Abstract:
Unemployment in Sri Lanka throughout the last few decades has been extremely high
compared with those in most of the countries in the Asian region, which have been
following open market policies similar to Sri Lanka. In analyzing the unemployment
problem ‘skills mismatch’ hypothesis, first articulated by the ILO Mission to Sri Lanka in
1971, is still highly influential. Those who stress the orthodox view of the mismatch
hypothesis believe implicitly that although the economy has employment opportunities,
jobs expected by a large amount of job seekers are not adequately found or they do not
fit into the prevailing jobs. Particularly the private sector business leaders ascribe this
mismatch primarily to the weakness of the educational structure of the country.
However, new evidence appears to believe that rigour of mismatch hypothesis has faded
away. In this setting, this paper aims at challenging the majority view that mismatch is
responsible rather than the lack of employment generation in the economy to appear a
high level of unemployment in the country.
The paper, mainly depending on various sources of secondary data, found that the
mismatch hypothesis is still relevant in some areas. Accordingly: i) a high percentage of
the unemployed desire employment in professional, technical and clerical occupations
although in the current employment profile these three categories comprise only a lesser
percentage of all the employed; ii) the analysis of the profile of expectation reveals that
expectations for higher level jobs rise with increasing education; and iii) long-term
unemployment is most conspicuous among those who have obtained higher educational
qualifications. Contrary to the majority view, it is found that i) unemployment in all
educational levels shows a considerable decline with nearly the same rates over the
years; ii) the unemployment rate of females throughout the past period shows a faster
declining; iii) the university education system, particularly in the last decade or so, has
been geared to give more skills to graduates; and iv) the employment creation by the
formal private sector as the engine for growth has not sufficient to catch up job loss in
the public sector after 1990, and absorb new job seekers considerably to the formal
economy. Consequently, the paper concludes that the strength of mismatch hypothesis
has now considerably faded away, and failure to create a sufficient amount of
employment by the private sector led economy is largely responsible for the current high
unemployment level of the economy.
