Comment - Tapping idle manpower

In economics unemployment is defined as "one who is willing to work at a prevailing wage rate but yet unable to find a paying job". The unemployment rate is the number of unemployed workers divided by the total civilian labour force, which includes both the unemployed and those with jobs (all those willing and able to work for a salary/wage).

Unemployment gives rise to so many issues. Therefore solving the issue is of paramount importance for any government in power. A 6.3% lower unemployment rate recorded in the second quarter of 2006 is a good message because the economy faced tremendous challenges during this period.

This lower unemployment rate was the main highlight during the budget debate that our political leaders and economic advisors of the government spoke about with humble pride.

The 6.3% unemployment rate is the lowest in the recent past and the reducing trend is continuing from 2003 with 8.4% in 2003 and 7.2% in the first quarter of 2006.

The last double digit unemployment rate, 11.3% was reported in 1996, according to the Department of Census and Statistics.

Whatever these economic terms and numbers mean, the practical experience of unemployment was evident in the suffering masses in the past. Picketing campaigns organised by unemployed graduates took the issue to the streets.

However, the real issue does not come to the streets but appear in these statistics and surface during elections throwing governments out of office or in worse cases in political turmoil.

In Sri Lanka unemployment is higher among young educated people and according to the Department of Census and Statistics the rate is 22.4% among the 20-24 age group.

The unemployment rate among GCE O/L qualified people is 24.3% and it is 24.8% among GCE A/L or above qualified people. In gender classification the unemployment rate among females is higher than males. The problem of unemployment is complex in this context.

Solving the unemployment issue is not simple. The Government can't solve the issue by only providing public sector jobs.

If the economy is growing at a higher rate and economic activities are expanding the economy itself would absorb the idling manpower.

No doubt the declining unemployment rate is associated with the prevailing (relatively) peaceful situation in the country during the last three years.

After the Ceasefire Agreement the rebuilt North-South relationship increased economic activities across the country. Trade, movement of people between the two ends of the island, increased tourist arrivals, increased local demand, together with the boom in the construction sector, boost in the agricultural and SME sectors with government support contributed to a high economic growth rate and a lower unemployment rate.

However, in some cases the growing economy itself would not solve the problem fast and the government will have to intervene. The unemployed graduates' issue is one such example and the UNF government that left the issue to be solved by the market economy itself, coupled with many similar policies was compensated for it by being thrown out of office in 2004.

In 2004 as a solution to Graduate unemployment the UPFA government decided to recruit 40,000 unemployed graduates to the public sector.

This exercise was completed within two years. However, the issue has not ended and in this budget the government again decided to recruit 10,000 graduates.

All these people are absorbed into the public service, which is bursting at its seams. There is no tangible evidence of any productivity increase as a result of these recruitments.

On the other hand, there is a dearth of skilled labour in sectors such as rubber, garments, agriculture, construction, and plantation agriculture, machine operators in the garment sector as well as the high-end service sector.

Last week a software development company CEO said that he spent Rs.200,000 and a recruiting company spent over six months to find a Java developer for one of his new projects. It is a myth to say that there are no jobs in the market.

The reality is that investors cannot find the correct people and talent in the requisite number. It was only last week that Treasury Secretary Dr P.B. Jayasundera pointed out the same issue at a post budget seminar. His driving point is that we face this skilled labour shortage at a time when the sectors are not being used to its optimum.

This shows the mismatch between the demand and supply in the labour market and this is not a newly discovered fact. For decades business leaders and professionals have pointed out this wide disparity but solutions have not been found.

Educational reforms are more important with the increasing budgetary allocation to equip the nation with knowledge that has no commercial value.

The Government has allocated a large sum of money on education in this budget, the highest in history.

More budgetary provision on education would only be productive if money is allocated to address this fundamental issue in our educational set up.