Sectoral Impact of COVID-19

The sudden outbreak of COVID-19, originated in China in December 2019, struck the world so hard affecting all the economic and daily activities of humans. It is still active in South and North America, Asia and Europe. Countries are briskly taking necessary prevention methods to control the spread of the disease. Though the Sri Lankan Government is so far successful in controlling the spread of COVID-19, the damage caused by it is immeasurable. With the aim of identifying the impact of COVID-19 on labour market issues in the country, an online survey was conducted concerning the most economically sensitive sectors: Tourism and Hospitality Industry, Construction Industry, Foreign employment, SMEs, Apparel, Logistics, Aviation and IT with sub aspect, Legal, Educational and Financial situations.

Data were collected from both primary and secondary sources. Eight mini surveys were conducted to collect primary data from each sector. The convenience non probability sampling method   was used to select the sample. The sector specific e-questionnaires were developed and circulated among employers, expertise and relevant organizations through email and other online platforms. Information was collected from a sample of 206 employers and expertise of the selected sectors.

Sectors

Contribution to GDP (%)

Direct/Indirect Employment 2018/2019

Impact (assumed based on expertise views and surveys)

Construction

8

684,970

60% of companies

Tourism

4.3

600,000

41%-60% of employees

Logistic

2.5

40,000 - 50,000

85% of companies

Foreign Employment

8

1,500,000

30,000-100,000 of employees

Textile and apparel

7.5

1,200,000

35% of employees

SME

52

3,000,000

85% of SMEs

Sectoral Contribution to GDP and Employment

Source: DCS Quarterly Labour Force Survey report and Central Bank Annual Report (2019) and NHRDC survey (2020)

More than 6 million people are employed in these sectors and it is a composition of more than 75% of the total employed population. The contribution of the selected sectors to the GDP is considerably high.

The results of the survey indicated that all the sectors have been affected by the sudden pandemic. Focused on the findings of the survey, the majority (71%) of the experts and hotelier of the Tourism and Hospitality sector have stated that the Tourism sector would lose 41% - 60% of employees due to this situation. Therefore, 58% of experts emphasized the re-skilling program for employees who have lost their jobs in the tourism industry.

The study analysis has revealed that in the Foreign Employment Sector, there are about 1 to 1.5 Mn of estimated migrant workers working overseas during the COVID-19 period. Due to this pandemic 30,420 to 100,000 of jobs of migrant workers could be lost or affected. Also comparing to the last year the private remittance generates by migrant workers would be decreased by 30% to 40% in the first half of the year 2020 while the COVID-19 impact on foreign employment will last up to 2 years or more.

In the SME sector, only 23% of the SMEs have claimed to recover in less than 6 months, but the majority (77%) need more than 6 months to recover.

The Apparel Industry, 64% in the sample revealed that they have not decided to introduce any payment procedures for the workers who will unable to joining the production process.

In the Logistics sector, 38% stated that low skill employees face a high risk of job security while 70.5% have adopted pay cuts plans to mitigate the negative impact.

When compared with other sectors, there is no significantly negative impact on the IT sector. However, the main problem faced by 90.5% of the responded the organizations is the postponement of their orders. All IT organizations have been instructed to replace physical meetings with virtual meetings.

Recommendations to the Government  

At the light of COVID-19, the government started to give various assistance and reliefs to the sectors to protect them from the adverse impact. There are various other sector specific strategies which can be taken to speed up the reboot process of the sector which will ultimately benefit the employees. Below are some of the sector specific measures that can be initiated,

Employment

  • Creating an unemployed database of affected employees for reskilling and redeployment to the needed industries/SMEs accordingly.
  • Introduce competitive new tourism models (Health tourism) under the pandemic situation and beyond.
  • Promote textile and raw material production in the country.
  • Introduce new ways of working models, work from home such as home garments concept and develop e-commerce platform which could be systematic and easy to monitor.

Legal and Regulatory

  • Obtain approval to National Response Plan (NRP) from cabinet of Sri Lanka and relevant short and long term actions of NRP could be implemented with relevant stakeholders.

