The Central Bank has warned that further tightening of labor market conditions may pose challenges to economic and price stability as well as social stability since increased economic activity has absorbed a majority of the labor force resulting in a continued low rate of unemployment. According to Central Bank Annual Report 2011, Sri Lanka’s unemployment rate has been below 5 per cent in each quarter since the second half of 2010, and greater foreign employment opportunities, in spite of adverse global economic conditions, continue to tighten labour market conditions further.
“This could give rise to a wage-price spiral where wage pressures may lead to upward pressure on prices as well, although the continued low consumer price inflation, which has remained at a single digit level during the past three years, remain a dampening factor. Hence, to sustain the growth momentum of the economy it is essential to support improvements in labor productivity and increase capital intensity,” the Annual Report suggested.
It further noted that the labor force participation rate, which was 48.2 per cent in 2011, still has room for improvement and ease pressure in the labor market through absorbing population currently not in the labor force into the market.
“Therefore, it is essential that physical infrastructure and social infrastructure facilities including good quality public transportation, urban housing, and childcare facilities continue to be developed to promote labor productivity and increased labor force participation. Recent advances in Sri Lanka’s information and communication technology could also provide alternative flexible work arrangements for some types of work, which may also help in reducing labor costs while attracting those not in the labor force into the labor market,” the Annual Report further highlighted.(AR)
“This could give rise to a wage-price spiral where wage pressures may lead to upward pressure on prices as well, although the continued low consumer price inflation, which has remained at a single digit level during the past three years, remain a dampening factor. Hence, to sustain the growth momentum of the economy it is essential to support improvements in labor productivity and increase capital intensity,” the Annual Report suggested.
It further noted that the labor force participation rate, which was 48.2 per cent in 2011, still has room for improvement and ease pressure in the labor market through absorbing population currently not in the labor force into the market.
“Therefore, it is essential that physical infrastructure and social infrastructure facilities including good quality public transportation, urban housing, and childcare facilities continue to be developed to promote labor productivity and increased labor force participation. Recent advances in Sri Lanka’s information and communication technology could also provide alternative flexible work arrangements for some types of work, which may also help in reducing labor costs while attracting those not in the labor force into the labor market,” the Annual Report further highlighted.(AR)
No comments:
Post a Comment