Increased exports in Sri Lanka can improve jobs, raise wages: report

Feb 26, 2019 (LBO) – Increasing exports can lead to better jobs and higher wages in Sri Lanka, including more formal jobs for women, a new report launched today in Colombo, showed. The report also highlighted that the labor market policies can help different groups of workers to acquire the right skills and to ensure that the gains of more exports are shared more broadly across society.
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The report, jointly produced by the World Bank and the International Labour Organization (ILO), breaks new ground in examining the impact of exports on local labor markets in South Asia. It uses an innovative approach, analyzing the effect on local employment and wages of changes in exports by combining disaggregated data from household-level or worker-level surveys with trade data from India and Sri Lanka. The approach builds on a new wave of research looking at how globalization might contribute to local jobs and wages, but, unlike previous studies, it focuses on exports. “Our research shows that exports can improve the performance of local labor markets and that policies need to be put in place to increase exports in South Asia while ensuring that the benefits of higher exports are shared more broadly,” said Gladys Lopez-Acevedo, World Bank Lead Economist and one of the report’s authors. “Addressing constraints that prevent people from moving and from switching to new jobs is important.” The report provides options on how to expand and widely share the benefits of higher exports. Improving workers’ skills, getting women and youth into more jobs, and addressing distortions that make labor mobility costs are some of the recommended policy actions. “Economists and policymakers need a better understanding of how exactly globalization affects both workers and national labour markets,” said Daniel Samaan, Senior Economist, ILO Research Department and one of the report’s authors. “Our research shows that more exports can create benefits for workers by raising wages and reducing informality, but we need stronger policies to ensure these benefits reach everyone in the labor market and don’t leave any groups behind” Sri Lanka grew at an average rate of 5.8 percent between 2010-2017, and the number of people living in poverty also fell.
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However, many Sri Lankans still don’t have regular jobs in the formal economy and there are large differences in wages across regions and worker characteristics. Sri Lanka’s exports have fallen from a high of 39 percent of Gross Domestic Product (GDP) in 2000 to only 21.4 percent of GDP in 2016, with export growth limited to a few industries such as textiles, apparel, and agriculture. With the right policies, Sri Lanka can ensure that greater export orientation can boost the workers’ gains from trade and spread them more widely, so benefiting disadvantaged groups.