Institutional and Administrative

  • Multi stakeholder taskforce could be established by govt. including civil societies to prepare a long term plan to increase remittances and diversify the earnings of foreign employment using the whole-of-government and whole-of-society approaches.
  • Establishing a strong SME’s information network.
  • Establishing SME business supporting centers/advisory centers in district and divisional wise.

Monetary

  • Introduce venture capital funds for SME startups.
  • Although ICTA has already developed a video-conferencing application (meet.gov.lk) most of the private and public organizations are using paid applications like Zoom and Microsoft Teams predominantly. People could be encouraged to attend video conferences using the free applications developed by Government ICT organizations to reduce the outflow of US dollars.

There is no any specific definition to identify unskilled labour force in Sri Lanka. But according to the Labour force definition there are two types of categories that could be identified as employed labour force and unemployed labour force. Therefore, it can be assumed that two types of unskilled labour forces are there as unskilled employed labour force and unskilled unemployed labour force. According to the UN definition, an unskilled employee (worker), “is an employee who does not use reasoning or intellectual abilities in their line of work. These workers are typically found in positions that involve manual labour such as packaging, assembling, or apprentice, or farm working. Unskilled jobs usually do not require formal education and can be performed by the majority of individuals. Due to the fact that their jobs do not require high levels of education or training, unskilled workers tend to earn lower than the average salaries when compared to other workers. Jobs performed by unskilled workers are sometimes labeled as “blue collar” jobs by mainstream society. Unskilled workers often work in environments where they are exposed to unsafe conditions on a regular basis”. Therefore unskilled employees could be found in the occupational category in “Elementary Occupation” that define in the International Standard Classification of Occupations (ISCO 08).Therefore, elementary occupations could be obtained through the Labour Force Survey conducted by Department of Census and Statistics. Also, unskilled unemployed labour force could be found by using unemployed labour force who has not followed a vocational training. It could be obtained through the Labour Market Information Bulletin published by TVEC. Therefore, combination of both categories is considered as unskilled labour force in Sri Lanka. Accordingly, characteristics of unskilled labour force are manipulated.

According to the Labour Force Survey data of the 1st quarter of year 2020, the labour force is 8,503,617 and estimated unskilled labour force is 2,129,672. Thereby, the percentage of unskilled labour force out of the total labour force for the 1st quarter of year 2020 is around 25%. Out of the 25% the unskilled labour force the majority could be identified as Male (16.45%) and rest is female (8.59%). According to the age group of unskilled labour force, 2.62% of youth belongs to the age group 15 – 24 yrs, 2.44% is in 25-29 years age group and 5.32% is in 30-39 years age group while the majority (14.66%) could be in the 40+ years age group. Out of 25% of unskilled labour force the majority (14.89%) is represent the grade 10 or below educational level and rest (10.15%) is represent from the G.C.E O/L or above education level. Out of 25% unskilled labour force, the highest percentage of unskilled labour force is reported from Western province (7.05%) followed by Central province (3.25%) and lowest unskilled labour force is reported from Northern Province. Also in comparison with districts, highest percentage of unskilled labour force is reported from Colombo district (2.91%) followed by Gampaha district (2.65%) and lowest unskilled labour force is reported from Mullativu district (0.1%). (See Annex-1 (Table 1, Table 2, Table 3 and Table 4) for more information statistics.)

