Sri Lanka develops skills to meet labor demands and supports economic diversification

“Sri Lanka has achieved universal primary and high secondary enrollment rates, a high adult literacy rate, and gender parity in access to all levels of education. However, there remains a clear mismatch between skills among youth and labor market demand,” said Gi Soon Song, an ADB Principal Social Sector Specialist. “The ongoing skills enhancement program, spearheaded by the government and supported by ADB, will address this issue through a focus on technical and vocational education and policy support.”

This lack of skilled labor is hurting the Sri Lankan economy, with the country’s private sector considering this as a key constraint to business growth. The unemployment rate is also high, with one out of five Sri Lankans aged 15-24 years out of work. Meanwhile, only 35.9% of women are included in the labor force despite outperforming male counterparts academically at every level. Equipping youth, especially young women, with employable skills is crucial to decrease youth unemployment and prepare the workforce for a high value-adding economy.

The additional funding will enable the government to continue implementing the Skills Sector Development Program (SSDP), which is supported by a USD100 million ADB loan approved in 2014, through 2020. SSDP aims to significantly improve the quality of TVET provided to young people in Sri Lanka to increase their employability, while also enhancing partnerships with the private sector for better TVET planning and provision to align skilled labor supply with market demand. The program is also increasing the number of TVET graduates and improving policy, institutional, and operational reforms to support the country’s skills sector.

The program’s first phase (2014-2016) has been performing well, with the employment rate of technical and vocational education and training (TVET) graduates rising from 50% in 2012 to 57% in 2015, exceeding the 55% target. The additional financing will expand successful program activities and accelerate the pace of reform initiatives.

ADB will also administer a USD3 million grant from the Japan Fund for Poverty Reduction (JFPR) to complement existing assistance to strengthen private sector engagement and women’s participation in TVET and employment in Sri Lanka. JFPR provides direct grant assistance to the poorest and most vulnerable groups of ADB’s developing member countries while fostering long-term social and economic development./.