Demographics and development

Rahul Jacob of London’s Financial Times reported recently that while Western clothing and footwear firms are moving production from China to countries such as Indonesia, Vietnam and Bangladesh, they are not relocating to India, the other big Asian economic powerhouse.

He attributes this geographic industrial shift towards the newest ‘Tiger Economies’ to demographics. In China, the rate of population growth has been slowing and this has resulted in a labour shortage in its Southern region, the hub of its industrial growth.

The labour shortage has compelled companies in labour-intensive manufacturing, such as garments and shoes, to move their operations to countries where cheap labour is available in abundance.

Labour shortage

The reason Jacob gives for not these operations not being transferred to India is that country’s relatively low level of literacy, particularly among women, who make up the bulk of employees in the labour-intensive sector.

China is expected to deal with this movement - and with the chronic labour shortage which caused it - by shifting its emphasis from industries requiring semi-skilled and unskilled labour to higher technology ones, which call for a skilled and educated workforce.

Educational level

It is well equipped for this change, since the number of young people with secondary and higher education has been growing.

What significance does this phenomenon have for the economic development of Sri Lanka? Is this island a potential target for the industries shifting out of China?

An examination of the country’s demographics shows that the population growth rate has been slowing for some time. The 15-19 age cohort is the largest, the following cohorts decreasing in size in succession.

Given that unemployment, at 4.9 percent is at a historic low, and given that the highest level of unemployment is in the 15-24 age category, this means that there is likely to be a shortage of labour in the future - especially since there is a very high rate of worker migration overseas.

Unemployment among those with an education level of Grade 5 or below is virtually non-existent at 0.7 percent. It increases with educational level, from 3.6 percent for those with Grade 6-10 education, through 6.9 percent for those who have GCE (O-Level) to 11.6 percent for those with A-Levels and above.

The level of unemployment for women is double that for men, both overall and in each educational category. Even so, it is quite clear that Sri Lanka’s labour market will not be attractive to labour-intensive manufacturers looking to relocate out of China, since there is a labour shortage in the less-educated categories.

Obviously Sri Lanka should be looking to exploit the greater availability of higher-productivity educated workers.

Clerical work

This is already happening to a certain extent, with the outsourcing industry building up rapidly. However, most of the jobs in this sector rely on the use of English - not only for call centres, but also for accounting, architecture, medical analysis and clerical work.

This highlights another problem facing our educated workforce as regards the labour market - its learning is skewed along industrially non-productive avenues.

Lack of English is just one example. The high numbers of people with knowledge of such things as Buddhist Civilization, Geography and Art means that they are unsuited for the current job market.

These subjects are of course essential for a well-rounded education.

However, they do not provide the skills necessary for the modern-day cut-throat employment bazaar.

The educational reforms of the mid 1970s were intended to partially remedy this already visible gap between education and the employment. However, they probably did not go far enough.

Outdated attitudes

Educational reform is essential. However, not only will it take time to formulate and implement, it will be decades hence before its effects will be visible. Concrete action is required now. Steps need to be taken to address another drawback in our educated workforce - its disinclination for manual labour. Once people get through their A-Levels, they feel entitled to a desk job - an outlook that gets even more extreme with university education.

This has much to do with outdated attitudes of caste and rank - it is recorded that the Kandyan aristocracy looked down on King Sri Wickrama Rajasinghe because he worked in his own Kurakkan fields. Our society still lacks the concept of dignity of labour.

Hence, to the government there falls an immediate, threefold task. Firstly, it is necessary to impart to the educated workforce a new work ethic.

Foreign markets

Secondly, it must enhance the skills of those currently educated but unemployable, using their existing skills wherever possible. For example, art students could be trained further to be graphic designers or cartoonists. Thirdly, it actively must promote the industries which require these skills, both among local entrepreneurs and in foreign markets. The art students exemplified above could be employed in outsourced advertising or animation work. Sri Lanka is poised on a cusp in its development. It can continue as a cheap labour market, supplying housemaids to richer countries and producing garments - in which case it will stagnate in the long run.

Alternatively, it could position itself as the knowledge and skills hub of Southern Asia, in which case it will be bound to develop by leaps and bounds. However, this will require timely and dedicated action by all concerned.