During 2020-2021, both monetary and fiscal policy measures were executed to mitigate the labour market impacts of the COVID-19 pandemic in Sri Lanka. Nevertheless, the pandemic adversely affected on a number of labour market outcomes. First, youth labour force participation, in particular, in urban areas declined drastically during the pandemic period. Second, the reduction in employment was very much significant among females as well as in the urban areas compared to their counterparts. Third, most of the job losers joined the agriculture sector, resulting an increase in the share of agricultural workers in the economy. Forth, employment levels of many economic sectors contracted; namely Mining & Quarrying, Manufacturing, Accommodation and Food Services Activities, Financial and Insurance Activities, Professional, Scientific and Technical Activities, and Administrative and Support Service Activities. Fifth, unemployment, in particular among educated youths, increased significantly. Finally, informal employment slightly increased while impact on real wages were marginally witnessed. The economy of Sri Lanka went into a deep crisis by early 2022 and the country defaulted on its debt for the first time in its history. In subsequent period, economic activities were contracted due to a number of unhealthy developments including fertilizer import ban, shortages of essential imports, import restrictions and power cuts. Hence, it could reasonably be assumed that the effects of the pandemic may have further aggravated in the subsequent periods though an increasing number of workers sought foreign employment opportunities in recent months. Hence, it is imperative that the policy makers take note on above effects.
Keywords: COVID-19 pandemic, Labour Market, Public Policy, Sri Lanka
Priyanga Dunusinghe (2023). Labour Market Performance and Public Policy Responses during COVID-19 Pandemic: Evidence from Sri Lanka. Indian Development Policy Review, 4: 2, pp. 95-109.