There is a sharp decline in employment in the manufacturing and services sectors in Sri Lanka amid a severe economic crisis, with companies and businesses struggling to remain afloat as soaring inflation and demand-destructive policies have hit them hard.
Retirements and resignations in large numbers have also contributed to a loss of employment, the Daily Mirror quoted the survey by the Central Bank as saying.
The manufacturing and services sectors are already seeing widespread layoffs, non-renewal of employment contracts and hiring freezes as businesses downsize their operations. the economic crisis is on course to trim the country’s output by at least 8 per cent by the end of this year, the survey found.
The survey on both manufacturing and services sectors found that declining employment in both sectors was at a rapid pace through July as employers were trimming their staff strength as they attempt to stay lean.
While the soaring inflation and demand destructive policies have weighed on the top lines of companies, the exponentially higher interest rates and cost inflation have squeezed their bottom lines, casting a long dark shadow over the business outlook.
“Employment also declined, particularly in the manufacture of food and beverage sector, mainly due to the discontinuation of casual employees,” the Central Bank said in its survey findings.
While certain leading export-oriented manufacturing sectors such as textiles and garments were still holding up, others, especially the micro, small and medium-sized enterprises, were struggling, the Mirror reported.
The construction sector is reeling from the sudden stoppage of government-sponsored projects and the import controls, rendering hundreds of thousands of people without work.
In the services sector, there is also a freeze in recruitment and non-renewal of existing employment contracts amid subdued business activities. Retirements and resignations have also contributed to the loss of employment in this sector.
The most recent data showed that 208,000 people left Sri Lanka for foreign employment in the first eight months of the year, the daily said.
The people who took to agriculture during the early days of the pandemic, increasing the share of employed persons in that sector to recent highs, are now returning to other areas of work only to see their hopes dashed in a shrinking economy, the survey said.
Last week, Decathlon, a France-based sports-wear brand, announced it would close its only remaining outlet in Battaramulla and its e-commerce store effective from October 30 as the ongoing restrictions on imports have made it virtually unable to source supplies, the Mirror said.
While Sri Lanka recorded an official jobless rate of 4.3 per cent by the end of the March quarter, easing from 5.1 per cent in 2021, unemployment could pick up sharply in the remainder of the year as the economy is projected to shrink at least 8 per cent in 2022.