2018 - ISSUE ONE

08 Straight Talk on Sri Lanka – Singapore FTA: What it Means for Trade and Investment Flows 18 Building a More English- LiterateSri Lanka: The Need to Combat Inequities

Regulating Inbound Migration: 24 ‘In’s and ‘Out’s of Sri Lanka’s Policy Framework Creating a 30 Malnutrition in Sri Lanka: A Persistent Problem Knowledge-based Economy CONTENTS

04 14 Economic Reforms in Sri Lanka: Improving Education in Sri Lanka Salvation or a Recipe for Inaction? Priority Areas for Action

06 16 Trouble Brewing? How Sri Lanka’s Towards a Knowledge Based 26 Tea Industry Can Prepare for Future Economy Start with Quality STEM Challenges Teachers for Every Child! Economically Empowering Sri Lankan Women One Strategy Does Not Fit All

28 ‘Lead like a Girl’: Empowering Sri Lanka’s Female Leadership 08 18 Straight Talk on Sri Lanka – Singapore FTA What it Means for Building a More English-Literate Trade and Investment Flows Sri Lanka The Need to Combat Inequities 10 30 20 FTA with Malaysia Will it Lead to Malnutrition in Sri Lanka: an Expansion in Flow of Trade and Where have all the Workers Gone? A Persistent Problem Investment with Sri Lanka? ‘Sectoral Mismatch’ between Labour Demand and Supply in Sri Lanka 32 Inside IPS 34 IPS News 35 22 Latest Publications Sub Agents and Migrants Dissecting 36 their Relationship to Guide Regulation Contributors 12 24 Walk Before You Run: Defining the 38 Scope of the ‘Single Window’ for Regulating Inbound Migration: ‘In’s Fast Facts Trade in Sri Lanka and ‘Out’s of Sri Lanka’s Policy Framework 39 In a Nutshell Copyright and Disclaimer

All material published in the Talking Economics Digest are copyright of the Institute of Policy Studies of Sri Lanka (IPS), unless otherwise specified. It cannot be quoted without due acknowledgement to the IPS and the author. It cannot be reproduced in whole or in part, without the written permission of the IPS. The content, comments and posts of the Talking Economic Digest and the IPS blog represent the views of individual authors and do not necessarily represent the views of the IPS. 2 EDITORIAL Previous Issues As Sri Lanka attempts to establish a highly- Meanwhile, Harini Weerasekera draws competitive, knowledge-based economy, it attention to another dynamic in the Sri Lankan is important to pay attention to the education labour market – the sectoral mismatch sector of the country. One of the biggest between the demand and supply of labour. challenges in this regard is reforming the Analysing the data from Sri Lanka’s first Labour outdated education system in Sri Lanka. The Demand Survey, she points out that a large current system that emphasises success at portion of existing vacancies in the country are examinations over any other achievement, found to be in routine and non-routine manual coupled together with the overloaded jobs. However, most of Sri Lanka’s job-seekers curricula, is a cause for concern. Inequities in are educated youth, who instead, search for physical and human resources at the school white-collar jobs. This has led to a mismatch level only serve to exacerbate this problem. between sectors which have job openings and Allocating more funds is not the only answer the kinds of jobs that are sought by youth. She to these issues; the education system as a deliberates the option of attracting foreign whole needs to be scrutinised and suitable workers to fill these shortages as a solution to policy reforms need to take place to address the problem. An expert on this subject, Bilesha these structural weaknesses. Weeraratne discusses the importance of having a proper policy to regulate in-bound migration, It is in such a context that the theme of this noting that such impending changes hasten edition of the Talking Economics Digest the need for stronger policies to increase Sri focuses on ‘Creating a Knowledge-based Lanka’s preparedness to receive incoming 2017 - ISSUE TWO Economy’, through ameliorating the education migrant workers. This is especially important Sri Lanka Reaping the 10 Benefits from sector. with the signing of the Sri Lanka – Singapore Preferential Trade Is Sri Lanka’s 24 Grade Five Scholarship Free Trade Agreement (SLSFTA), she says. Exam Akin to a Fool’s Errand?

Did the 30 Blue-Green Budget Forget Migrants and Fittingly, this edition of the Talking Economics their “Greenbacks”? Measuring Sri Lanka’s 46 Sustainable Tourism: Janaka Wijayasiri and Kithmina Hewage takes Missing Piece of Digest features an interview with IPS’ the Puzzle Director of Research and the Head of the a look at the SLSFTA in detail, noting its key Labour, Employment, and Human Resource features and the benefits Sri Lanka stands to Development unit, Nisha Arunatilake. Here, gain from it. Apart from this, the Digest also Integrating she highlights the importance of education includes a special interview with one of IPS’ Sri Lanka into the research in ensuring that Sri Lanka has a pool Distinguished Fellows, H. N. Thenuwara, on the Global Economy of trained and skilled workers, who can help challenges facing the tea industry of Sri Lanka create a knowledge-based economy in the and its future course. A wide range of other country. She also identifies two challenges issues are discussed, ranging from the National in this regard – improving, modernising, Single Window process in the pipeline, the Executive Director and expanding the tertiary education sector persisting problem of malnutrition facing the and facilitating the creation of sophisticated country, and the viability of economic reforms Dushni Weerakoon professional jobs. that are proposed for the short and medium term. In addition, it also contains news from IPS, its latest and forthcoming publications, Director of Research As such, in one of the articles included in this including the annual flagship report, ‘Sri Lanka: edition, the importance of science, technology, State of the Economy 2018’, as well as a Nisha Arunatilake engineering, and math (STEM) education quick snapshot of local and global highlights is stressed. Here, the authors note that, affecting Sri Lanka’s economy. unless qualified teachers are available in all Talking Economics Team classrooms, Sri Lankan students will find it difficult to pursue higher studies in the science While wishing you a pleasant read, I hope that Janaka Wijayasiri and technology fields. Another skill that is the Talking Economics Digest serves as an Bilesha Weeraratne informative, engaging, and thought-provoking vital to improve the employability of graduates Kithmina Hewage is English literacy. In this regard, Ashani piece of work. As always, I welcome your Abayasekara highlights the necessity to cater thoughts, insights, and feedback to make this Shihara Maduwage to students of different levels of competencies exercise even better. Charmaine Wijesinghe and to improve teacher allocations to ensure that disadvantaged schools are staffed with good English teachers. Shihara Maduwage IPS Photo Credit Editor – Talking Economics Roshan Kaluarachchi [email protected] Nalaka Liyanapathirana October 2018 Institute of Policy Studies of Sri Lanka

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Suresh Fernando 3 ECONOMIC REFORMS IN SRI LANKA: Salvation or a Recipe for Inaction? By Kithmina Hewage and Harini Weerasekera

4 Economic reforms have become an urgent need three changes in its overlooking ministry in the enrolment in STEM (Science, Technology, for Sri Lanka, with successive governments space of three years. Engineering, Mathematics) subjects has a since independence, resorting to short-term, knock on effect on the economy, with only 3.1% politically expedient economic strategies that Another crucial area in need of reforms, of the population above the age of 15 engaged have placed considerable macroeconomic hampered by institutional complexity, is the in science and technology related education pressures whilst reducing Sri Lanka’s global State-owned Enterprises (SOE) sector. Multiple and employment. Given the current challenges competitiveness. Vision 2025, the current stakeholder contestations take place on SOE regarding broad economic reforms, the government’s short and medium-term policy reforms due to the decentralization of SOE government should concentrate on prioritizing direction, is aimed at steering the economy oversight, which slows and complicates the policies that have wide public and bipartisan towards more sustainable means of growth, reform process. support, such as accommodating flexible office led by foreign and domestic private investment. hours and less rigid working conditions. The successful implementation of economic Given that unstable and bloated public reforms, however, depends heavily on a institutions are often a reality that developing Deficient Data Accessibility combination of political, institutional, and economies must contend with, a more practical Successful reform identification, proposal, and socio-economic factors. In fact, institutional approach suggested would be to adopt implementation depend heavily on evidence- misalignment, misidentified reforms, and data ‘clusters’ of core subjects areas that group based policymaking. Therefore, deficiencies in deficiencies were identified as key structural together multiple ministerial portfolios belonging data accessibility are a leading obstacle to good and institutional bottlenecks hampering the to the same core subject area. Under such a policy research in Sri Lanka, and ultimately to successful implementation of Vision 2025 at the framework, clusters should coordinate closely to its capacity to influence policy reform. This is a New Thinkers’ Symposium – a unique platform avoid duplicating mandates. The current ad-hoc composite problem due to obscure governance launched by IPS for those under the age of 35 division of ministerial portfolios creates conflicts structures and poor access to official data and from the public sector, private sector, academia, of interest whilst also hindering the scope of information. The problem affects the research think-tanks, and other fields of interest involved policy consistency and continuity. community and university students alike. in economic affairs. Using facilities like the Right to Information Misidentified Reforms (RTI) Act has led to some improvements – Institutional Misalignment Economic reforms are often spread over however, Verite Research finds that nearly The most severe impediment to national a significant amount of time and require 90% of 55 public authorities are ‘moderately economic policy implementation is the complex considerable sequencing. In this regard, it is unsatisfactory’ in their proactive disclosure institutional framework within Sri Lanka’s public vital that the government undertakes reforms of information and only 2% moderately sector, which lacks coordination and capacity, that are most impactful on the economy, while satisfactory’ with regards to the same. and is worryingly bloated. The sector is made taking into account “low hanging fruit”. For This issue links back to poor public service up of too many workers who are engaged in instance, when considering the impact of delivery, under a highly complex institutional duplicative work while being subject to constant Information Communication Technology (ICT) on setup, making the accessing of datasets time shifts in ministerial portfolios; a recipe for the economy, policies to enable flexible working consuming or impossible. inaction of any national economic action plan. conditions facilitated by ICT and improved online payment mechanisms can have a much Conclusion ‘Institutional excess’ in Sri Lanka’s public sector larger marginal benefit to the economy than Unfortunately, Sri Lanka’s history of economic is giving rise to ‘institutional fragmentation’ the significant investment cost of providing free policy reforms has often been defined by its and instability, which is ultimately the primary wifi to the public. For instance, internet usage short-term nature, despite the necessity for hindrance to implementation of any reform is low in Sri Lanka, amidst relatively affordable long-lasting economic reforms heightening agenda. Policy ‘roadmaps’ such as Vision 2025 and higher internet speeds, compared to in recent years. Regardless of political – which have undergone a consultative process other countries in the region. Similarly, on affiliation, the country’s economic future will be to include inputs of relevant stakeholders – are education reforms, low determined by responsible policymaking over likely to be futile in the absence of a stable levels of tertiary the next few years that address structural and institutional setup to implement the mapped out institutional weaknesses. While political will is reforms. A snapshot view of ‘institutional important to successfully implement these excess’ can be seen in Figure 1. Too reforms and the appetite for reforms has many ministries, agencies, and waned recently, there is departments, result in overlapping significant scope for functions and mandates, which reforms with little to leads to institutional fragmentation. no political costs. Furthermore, the level of Even these reforms, institutional instability however, are likely in Sri Lanka can to be undermined be illustrated by bottlenecks with the case of discussed above, unless the the ‘Department government takes decisive steps to of Project mitigate them. Management and Monitoring Department’ (for Vision 2025), which experienced Source: Persentation made at the New thinkers’ Symposium 2018, based on information from the Department of Management services, Ministry of Finance(2017) 5 and was only second to India. However, over the years, Sri Lanka’s growth was slow, and Trouble brewing? it fell back to the fourth position in global tea production. How Sri Lanka’s Tea Q: What are the challenges tea producers in Sri Lanka face, when attempting to Industry Can Prepare for increase the supply of tea? The world of tea supply is controlled by two Future Challenges factors; the increase in area harvested and the By H.N. Thenuwara and Nisha Arunatilake increase in yield. The increase in harvested area is seen in countries with large amounts of arable land. Those countries also have large populations that can facilitate the labour requirement in the tea industry. Sri Lanka, on the other hand, has the smallest land mass and the smallest population. These factors limit Sri Lanka’s future production and supply of tea. The increase in production in Sri Lanka is purely due to the increase in the yield because the area harvested has not increased over the years.

Sri Lanka’s exports are also facing a similar fate in terms of production. Sri Lanka beat India to become the world’s largest tea exporter in the 1990s. Since then, Sri Lanka has fallen behind Kenya and China. Sri Lanka is now at the third position, competing with India and Vietnam.

