Sri Lanka battles its worst economic crisis in 70 years, the joblessness rate has climbed, stoking massive social and political concerns. The latest official data shows the island nations unemployment rate rose to 5% by the end of September last year and during this time the economy contracted by 12%.
The unemployment rate was 4.6% in the prior quarter ending June. The Central Bank's monthly business surveys, which are more forward looking indicators, reveal the consistent cuts in jobs in both the manufacturing and services sectors as a result of hiring freezes, layoffs and retirement.
And what will complicate matters further for policymakers, data showed labor participation in Sri Lanka continues to sink. The exodus of people from the country escaping the miserable living conditions have added to the issues facing businesses in recruiting top talent.
Sri Lanka lost well over 300,000 of its workforce in 2022 to overseas employment, the worst for any year on record. Sri Lanka has also cut its recurrent budget spending by 6% this year to manage its finances.
The cabinet also approved a plan to delay the salaries of government employees to manage its already stretched and highly indebted public finances. A cut in public spending is a requirement for an IMF bailout, which the President said was the only way out for the crisis stricken country.
That comes at a time when the most vulnerable in Sri Lanka fear that they won't be able to make it through the food security crisis caused by the country's rising cost of living. The government struggles to manage the country's worst economic crisis since independence and balance it with conditions for a bailout which the island nation desperately needs.
