Inadequate HR skills, key constraint to growth -IPS

Against the background of a progressive improvement in the macroeconomic environment, led by better fiscal policy outcomes, Sri Lanka needs to urgently address structural constraints through a process of reforms, if the country is to raise its medium term growth prospects, the country’s leading economic policy think tank, Institute of Policy Studies (IPS) says.

In its annual flagship report, Sri Lanka: State of the Economy 2017, a primary constraint on growth is identified as the nation’s inadequate human resource pool of professional and technical skills. It notes that Sri Lanka’s labour market efficiency has to be improved by tackling two of the biggest limitations – its stringent employment protection laws and low female labour force participation rates.

As such, the report, which will be launched on October 10 at the Dr. Saman Kelegama auditorium at the IPS office, focuses on ‘Demographics, Labour Markets and Growth’ as its main thematic area.

Other areas of policy priority to revive Sri Lanka’s medium term growth outlook from the current rate of 4.0-4.5 per cent highlighted in the report include education, health and human development, agriculture and land resource management, tourism, migration, and climate adaption and disaster resilience, the agency said in a media release providing a few details of the report.

The implementation of reforms, the report says, will depend on persuading government coalition partners that economic reform initiatives are designed with sufficient reference to the concerns of ordinary voters. If political indecision makes a reform effort less achievable, the evidence will begin to confirm that the probability of a sustained upswing for the Sri Lankan economy is dim. In view of the daunting medium-term debt financing challenges that Sri Lanka must prepare to meet, the country cannot afford to lose this opportunity to put its economic house in order.