Q: Apart from the ones mentioned above, what are the main challenges facing Sri Lanka’s tea industry? Last year Sri Lanka celebrated the 150th over time? How have we Sri Lanka has the ability to maintain a healthy anniversary of its tea industry. Will the tea performed compared to our production level, though it may not be able industry survive another 150 years? The to compete in terms of production quantity prospects for the growth of the industry are competitor countries? with other players, who are better endowed promising. Helped by the health benefits of Sri Lanka’s production has been increasing, to increase production levels. Thus, major tea and the growth of an increasingly health but at a low rate of 0.8 per cent, over the last challenges facing Sri Lanka are keeping up a conscious population and per capita incomes, 50 years. Meanwhile, Sri Lanka’s share in the healthy production level, maintaining the high the global demand for tea has risen over time. global supply has dropped from 21 per cent to 6 quality, and raising unit price while cutting costs However, Sri Lanka’s supply of tea has not kept per cent during this period. of production. up with the growth in global demand for tea. H. N. Thenuwara — currently an Adjunct Assistant Tea grows only in some parts of the world. The above challenges can be met by taking Professor attached to the University of Iowa, Only about 50 countries grow tea, according to a series of critical measures, which include USA who served as the Director of Economic statistics published by the Food and Agriculture developing natural resources and human Research and Assistant Governor of the Central Organization of the United Nations (FAO) in capital needed for the industry, developing Bank of Sri Lanka — in his chapter on “The 2017. However, 10 countries produce over 90 physical infrastructure, maintaining sound Future of Tea Industry,” in the forthcoming per cent of world tea output, namely, China, macroeconomic policies, adopting appropriate Sri Lanka Tea Industry in Transition – 150 India, Kenya, Sri Lanka, Vietnam, Turkey, Iran, trade policies, enhancing competitiveness, years and Beyond, examines the challenges Indonesia, Argentina, and Japan. Of these fostering a unique brand, integrating deeper and opportunities facing the tea industry of countries, China was the largest producer with a in the global value chain, and benefitting from Sri Lanka and provides recommendations on production of over 35 per cent of world tea. This external economies while overcoming external different strategies the tea sector can adopt to was a result of an impressive annual average dis-economies. take advantage of global prospects. Following growth of 6.5 per cent from 1961 production is an expert interview on the main findings from of 79,000 metric tons, compared with the his chapter. growth of 0.8 per cent recorded by Sri Lanka. Q: What are the strategies In 1961, Sri Lanka produced a substantially for developing human and Q: Has the Sri Lankan tea larger amount of tea (206,000 metric tons) than natural resources need- industry increased supply China, which produced only 79,000 metric tons, ed for the tea industry? 6 The tea industry in Sri Lanka is more intensive solution is mechanization. Another is harvesting Q: How can the global in land and labour, and less in capital. While tea under different models, rather than the competitiveness of the in- the industry uses the land for its growth, it also traditional employer-employee model. Sri gradually degrades the land with pollutants Lanka’s plantations have already experimented dustry be increased? associated with fertilizer, and engendering soil with out-grower systems, where workers The critical pillar of the sustainability in the tea erosion. Thus, the long term sustainability of receive plots of land from plantations to sector is enhancing global competitiveness. the industry depends on how well the land is independently cultivate, and supply green leaf Competitiveness increases with the quality of conserved. In a growing economy, it is difficult to factories. This could solve various incentive the product and the profitability of suppliers. to retain manual labour over long periods of problems associated with hired labour. The higher unit price indicates the existing high time, as younger generations do not wish quality of Sri Lankan tea. to render manual work in plantations. One Sri Lanka’s best opportunity in sustaining the tea sector is strengthening the unique brand Sri Lanka’s Tea industry of ‘Pure Ceylon Tea’. Sri Lankan tea already commands a premium price. Improving quality and brand uniqueness are essential to continue 150 years the command in high price. Sri Lanka can also raise earnings from tea by integrating deeper into the global value chain. This can be achieved by increasing the share of value added tea production and exports. Sri Lanka has a great potential to engage deeply in the global value chain with entrepreneurial strength of private firms and institutional support from the government.

Q: How can the sector benefit the economy in other ways? The tea sector provides an economically significant positive externality (or external economies) mostly to the tourism sector.

The colonial heritage of tea and the unique taste of ‘Ceylon Tea’ provide additional

Tea is a Sri lanka’s Tea is a valuable th incentives for tourists to choose Sri Lanka rd foreign exchange. Sri Lanka is the 4 3 largest largest tea producer in the as a prime destination. The tea sector in turn industry world and contributed to can introduce pure Ceylon Tea to tourists to 6.5% of global initiate and develop a lasting desire for its tea. production of tea. Tea lands can also be used for various other economic activities with external economies, such as dairy farming to supplement the income of the plantation and its workers. The tea sector also provides forward and backward linkages to a large number of other economic activities.

The tea industry In 2016 Sri Lanka exported nd So to summarize … provides employment approximately 2 largest exporter of The future of the tea industry in Sri Lanka directly and indirectly to tea to the world market depends largely on the quality of tea, and not 288,771 MT of contributing to 1 million people black tea, with a value of on the quantity. Thus, the growth of the industry 17.3% of world will depend on maintaining the high quality of USD mn. tea exports. 1,269 tea, and producing value added tea, developing Sri Lanka’s own brands, and stamping a Tea growing reputation as an environmentally friendly and areas in Sri Lanka ethical tea producing country in order to draw buyer interest and a higher price. Kandy *Nisha Arunatilake is Director of Research Nuwara Eliya Uva at the IPS. This interview is based on a chapter by H. N. Dimbulla Uda Pussellawa Thenuwara in the IPS publication ‘Tea Industry Ruhuna in Transition – 150 years and Beyond.’ 7 Straight Talk on Sri Lanka – Singapore FTA What it Means for Trade and Investment Flows By Janaka Wijayasiri and Kithmina Hewage

The freshly-signed Sri Lankan-Singapore Singapore was Sri Lanka’s seventh largest FTA (SLSFTA) marks a new milestone in the trading partner, with total trade in goods relations between the two island economies. amounting to USD 1.14 billion, accounting for 4 The agreement, signed on 23 January 2018, % of Sri Lanka’s total trade. Sri Lanka imported after almost 18 months of negotiations, is from Singapore goods amounting to USD 1.03 a modern, comprehensive, and high quality billion, comprising of mostly petroleum, gold, agreement. It covers a wide range of areas machinery and equipment, chemicals, plastics, including goods and services, investment, iron, malt, and paper. Sri Lanka’s exports to e-commerce, government procurement, Singapore during the same period totaled intellectual property rights, telecommunication, USD 115 million, comprising of boats, fuel oil, etc. While FTAs aim to reduce or eliminate trade tea, quartz, gems and jewellery, wheat, crabs, barriers and increase trade, more importantly, electrical capacitors, nuts, and rubber tyres. in the case of SLSFTA, it demonstrates to the rest of the world that Sri Lanka is open Singapore has also been an important foreign for business, including investments, while investor in Sri Lanka for the past two decades; complementing each other as hubs – Sri Lanka it has consecutively been among the top 10 as a hub for South Asia and Singapore for South investors in recent times. Singapore firms East Asia. This is in line with Sri Lanka’s Vision have been active in areas such as property 2025, which aims to position the nation as an development (Overseas Reality Ceylon export-oriented economic hub at the centre of Ltd), tourism (Shangri -La Hotels), food and the Indian Ocean. beverage processing (Prima Ceylon, Asia Pacific Breweries), and telecommunications (Lanka Trade between Singapore and Sri Lanka has Bell). Some of the areas in which investors from steadily grown, with bilateral trade crossing Singapore have expressed interest in Sri Lanka the USD 1 billion mark since 2006.In 2016, include warehousing facilities and logistics, service apartments, furniture manufacturing, training centres, fire safety engineering, solar Sri Lanka-Singapore FTA solutions, and retail. Likewise, Sri Lanka has identified infrastructure, BPO/IT and IT SG investments in LKA Bilateral trade(US$ Bn) enabled services and educational institutes, Singapore has been an important fereign 2 tourism, gems and jewellery, and hospital and investor in Sri Lanka healthcare as targeted sectors for attracting Singaporean companies have invested in 1 FDI from Singapore. property development,tourism,food and beverage processing, telecom 0 2007 2011 2016 Reasons to Sign the Singapore Market Snapshot Agreement There are two compelling arguments supporting the agreement; at the bilateral level, it provides reciprocal benefits for both countries. It will enhance bilateral trade, 5.62 mn $ 295 mn $ 52,479 $ 1.8 improve the economic and investment Population GDP GDP per capita GDP growth relationship, and provide more secure rate and open access for goods, services, and investments in Sri Lanka and Singapore. SLSFTA was signed in Colombo on 23 January 2018 by Singapore’s Minister for Trade & Industry, S. Iswaran and Sri Lanka’s Minister for development But more importantly, it will help Sri Lanka Strategies & International trade, M. Samarawickrama. advance the government’s policy of trade liberalisation, and signal its commitment to Sri Lanka and Singapore announced the launch of negotiations for a bilateral economic reforms, by signing a deal with one FTA on 18 July 2016. of the most liberal economies in the world. Source: Compiled from data from UNCTAD and ITC

8 Future Outlook Key Features of SLSFTA Sri Lanka’s overdependence on European „„ Custom duties on 50% of tariff lines will „„ Better access to service sector markets and American export markets increases the be eliminated immediately by Sri Lanka in Singapore and Sri Lanka, with economy’s vulnerability to external shocks, (approximately 3600 tariff lines). This liberalization across different modes such as the economic recession in 2008 will be gradually increased to 80 % over of trade in services, in sectors such as and the loss of GSP+ concessions in 2010. a period of 12 years. Singapore already professional and trade related services, Diversification of both export markets and the grants Sri Lanka tariff free access on environmental services, construction, basket of exports are thus vital to position the 99% of goods. and tourism. Movement of natural Sri Lankan economy on a more sustainable persons will be linked to commercial „ All goods under the agreement have footing. Therefore, the SLSFTA could act as a „ presence (e.g., intra-corporate to fulfill general rules of origin of 35% catalyst towards more proactive engagement transferees). Only Singaporean and Sri domestic value addition (DVA) and a with fast growing economies in East Asia, Lankan nationals are recognized under change of tariff headings (CTH at 4 digit the Agreement. through exports and investments. HS level). For some export products, specific process rules will apply. No „„ The FTA includes a chapter on The success of such an agreement, however, ASEAN cumulation is allowed under the investment which provides a would also depend on sustained political will FTA. binding commitment and framework along with domestic institutional and economic guaranteeing predictability and „ Sri Lanka’s Negative List accounts for „ transparency for investors. policy reforms to facilitate better export sector 20% of the country’s tariff lines and growth and investment. For instance, Sri contains sensitive items based on „„ Government procurement (GP) is Lanka’s complex para-tariff structures and revenue and domestic considerations included in the agreement, ensuring Sri the existence of other non-tariff barriers could (i.e., petroleum products, alcohol Lankan businesses can compete with severely undermine the success of the SLSFTA. and tobacco).Under the agreement, Singapore businesses for government international standards and practices contracts. This is the first time Sri Lanka have been adopted to reduce non-tariff has included GP in its trade agreements. Economic liberalisation efforts often create measures impeding trade. pockets of sub-industries that lose out. „ Reduced business costs and red tape „ Therefore, the government should also create around customs processing, and adequate safeguards through trade adjustment technical and quarantine standards. assistance schemes and ensure that the „„ A clear process to settle disputes. broader economy does not lose out on potential benefits due to resistance by special interests. In fact, Sri Lanka could learn from Singapore’s The FTA is also expected to encourage greater Stronger relations with Singapore can help previous experiences in complementing a investment flows between the two countries. Sri Lanka’s standing in South-East Asia and network of strategically placed FTAs with Singapore sees potential in Sri Lanka as a participation in global value chains. SLSFTA is domestic economic reforms. destination for Singaporean investments Sri Lanka’s first FTA with a South East Asian and a gateway to rest of South Asia, given country – Sri Lanka has expressed an interest Therefore, the SLSFTA should be considered, the proximity to and trade agreements with in pursuing trade deals with Malaysia, Thailand, not just in isolation, but as part of a broader countries in the South Asian region. and Indonesia in the near future with a view to strategy to create an economy led by private improving economic linkages with ASEAN and sector growth and well integrated into regional At the regional level, the agreement serves Sri joining the mega trade agreement, Regional and global value chains. Lanka’s broader engagement with one of the Comprehensive Economic Partnership (RCEP). fastest growing regions in the world – ASEAN. 9 but these have been shelved since 2009 over a number of issues (government procurement, Bumiputra policy, etc). Malaysia’s approach in negotiating FTAs has been progressive; while its initial FTAs reduced tariffs and non-tariff barriers, those signed recently have been more comprehensive, with deeper commitments, indicating that Malaysia has stepped up its game.

A FTA with Malaysia opens avenues for Sri Lanka to enter into the dynamic Malaysian market and plug into value chains in the region. Sri Lankan exporters, importers, and consumers can stand to gain by opening its market and freeing trade and investment between the two countries.

