Sectoral Impact of COVID-19 on Employees in Sri Lanka

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. A limited sample was selected due to the prevailed situation of the country during the study period.


Contribution to GDP (%)

Direct/Indirect Employment 2018/2019

Impact (assumed based on expertise views and surveys)




60% of companies




41%-60% of employees



40,000 - 50,000

85% of companies

Foreign Employment



30,000-100,000 of employees

Textile and apparel



35% of employees




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 be unable to join 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,


  • Introduce competitive new tourism models (Eg. Health tourism) during 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 non-state stakeholders 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.


  • Introduce venture capital funds for SME startups.
  • Relaxation of suitable construction industry regulations to facilitate contractors and other stakeholders to survive. This include obtaining the support from banking etc.
  • Introduce bank loan schemes for self-employment on concessionary interest rates and relief for re-payment of installments of outstanding loans obtained by migrant workers.


  • Creating an unemployed database of affected employees for reskilling and redeployment to the needed industries/SMEs accordingly.
  • Although ICTA has already developed a video-conferencing application ( 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.