- But large-scale job losses are expected in the coming quarters as opportunities shrink in a declining economy
Sri Lanka’s unemployment rate fell in the March quarter as the economy emerged from most virus-related restrictions only to be hit hard by the currency crisis that brought it to a virtual standstill, even reversing small improvements to job matrices.
According to the Census and Statistics Department, Sri Lanka’s official unemployment rate fell slightly to 4.3% at the end of March, from 4.6% in December 2021.
But the Great Economic Collapse in March likely forced several thousand people out of their jobs in the following quarter, which ended last week, as the damage continues to deteriorate at an intensified speed as factories downsize their operations, rendering thousands of employees out of work. jobs, according to data from the Purchasing Managers Index.
Meanwhile, the day workers lost their jobs as the crippling fuel shortage brought the entire transport system to a virtual standstill, triggering a virtual lockdown across the entire economy for two weeks with no end in view for the misery that people experience on a daily basis.
The official unemployment rate masks true unemployment in an economy because it does not reflect those who are out of work but not looking for work during the survey period.
During the two years of the pandemic, while there have been large-scale job losses caused by layoffs, another larger segment has voluntarily left the job market which is identified as “the big resignation,” as some feared catching the virus and others saw less reason to stay in their jobs.
As a result, the Mirror Business a fortnight ago showed that Sri Lanka had more people doing nothing at the end of 2021 than people engaged in some type of employment, as evidenced by the population participation rate active (LFPR).
However, in the first three months, the LFPR rose slightly to 51.2% from 49.5%, according to data released last week.
The LFPR measures the economically active population or the segment of the population that is either employed or at least seeking employment, as a proportion of the country’s working-age population.
Although there was a slight improvement in the rate in the March quarter, the rate may fall to new lows in subsequent quarters as the Sri Lankan economy experiences its worst economic downturn, which will erase economic opportunities at a rapid pace.
The World Bank recently predicted a 7% contraction in the Sri Lankan economy in 2022, with the decline continuing until 2023 before any improvement can be seen from 2024, which will also be insignificant.