Two-way Trade Trade between Sri Lanka and Malaysia has grown moderately over the past decade. FTA with Malaysia: Aggregate bilateral trade (exports plus imports) increased from US$ 384 million in 2007 to US$ 684 million by 2016, representing a 75% rise. Will it Lead to an Expansion in However, such figures belie the actual state of affairs. An examination of disaggregated statistics indicates fluctuations in bilateral Flow of Trade and Investment trade. Furthermore, trade flows have been persistently asymmetric; Sri Lanka has been running a trade deficit with Malaysia, given that with Sri Lanka? exports have remained somewhat stagnant, while imports display an upward trend. In By Janaka Wijayasiri 2016, the trade deficit stood at approximately US$ 599 million, almost double the figure Prime Minister of Malaysia, Najib Razak, recorded in 2007. However, one should not be who was on an official visit to Sri Lanka in too concerned about the growing trade deficit, December 2017 to mark the 60th anniversary given that over 60% of total imports (excluding of diplomatic relations between the two consumer goods) from Malaysia consist of countries, has agreed with his counterparts, to intermediate goods, capital goods, and raw expand cooperation in fields such as trade and materials, which are in turn used as inputs into investment. He said a Free Trade Agreement production and exports from Sri Lanka. (FTA) would be useful to expand bilateral trade and steps would be taken to explore its As a trading partner, Malaysia is the 6th largest feasibility during his meetings with President source of imports to Sri Lanka; Sri Lanka Maithripala Sirisena and Prime Minister Ranil imported goods worth US$ 642 million from Wickremesinghe. Malaysia in 2016, accounting for 3.3% of inflows into the country. Conversely, Malaysia Compared to its neighbors in Southeast Asia, ranked at the 36th place in terms of Sri Lanka’s Malaysia was a latecomer to FTAs. But now export markets, with Sri Lanka exporting US$ it does not want to be left out of major deals. 42 million or 0.4% of total exports to Malaysia. Malaysia has signed 13 FTAs with ASEAN Main exports from Sri Lanka are, vegetable and other partner countries: 7 bilateral FTAs products, rubber articles, textiles and clothing, and 6 regional FTAs. Malaysia signed its first food products, while imports from Malaysia bilateral FTA with Japan in 2005. Since then, it included fuel, vegetables, machinery and has signed deals with South Korea, Pakistan, electronics, and wood products (Figure 1). Chile, India, New Zealand, Australia, and more recently with Turkey. It is in negotiations with To truly maximize the benefits of the bilateral Hong Kong, the European Union (EU), and trade relationship, Sri Lanka needs to the European Free Trade Association (EFTA), significantly increase the quantity and the while also being involved in the Regional value of exports to Malaysia. Opportunities Comprehensive Economic Partnership (RCEP) for this still exist in a selected number of and the Trans Pacific Partnership (TPP). export products, given the supply and demand Malaysia has been in FTA talks with the USA, situation between the two countries; for 10 example, rubber, tea, etc. International trade statistics indicate the Malaysian FDI market potential for “Black Fermented Tea” to be around US$ 27 million In addition to being a popular destination for Foreign Direct Investment in Malaysia. However, Sri Lankan producers face stiff competition when (FDI), Malaysia has successfully become a significant outward investor catering to the Malaysian market. Such competition is intra-regional in as well. Malaysian firms are increasingly investing in Asia and in the nature, with nations like China, Vietnam, and Cambodia offering relatively services sector. Outward investment by Malaysian firms has steadily similar products at a significantly lower cost. Furthermore, Sri Lankan increased and has consistently topped more than US$ 7 billion a year exports lose competitiveness when slapped with high import tariffs. For since 2009. instance, Sri Lankan exporters struggle to compete with regional traders who have duty free access given their countries’ membership in ASEAN. Malaysia is one of the main sources of FDI into Sri Lanka, accounting for 14% of total FDI inflows between 2005 and 2015 (at US$ 1.36 billion). If Sri Lanka liberalizes trade with Malaysia under a FTA, exports are These investments are mainly in the telecommunications, construction, likely to increase by US$ 2.34 million, according to preliminary estimates and education-related services. Malaysian investments have gradually by IPS. This would amount to a 6% increment from the current export declined over the past few years, but this is in keeping with the general levels. Significant gains can accrue to rubber products and tea, which trend of FDI flows into Sri Lanka (Figure 1). together encompass more than 60% of potential trade gains under a FTA. Particularly, Sri Lanka is projected to make strides in the export of The largest Malaysian investor in Sri Lanka is Dialog Axiata, a cellular pneumatic tyres, solid/cushion tyres, and black tea, if Malaysian tariffs mobile telephone network provider with a reported investment close on such produce are eliminated under a trade deal; currently Malaysia to US$ 2 billion. In addition, Maxis Berhad has also invested in the imposes custom duties of 23%, 25%, and 5%, respectively on these telecommunications sector through Sri Lanka Telecom. Recently items. It is important to note that these projections do not take into Khazanah Nasional Bhd bought an 8.9% stake in Sri Lanka’s largest account the effect of liberalization on the rest economy. listed company, John Keells Holdings PLC for US$ 120 million. Major investments have also taken place in the educational sector (e.g. APIIT), However, it is worrying to note that commonly used trade indicators agriculture (e.g. Naratha Agro Industries), and construction (e.g. Wincon do not suggest a huge potential for bilateral trade expansion. Growth Development Ceylon Ltd). It has been reported that Malaysian businesses in exports has been negative during the past five years. Trade Intensity are also interested in investing in other areas such as health, the energy Index has been falling over the last ten years, suggesting that Sri Lanka sector and agriculture. A FTA with Malaysia can further facilitate cross- has been trading less intensively with the Malaysia vis-a-vis the world, border investments by easing the entry for Malaysian investors in the while Trade Complementarity Indicator also remains low. The latter context of an improved business environment in Sri Lanka. Figure 2 suggests that Sri Lanka’s export/import structures do not align well with those of Malaysia. This premise is further supported by a cursory look at the Revealed Comparative Advantage indicators of Sri Lanka and Figure 2: FDI inflows from Malaysia to Sri Lanka, US$ Mn. Malaysia, which show both countries are competitors in some exports, 350 reducing the potential for bilateral trade expansion. Given the importance 300 of the services sector in both countries, accounting for more than a half 250 of economic activity and expansion of export and import of services, 200 there might be greater benefits from liberalization in trade in services; 150 opportunities are already increasing due to Malaysia’s liberalization 100 policies since 2009. 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Figure 1 MALAYSIA Source: Board of Investment of Sri Lanka Market Snapshot Need for a Feasibility Study Top 5 Imports to LKA A FTA will make it easier for Sri Lankan goods to gain a foothold in Mineral Fuels - $116m Vegetable oils - $103m the Malaysian market by lowering tariffs that Malaysia imposes on Appliances - $73m imports from Sri Lanka. This will help make Sri Lankan businesses more Wood - 63m competitive in Malaysia. A FTA will also lower the cost of Malaysian Electricals - $ 37m products for Sri Lankan consumers and businesses. A comprehensive FTA will give service providers better access to both markets and reduce a number of other barriers to trade in services and investment flows. In this context, Sri Lanka and Malaysia have decided to undertake a joint

Top 5 Export to LKA feasibility study to explore the potential for FTA. Preliminary estimates Rubber articles - $ 8m suggest that likely gains from bilateral trade liberalization in goods will Textile & clothing - $ 3.7m be limited to few products but there might be gains from other areas Ships/boats - $ 3.6m Tea - $ 3.1m of cooperation, namely in investment flows to Sri Lanka. Moreover, a Edible prep - $ 2.9 m FTA with Malaysia in addition to a FTA with Singapore, which is under negotiation, will help to step up Sri Lanka’s relationship with ASEAN and to explore opportunities for greater economic engagement with South- east Asia.

31.0 mn $ 309.3 bn $ 810.8 $ 4.4 Population GDP GDP per capita GDP growth rate *This blog is based on a report on the ‘Benefits and Costs of a Bilateral 2015 2016 2016 2016 Trading Arrangement between Sri Lanka and Malaysia’, by Kithmina Source: Compiled by IPS Hewage, Vishvanathan Subramaniam, and Janaka Wijayasiri. 11 In an increasingly globalised world, ease WALK BEFORE of trading across borders is essential for businesses. Many governments around the world have recognised this and are undertaking measures to increase YOU RUN: countries’ participation and competitiveness in trade by simplifying trade and transport Defining the Scope of the procedures and document requirements. Along these lines, the government of Sri Lanka has identified the implementation of a Single Window (SW) for trade as a national ‘Single Window’ for priority. Its implementation is expected to reduce the time and costs of cross-border trade, and enhance the country’s trade and Trade in Sri Lanka competitiveness. Also, the establishment of SW will be an important step towards By Janaka Wijayasiri, Kithmina Hewage and Nuwanthi Senaratne meeting the World Trade Organisation’s (WTO) Trade Facilitation Agreement, which Sri Lanka has ratified. Sri Lanka has indicated its intention of establishing a SW by 31 December 2022,while calling for technical assistance towards its implementation. However, it is yet to decide on its SW ambitions by defining the scope, which is currently under consideration. This article suggests that a little bit of walking before running would ensure a successful phase-wise implementation of SW.

What is a SW? A SW allows traders to submit trade information in a virtual location that communicates with the relevant government agencies (GAs) and obtain certificates, permits, licenses (CPLs), and approvals electronically. With a SW facility, traders no longer need to visit different physical locations to obtain them.

Many countries have already undertaken steps to switch from paper-based customs processes towards a paperless system. Electronic systems for exchanging regulatory information have become an important means of managing cross-border trade. Some economies have gone a step further by linking not only traders and customs but also other GAs involved in trade, through the SW. The most advanced systems in South Korea and Singapore connect banks, customs brokers, insurance companies, and freight forwarders.

If implemented effectively, a SW can significantly reduce the time, money, and documents required for trading. It can benefit not only the traders but the government and the economy. Several economies have reported positive gains

12 from SW implementation; for example, the introduction of a SW in South Korea in 2010 generated some US$18 million benefits to Internet Connection Available to Customs and Other Trade Control Agencies the economy. Similarly, the SW in Singapore Electronic Single Window System brought together more than 35 GAs since Electronic Submission of Customs Declarations 1989, resulting in huge productivity gains Electronic Application and Issuance of Import and Export Permit for the government. However, there are many challenges to its establishment, which Electronic Submission of Sea Cargo Manifests go beyond technical issues. Creating a SW Electronic Submission of Air Cargo Manifests requires tremendous effort, costs, changes in Electronic Application and Issuance of Preferential Certificate of Origin mindset, and most importantly, strong political E-Payment of Customs Duties and Fees will. For example, the initial budget of SW in Electronic Application for Customs Refunds Singapore was US$ 14.3 million in 1988; since UN Global Survey on Trade Facilitation and Paperless Trade Implementation 2017 then it has evolved over almost three decades, with the latest upgrade expected to cost US$75 million in 2017. stakeholders and intermediaries at major and make online payments of duties/fees to airports and seaports. A Port SW (Level 3) SLC through selected banks. However, they connects the port community to the electronic still have to visit SLC to submit physical paper Evolutionary Map of SW customs declaration system and other GAs. documents because of signature, and to obtain SWs are implemented in an incremental The system manages and automates port approvals/clearance. Last year an online manner rather than in a big-bang approach. and logistics procedures through a single payment platform was launched while digital They gradually evolve over a long period of submission of data by connecting transport signatures were accepted this year, but the time, given that SW is an extremely complex and logistics chains. Fully Integrated SW (Level uptake has been low by the trading community. and costly undertaking. As a result, there 4) connects not only traders, customs, and Currently, SLC is ready to move to a completely are different SWs with different scopes and other GAs, but also private-sector participants paperless system with an accompanying digital functionalities across the world, reflecting the such as banks, customs brokers, insurance signature. Of the 30 plus GAs that are involved readiness and priorities of individual countries. companies, freight forwarders, and other in issuing CPLs, only a few are electronically logistics service providers. Cross-border SW and partially linked to SLC; the required Broadly speaking, a SW can be divided into (Level 5) connects and integrates national documents still need to be submitted by five incremental development levels, involving SWs at bilateral/regional levels, allowing traders/agents to these agencies for relaying of migration from paper to electronic-documents cross-border electronic-information exchange approvals to SLC. In addition to SLC, Sri Lanka whilst integrating customs, other GAs and between economies within a regional grouping. Ports Authority and Sri Lanka Cargo have their private stakeholders (Figure 1). own automated management systems which are connected to Customs through ASYCUDA. Most countries first start with electronic Current Status of Paperless customs declaration systems because every Trade in Sri Lanka import-export must be declared to customs. At present, Sri Lanka does not have a national SW Blueprint Sri Lanka is at an early stage of SW This usually evolves from a paper-based SW (Table 1). The system in place is a customs development and currently, a blueprint is customs or from the use of traditional centric facility, fulfilling traditional customs being prepared for its implementation which Electronic Data Interchange (EDI) systems, clearance functions. Sri Lanka Customs (SLC) is will spell out amongst others, the scope of the to which traders submit both electronic and partially automated and connected to other GAs functions to be included. Given Sri Lanka’s paper declarations. In a paperless customs and ports electronically through ASYCUDAWorld, current situation – a paperless customs but environment (Level 1), documents are sent a computerised customs management system. not interconnected with other GAs with a lot of electronically through secure Value Added While the system implemented covers both cumbersome procedures related to CPLs – a Networks (VANs), without requiring physical imports and exports, it has not eliminated the regulatory SW (Level 2) should be the country’s visits and paper submissions. need for paper handling; traders/agents can target with regard to SW development. only electronically submit documents, data After linking traders and customs electronically, countries can develop a regulatory Or, perhaps the extension of the SW to serve the entire trade and logistics SW (Level 2) by linking several or Cross-border NSW all GAs regulating trade. The system community at the ports (Level 3) Integrated NSW at this level allows for application could be within the scope of SW and issuance of electronic CPLs by development. Cross-border information

GAs. With such a system, traders do Potential Benefits exchange can also be included after not need to make physical visits to the implementation of paperless different GAs. The most challenging customs. However, it is important to Port SW - Interconnecting feature of a regulatory SW is single with Port Community bear in mind that, higher levels of SW submission, where traders submit Intergration with Other development take time, money, and their export or import data only once to Government Agencies effort (Figure 1); thus it requires a obtain all necessary CPLs and customs Paperless Customs careful cost-benefit analysis, as well Declaration System declarations. as managing the expectations of all stakeholders given the time frame The next stage in developing a SW Time & Cost for implementation, capabilities and Tsen, J. K. (2011). Ten Years Of Single Window Implementation: Lessons is integrating the private-sector Learned For The Future. Discussion Paper: resources available in Sri Lanka. 13 Improving Education in Sri Lanka Priority Areas for Action By Ashani Abayasekara and Harini Weerasekera

IPS hosted its first Policy Engagement Forum on Education and Skills Education Outcomes for Prosperity: Building Networks for Bridging Knowledge Gaps recently, An overarching concern voiced by many stakeholders was Sri Lanka’s which was attended by a range of stakeholders in the education sector, current education environment; the examination based system and including officials from the Ministry of Education (MOE), National overloaded curricula cause undue pressure on students, starting as Education Commission (NEC), National Institute of Education (NIE), early as primary school. It was noted that relying on paper qualifications universities, think tanks, and donors. The objectives of this forum were alone has resulted in children not being evaluated in a holistic twofold: (1) to identify knowledge gaps regarding the constraints for manner. Dr. Sujata Gamage, Team Leader, Human Capital Research improving the relevance and quality of education in Sri Lanka; (2) to build Program, LIRNEasia, said that exams should be just one component networks among different stakeholders to conduct collaborative research of student assessments, among others, such as common general in bridging such knowledge gaps. tests, school-based assessments, and student portfolios. She stated that such demonstrative portfolios can provide students with alternate The Forum focused on four themes: education outcomes, equity in qualifications, even if they drop out of school at an early stage, to pursue education, tertiary education, and education planning. Participants a non-academic vocation. identified key constraints under each of these thematic areas and underlying causes, using a ‘Fishbone’ diagram that helps in identifying Career guidance for students was also seen as lacking in our education possible causes for a problem in a structured way. The discussions at system. Ms. Dileepa Wedage, from the University of Sri Jayewardenepura, the forum were facilitated by IPS researchers, Ashani Abayasekara, Nisha opined that students need advice when selectingA-Level streams, Arunatilake, Priyanka Jayawardena, and Sunimalee Madurawala. particularly in rural areas, where parents are not aware of the opportunities available to children.

14 In addition, it was noted that career guidance counselors need training and that psychological problems faced by students require more attention by educators.Lack of properly qualified and trained teachers was identified as another key concern. Validating recent research by IPS, Prof. Prasad Sethunga, from the University of Peradeniya, pointed out that there is a need to increase the number of teachers with both subject and pedagogical training, offered via Bachelor of Education (BEd) programs. Currently only two out of our 17 state universities offer a BEd, producing a negligible 135 graduates annually. Overcrowded class sizes were highlighted as another constraint to improving education outcomes, given the limited attention teachers could provide to students in large classes. Officials from the MOE noted that the Ministry has embarked on an initiative to reduce class sizes to 35 in all schools.

Equity in Education Inequities among schools, in terms of physical and human resources, access, and administration were identified as issues of concern. Confirming recent IPS research findings, it was noted that large disparities exist in school-level resources among national and provincial schools, as well as among different school types, based on functioning grades. The problem of an unequal distribution of teachers in terms of their qualifications and experience, with good quality teachers being concentrated in privileged schools, was also highlighted. Adequate incentives and support programs to attract good quality teachers to disadvantaged schools in rural areas were identified as crucial in addressing equity issues.

