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Heading towards a human capital crisis?

11 Sep 2022

  • Soaring cost of living and breakdown in rule of law are contributory factors
  • Conduct surveys of persons who are migrating, Dr. Wijewardena urges State
  • Short-term solutions alone will not help, stability and credibility needed: Fernando
By Skandha Gunasekara   As the crisis-driven brain drain steadily increases, experts warn that Sri Lanka risks undermining economic recovery efforts as the island nation will soon face a serious human capital problem due to a lack of professionals and skilled labour.  According to Sri Lanka Foreign Employment Bureau General Manager D.D.P. Senanayake, approximately 211,000 people – many of them young professionals and trained workers – have left Sri Lanka for foreign employment since January this year.  “A majority have gone to the Middle East for employment,” Senanayake told The Sunday Morning.    Inflation and lack of rule of law   Former Deputy Governor of the Central Bank Dr. W.A. Wijewardena said that inflation and the lack of rule of law were some of the main contributing factors for the mass exodus of Sri Lankans in search of greener pastures.  “There are several factors in the present situation pushing people to leave. Number one is unbearable inflation. Secondly, there are no economic activities they can engage in. Thirdly, there is a serious problem about the Government observing the rule of law and also the maintenance of law and order. Because of this, people fear that they will be subjected to different types of persecution, so they want to get out of Sri Lanka and build a new life in a foreign land.” He said that authorities must ascertain why people were opting to migrate as an initial step, so that steps could be taken to address the problem. “First, the Government should find out why people are leaving and what sectors are most affected and address the issue. From what I understand, all sectors are affected but some more than others, like motor mechanics who have been trained by the Ceylon-German Technical Training Institute in Ratmalana – all these people are leaving Sri Lanka today.” He warned that Sri Lanka’s labour capital would reduce drastically and that this would have a significant impact on the economy and its recovery process. He also added that in the short term Sri Lanka would lose its trained labour and without those human skills, the country was unlikely to return to its normal economic growth path. In the long run, Sri Lanka will have to train professionals for skilled labour continuously to prevent any shortage. Dr. Wijewardena also pointed out that since Sri Lanka’s population level was more or less fixed because growth was only around 1%, there was a possibility of not having adequate numbers of citizens who could be trained. “We are heading towards a serious human capital problem,” he warned. Dr. Wijewardena pointed out that Sri Lanka did not have options such as those that other countries incorporated in order to circumvent a loss in skilled labour and that the Government’s only option was to ensure better living conditions via a stable economy.  “Most of the countries that faced this sort of human capital problem allowed foreigners to come and reside in their countries and secondly, they automated the production process, but neither option is available to Sri Lanka. We cannot attract foreigners to come and work, nor can we acquire automated technology because we don’t have foreign exchange. We have to create conditions where these people have no incentive to move out and will stay here and work.”   Remedies available   Offering possible solutions, Advocata Institute Chief Operating Officer (COO) Dhananath Fernando said that while economic recovery was key in the short term, there were a few remedies available. “What we can do is to recover the economy as soon as possible. It’s a long shot, but if you get the economy back to normal and make it sustainable, we can get the diaspora investing. If we can attract investments, then it will balance things out. But given the situation, it’s easy to say these things but it’s not realistic. For example, when inflation is above 50-60%, it takes time to settle down. You can’t do anything urgently and then the Government will impose regulations, saying you can’t travel or something similar. But this will only result in the emergence of a black market. There is no short-term solution. It boils down to bringing some stability to the economy and only then will there be sustainability in moving forward.” Fernando noted that the Information and Communication Technology (ICT) industry was seeing some of the highest losses in skilled labour. “I don’t think any survey has been done, but from what I see the IT sector is one of the most affected. In that industry, the small companies are the ones who are finding it difficult because they are the first to lose employees to bigger companies abroad. Other technical skills sectors are also leaving. Basically, whoever can afford to move abroad is considering and doing it.” Fernando also noted that the Sri Lankan economy’s production capabilities would take a hit as a result of mass migrations. “Overall, the productivity of the economy will go down because labour and skilled labour is leaving and in the long run, there will be a shortage of skills. If the skill set leaves, it becomes difficult for businesses to operate.”    Short-term economic fixes essential   Meanwhile, cyber security expert Asela Waidyalankara echoed the sentiments of Dr. Wijewardena and Fernando, adding that lower inflation and better economic stability would help stem the tide.  “One thing that’s needed is to improve the economic conditions because most of these exits are linked to inflation. Also, these people need to be mentally free because they are knowledge workers and knowledge workers work very differently from other white-collar workers. They need to be fairly carefree to do their work, which is also a concern, so short-term economic fixes are essential.” Sri Lanka should also look at bringing in investments in the field of ICT as it is a major contributor of foreign exchange to the economy.   “In the medium and long term, the goal is to try and attract investments into the industry. If you look at India, they have a lot of IT companies that have been set up there. The Government should try to get companies or at least subcontract some of those companies. For example, the Indian company HCL is expanding in Sri Lanka. We need to get companies which are global like that because they can pay the employees and take care of them.”  


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