Business Times

Working poor and job-oriented growth

A research study launched by the International Labour Organisation (ILO) says that Sri Lanka needs to create better quality jobs to reduce ‘working poverty,’ or to take already working people, out of poverty.
A second study, also commissioned by the ILO, on ‘Promoting Employment-Intensive Growth in Sri Lanka’, says the manufacturing sector has responded positively to policy reforms of the post-1977 period in terms of growth, export orientation, productivity, profitability and also job creation.
The study on Sri Lanka’s Working Poor, by researcher Ramani Gunatilake, noted that a majority of poor household heads are already employed. Therefore, poverty in Sri Lanka is a case of many working people not earning enough to get out of poverty.

“Thus, the economy needs to generate enough decent and productive employment opportunities if Sri Lanka is to meet the United Nations’ Millennium Development Goal (MDG) of halving the share of people living on less than US$1 per day by 2015, versus 1990 levels,” noted the study. Both reports were officially released at an ILO event in Colombo on Friday. In 2006/7, 15.2% of Sri Lankans were said to be poor (excluding the north) compared to 26.1% in 1990/91 (excluding north and east). Urban poverty incidence dropped from 16% to 7% and rural poverty declined from 30% to 16%, but poverty on the estates increased from 21% to 32% during this period.

The ILO study examines the links between the nature of employment and the incidence of poverty and investigates in greater detail the prevalence of poverty among different categories of employment. It also examines factors other than growth and redistribution that contribute to poverty.

The study on ‘Promoting Employment-Intensive Growth in Sri Lanka’, by researcher Sunil Chandrasiri, examines the employment effect of growth in manufacturing sector industries in Sri Lanka over a period of 17 years from 1990. The study focuses on the slow growth period of the 1990s and the period of high growth post-2000.

“Since 2001, growth of value added in manufacturing was rather low and the services sector emerged as the best performer. In terms of employment intensity however, manufacturing sector performed better than that of the services sector and the national economy. This implies a transition of manufacturing sector from low employment intensity, to high employment intensity between 1990 and 2006, relative to other sectors,” noted the study. However, the study noted that jobs created in some sub-sectors in manufacturing tended to be low quality.

The study also said the government has to play a major role in promoting employment intensive growth, particularly in the present context of global economic downturn. The government needs to pay attention to fiscal consolidation, exchange rate management, and appropriate monitory policies. Other areas for government intervention are skills development, investments in research and development, infrastructure facilities and institutional support.

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