While more funding for education was deemed necessary to improve both education outcomes and equity, it was noted that substantial The MOE is tasked with implementation, monitoring and supervision. amounts of funds have already been allocated for the education sectorby But, he pointed out that lack of a national plan and proper coordination the likes of the World Bank and the Asian Development Bank. The need between these stakeholders acts as constraints in the system. to look at how effectively such funds have been utilized, before calling on Politicized systems and poor capacity of current bureaucrats were also more funds, was highlighted. identified as issues.

Critical to addressing any policy suggestions for improvement, Tertiary Education however, is the need to confront implementation hurdles, noted Dr. G.B. With respect to tertiary education, limited enrollments in the Technical Gunewardena, Vice Chairman of the NEC. He lamented that despite and Vocational Education and Training (TVET) sectorwas identified as a a range of good practical recommendations that have emerged from cause for concern. According to Dr. Sujata Gamage, who served as the numerous research studies conducted over the years, lack of a stable Director General of the Tertiary and Vocational Education Commission of system of implementation has hindered progress. Sri Lanka, a key factor contributing towards low enrollments is the rigid segregation of the academic and TVET sectors. “The Education Ordinance (No. 31 of 1939) still remains the basic law of education in Sri Lanka, despite several attempts to push the “Students are drilled from the O-Levels itself to think that only A-Levels implementation of new policies over the past decades”, said Dr. and academics matter”, she said, leading to a lack of social recognition Gunewardena. While the NEC is mandated to submit recommendations of TVET. She further stated that the shortage of qualifications of TVET to the president, it is up to the president to accept such teachers in comparison to teachers in academics exacerbates this recommendations and declare them as policy. mindset, particularly in a status-conscious society as ours. Insufficient funding of the TVET sector is another constraint. Although equipment and Despite policy recommendations being presented to several presidents programs for training students cost significantly more than for producing on 18 occasions, only the most recent proposals submitted in January a graduate, fewer funds are allocated to the TVET sector, given that last year have been accepted. He further stated that there is a ‘legal academics are prioritized. vacuum’ for education in Sri Lanka, “a situation we need to overcome.”

Education Planning and Implementation Research Collaborations of Reforms Priority areas identified by the participants for research collaborations Dr. Upali Sedere, Rector of the Sri Lanka International Buddhist Academy with IPS included measuringthe effectiveness of utilization of education and education sector specialist, stressed the importance of efficient funding, reassessing the current education evaluation systems planning and coordination between different stakeholders in developing andeducation outcomes being measured, analyzing the psychological effective policy frameworks. According to the current structure in Sri problems faced by students and the adequacy of counselling and Lanka, the NEC is in charge of formulating education policy, while the NIE career guidance programs in schools, and studying the policy impact is responsible for the preparation of such policies. of research to determine what works and what does not in policy recommendations.

15 TOWARDS A KNOWLEDGE BASED ECONOMY Start with Quality STEM Teachers for Every Child!

Deepani is a grade 10 student who loves mathematics and science. Her speech correctly identified the need for “improving the ratio of STEM to parents are delighted and encourage her to continue in these fields, non-STEM graduates in the country”. The foundation for STEM education assuring her that she will have a bright future. But Deepani is worried at the graduate level needs to be laid at the school level. Only those with that she is not learning all that she should – her teachers in both a good foundation in general education will move on to tertiary level subjects are not the best, and at times Deepani has been unable to clarify education, especially in STEM subjects. doubts in certain areas. Deepani wonders whether she can continue in the field of sciences, if her teachers lack the competency to instruct A recent IPS research study highlights the need for good quality teachers and guide her. Without doing well in mathematics and sciences at the for improving education outcomes of children at the O-Levels. A Ordinary Level Examination (O-Levels) next year, her dream to continue complimentary recent study examines the adequacy of quality teachers her studies in the science stream will be futile. to teach science, mathematics and English at the secondary level in the country. This article summarizes the main findings of the study. Deepani is a not alone in her concerns. IPS research finds that at present, close to half the students who sit for O-Levels fail the exam. In fact, being Surplus of Teachers, but Not Enough unable to meet the minimum requirement of a credit pass (C grade) in mathematics or science at the O-Levels is the main reason for the low Subject-qualified Teachers number of students in science streams in the Advanced Level (A-Level) According to the 2016 School Census data, Sri Lanka has an overall classes. According to the 2016 School Census Preliminary Report, surplus of teacherswho usually teach mathematics and science subjects; even of those who continue on to sit for A-Levels, less than a quarter that is, the number of teachers who mostly teach mathematics and (23 per cent) is in the science stream, while only a further 10 per cent science are more than the number recommended by the Ministry is in the technology stream. The majority (66 per cent) are in the arts of Education (MOE) in the first circular of 2016 on determining staff and commerce streams. Similarly, the distribution of students in public numbers in a school. universities is highly skewed towards the arts and social sciences, while enrollments in the natural sciences are much lower. However, this does not mean that all these teachers are subject-qualified. A teacher with either a degree or a specialized training in a particular Generating a high share of university graduates, especially in science, subject is considered as a subject-qualified teacher. Even though in many technology, engineering and math (STEM) subjects, is a policy priority countries teachers need to be especially certified to teach a subject, Sri for Sri Lanka, given the country’s goal of becoming a knowledge based Lanka’s teacher service does not have such a requirement. economy, driving competition through innovation. The 2018 budget 16 As Figure 1 indicates, the shares of available teachers are more than Diploma in Teaching (NDT). Untrained graduates have a degree, but do the recommended number of teachers (over 100%), indicative of overall not have pedagogical training. Those with NDT are trained teachers teacher surpluses. Nevertheless, the shares of subject-qualified teachers without degrees. This is in contrast to the best practices in other are much lower than the recommended number of teachers. countries. In most countries, a degree and a certificate in specialized teacher training is necessary to become a teacher. In Sri Lanka, only Issues with the Allocation of Teachers those who join the teacher service with a Bachelor of Education (BEd) have both a degree and specialized teacher training. But, School Census The MOE clearly provides guidelines on the number of teachers 2016 data show that only a very small share of those joining the teacher recommended for each school, based on the number of classes, service hold a BEd. availability of subjects, and the languages of instruction offered by the schools. However, our analysis shows that some schools have an excess of science and mathematics teachers, while others are sorely lacking in Policy Recommendations this regard. Our findings also show that more affluent schools, attended There is an urgent need to improve pre-service teacher training, currently by wealthier students, have better teachers than less-advantaged offered at the National Colleges of Education and at universities, to match schools. the demand for STEM teachers in schools. Improving and expanding the pre-service training of teachers and giving priority to recruiting teachers Unsystematic Recruitment of Teachers with proper pre-service training can help improve the availability of qualified teachers. Such training programmes should especially Unsystematic teacher recruitment is one reason for the inadequacy of cater to the demand for teachers in different subject areas. Teacher teachers. If teacher recruitments are properly planned, the number of training should also be well planned to meet the requirements of the teachers recruited should roughly match the number of teachers leaving teacher service. Further, teachers should be certified to teach different the teacher service. But, an analysis of School Census data shows that subjects and the subject knowledge of teachers should be taken into teacher recruitments are done haphazardly and arbitrarily. In some years consideration when filling vacancies. more than 20,000 teachers are recruited, while during other years less than 5,000 teachers are recruited. Lastly, teachers should be allocated to schools according to need, so that no school has an excess of teachers, and teachers are evenly distributed Also, teachers are often not matched to their subject-related education across all schools. Allocating teacher cadres for schools according to and training at recruitment. As Figure 2 shows, of the total number of the available classes, subjects, and mediums of instructions can prevent science and mathematics teachers joining teacher service in 2016, only a schools from recruiting teachers in excess. fraction was subject-qualified.

Unless qualified teachers are available in all classrooms, many students Limited Pre-service Teacher Training like Deepani will not be able to realize their dream of pursuing higher Opportunities studies in the science and technology field. Unless students interested The numbers of teachers trained by pre-service teacher training in science and mathematics are encouraged from a young age, and programmes are not adequate to meet the demand arising for teachers are given proper guidance, expanding science education at the tertiary each year. The majority of teachers recruited to the teacher service in level will remain a pipedream. Authors, Nisha Arunatilake is Director of Sri Lanka are untrained graduates, followed by those with a National Research and Ashani Abayasekara is a Research Officer at IPS.

Teachers as a share of recommended, 2016

Science: Total: 109% Subject-quali ed: 80%

Total:102% Math: Subject-quali ed: 61%

Source: Authors’ calculations based on 2016 school census data. Note: Data is for all secondary schools

17 Lack of English proficiency is a key constraint affecting the employability of Sri Lankan graduates in the private sector, according Building a More to a recent Labour Demand Survey conducted by the Department of Census and Statistics. Although teaching English as a second language to all school children has been a key social policy of successive English-Literate governments of Sri Lanka since the early 1950s, Census of Population and Housing data indicate that English literacy is just 22% among Sri Sri Lanka: Lanka’s population above 15 years of age. Recognising the critical need for strong English language skills in today’s context of increasing globalisation, technological advancement, The Need to and a modernized labour market, recent government policy has devoted attention to addressing persistent gaps in English education; the 2018 budget allocated Rs. 50 million for the establishment of a center for Combat Inequities training English teachers, while the previous government announced targets to double the number of English teachers over the 2011—2020 By Ashani Abayasekara period. Yet, are such policies the need of the hour? Based on an analysis of available data, this blog argues that what is more important is to address disparities in access to quality English education, rather than solely focusing on improving overall quality.

Unequal Student Outcomes Since 2003, the National Educational Research Centre (NEREC), based at the University of Colombo, has administered tests in the first language (Sinhala and Tamil), mathematics, science, and English to grade four and grade eight students in a representative sample of schools across the country. The latest assessments from 2015 and 2016 reveal low national English mean scores of 54% and 36% among grade four and eight students, respectively. Even more concerning is that these national averages mask considerable variation in scores both between and within schools. As Figure 1 shows, both fourth and eighth graders in urban schools outperform their rural school counterparts by significant margins. Further, there are wide disparities in scores within schools, particularly in urban schools. For instance, while 21% of eighth graders in urban schools scored within the 20—29 mark range, another 18 Figure1: National English Mean scores of Fourth and English Graders by School Location, 2016 Grade 8 Grade 4 Urban Rural Urban Rural

45% 33% 61% 49%

Above 80 20-29 Above 70 Below 40

21% 20% 23% 32%

Source:NEREC ( 2016, 2017), “ National Assessment of Achievement of Students Completing Grade 4 (8) in Year 2015 (2016) in Sri Lanka” , Ministry of Education of Sri Lanka.

20% scored above 70. Among fourth graders, 23% scored below the pass schools; privileged schools have more than enough competent English mark of 40%, while 32% scored above 80%.In fact, student heterogeneity teachers. It is thus not surprising that, students from rural primary schools in English has been identified as an issue in urban schools, primarily who enter urban schools lack basic English skills. due to national schools that admit students from rural disadvantaged schools—for instance via the grade five scholarship exam—who have Policy Implications had limited exposure to quality English education both at home and at Children from rural and less privileged backgrounds are doubly school. This means that a typical classroom consists of students on both disadvantaged as they lack access to good English education both at extremes of language proficiency, presenting English teachers with the home and at school. As a National Education Commission Report puts it, in challenging task of catering to different competency levels. Sri Lanka English “continues to be an agent of social differentiation”, with good quality education and jobs being limited to a select English literate Unequal Teacher Allocation population. The fact that many students miss out on being taught by Contributing to the problem of unequal student outcomes is an inequitable qualified English teachers despite Sri Lanka having an oversupply of them allocation of English teachers across schools. Contrary to what one would is a deep injustice. expect, recent IPS researchreveals that Sri Lanka not only has more than adequate overall English teacher numbers, but also an excess of subject- A potential measure to deal with student heterogeneity in classrooms is qualified ones—i.e. those with either a university degree in English or who to cater to students of different levels of competencies. A study among a have been specially trained to teach English. This is in contrast to sizeable sample of grade seven and 10 students in Sri Lanka grouped students in shortages of subject-qualified mathematics and science teachers in the a given classroom into three levels based on marks obtained for English country. The problem appears to be that most of these qualified English at the second term test. Students in these three different levels were teachers are concentrated in more privileged schools, leaving students in taught using different activities, in line with competencies identified in the remote schools at the hands of unqualified teachers. As Figure 2 indicates, Teacher Instructional Manual. Student performance showed improvements while qualified mathematics and science teachers are lacking in all school as early as the third term test, and were also evident in end of year tests, types, qualified English teachers are deficient only in underprivileged especially among less able students. Teaching at different levels within a given classroom is however a challenging task, and it is important that Figure2: Difference between Available subject-Qualified and teacher training programs include modules on related teaching techniques Recommended Teacher Numbers, by school status and preparation of learning material. 1000 Science Math English To tackle inequities across schools, efforts need to be directed at 500 improving teacher allocations to ensure that disadvantaged schools 0 are staffed with good English teachers. A study on teacher education notes that many existing policies on teacher deployment and transfers -500 in Sri Lanka are limited to paper, with some teachers using political and -1000 other influences to get transfers to schools of their preference. This is -1500 in part possible owing to the current practice of recruiting teachers by the Ministry of Education at the central level, which affords flexibility in -2000 moving between schools. Giving schools powers to recruit teachers at the Not privileged

-2500 Underpriviteged Highly privileged school-level could restrict teacher mobility. While less privileged schools Highly underprivileged

Privieged may not necessarily succeed in attracting qualified teachers, with more restrictions on teacher movement, recruited teachers in these schools Source: Arunatilake, N. and Abayasekara, A.”Are there good Quality Teachers will gain experience over time, which, along with in-service training, for all classrooms in Sri Lanka?” Colombo: Institute of Policy Studies. would improve teacher quality. School-level recruitment has already been Note: Sri Lanka public schools are categorized into five status groups based implemented in Estate sector schools among Tamil medium teachers who on school resources, amenities, and ease of access to a school are in short supply.

