📈 Sri Lanka’s Structural Labour Shortage Constrains Growth

A new analysis reveals Sri Lanka's private sector faces a critical, long-term structural labour shortage across agriculture, construction, manufacturing, logistics, and services, heavily delaying expansion plans. • Shrinking Labour Force: The Labour Force Participation Rate (LFPR) dropped from 54.1% in 2017 to 47.4% in 2024. The total active workforce shrank from 8.2 Mn to 7.95 Mn workers, significantly below the 61% global average. • The Female Worker Gap: Female LFPR fell sharply from 36.6% to just 29.8% (approx. 338,000 fewer women), drastically underperforming against the global average of 48–50%. • Migration Shock: In 2024, 314,786 Sri Lankans registered for foreign employment. Crucially, 77.66% were skilled workers (machine operators, technicians, tradespeople), creating a severe domestic drain. • Sector Imbalances: Agriculture still holds 26% of employment (2.07 Mn workers) but remains largely informal and low-productivity. Meanwhile, the country lacks updated data, with the last comprehensive Labour Demand Survey conducted back in 2017. • Policy Outlook: Importing foreign labour is deemed unviable due to high compliance costs and low wage premiums over regional peers (India, Bangladesh). Experts urge an immediate 2026 National Labour Demand Survey and structural reforms to boost domestic female participation.