Acceding to the “Vistas of Prosperity and Splendour” the President is targeting to reduce the unskilled labour force to 20% within the first two years (by 2022) and to bring it down to 10% by 2025. In order to achieve the 2022 target of reducing the unskilled labour force to 20%, 5% of existing unskilled labour force need to be skilled and in order to achieve 2025 target, another 10% of unskilled labour force should be converted in to skilled labour force. Hence, it is needed to identify the prioritized economic sectors for the next decade. According to the “Vistas of Prosperity and Splendour” the President is targeting High tech integrated Agriculture based economy in next decade; it is expected to get the youth participation on new technological Agriculture farming such as Green house agriculture, Hydroponics agriculture and Aquaponics agriculture. Therefore, considerable percentage out of 2.62% of youth (irrespective of gender) unskilled labour force and considerable percentage of unskilled labour force in age group 25-29(irrespective of gender) could be skilled in above mentioned agricultural framings with integrated new technology. This type of agricultural based skilled training could be carried out for the unskilled labour force in coastal districts and in Anuradhpura, Polonnaruwa, Kurunegala and Puttalama districts etc. Also according to “Vistas of Prosperity and Splendour” in chapter 5, it is expecting to develop technical training course with a suitable NVQ level in order to the convert cinnamon extraction and preparation to a respectable job. Therefore, a considerable percentage out of 5.32% unskilled labour force in 30 to 40 years age group in Kandy, Matale, Matara and Galle districts could be skilled in above technical. As per the chapter 5 of “Vistas of Prosperity and Splendour” under the construction industry, it is expected to address the issue of labour in this industry. The investment assistance required for them to move to technical solutions to address labour shortage will be provided. The Government will also create facilities to train workers for the machinery to be increasingly used in the industry and the youth will be trained to take up jobs in technical grades and there will also be training of required technologists. Therefore, a considerable percentage of 10.15% unskilled labour force in G.C.E. O/L or above category in Colombo, Gampaha and Kalutara districts could be skilled into the machinery training to be used in the industry as well as trained for technical grades. Also according to “Vistas of Prosperity and Splendour” in chapter 5 under the Tourism industry, it is expected to take actions to increase the numbers, with and without training, serving in the tourism industry up to million workers and a preliminary diploma course will be initiated to train the youth currently engaged in tour services and those interested in joining the field who do not have the O-level qualifications demanded by existing diplomas. Hence considerable percentage out of 14.89% unskilled labour force in grade 10 or below education category (irrespective of gender) in coastal districts could be skilled in above mentioned specific sectors. Therefore, Agriculture, Construction and Tourism sectors are most reliable sectors for unskilled labour force to train and engage in skilled employment in the next decade in Sri Lanka.

Research Team

NHRDC

 

Annex-1

Profile of Unskilled Labour force in Sri Lanka

  • Labour force in 1st Quarter 2020 – 8,503,617
  • Unskilled Labour force 1st Quarter 2020 – 2,129,672
  • % Unskilled Labour force out of total Labour Force –  25.04

 

Table 1 -Unskilled labour force with respect to Gender

Gender

2019Q4

2020Q1

 

Labourforce

Unskilled

Labourforce

Unskilled

% Unskilled/Labourforce

% Unskilled/ Total Unskilled

 
 

Male

5,530,953

1,385,189

5,585,314

  1,398,803

16.45

65.68

 

Female

3,037,949

760,833

2,918,304

      730,869

8.59

34.32

 

Total

8,568,902

           2,146,022

8,503,617

  2,129,672

25.04

100.00

 

Table 2 - Unskilled labour force with respect to Age group

Age group

2019Q4

2020Q1

Labourforce

Unskilled

Labourforce

Unskilled

% Unskilled/Labourforce

% Unskilled/ Total Unskilled

15 - 19 YRS

177,606

               44,480

          176,253

          44,141

0.52

2.07

20 - 24 YRS

719,914

             180,297

          714,429

       178,924

2.10

8.40

25 - 29 YRS

835,234

             209,179

          828,870

       207,585

2.44

9.75

30 - 39 YRS

1,820,274

             455,875

      1,806,406

       452,402

5.32

21.24

40 + YRS

5,015,874

         1,256,191

      4,977,659

    1,246,620

14.66

58.54

Total

8,568,902

         2,146,022

      8,503,617

    2,129,672

25.04

100.00

 

Table 3- Unskilled labour force with respect to Educational Attainment

Level of Education

2018

2019Q4

2020Q1

labor force

Unskilled

labor force

Unskilled

labor force

Unskilled

% Unskilled/Labourforce

% Unskilled/ Total Unskilled

Grade 5 and below

   1,202,457

           301,147

            1,228,425

        307,651

           1,219,066

             305,307

                3.59

14.34

Grade 6 - 10

   3,784,587

           947,824

            3,866,319

        968,293

           3,836,862

             960,916

              11.30

45.12

G.C.E.(O/L)