19 WHERE HAVE ALL THE WORKERS GONE? ‘Sectoral Mismatch’ between Labour Demand and Supply in Sri Lanka By Harini Weerasekera

The first “Labour Demand Survey”(LDS) in Sri Lanka, conducted by the operators, security guards, shop sale assistants, advertising and Department of Census and Statistics (DCS), recorded nearly half a million marketing professionals, and commercial and sales representatives, vacancies in the private sector. A large portion of these vacancies are topped the list. The survey also quantifies vacancies that are ‘hard-to-fill’ found to be in routine and non-routine manual jobs. However, most of and ‘recruitments’. The same occupations mentioned above fall into the Sri Lanka’s job-seekers are educated youth, who instead, search for top 5, with the exception of advertising and marketing professionals and white-collar jobs. This situation has given rise to a “sectoral mismatch” the inclusion of ‘cleaners and helpers’ (Table 1). between the demand and supply of labour in Sri Lanka. That is, a mismatch between sectors where job openings lie and sectors where As such, overall labour demand is largely concentrated in middle and job-seekers search for work. The blog discusses this mismatch using low-skill jobs involving manual tasks, rather than in high-skill jobs. IPS LDS data, and looks at ways in which it can be resolved. research has found similar evidence of there being a low number of vacancies for “good” jobs. When it comes to these “good” jobs, or jobs Labour Demand Profile: High Demand for in professional occupations, advertising and marketing professionals, nursing professionals, and mechanical engineering technicians top Manual Jobs the list, as per the LDS. Of these, only advertising and marketing The LDS revealed that of 497,302 vacancies in the (formal and informal) professionals fall into the top ranked high demand jobs (Table 1). private sector in the first half of 2017, vacancies for sewing machine

20 Table: Top Occupations with Vacancies and Recruitments on labour-intensive manufacturing. Experts in the apparel sector, for instance, have long Occupation No.of % of total Rank No.of Hard-to-fill Rank No.of Rank Vacancies Vacancies Vacancies Recuritments acknowledged the need to automate tasks in order to overcome labour shortages. Sri Lanka Sewing Machine 77,189 15.5 1 61,243 1 188,117 1 Operators was once able to compete as a low labour-cost Security Guards 57,008 11.5 2 45,316 2 114,237 2 destination, but this is no longer the case; rising Shop sales labour costs in Sri Lanka have made countries assistants 28,180 5.7 3 8,403 5 30,205 4 like Bangladesh and Vietnam relatively more Advertising and 21,067 4.2 4 - - - - competitive. Hence, Sri Lanka has reached a Marketing Professionals juncture where it seems timely for the sector Commercialand Sales 19,775 4 5 32,153 3 51,975 3 to transition away from labour-intensiveness Representatives towards automation in manufacturing, in the Cleaners and Helpers 18,614 3.7 6 8,852 4 28,024 5 absence of a labour supply pool to fill jobs. Source: LDS,DCS2017 What is Giving Rise to to suffer from slow job creation, which has Second, attracting foreign workers to fill partly contributed to this. IPS researchers have shortages in other types of manual jobs ‘Sectoral Mismatch’? also argued that the limitation in vacancies (cleaners, helpers, security guards, etc.) should could be stemming from job-seekers lacking also be considered. Although the general The LDS clearly signals the overwhelming competence in general skills required to public tends to oppose this idea, (ETCA being shortage of manual workers. These numbers secure a “good” job; English and ICT skills are the famous example) the motivation behind reinforce findings from a recent study on labour lacking, but are highly demanded by private this is based on the concept of labour market shortages in the manufacturing sector, which sector employers. A World Bank study found segmentation, under which labour demands notes that manufacturing jobs – particularly in that 80% of employers expect English literacy in certain sectors are met with the help of the apparel sector – are becoming increasingly from high-skilled workers although only 20% migrant workers when the labour force in the undesirable. Competing sectors such as of Sri Lankans are fluent in English. In addition, host country is unavailable or unwilling to take tourism and retail offer more competitive 30% of employers surveyed in the LDS cited on those jobs. Since locals are unwilling to wages, better working conditions, and higher communication skills as one of their top needs. fill certain positions, tapping the global talent social recognition. In addition, youth have pool serves as a practical solution in meeting shifted career aspirations from routine-manual Resolving the Mismatch: demand. jobs (such as factory workers) and non-routine manual jobs (such as security guards) towards Policy Implications While addressing shortages in high demand non-routine-cognitive jobs (such as computer- sectors is one priority in resolving sectoral based jobs) that require higher skill and mismatch, ensuring that people searching interaction. Over the next year, top hires are expected to be for jobs in high-skill sectors, can in fact in jobs for tailors and dressmakers (74,079), secure those jobs, is another priority. Although With the general increase in average wages of commercial and sales representatives (69,865), Sri Lanka’s education system has tried to Sri Lankans, toiling in factories for poor wages and sewing-machine operators (63,341). To incorporate soft-skills training into curricular, and engaging in manual tasks that provide little what extent can the demand for these middle- there is still a lack of desire on the part of the scope for career progression, are no longer skill manual jobs be met in the presence of students to learn English and ICT up to the desirable. This is reflected in the LDS data on sectoral mismatch? Policies need to focus on required private sector standards, as degree employer perceptions on reasons for vacancies re-adjusting demand towards more high-skill holders have been routinely provided with being ‘hard-to-fill’ – a quarter of employers sectors. public sector jobs. surveyed believe that lack of interest in the given job contributes to this (Figure 1). First, policies should look at automation as a One solution is making internships part of means of moving away from the dependency course curricular from secondary school Moreover, job openings remain onwards, akin to ‘summer Figure 1: Reasons for ‘Hard - to - Fill’ Vacancies (% Response) in sectors where job-seekers are internship’ programmes that are Seasonal or timely no longer searching for jobs. The limited work Other commonplace for students in supply of labour is young, educated, 3.4 3.7 other countries. Although these Remote location/poor programmes are already conducted and have aspirations for high-skill no. of transport Not enough people interested in some universities, being exposed jobs, in sectors outside those that 5.1 in doing this type are in demand. This gives rise to a Job entails shift of job to on-the-job training from an work/unsociable 25.4 earlier age will give students more sectoral mismatch between labour hours demand and supply. Apart from high 5.2 time to master these skills. This Too much demand manual jobs going unfilled, may help bridge the gap between Poor terms and competition another concern with sectoral conditions from other employee expectations and (e.g.pay) offered employers what workers bring to the table, mismatch is that sectors in which for post 21.3 job-seekers wish to supply labour 9.5 which might in turn, create more Salaries/payments have limited vacancies. Only 7.2% demanded for this openings in high-skill jobs desired of private sector vacancies are in Low number of applicants occupation are too high by the labour pool. qualified for the job 13.5 high-skill occupations, according 13.5 to LDS data. Sri Lanka is known Source: LDS, DCS2017

21 Geetha is an unskilled and uneducated female from rural Sri Lanka. As she was saddled Sub Agents and Migrants with financial issues and could not find a suitable job in Sri Lanka, she decided to seek employment in Saudi Arabia as a Female Dissecting their Relationship Domestic Worker (FDW). However, Geetha was clueless about how to proceed, and thankfully Somadasa – a Sub Agent from her village, to Guide Regulation helped her through the entire process. Now Geetha has a job (for which she did not have By Bilesha Weeraratne to pay any recruitment fees) that pays her a constraints, licensed recruitment agents have illegally withholding the passports of potential steady monthly income of LKR 35,000; she evolved to rely on Sub Agents, who informally migrants) in the recruitment process for foreign also received over LKR 200,000 as an upfront operate at the grass root level in areas where employment. The informal nature of their role incentive for taking up the job. potential migrants originate from, to work as and the absence of a regulatory framework a conduit between a licensed agent and a to control their conduct contribute to low Sub Agents like Somadasa play a significant potential migrant. accountability and high levels of misconduct by role in the recruitment of migrant workers Sub Agents. from Sri Lanka. However, to-date Sub This working arrangement between licensed Agents are informal stakeholders in the agents and Sub Agents also fits perfectly with As such, the government of Sri Lanka is recruitment process. As such, currently, there the needs of low-skilled potential migrant attempting to regulate Sub Agents. However, is increasing interest in Sri Lanka to regulate workers like Geetha, who come from less regulating these informal stakeholders is a Sub Agents and hold them accountable for educated backgrounds and belong to the complicated exercise. their conduct. In this context, IPS carried out lowest socio-economic stratum of society. a study to better understand the relationship For them, the recruitment process for foreign between migrants and Sub Agents and Efforts to Regulate Sub Agents employment is often strange, intimidating, and provide empirical evidence for policy Similar to the rest of South Asian sending complicated. As such, these potential migrants recommendations to regulate Sub Agents in countries, Sri Lanka has previously tried and are often reluctant to directly approach a Sri Lanka. This blog is based on the findings failed to regulate Sub Agents. In 2012, the licensed recruitment agent, but are more of the study. Sri Lanka Bureau of Foreign Employment willing to go to a Sub Agent, who is usually (SLBFE) issued identification cards to Sub a known person from their village. Moreover, Agents through the respective licensed despite the absence of a formal recognition for Role of Sub Agents agents. However, there were more Sub Agents Sub Agents play a critical role in recruitment Sub Agents, migrants have the misconception operating in the field than registered, and as for foreign employment from Sri Lanka, that Sub Agents are formal stakeholders in a result unethical and unregulated activities by linking potential migrants with licensed the recruitment process. As such, the services of Sub Agents continued. As such, in 2016 recruitment agents. Licensed recruitment of Sub Agents are common in recruitment of the SLBFE issued a circular requesting all agents often operate in the city centers, Female Domestic Workers (FDW) to the Gulf licensed agents to return the identification considerably far off from the rural villages Cooperation Council (GCC) countries. cards issued to their respective sub-agents. where potential migrants reside. This This circular implies the government position geographical distance limits licensed Misconduct of not recognising the operation of Sub Agents. recruitment agents from adequately reaching However, not all Sub Agents in Sri Lanka are However, the SLBFE did not take action out to their clientele. At the same time, the genuine like Somadasa and not all migrants are against the non-return of identity cards or the regulatory framework in Sri Lanka restricts as lucky as Geetha. As informal stakeholders continued operation of Sub Agents. licensed recruitment agents from establishing in the recruitment process, Sub Agents are branch offices. often criticised for their contribution to debt Now there is renewed interest to regulate Sub bondage and trafficking, over charging, Agents. Specifically, in March 2017, a Cabinet As a remedy to these legislative and capacity forging documents, and misuse of power (i.e. Paper with recommendations to regularize

22 Sub Agents was submitted by then Ministry for alternative licensed recruitment agents, lower probability to migrate. If this information of Foreign Employment, while the SLBFE is until an attractive commission is offered to the can be provided earlier on in the recruitment actively engaged in attempts to revise its Act to Sub Agent. Simultaneously, this submission process, potential migrants could be saved incorporate regulation of Sub Agents. of passport deprives the potential migrant of from adverse experiences in the recruitment alternative offers, as she is unable to approach process, and possibly ensured better outcomes One common element across all these failed other licensed agents or Sub Agents. This in terms of wages, incentives and probability attempts is the lack of empirical evidence to leads to lower bargaining power and related to migrate. guide regulatory efforts. The following are some lower promised wages and incentives for interesting empirical findings on the unique and potential migrants. However, lower financial Sub Agent Requested Fees dynamic relationship between migrants and outcomes are in the context of higher chance Sub Agents, that are valuable for regulating Sub of migrating, because a passport is needed Agents. to process the final steps of the migration process, and often these final steps are carried 22% to 38% Findings out by the Sub Agent on behalf of the licensed agent. Based on rigorous analysis, the IPS study finds that: Sub Agent Collected Passport A 8% Migrant’s misconception that the Sub Agent is a formal stakeholder leads to lower probability to migrate, lower promised wages, and lower 0.46% Probability of promised incentives. When potential migrants Migration are unaware of a Sub Agents’ actual formal Promised Promised Wages Incentives Promised Promised status and have a misconception that they Wages Incentives are formal, potential migrants are more likely Probability of -0.40% Migration to be intimidated, leading to accepting lower Sub Agent Collected Passport wage and incentive offers. Similarly, with such intimidation, potential migrants are less likely -5% to -6% Recommendations to follow up and pressurise Sub Agents about The findings of the study provide valuable migration. information to shape proposed revisions0.46% to M M the SLBFE Act to regulate Sub Agents. S A S „„ SLBFEPromised toPromised develop a mechanism to inform -22% to -74% Wages Incentives potential migrants about SubProbability Agents’ of current informal status, role andMigration capacity. It Sub Agent requesting money for his services is crucial that such information is provided leads to higher promised wages and higher to migrants earlier on in the recruitment Promised Promised Probability of -5% to -6% Wages Incentives Migration promised incentives, but a lower probability process. If Sub Agents are formalized in to migrate. The status quo for recruitment future, such updated information should be of a FDW to the GCC countries involves zero clearly disseminated in a timely manner. Often migration is a family decision, -0.09% to -0.16% recruitment cost to migrants. Yet, this finding reveals that recruitment fees are collected influenced by friends and community. As by Sub Agents, resulting in contradictory such, in addition to potential migrants, wide dissemination-22% to -74% of above information -7% to -14% implications to potential migrants. to the general public, beyond potential migrants, is important. Higher promised wages and incentives, Migrants’ Misconception about coupled with lower chance of migration reflect „„ SLBFESub Agent’sto develop Formala clear procedure Status to the misleading nature of Sub Agents with facilitate collection and return of passports by Sub Agents, and handing over same -19% to -60% ‘over promise and under delivery’. Fraudulent to licensed recruitment agents. This Sub Agents often offer unrealistically good procedure could specify the stage in the recruitment packages, with slim chance of Collection of the migrants’ passports by Sub recruitmentPromised Promised process where aProbability Sub Agent of actual migration, and attempt to earn an Wages Incentives Migration Agents leads to lower promised wages and can collect a potential migrant’s passport, income by misleading potential migrants. promised incentives, but a higher probability specify maximum duration for a Sub Agent to migrate. As per the existing regulations, to hold a migrant’s passport, and impose Transition from potential to current migrant as informal stakeholders, Sub Agents have the requirement to provide-0.09% receipt to -0.16%of enables migrants to realize the actual status of collection/return of passport. no authority to collect passports. However, Sub Agents. Given that Sub Agents are informal in practice, it is the Sub Agent who initially „-7%„ And to -14%finally, a clear structure for fee stakeholders, migrants start to realise the collects the passport from the potential migrant collection for Sub Agents ought to be former’s actual status through own experience. and hands it over to a licensed recruitment developed. This Fee structure could But this self-realisation requires one to agent. draw from the one currently adopted for go through the entire recruitment process licensed recruitment agents. and perhaps endure exploitation, abuse, As such, there are instances where Sub Agents vulnerability, lower incentives and wages, and -19% to -60% hold on to passports while they `shop around’

