The Challenge of Youth Unemployment in Sri Lanka

Presenting results of original research as well reviewing and synthesizing existing studies, the publication provides an in-depth analysis of Sri Lanka's youth unemployment. The analysis follows the "4Es" conceptual framework by focusing on four key labor market aspects: employment creation, employability, entrepreneurship, and equal opportunity. In each of these areas, the publication describes main outcomes and trends, analyzes key issues, and proposes policy recommendations: Among obstacles to employment creation, the publication singles out restrictive labor market institutions that contribute to perverse labor incentives (including waiting for public sector jobs) and to labor market duality, thereby pushing workers to worse paying and also otherwise less attractive informal sector jobs. The analysis of employability shows that education system provides skills more suited for public sector, and that transition from university to work is difficult for most, with social status and the field of study, among others, determining the timing and type of employment obtained by graduates. The chapter on entrepreneurship shows that relatively few young Sri Lankan have access to training and have financial resources available to start their own enterprises, and that the prevailing social culture also represents an obstacle. In the area of equal opportunity, the volume documents the existence of a gender wage gap that cannot be explained by "productive" characteristics of workers, as young women in Sri Lanka have better characteristics than men, but are underpaid, in all sectors and among all ethnic groups, and it claims that a system of job rationing is partly based on class-based skills and social assets, putting young people from rural backgrounds at disadvantage. The volume also discusses psychological stresses and other consequences on youth of the decades of violence, including long-lasting ethnic conflict.