   1,530,480

           383,298

            1,563,532

        391,576

           1,551,620

             388,592

                4.57

18.25

G.C.E.(A/L) & above

   1,870,235

           468,387

            1,910,626

        478,502

           1,896,069

             474,857

                5.58

22.30

Total

8,387,759

        2,100,656

8,568,902

    2,146,022

8,503,617

         2,129,672

              25.04

100.00

 

Table 4 -Unskilled labour force with respect to Districts

Province

District

2019Q4

2020Q1

Labourforce

Unskilled

Labourforce

Unskilled

% Unskilled/Labourforce

% Unskilled/Total Unskilled

Western

Colombo

              996,450

                                           249,554

                           988,858

                          247,653

                  2.91

                      11.63

Gampaha

              907,018

                                           227,156

                           900,107

                          225,426

                  2.65

                      10.58

Kalutara

              509,082

                                           127,496

                           505,203

                          126,525

                  1.49

                        5.94

Central

Kandy

              551,808

                                           138,196

                           547,604

                          137,144

                  1.61

                        6.44

Matale

              213,953

                                              53,583

                           212,323

                            53,175

                  0.63

                        2.50

Nuwara Eliya

              346,282

                                              86,724

                           343,644

                            86,063

                  1.01

                        4.04

Southern

Galle

              433,642

                                           108,603

                           430,338

                          107,775

                  1.27

                        5.06

Matara

              341,770

                                              85,594

                           339,166

                            84,942

                  1.00

                        3.99

Hambantota

              260,136

                                              65,149

                           258,154

                            64,653

                  0.76

                        3.04

Northern

Jaffna

              221,850

                                              55,561

                           220,159

                            55,137

                  0.65

                        2.59

Mannar

                40,108

                                              10,045

                             39,802

                               9,968

                  0.12

                        0.47

Vavuniya

                70,754

                                              17,720

                             70,215

                            17,585

                  0.21

                        0.83

Mullaitivu

                35,500

                                                8,891

                             35,230

                               8,823

                  0.10

                        0.41

Kilinochchi

                40,030

                                              10,025

                             39,725

                               9,949

                  0.12

                        0.47

Eastern

Batticaloa

              194,457

                                              48,700

                           192,975

                            48,329

                  0.57

                        2.27

Ampara

              239,974

                                              60,100

                           238,146

                            59,642

                  0.70

                        2.80

Trincomalee

              130,381

                                              32,653

                           129,388

                            32,404

                  0.38

                        1.52

North Western

Kurunegala

              708,743

                                           177,500

                           703,343

                          176,147

                  2.07

                        8.27

Puttalam

              332,900

                                              83,373

                           330,364

                            82,737

                  0.97

                        3.88

North Central

Anuradhapura

              386,050

                                              96,683

                           383,109

                            95,947

                  1.13

                        4.51

Polonnaruwa

              162,986

                                              40,819

                           161,745

                            40,508

                  0.48

                        1.90

Uwa

Badulla

              371,718

                                              93,094

                           368,886

                            92,385

                  1.09

                        4.34

Moneragala

              189,614

                                              47,488

                           188,170

                            47,126

                  0.55

                        2.21

Sabaragamuwa

Ratnapura

              509,827

                                           127,683

                           505,943

                          126,710

                  1.49

                        5.95

Kegalle

              373,869

                                              93,633

                           371,021

                            92,920

                  1.09

                        4.36

Total

          8,568,902

                                        2,146,022

8,503,617

                      2,129,672

                25.04

                    100.00

 

5. Population Projections for year 2030

  • Projected Population for year 2030 – 22,513,000
  • Estimated Labour force for year 2030 – 8,714,057
  • Estimated Unskilled Labour force for year 2030 – 2,182,375

Note:

1. All the Unskilled parameters are calculated based on assuming available Labour force parameters of latest year are same as the Unskilled labour force parameters.

2. Population projection was done using The World Bank website [Population estimates and projections]

Link - https://databank.worldbank.org/source/population-estimates-and-projections

3.  Secondary data for Labour force were obtained through the Quarterly Labour Force Survey reports of 1st Quarter of year 2020, 4th quarter of year 2019 and annual Labour force survey report of year 2018 conducted by Department of Census and Statistics of Sri Lanka.

 

 

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