversy surrounding the Ondansetron injection, which was later found to be contaminated, had exposed deep weaknesses in drug regulation and quality assurance.

Dr. Sanjeewa said that the manufacturer had confirmed that the drug had been imported into Sri Lanka on four occasions this year, despite later being temporarily withdrawn from use. The drug was manufactured in India in November 2024 and in May and August 2025, and imported to Sri Lanka in February, July and September. On each occasion, 67,600 phials were procured.

Dr. Sanjeewa said the company had informed the NMRA that the drug was tested in Indian laboratories, prior to shipment, and passed all required quality checks. The manufacturer reportedly tested the injections against 10 parameters, including basic quality standards,

pH value, visual appearance, component composition, quantity per phial, sterility levels, presence of other substances, bacterial toxin levels and spectral variations.

According to documents submitted to the NMRA, no bacterial toxins were detected in the original samples, and the reported toxin levels were within European safety limits of less than 9.9 international units per milligram.

Dr. Sanjeewa said the credibility of local regulatory oversight had come under scrutiny, noting that the NMRA’s quality control laboratory was not SLAB-accredited. He said establishing a fully equipped, internationally accredited laboratory would cost nearly Rs. 5 billion.

He warned that the failure to invest in such a facility could have grave consequences, including continued loss of life due to substandard medicines and the inability of the State to recover large sums of public funds paid to pharmaceutical companies for defective drugs.

“If urgent steps are not taken, public money will continue to be lost and accountability will remain elusive,” Dr. Sanjeewa said.

He added that if it was ultimately confirmed that the drug did not contain bacterial toxins at the time it entered Sri Lanka, the fallout would be even more damaging, severely undermining the credibility of the country’s health system and exposing weaknesses in health administration.

Dr. Sanjeewa said public trust in the health sector had already been eroded and called for legal action against all politicians and public officials responsible for regulatory failures linked to the incident.

by Chaminda Silva ✍️