Build Relevant Skills for Economic Growth and Global Competitiveness in Sri Lanka

July 10, 2014

Every year around 140,000 students complete general education in Sri Lanka without acquiring job-related skills.

WASHINGTON, July 10, 2014— Sri Lanka’s workforce lacks critical job-specific skills that are in high demand, threatening the country’s sustained economic growth, said the World Bank in a new report.

According to the report, the workforce’s lack of technical and soft skills undermine private sector growth as well as the government’s ambitious development plan, Mahinda Chintana, which aims to sustain economic growth at 8 percent annually while transforming the country into a commercial, energy and knowledge hub. Achieving such growth requires a skilled workforce and dynamic labor market.

 “To reach middle-income status, Sri Lanka aims to address the current mismatch between the supply of and demand for skilled labor,” says Halil Dundar, a lead education specialist at the World Bank and one of the report’s authors.

A large share of Sri Lanka’s economy has shifted from agriculture to industry and services.  Between 2000 and 2013, agriculture’s share of GDP declined from 20 percent to 11 percent, while the share of industry increased from 27 percent to 33 percent and the share of services from 53 percent to 56 percent leading to substantial shifts in labor and skills requirements. But Sri Lanka’s school curricula, technical education and vocational training programs have not evolved adequately to meet changing demands, resulting in a large skills gap and mismatch in the labor force.

More than 50 percent of surveyed Sri Lankan firms state that education and training system does not produce skills that are relevant for their needs. Moreover, about 33 percent consider the lack of adequate skills as one of the major constraints on operating and growing their businesses, third only to taxes and regulation. Sri Lanka has the most educated workforce in South Asia, with 87 percent of citizens completing secondary school, and yet its workforce is not equipped with the right skills to be machine operators, technicians, sales associates and managers.

Skills development is complex and happens over a lifetime, says the report, beginning in early childhood and continuing through formal schooling, technical and vocational education and training, higher education, and on the job. An integrated approach to skills formation that covers the entire education and training system from early childhood through the workplace is crucial.

The report presents a number of policy recommendations to address the issue. Sri Lanka needs to implement a menu of reforms such as those already identified in the Mahinda Chintana, National Human Resources and Employment Policy and Skills Sector Development Plan (2014–2020). “To fulfill its development goal of becoming a regional hub in strategic areas, it is critical for Sri Lanka to embrace an integrated approach to skills development and also focus on developing critical technical and soft skills demanded by the markets” says Francoise Clottes, the World Bank Country Director for Sri Lanka and the Maldives. Technical and vocational education and training programs should be developed with active participation of employers and become more demand-driven and diversified. The potential for enterprise-based training should be explored.  These initiatives would help improve training quality and make it more attractive to both youth and employers.  Allocating adequate resources on the basis of performance for public vocational and technical institutions would further help strengthen such programs.

The World Bank last month approved a $101.5 million credit to expand the availability of employable workers in Sri Lanka by increasing access to high quality, labor market relevant skills development programs. This project supports the Skills Sector Development Program (SSDP) launched by the Government of Sri Lanka as part of its Public Investment Strategy for 2014-16.

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