23 receive incoming migrant workers. The ability to retain skilled foreign workers, and continue to attract high-skilled migrant workers is contingent upon the development of policies that will cater to the needs Regulating of inbound migrant workers while leveraging the potential they hold to foster economic growth and development in the country. Managing the multi-dimensional challenges associated with migration, however, requires a set of comprehensive policies that are designed to maximize Inbound the benefits of migration, while minimizing the potential harmful costs associated with the movement of people across international borders. Migration: Current migration policy in Sri Lanka – the National Labour Migration Policy (NLMP) of 2008 – focuses on three main areas, namely: 1) governance of the migration process; 2) protection and empowerment ‘In’s and ‘Out’s of of migrant workers and their families; and 3) linking migration and development processes. The policy identifies that return migration Sri Lanka’s Policy and circulation are key opportunities for skills transfer and productive employment. Similarly, the NLMP of 2008 also notes that it would work to engage ‘transnational communities to harness the resources, skills and Framework expertise of Sri Lankans working in skilled and professional capacities overseas by providing incentives to return, contributing to home country By Bilesha Weeraratne development’. However, these aspects on transnational communities have not yet gathered momentum in policy implementation. With the recent signing of the Sri Lanka – Singapore Free Trade Agreement (SLSFTA), as well as the Economic and Technological At present, the NLMP explicitly excludes incoming migrants from its Cooperation Agreement (ETCA) with India that is being negotiated, there general purpose and scope. Hence Sri Lanka has no formal, regulatory has been wide public debate on the issue of allowing free movement of framework to govern immigration of workers. As a result, Sri Lanka lacks people across borders. domestic regulation to determine and recognize the foreign training, skills and education of incoming workers. The absence of an established Historically, migration policy in Sri Lanka has focused exclusively on protocol for training, skills and education recognition of incoming workers regulating the outflow of migrants. This is due in part to Sri Lanka’s has been one of the central themes in the criticism levelled against the status as a labour sending country. However, shifting dynamics hasten ETCA. Professional bodies related mainly to the IT sector and medical the need for stronger policies to increase Sri Lanka’s preparedness to field such as the Government Medical Officers Association (GMOA)

24 have expressed fear that in an environment where qualifications of the profession in Sri Lanka. For instance, a Sri Lankan with a British Barrister professionals cannot be guaranteed, less qualified/skilled workers who qualification or an L.L.B. qualification can sit for the final examination fail to secure employment in India would seek employment opportunities of the Law College of Sri Lanka and enter the legal profession after in Sri Lanka. completing the practical training and taking oaths. Perhaps these existing mechanisms targeting Sri Lankan nationals with foreign qualification Similarly, NLMP also leaves out any mention of students, be it incoming can serve as a foundation in developing a framework for qualification or outgoing. This reflects a significant loophole which must be addressed and credential recognition of incoming foreign workers with foreign in order to ensure the protection of migrant students. Another area that qualifications. the revised NLMP ought to focus is integration of immigrant workers, as integration policies are important to attract foreign workers into As indicated in the above two examples, the existing mechanisms host-countries. While immigration policies differ widely according to require foreign qualified professionals to sit local examinations prior country-specific policy aims, there are several key lessons to be gleaned. to professional activities in Sri Lanka. By contrast, Mutual Recognition Foremost, immigration policies designed to attract foreign workers must Agreements (MRAs), a key element of FTAs like ETCA, enable the go hand-in-hand with national policy instruments designed to effectively qualifications of migrant workers recognized by a professional body in integrate immigrants into host countries. Integration is considered to be the sending country to be mutually recognized by its counterpart in the the most effective way to realize the potential of migration. receiving country.

The introduction of such policies recognizes the responsibility of the This could eliminate the requirement to sit for local examinations and host society to ensure the right of immigrants and newcomers to replace the case-by-case credential evaluation. For instance, under fully participate in the economic, social, cultural and political life of ASEANs regional integration in services negotiation process, MRAs are the country. For non-nationals, the existence of such policies also signed for many occupations such as nursing services, engineering demonstrates the commitment of host-countries to protect and foster the services, architectural services, and medical and dental practitioners. wellbeing and development of migrant workers and their families. As per the MRA of Nursing Services, foreign nurses from other ASEAN countries could apply for registration/licencing to practice nursing in In contrast to the NLMP, the National Migration Health Policy (2012) takes the host country if they fulfil certain requirements including having a into account the needs of incoming migrants. However, it is severely nursing qualification, professional registration/licencing from the country limited in scope. Indeed, the policy sets out an imperative strategy of origin, and practical experience of over three years, to name a few. to increase access to vital health services for all incoming migrants Most importantly, the MRA identifies 10 nursing regulatory authorities in as well as to respond to potential health challenges arising from the the 10 member countries as bodies vested with the authority to control movement of persons across borders, which marks an important step in and regulate nurses and their practice in these countries, which will be the recognition of the rights of migrants workers and their families who mutually recognized by the other member countries. live and work in Sri Lanka. However, the policy itself is inadequate as a stand-alone regulator as it only addresses a single, albeit important, If Sri Lanka is to pursue ETCA and other such agreements, MRAs are to aspect of immigration policy. guide the recognition of qualifications of Indian personnel, some critical conditions to be considered are: A Protocol for Evaluating Credentials of „„ The minimum level of education required (entry requirements, length Incoming Workers of study, subjects studied) An important component of regulating incoming migrant workers is to „„ The minimum level of experience required (location, length and adopt a framework to determine their qualifications. If Sri Lanka is to conditions of practical training or supervised professional practice open its labour market to foreign workers, it is crucial to develop an prior to licensing, framework of ethical and disciplinary standards) authoritative framework that captures foreign credential evaluation beyond individual professional bodies. Such a framework would on „„ Examinations passed for professional competencies the one hand ensure that foreign workers competing with Sri Lankan „„ Extent to which Indian country qualifications would be recognized in nationals are equally qualified. At the same time, employers in Sri Lanka Sri Lanka will be able evaluate a pool of equally qualified talent – consisting of both - listing particular diplomas or certificates issued by pre-identified Indian local and foreign labour – to hire a worker who is best suited for the job. institutions, Most importantly, such a macro level authoritative competent authority would ensure an impartial evaluation of credentials, from a broader - by reference to particular minimum requirements to be certified by perspective which goes beyond the objectives of respective professional authorities in India, bodies. - including whether the possession of a certain level of qualification Currently, in selected professions such as medical doctors and lawyers, would allow recognition for some activities but not others. there are regulatory mechanisms to recognize foreign qualifications of Sri Lankan nationals. For instance, the Examination for Registration Similarly, the MRAs ought to outline the rules and procedures to be used to Practice Medicine in Sri Lanka (ERPM) – formerly known as Act 16 to monitor and enforce the provisions of any agreement, the mechanisms – is an overseas qualification recognition process carried out by the for dialogue and administrative co-operation between the parties, and the Sri Lanka Medical Council (SLMC) in conjunction with the University means of arbitration for disputes under the MRA. Grants Commission (UGC) of Sri Lanka. Sri Lankans with foreign medical qualifications who wish to practice medicine in Sri Lanka are required *This article is excerpt from the chapter ‘Retaining, Reintegrating, and to pass the ERPM. Similarly, the Law College of Sri Lanka conducts Attracting Talent for Global Competitiveness’ in Sri Lanka: examinations to accept Sri Lankans with British qualifications to the legal State of the Economy 2017.

25 This year, Sri Lanka celebrated the ‘contributing family members’ (involved in a family business or farming without payment), as they have no other choice. Men from the rural International Women’s Day nationally with the communities overcome this problem relatively easily by migrating to urban theme ‘Strong Woman Reveals, areas, where jobs are available. the Path for Progress’. However, limitations in mobility, familial responsibilities, and safety concerns prevent women, particularly married women and those with By Sunimalee Madurawala young children, from leaving their villages to search for jobs. On the contrary, when it comes to urban women, finding a job is not a difficult More than half the working population in Sri Lanka consists of women. task, especially for young and unmarried women. But, married women But out of the total working age population, the share of employed women with children from urban areas are concerned about the lack of flexibility is only 18%. At the same time, around 80% of the economically active in available job opportunities and their difficulties in balancing the job women of Sri Lanka are from the rural sector. The rural sector also records requirements and familial responsibilities. the highest unemployment rate for women compared to other sectors. The unemployment rate among rural women is 7.3%, which is higher than Rural women lack physical access to markets; all women need better the unemployment rates for both urban women (6.2%) and estate women negotiating skills: community consultations carried out by IPS during (4.1%). the study revealed that, regardless of gender, those in rural areas have difficulty accessing markets. They find it challenging to sell their products When empowering women economically, it is important to look at the at a fair price due to the heavy dependency on intermediaries, and failure differences in women’s needs and priorities from different settings in order to establish reliable channels in accessing markets. That being said, to introduce more effective development efforts. For example, most of the women in these communities are even more disadvantaged than their male rural women tend to engage in agricultural activities whereas the urban counterparts. Women find it more difficult to transport their produce to the women are employed in the non-agricultural sector. Thus, rural and urban urban areas (including loading and unloading, finding a suitable vehicle) women need to be considered separately. As part of an IPS recent study*, and are pushed around more when it comes to negotiating. Comparatively, women from both rural and urban communities were consulted to identify women from urban communities do not face such difficulties in accessing the factors that hinder them from being economically empowered. markets, but they also lack negotiation skills which is essential for effective market access. Barriers to Economic Empowerment Both rural and urban women lack financial literacy:there are many Limited job opportunities for rural women; no flexibility for urban loan schemes operated by various parties (state banks, private banks, women: even though there are scores of unemployed women who are financial institutes, and micro-finance organizations), in all parts of Sri willing to work in rural areas, there are only a few job opportunities for Lanka. However, due to tight procedural requirements of banks and other them at their villages. Many of them engage in agricultural activities as

26 There are so many micro-finance companies operating within villages and so many loan

“schemes are available for villagers. One loan

is take to settle another loan and another loan is taken to settle the second one. People have to work hard just to“ pay the interst. with this,women of these villages are more in devt ECONOMICALLY than ever before. EMPOWERING Nusra, from Eravur

SRI LANKAN Even though there are many woman who are looking for jobs at our villages, there are no WOMEN “opportunities for them; not even a garment “ factory is nearby. Earlier, there were few garment One Strategy factories, but now they are not functioning.

Does Not Fit All Padmini, from Padaviya

financial organizations (e.g., providing collaterals, finding state employees as guarantors), micro-finance organizations are preferred; most of them target women with special loan schemes. However, most of the community Relevent authorities“ should be members from rural as well as urban sectors are of the opinion that these infrmed about the disaster done by loan schemes are not helping women improve their economic status, but are a ‘trap’ that weakens women’s economic advancement. This situation “ the micro credit companies in our has arisen due to the lack of financial literacy and financial management communites. skills of women. Shanthi, from Kaduwela Rural women lack access to training opportunities, urban women lack knowledge on training opportunities: acquiring a recognized vocational to facilitate market access. Attention should be given in developing training qualification is an important starting point in obtaining a good job negotiation skills of both rural and urban women as it has been shown that or in starting a business. However, rural women find it difficult to attend men tend to achieve better economic results in negotiation than women. such programmes, owing to lengthy travel times and transport costs as Better management and understanding of finances: though micro-finance most of the vocational training programmes are conducted in urban areas; institutes and loan schemes offered by various institutions have widened on the other hand, urban women lack knowledge and information about credit access opportunities for women, women’s naivety about financial such programmes. and credit management has prevented the effective use of these schemes. Awareness creation, tight regulation, and more scrutiny can ensure the effective usage of such loan schemes. Breaking Down the Barriers It is important to use different strategies when addressing the issues faced Better reach for vocational training: if the authorities can make by women from different settings. A blanket approach will not be effective arrangements to offer vocational training programmes at the village level in this regard. More opportunities, more flexibility: for women in rural areas, or at close proximity, it would increase rural women’s participation in such the availability of job opportunities is the priority. Women who participated programmes. For urban women, effective communication and information at the community consultations from rural areas suggested setting up sharing is more important. Use of modern technology (mobile phones) and industries in close proximity, using resources available in the villages, to social media would give more effective results in sharing information with create more job opportunities especially for women. Work options such urban women. as flexible working hours and working from home can be introduced for women from urban areas. Better access, smarter negotiation: ruralwomen *This article is based on the research findings of the ‘A Desk Review to are mostly engaged in agriculture and self-employment, and therefore, Assess the Sri Lankan Girls’ and Young Women’s Economic and Social effective market access is crucial to selling their products at a reasonable Empowerment for Leadership’ done by IPS, with the guidance of the price. The community members proposed establishing collecting centers Ministry of Women and Child Affairs, and funding from Plan International at village levels and directly involving the government to buy the produce Sri Lanka.

27 leadership in decision making bodies at all levels, especially at the community level – the most critical entry point leading to national ‘LEAD LIKE A level leadership positions.

