Wednesday, October 4, 2023

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Sri Lanka Private firms reduce staff while halting new recruitments

Sri Lanka’s manufacturing and services sectors are already seeing widespread layoffs, non-renewal of employment contracts, and hiring freezes as businesses are downsizing their operations amid the worst economic crisis, which is on course to trim the country’s output by at least 8 percent by the end of this year, a survey found.

A monthly survey carried out by the Central Bank on both manufacturing and services sectors of the country found that employment declined in both sectors at a rapid pace through July as employers are trimming their staff strength as they attempt to stay lean.

While the soaring inflation and demand destructive policies have weighed on 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 & 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 are still holding up, others, especially the micro, small and medium-sized enterprises are struggling to stay afloat.

Meanwhile, the survey also found that employment had continued to fall in the services sector through July due to freeze in recruitment and non-renewal of existing employment contracts amid subdued business activities.

The private sector accounts for 42.7 percent of employees and 2.5 percent of employers contributing to the Sri Lankan economy (Labour Force Survey, 2020).

Therefore, the Department of Labour has decided to identify the labour demand required to meet the private sector targets for the coming year and to explore the new directions regarding the country’s labour interests in the future with the aim of restrengthening the Sri Lanka economy.

The e- survey was planned and conducted in July 2021 and extended up to September 2021.

Out of the companies that responded, 45 percent recorded labour need for 2022.

Out of these, nearly half of the companies are situated in Colombo district while Western province covered three fourth of them.

The highest demand of labour is requested by the large companies with current employment of more than 100.

When look at the labour requests by economic activities, 69 percent were recorded to the Manufacturing sector while Trade sector reports 15 percent.

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