The government has said it expects growth to be boosted by an economic revival in the north and east, which has been cleared of Tamil Tiger rebels.
The central bank suggested the present period of economic slowdown be used to train and retrain the unemployed in areas where there will be more employment opportunities when a recovery takes place. It warned that the country's unemployment rate, which has been falling in recent years, might go up again in 2009 as the economic recession reduces consumer demand and production of goods and services.
" . . . as the public service is already overstaffed and absorbs a substantial part of budgetary allocation, it is imperative that further recruitment be limited by the government assessing the essential cadre requirement in the public sector," the bank said in its annual report.
Sri Lanka's public service and state sector institutions are heavily over-staffed, with politicians from successive governments stuffing them with their supporters to win vote