In this backdrop, the Ministry of Women and Child Affairs, and Plan International Sri Lanka, GIRL’ together with the Institute of Policy Studies of Sri Lanka (IPS) recently carried out a research study to identify the main obstacles Empowering faced by women when emerging as leaders at different levels. This article, based on the study, focuses on female leadership at the Sri Lanka’s Female community level. Benefits of Female Leadership Leadership At the national level, female leadership promotes policy agendas focused on inclusivity and empowerment, especially with only 2 women representatives accounting By Sunimalee Madurawala regard to increased access to education, for just 3.4% of total representation; more employment, and economic participation of than 80 years later, the eighth Parliament Sri Lanka is widely acclaimed for its women. At the business level, studies have of Sri Lanka (2015-present) still has only success in achieving many crucial human demonstrated little gender difference in key 13 female representatives. However, in a development indicators. However, surprisingly leadership qualities, such as innovativeness, landmark achievement, it has been made the country lags behind when it comes entrepreneurship, and intelligence. to achieving gender related targets set mandatory for all political parties to have 25% female representation in candidate lists at by global development agendas. Despite It is also evident that women are better than the upcoming Local Government Elections. boasting of having the world’s first female men when it comes to being compassionate But violence against female candidates prime minister, historically, Sri Lanka’s and organized – companies that have and discrimination against women within performance has been disappointing with female board members show significantly political parties are tainting this historical regard to women’s participation in decision better financial performance than those with milestone. This indicates the need for a more making at the national level. In the first low female representation. There are also Ceylon State Council (1931-1936), there were comprehensive approach to enhance women’s

28 many benefits of having women leaders it does not provide adequate support to build positions is mostly due to external barriers, at the community level; higher status in leadership qualities and to overcome the as mentioned above. Hence, to increase the the community, more women approaching negative self-attitudes among children. visibility of women at leadership positions, the community leaders, and increased a holistic approach is needed; enhancing numbers in civic associations, such as school Restrictions on mobility: mobility restrictions women’s leadership qualities should start management committees, development are mainly imposed by cultural beliefs and at early stages of life and at every level of committees, village development committees, social norms (e.g., “it is not suitable for society. With such backing, women will be and political parties, and more unity to take woman to go out during the night”). At the able to perform much better as leaders, action on local problems, such as corruption, community level, leaders are expected to especially at the community level. Women child marriage, and dowry to name a few. interact with others and act quickly in case of should be encouraged to take part in decision an emergency. But women may not have the making process by making them aware of Barriers to Female Leadership flexibility to be available and at all times of the the importance of such involvement and by day, especially at night. providing them required assistance both in at the Community Level monetary and non-monetary forms. Community discussions and consultations Lack of interest: even though community with stakeholders conducted under the above- leadership paves the way for political Most of the barriers facing women are tied mentioned IPS study confirmed that women’s leadershipin most communities, women to social norms and practices on gender. participation is prominent in Community deemed involvement in politics as a ‘non- Changing such gender norms and stereotypes Based Organizations (CBOs). In fact, women’s productive activity’ and a ‘waste of time’. is challenging and sluggish. Yet, Sri Lanka’s visibility in community activities is remarkably Most of them preferred to spend their time on education system can contribute immensely higher than that of men. Indeed, it is evident economic activities or with their families, over in speeding up this process by providing more that in many contexts leadership experience participating in political meetings and election gender-balanced education and by opening and social capital gained at the CBOs play campaigns. It was evident that a fear of up more avenues to develop girls’ leadership a critical role in formulating women political supporting a particular political party openly, qualities from an early stage. Women also leaders.However, even the most active female low presence of female leaders in politics, need to recognize and value their own selves members were reluctant to take up leadership prevalence of violence, lack of resources, and as powerful, and important. For this, they positions at these CBOs. The study revealed a lack of support from other women constrained need strong support networks and inspiration. number of reasons behind this hesitancy. women’s active political participation. *This article is based on the research findings Lack of recognition: the community of the ‘Assessing the Sri Lankan Girls’ consultations revealed that most of the Encouraging Women Leaders Community consultations revealed that and Young Women’s Economic and Social female CBO leaders are not satisfied with women’s low enthusiasm in taking leadership Empowerment for Leadership’ done by IPS the recognition they get from society. In with funding from Plan International Sri Lanka. some cases, they are disappointed by the support and appreciation from spouses and family members. Cultural and religious Barriers for Woman Leadership restrictions: in some communities, cultural and religious practices and beliefs impose at Community Level limitations on female leadership.

This could be observed mostly in the Muslim communities and among the estate communities. Uneven distribution of family responsibilities: this is another factor that limits women taking leadership at the Lack of Interest Lack of Recognition community level. In most families, the time and support given by males in carrying out day-to-day household chores are limited, and women are expected to tackle household duties and care work by themselves. As such, women are reluctant to take leadership positions in CBOs due to the difficulty in balancing family responsibilities with Cultural and Religious Restrictions Family Responsibilities community work.

Negative self-attitudes: false social perceptions about women leaders (e.g., “women are not ‘strong’ enough to lead”) and traditional stereotypes discourage women from realizing their leadership potential. Community members stressed that the current education system, which is more Negative Self-Attitudes Restrictions on Mobility exam-centric, is also responsible for this, as 29 Figure 1: Percentage of Underweight Children and Underweight Births MALNUTRITION IN SRI LANKA A Persistent Undereigt ildren Undereigt birt Source onstructed based on DHS Problem ote nthropometric measure weight-for-age is considered as a measure of underweight children. This inde is based on the WHO hild rowth Standards adopted in . Low birth weight is defined as a By Priyanka Jaywardena birth weight of less than g.

Although Sri Lanka performs well in most nutritional levels have not improved considerably Socio-Economically poor are more likely to health indicators, child nutrition is still a major over the years (Figure 1). be malnourished. Recent DHS-2016/17 data challenge. Sri Lanka Human Development Report reveals,a child of the “socio-economically 2012 revealed that poor nutrition is the chief Also, these numbers worsen when it comes to poorest” quintile is twice as likely to be cause of multidimensional poverty, accounting certain population groups, such as the estate underweight than a child in the socio- for 30% of the multidimensionally poor (based sector, where prevalence of malnutrition is economically richest quintile; among the poorest, on 10 indicators representing health, education, more severe irrespective of how malnutrition is 27.6% of under 5 year olds are underweight, and living conditions). Well-nourished people are measured. For example, 30% of children under while among the richest, only 12.5% of the under healthier, better learners, and more productive in 5 years of age (U5) are underweight while 25% 5 year olds are underweight. This means that life. Recognising the importance of improving the babies have low birth weight (Figure 2). those who are socio-economically better off, are nutritional levels, National Nutritional Policy (NNP) less likely to be underweight or malnourished. was initiated in 2010. However, recent nutritional In such deprived regions, there are deep rooted Further, IPS research on the “Causes of estimates of Demographic and Health Survey socio-economic factors which affect health Malnutrition in the Estate Sector”revealed (DHS) 2016/17 do not paint a positive picture and wellbeing of communities. As revealed thatthe main reasons for child and maternal about the current status of Sri Lanka. Despite in the “Socio-Economic Determinants and malnutrition in the estate sector were imbalanced countless initiatives to alleviate malnutrition, child Inequalities in Child Malnutrition in Sri Lanka”, diets – consisting of more starchy and fatty food 30

Figure 2: Prevalence of Malnutrition by Sector Poor dietary habits is a signifi- sanitation facilities, another contributory factor for higher prevalence of malnourishment in the cant reason for malnourishment estate sector in the estate sector Those in the estate sector continue their cultural DHS 2016/17 reveals that 57% of the estate dietary practices and consume more wheat sector households do not have access to a safe flour. Estate sector households’ average wheat drinking water facility, while 21% do not have flour consumption is steep, at around 10kgs per access to sanitary toilet facility, which negatively month, whereas average household wheat flour affect the health, wellbeing, and nutrition of this Undereigt ildLo eigt birt Maternal alnutrition group. Urban Rural Etate consumption is around 1.9kg (Figure 3a). On the Source onstructed based on DHS other hand, those in the estate sector consume ote ody Mass Inde MI classification is employed for identifying less animal protein; their expenditure for animal maternal malnutrition How to Tackle the protein is much less when compared to the and not enough high-protein food, – and high expenditure patterns of the other regions (Figure Malnutrition Problem alcohol and tobacco consumption. Further, it 3b). These poor dietary habits negatively affect National Nutrition Policy has recognized says these factors, coupled with the households’ their nutritional status. theimportance of targeting of nutritional poor socio-economic conditions and lack of interventions to underserved areas, the plantation education among women, perpetuate a vicious Figure 4: Household Average Monthly community, urban poor, and conflict affected cycle of malnutrition in the estate sector. Expenditure for Liquor and Tobacco areas. Further it has identified the necessity Following the previous research findings and to promote behavioural change among the given the higher prevalence of malnutrition in the Etate , population, enabling them to make right food estate sector, this blog revisits current status of choices and care practices. To be more affective policies must recognize and remove individual income security, dietary practices, and financial Rural , management of those belonging to the estate causes of malnutrition within the community. sector. For better targeting, it is important to identify Urban , food shortages, and diversities in diets that exist among community. Also, educational Socio-economically poor are , ,, , programmes on nutrition should be strengthened more likely to be Source: Constructed based on HIES 2016/17 to focus on the importance of nutritious food malnourished – what foods to select, how to prepare and feed children in relation to frequency, density, A main reason for malnourishment in the estate Poor financial management utilization, and the hygienic and nutrition value sector is because they are socio-economically escalates food insecurity in the of food. Such awareness programmes on health poorer. Although in the recent years poverty levels and nutrition should also cover complementary in the estate sector have reduced nearly fourfold, estate sector feeding and health promotion among children from 32% in 2006/07 to 8.8% in 2016/17, Although estate sector lags behind economically, and adolescents. Further NNP has recognised the this sector is still lagging behind compared to the expenditure on alcohol and tobacco in role of community organisations in programme the other parts of Sri Lanka. As reported in the this sector is roughly double, when compared planning, implementation, and monitoring Household Income and Expenditure Survey (HIES) to the average Sri Lankan (Figure 4). Estate of nutrition intervention programmes. For 2016/17, 64.6% of the estate sector households sector people are addicted to alcohol due better targeting, community must answer root are among the poorest 40% households of the to many reasons such as, being engaged in causes of malnutrition, with the help of trained country. Also, the HIES 2016/17 reveals that labour intensive work, habit, and cooler climate. individuals, and develop long-term solutions to the mean monthly per capita income for estate Also, there are many liquor shops available in the nutrition problem. Formation of women’s sector is remarkably low at around Rs. 8,566, close proximity, which also acts as a motivator groups, with backing of referral facilities, is when compared to the national average of Rs. for people to consume alcohol. Estate sector important to empower women to make the 16,377. It shows that, while the estate sector is households’ average monthly expenditure for right nutritional choices. Especially, community just pushing out of poverty, low income may still liquor and tobacco, as a percentage of their driven programmeshave a major role to play in hinder their food security. monthly food expenditure,is over 11%, negatively impacting the households’ food security. Poor improving the food security of the deprived estate sector. In addition, NNP proposes to implement Figure 3a: Monthly Wheat Flour Figure 3b: Average Monthly Household an evidence based community nutrition package Consumption Expenditure on Meat and Fish through community workers.

Interventions to increase household food security 12 3000 9.8 through with better financial management 10 2500 and campaigns against behaviours and 8 2000 practices such as alcoholism should be 6 Kg 1500 Rs. carried out amongst the youth in estates. Also, 4 1000 living conditions in the estate areas should 1.7 1.6 2 500 be enhanced by providing better housing 0 0 and increasing access to ding safe drinking UrbanRural Estate Meat Fish Dried fish water, sanitary facilities, drainage and waste

Rural Urban Estate management. Source: Constructed based on HIES 2016/17 31 Q:Can you briefly describe your journey at IPS? How long have you been with IPS and what are the different roles you have played at the Institute? I first joined IPS in 1995 as a Research Assistant. After one year at IPS, I left to pursue my PhD studies. I rejoined IPS in 1998 as a Research Economist. I was later promoted to INSIDE IPS a Research Fellow in 1999 and the Director of Research in 2018.

Q: What inspired you to choose labour and educa- Nisha Arunatilake tion related research as an In this edition of the Talking Economics Digest, we feature Ni- area of specialisation? I was always interested in doing micro applied sha Arunatilake, Director of Research at IPS. She has extensive economics. For my PhD, I specialized in health post-doctoral experience in conducting policy related economic and labour economics. When I joined IPS, there was already an established research unit research in labour market analysis, education, public finance and conducting health research. So I decided to health, and heads the Labour, Employment and Human Resource concentrate on conducting labour economics. Later I also conducted studies in education and Development unit at the IPS. She has collaborated with, and has health. been a consultant to different organisations, including the World Bank, United Nations Development Programme (UNDP), Asian De- Q: As Sri Lanka strives to create a knowledge-based economy velopment Bank (ADB), United Nations Educational, Scientific and in Sri Lanka, how helpful will Cultural Organization (UNESCO), United Nations Children’s’ Fund education research be when (UNICEF), and International Labour Organization (ILO) in numerous moving towards this goal? research studies. Dr. Arunatilake holds a BSc in Computer Science Talented human resources are a key component of a knowledge-based economy. Globally there and Mathematics from the University of the South, USA and an is a competition for talented people. Many MA and PhD in Economics from Duke University, USA. developed countries changed their migration policies to attract highly skilled workers at the turn of the millennium. Sri Lanka has also lost many talented individuals due to these policies. 32 Many developed countries changed their migration policies “ to attract highly skilled workers at the turn of the millennium. Sri Lanka has also lost many talented individuals due to these policies. Highly skilled workers are usually educated at the tertiary level and they are employed as professionals or semi-professionals. Highly skilled workers take long to train. Many developed countries changed their migration policies to attract highly skilled workers at the turn of the millennium.

Highly skilled workers are usually educated we will lose them to other countries. In the long term, I would like IPS to be a highly at the tertiary level and they are employed as sought after dynamic research center, that professionals or semi-professionals. I see two main challenges for Sri Lanka in improves the lives of Sri Lankans and the achieving this goal. The first is in improving, South Asian region, through policy research. Highly skilled workers take long to train. For modernizing, and expanding the tertiary In the short term, I would like IPS to initiate example, it takes at least 6 years after finishing education sector. The second is in facilitating and contribute to different policy debates in Sri high school for a person to get a Masters the creation of sophisticated professional jobs. degree. It takes even longer to get a PhD. So Lanka, and in the region, based on evidence. countries who want to be knowledge-based Q: What are some of the pre- economies need to plan ahead to ensure that Q: What are your proudest they train enough highly skilled workers to vailing gaps in education and supply the future demands for skilled workers. labour research in Sri Lanka? moments during your career?

