IPS Report: Key Policy Priorities for Sri Lanka’s Long-Term Durable Growth 📈

The Institute of Policy Studies (IPS) released its State of the Economy 2026 report, highlighting critical structural reforms across human capital, labour, and social protection to sustain post-crisis growth. • Higher Education & Skills Alignment • Tertiary-educated adult population doubled between 2012 and 2024 (+2.8 percentage points share increase), but growth lags regional peers. • Basic degrees account for 87% of growth; postgraduate and technical qualifications remain thin. • Only 34.1% of knowledge workers hold tertiary qualifications. • Women comprise 57% of tertiary graduates, but are concentrated in sectors like teaching rather than high-earning STEM fields (science, engineering, ICT). • Labour Market Challenges • Informal employment accounts for two-thirds of total workers, including 1.95 Mn informal workers in agriculture & fisheries exposed to climate risks. • Priorities include employer-linked training, formal job creation incentives, and real wage protection. • Social Protection & Ageing Population • 11.4% of households face high exposure to shocks, and 56.5% face moderate exposure. • 50% of households receive social protection (29.5% via Aswesuma), yet 45% of high-shock, bottom-quintile households remain uncovered. • Sri Lanka is South Asia’s fastest-ageing country; citizens aged 60+ projected to rise from 18.3% (2024) to 23.1% (2042). • Demands development of a health-centered silver economy, healthcare digital access, and expanded long-term care financing.