Sri Lanka’s economically inactive population overtakes economically active ones

Sri Lanka has more people doing nothing than the ones who either engage in a job or at least are seeking employment, the statistics office data showed.

According to the Annual Bulletin of the Department of Census and Statistics’ Sri Lanka Labour Force

Survey 2021 released last week, Sri Lanka’s economically active population by the 2021-end was estimated 8.55 million and the economically inactive population was estimated at 8.58 million, out of which women making 73 percent.

Labour Force Participation Rate (LFPR) indicates the extent to which a country’s working age population is either engaged in employment or at least seeking employment. In Sri Lanka’s case, this rate remains shockingly low, and appears to be declining further.

For instance, Sri Lanka’s LFPR was estimated at 49.9 percent by the end of 2021, much below the levels of the developed and other developing nations. LFPR remained as high as 62.3 percent in the United States by May this year while in Australia the ratio increased in May to 66.7 percent.

In Malaysia, the ratio increased to 69.4 percent in April despite the aftereffects of the pandemic as people who left or remained on the sidelines of the labour market during the two years of the pandemic are returning to the labour force amid rise in global inflation.

However, in Sri Lanka, the LFPR declined from 50.6 percent in 2020 to 49.9 percent in 2021 indicating that more people had abandoned their jobs contributing to a shrinking labour force, which is toxic for the country amid an economic crisis.

It is projected that Sri Lanka’s labour force would further shrink as more people are set to lose jobs as the full brunt of the economic crisis unravels.

This is why Sri Lanka’s unemployment rate, which is at 5.1 percent, is gravely misleading and masks the true picture of the labour market unless it is read in conjunction with the LFPR.