Right away after independence, even though the surge of unemployment was one of the
major issues in Sri Lanka, it was not distinguished as a factual crisis (Gunaratne & Herath,
1993). However, today’s unemployment rate in Sri Lanka is at the natural level of
unemployment, regardless of the issues of computing the rate.1
Not only in the era that this paper discussed but at the moment also unemployment must be
reduced because of many reasons. Mainly,
• Cost to the individuals
• Damage to the country
Because of the influence on the people’s usual consumption level and savings level,
unemployment definitely changes over their standard of living. Similarly, the extended period
of unemployment can be caused by the destruction of skills of individuals, which ultimately lead
to prolonging unemployment in an economy. When an individual lost his/her job, without doubt,
it affects the mental health of the person.
When the unemployed proportion of an economy increases the economic cost of
unemployment will be higher, which is incurred by the states. At the same time, governments
are no longer be able to collect the same level of taxes due to those extended expenditures.
Eventually, that will also be a burden to the public.
Hence the regimes which were control at this period tried to reduce unemployment with
many movements. The first unemployment rate could be found is in 1953 which was 16.6 percent from the total labor force.2 Since then the numbers computed were undersized, there was
no capability to calculate a rate as understood today. As mentioned earlier the unemployment
problem was not concerned as a significant issue under that level of social development (Lakshman,
1997).
For the consequences of the unemployment rates during the period of 1948 – 1977, the variance
of the definition involved. For instance, in 1953, people who worked for their families, but
receive no payments are excluded from the definition of unemployment while in 1963, that
proportion was included. Likewise, in 1979 the percentage of the students who are attending
school was excluded from the definition of unemployment. But in 1973, that proportion was
included in the unemployed persons, and that leads to a reduction of the unemployed persons
in 1979 and comparatively 1973’s unemployed percentage was higher. (Appendix 7)
In the 1950s, rapid population growth, the diffusion of the formal education system and
relatively reduced rate of economic growth were the main reasons for the increase of
1 The ILO definition of unemployment covers people who are: out of work, want a job, have actively sought work in the
previous four weeks and are available to start work within the next fortnight; or out of work and have accepted a job that they
are waiting to start in the next fortnight.
Unemployment Rate in Sri Lanka 4.1% in January 2017
2 The labor force is the sum of persons in employment plus persons in unemployment. Together these two groups of the
population represent the current supply of labor for the production of goods and services taking place in a country through
market transactions in exchange for remuneration.
UNP3 political regime was in power in the period from 1950 – 1955 and
the initial endeavor for reducing unemployment was found in a report of a “World Bank
Mission”, published in 1953. Though it was not precisely referred to the unemployment issue, it
had a particular effect on joblessness since it got deeds to the reduction of rapid population growth
by Family Planning. A paper called “The Six-Year Programme of Investment” was published
in 1955 as a continuation of the Mission, yet again the foremost emphasis was to reduce the
prompt population swelling.
From 1956 – 1964 period MEP4 political regime came into the power and in 1959, the first
the inclusive development program, “The Ten-Year Plan (1959-1968)” was published which,
The primary motivation was the issue of unemployment. Nonetheless, the direct emphasis of this
the plan was the higher employment, and there was a sub-objective to maintain a higher growth rate
which ultimately drawn to a lesser unemployment rate.
• Forming the education policy adjusted to the growth in employment opportunities in
numerous segments of the economy.
• Industrialization, primarily focusing on a small scale and cottage industries which were a
reliable method to attract the country’s rising labor force.
Though the main focus of the Plan was employment, there was no chance to execute it because
of the changes in government. Subsequently, there was a series of Short Term Implementation
Programs which was called as “STIP” under the fundamental Ten Year Plan, with some
adjustments. Thus, in the period of 1953 to 1963, it has been generated 448,000 new jobs which
the unemployment rate was decreased down to 13.8 percent. (Appendix 1 & Appendix 2)
In 1965 the UNP party again came to power, but there are no movements mentioned
for reduction of unemployment during the regime from 1965 to 1969.
In 1970 the new political party came into power, SLFP5 and in 1971 insurrection, the
unemployment issue was demonstrated, particularly the youth unemployment, as the
The government was unable to address the problem in the same way as The Ten Year Plan. So the
the result was “The Five Year Plan (1972-1976)” circulated in 1971 which was the main objective
was to reduce youth unemployment.
• Highlight on the expansion and modernization of agriculture.
• Development and diversification of the export sector and particular industrialization
with prominence on labor-intensive techniques of production.
In my opinion, the government aimed the young generation in the country to engage in the
agriculture sector as they emphasized in the expansion of that sector. In the same time, one of their
primary intentions was to develop the labor-intensive techniques of production, which will hire
the effort of the young persons, ultimately lead to the reduction of younger unemployment.
3 United National Party
4 Mahajna Eksath Peramuna
5 Sri Lanka Freedom Party
However, the Plan was a failure due to certain destructive exterior factors; absence of
dedication and mismanagement of the economy. Hence the unemployment issue remained as
the major problem as it was, and rose up to 24 percent in 1973. (Appendix 1 & Appendix 2)
Discussing the youth unemployment, by 1973 the absolute value of the total unemployed
people in Sri Lanka was 1,078,000 out of a total labor force of 4,491,000. Out of that total
unemployed group, 877,000 people were between the age group of 14-25 years (Appendix 3).
The expansion of the proportion of women arrival to the labor force, simultaneously with a
relatively higher rate of unemployment among women can be observed significantly in the era
from 1948 to 1977 (Appendix 5). As the consequences of several cultural and economic factors,
the number of women participated in the labor force was increased. In my opinion, the
increasing rate of the female population was a significant reason to the higher unemployment rate in
this era, because there was a norm in those days which women do not fit to engage in a
job since they had to perform in their day to day household activities. In general, the
breadwinners of the family were the males. Therefore the top part of the women population
was not employed at all.
On the other hand, in the period of 1948-1977, there were tremendous educational opportunities which
were resulted in a rise of the formal educational level (Appendix 6). Hence, the considerable
amount of school dropouts with secondary or post-secondary levels of education can be
observed after independence. It has led to an upsurge of the number of the school dropouts,
with some academic training but without much practical and vocational training (Gunaratne &
Herath, 1993).
It has demonstrated that in the sub-period of 1970-1973, the average growth rate of the economy
was at a very lower price which was only 3.0 percent. It has indicated as the demand side of the
labor market, and on the other hand, the labor force was up surging rapidly by this period
(Appendix 4). Obviously, this is the supply side of the labor market, and it leads to a surplus
of the supply side which was a substantial increase in the unemployment, occurred due to the higher
gap between the supply side and the demand side of the labor market.
Therefore, during the period of 1948-1977, the flying increase in unemployment was a
a consequence of not taking proper actions by the government, which was escaped by the new
the government elected in 1977 through better activities.
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