A few decades ago, it was possible to assess Education research is very important in This is a difficult question. Maybe it was when the labour market and train workers to supply this regard. Unless education at all levels is I got my first Partnership for Economic Policy the future demands. But, the nature of work is improved, the country will not have a sufficient (PEP) research grant in 2005. The grantees constantly changing today, due to technological cohort of individuals able to obtain tertiary were selected through a global competition. change. The labour and education markets of level education and become productive the country also need to cater to this changing professionals. Without a high share of highly demand. However, the information collected skilled workers, it is difficult for countries to Q: What advice do you have on the education and labour markets in the develop and adopt new technologies and use for young researchers who country do not allow assessing these new them to improve productivity and growth. developments. are starting out their ca- Q: In your opinion, is this a reers in this line of work? The education sector in the country needs to be realistic goal for the Sri modernised and revived from primary grades In order to be a good policy researcher, you need Lankan economy? onwards. to develop your analytical, writing, presentation, and networking skills. Young researchers who It is a difficult dream, but not unachievable. join are usually very skilled in some areas, but Most advance countries are aiming to have at To do this, teacher recruitments, curriculum need development in others. I think it is im- least 40% of their employed in professional developments, the management of schools, portant that young researchers develop all their and the mechanisms in place for assessing and semi-professional categories. Only about key skills at an early stage. Those who do that students achievements need to change. Little 13% of workers in Sri Lanka are professionals become really good researchers. Others take is known about these aspects of education in or semi-professionals. So we need to plan longer to progress in their careers due to skills the country. well to increase the supply of tertiary educated gaps. (who usually take on professional and semi- professional jobs). Q: As the Director of Research Also, I think it is important for all young at IPS, how do you envision the researchers to develop an expertise early on in The country also needs to pay attention to their careers. Initially it is important to try out facilitating the creation of professional and future of the Institute? What are different research areas. But, in order to make semi-professional jobs. For, if the tertiary your plans for IPS during the a name, it is important to become an expert in educated do not get good jobs in the country, short-term and the long-term? one or two research areas. 33 IPS NEWS January – June

BRIDGING THE CLIMATE INFORMATION AND COMMUNICATION GAPS FOR EFFECTIVE ADAPTATION DECISIONS

IPS Research Fellow, Athula Senaratne, recently noted that gaps in information, technology, IPS NEW THINKERS’ SYMPOSIUM and policy are some of the main challenges in HIGHLIGHTS MACROECONOMIC tackling climate change and pointed out that STABILITY AS TOP POLICY GLOBAL VALUE CHAINS AND farmers in Sri Lanka are especially vulnerable PRIORITY FOR SRI LANKA STANDARDS FOR TRADE IN ASIA to climate information gaps. Commenting on the government’s economic IPS Research Fellow, Janaka Wijayasiri, Dr. Senaratne made these observations reform plans in view of the local government remarked that the tea industry in Sri Lanka, at a stakeholder workshop for the project poll results, State Minister of National Policies which is predominately export oriented, is titled ‘Bridging the Climate Information and and Economic Affairs, Harsha De Silva, said increasingly governed by strict and complex Communication Gaps for Effective Adaptation the reforms will need to continue but the standards. government may need to go for the “third best Decisions: An Integrated Climate Information solution.” Management System (ICMIS)’ on 04 January He made these remarks at a ‘Seminar on Global 2018 at the Department of Meteorology, Speaking at the New Thinkers’ Symposium, Value Chains and Standards for Trade in Asia’, Colombo. organized by IPS on 27 February 2018, he organized by Institute of Developing Economies, said “operation successful, patient dead,” Japan External Trade Organization (IDE-JETRO) referring to the setback in the election, despite and the Ministry of Development Strategies current improvement in macroeconomic and International Trade (MODSIT). The Seminar measurements, and trade and investment was held on 29 March 2018 at the Dr. Saman flows. Kelegama Auditorium, IPS.

IPS EXECUTIVE DIRECTOR CALLS FOR FRESH RETHINKING OF THE PROPOSED BIMSTEC FREE TRADE AGREEMENT IPS Executive Director, Dushni Weerakoon, IPS RESEARCH FELLOWS NEED TO TRANSFORM SL’S recently argued for a fresh rethinking of the PRESENT PUBLICATION ON FOREIGN FINANCES FROM LOANS proposed BIMSTEC Free Trade Agreement MIGRATION TO SECRETARY OF TO INVESTMENTS”, PM SAYS AT (FTA), given that the initial conditions under FOREIGN AFFAIRS SAMAN KELEGAMA MEMORIAL which trade and investment integration was CONFERENCE conceived under the Framework Agreement IPS Research Fellows, Bilesha Weeraratne and of 2004 is much different to current national, Janaka Wijayasiri, met Secretary of Foreign Delivering the Keynote Address at the Saman regional, and global economic interests of the Affairs, Prasad Kariyawasam, to present a copy Kelegama Memorial Conference, Prime member states. of the IPS study ‘Cost of Low-Skilled Migration Minister, Ranil Wickremesinghe, noted that Sri to Saudi Arabia, South Korea and Malaysia: Value Lanka has to address weaknesses in trade Dr. Weerakoon made these remarks while Chain Analysis.’ competitiveness, eliminate trade barriers, tackle serving as a panelist at the session on anti-dumping legislation, and help domestic ‘Trade and Economic Integration’ at a Dr. Wijayasiri also presented the Secretary with industries become competitive. Regional Conference on Advancing BIMSTEC the latest copy of the Talking Economics Digest, Cooperation, organised by the Delhi Policy and discussed means of better dissemination of The policy aim of the government is to create a Group (DPG) and The Asia Foundation, New the articles and publication to Sri Lankan missions dynamic private sector, which will drive growth, Delhi on 26 – 27 April 2018. abroad to strengthen policy engagement. he further highlighted.

34 LATEST PUBLICATIONS

Cost of Low-Skilled Migration to Saudi Arabia, South Korea Sri Lanka Tea Industry in Transition: 150 Years and Beyond and Malaysia: Value Chain Analysis – Sri Lanka

By Bilesha Weeraratne, Janaka Wijayasiri, Edited by Janaka Wijayasiri, Nisha Arunatilake and Suwendrani Jayaratne with Saman Kelegama

January 2018 The tea industry in Sri Lanka has played an important role in terms of its contribution to the national output, employment and net foreign Labour Economics Series No. 20 exchange earnings from its inception in 1867. The industry has undergone a number of changes over Migration cost is distributed among many the last 150 years. During this period, the ownership stakeholders in the migration value chain of tea lands has changed from privately-owned large (VC). This paper utilises VC framework to scale tea plantations to nationalized tea plantations conceptualise the migration process and the managed by the state, and to the present day regional cost for low-skilled workers from Sri Lanka (LKA) to plantation companies owned by private companies. Saudi Arabia (SAU), South Korea (KOR), and Malaysia (MAS). In recent times, the smallholder sector of the tea industry has also grown The study adopts a qualitative methodology and collects data through eclipsing the tea plantations as the main source of tea production Key Informant Interviews and Focus Group Discussions in Sri Lanka. in the country. The industry is changing rapidly in many other ways The study identifies employers, recruitment agents in SAU and LKA, as well, due to the increased international competition, expansion of Sri Lanka Bureau of Foreign Employment (SLBFE), sub-agents, and the small holder tea sector, labour issues, automation, changes in migrants as the key players in the VC for SAU. demand for tea, climate change and multiplication of quality standards.

Sri Lanka: State of the Economy 2018 Climate Change, Food Security and Disaster Risk Management

The IPS’ annual flagship report Sri Lanka: in the Global Climate Risk Index for 2018. Against this backdrop, the Sri State of the Economy provides a critical Lanka: State of the Economy 2018 report draws attention to ‘Climate assessment of the country’s economic Change, Food Security and Disaster Risk Management’ as its main performance and near term outlook for thematic focus to examine the many interrelated socio-economic impacts growth and macroeconomic stability. Each that need policy consideration. year, the report also examines crucial medium term policy priorities to achieve sustained Climate change impacts exacerbate prevailing conditions of inequality. growth and strengthen socio-economic Disasters have a disproportionate impact on those with low incomes; they development outcomes for the country. face higher risks from poorer living conditions, and are more reliant on vulnerable sectors like agriculture for livelihoods. Sri Lanka’s most significant economic milestone in 2017 was the gradual reclaiming of The report addresses key topics on: macroeconomic stability with prudent fiscal, monetary and exchange rate policy management. Stronger economic fundamentals, and the expected „„ Transitioning Sri Lanka towards a Climate Resilient Low Carbon boost to investor sentiment, offer a transformative promise of sustained Economy and lasting growth. The question is whether despite the positive progress on the macroeconomic front, private investors will hold-off, uneasy at „„ Climate Change, Food Security and Rural Livelihoods in Sri Lanka the prospect of what promises to be testing electoral times ahead for the „„ Climate Change and Disasters: Managing the Risks in Sri Lanka country. „„ China’s Belt and Road Initiative (BRI): A Sustainable Partnership for Sri Lanka? Within a narrow growth corridor, the Sri Lankan economy remains exposed to both domestic and external shocks as never before. The immediate „„ Linkages in Climate Change, Migration and Remittances in Sri Lanka worries on the external front are the threat of rising oil prices and a shift to „„ Building Resilience: Public Investments to Improve Sri Lanka’s Rural a more decisive phase of interest rate tightening in advanced economies. Economy On the domestic front, Sri Lanka’s economic vulnerability to climatic-related „„ Managing Risks through Sri Lanka’s Microinsurance System shocks is on the rise. Massive losses due to disasters within a relatively short time period have seen the country climb up the ranks to fourth place „„ Addressing Nutritional Risks: A Persistent Problem in Sri Lanka

Visit our YouTube Channel ‘IPS Sri Lanka’ for Interviews with the Authors. For Details on IPS Publications Contact: Amesh Thennakoon, Publication Officer,011 214 3107 or 011 214 3100 | [email protected] or [email protected] 35 CONTRIBUTORS 36 Ashani Abayasekara Nisha Arunatilake Kithmina Hewage Priyanka Jayawardena Ashani Abayasekara is a Nisha Arunatilake is the Director Kithmina Hewage is a Research Priyanka Jayawardena is a Research Officer with research of Research at the IPS. She Officer with research interests in Research Economist at the interests in labour economics, heads the Labour, Employment international political economy Labour, Employment and Human economics of education, and Human Resource including WTO issues, trade Resource Development research development economics, and Development research unit. Her and development, export unit at IPS. Her research microeconometrics. research interests include labour competitiveness, and Foreign interests include education market analysis, education and Direct Investment. Kithmina is and skills development, labour skill development, migration also a member of the Talking economics, inequality analysis, and development and health Economics Team. health economics and child economics. nutrition.

Sunimalee Madurawala Shihara Maduwage Nuwanthi Senaratne H. N. Thenuwara Sunimalee Madurawala is a Shihara Maduwage is Manager Nuwanthi Senaratne is a Research H. N. Thenuwara is a Research Economist at the - Communications & Strategic Assistant whose research interests Distinguished Fellow of IPS and Health Economic Policy Unit. Outreach at the IPS and the include trade and international an Adjunct Assistant Professor at political economics including the Her research interests include Editor of Talking Economics. the University of Iowa, USA. health economics, gender and role of trade negotiations, sanctions and international relations as population studies. well as topics in development economics.

Harini Weerasekera Bilesha Weeraratne Janaka Wijayasiri Charmaine Wijesinghea Harini Weerasekera is a Research Bilesha Weeraratne is a Research Janaka Wijayasiri is a Research Charmaine Wijesinghe is Manager – Assistant at IPS, working in Fellow at IPS focusing on internal Fellow at IPS. He has over 12 years Publications & Events at IPS and is the areas of macroeconomic and international migration and of experience on trade policy issues a member of the Talking Economics policy and planning, labour and urbanization. She is also interested and heads the International Economic Team. migration, and econometrics and in labour economics, economic Policy Unit. He is a member of the economic modeling. development, and economics of Talking Economics Editorial team. sports. She is a member of the Talking Economics Editorial Team.

37 The Cabinet, in February, granted approval to reduce lease FAST FACTS payments for leasing state land for commercial agriculture purposes. The much-touted Sri Lanka – Singapore Free Trade Agreement was signed on 23 January 2018 and was expected to deepen economic ties and facilitates greater trade flows between the two countries.

After a 17-year-long pursuit, Sri Lanka’s new Inland The Asian Development Bank Sri Lanka’s Parliament passed Revenue Act took effect from (ADB) approved a US$ 100 the Anti-Dumping and Counter- 01 April 2018. million results-based loan for vailing Duties and Safeguard the government’s efforts to Measures in March 2018 to develop skills to meet labour advance the country’s standing demands, economic diversifica- in global trade. tion, and enhance productivity.

China imposed tariffs worth US$ 34 billion on US goods, including agricultural products, in retaliation to the The Port of Colombo recorded a escalation of tariffs on 16.2% growth in container Chinese steel and aluminium handling for the 1st quarter of imports by the Trump admin- 2018, relative to the preceding istration in June 2018. year. Among global ports, Sri Lanka’s growth rate was only second to the Port of Singapore. The World Bank approved a US$ 100 million credit line to support Sri Lanka’s efforts to strengthen and modernize its education system.

In May, the New Development Bank (NDB) set Asian stocks slumped to a up by the BRICS economies approved six new nine-month low at the end of projects, which brought its up to over $5.1 June 2018 in response to the billion across 21 projects. Two of these were increasing threat of a trade non-sovereign loans, which are issued to war between the US and companies without a government guarantee. China escalating further.

38 Vision 2025 is aimed at Sri Lanka’s tea industry An analysis of the key 04 steering the economy 06 has survived for over 150 08 features in the much touted towards more sustainable years. What are challenges Sri Lanka – Singapore FTA, means of growth, led and opportunities facing a milestone moment in the by foreign and domestic the tea industry of Sri trade and economic relations private investment. Is Sri Lanka and how should the between the two islands. Lanka on the right track in country move forwards? this regard?

Given the necessity to What are the gaps in How will a FTA with simplify trade procedures, 12 policymaking and priority Malaysia impact Sri Sri Lanka has identified 14 10 areas for educational reforms Lanka? Likely gains from the implementation of a in Sri Lanka? bilateral trade liberalisation Single Window (SW) for in goods will be limited trade as a national priority to few products, but and currently a blueprint is there might be gains in being developed. investment flows to Sri Lanka.

In today’s globalised The first ever “Labour 18 environment, English 20 Demand Survey” in Sri Generating a high share of proficiency is a must-have Lanka recorded nearly 16 tertiary educated university skill, especially when it comes half a million vacancies in graduates, especially in to the highly-competitive the private sector. A large STEM subjects, is a policy job market. What are the portion of these vacancies priority for Sri Lanka, reasons for the lack of English are found to be in routine given the country’s goal language skills in Sri Lanka? and non-routine manual of becoming a knowledge Are the government policies jobs. based economy, driving directed towards addressing competition through these issues? innovation.

When it comes to empowering Sri Lankan With the signing of the Sri women in economic Lanka – Singapore Free 26 24 terms, there are no one- Trade Agreement (SLSFTA), Sub Agents play a size-fits-all solutions. It is as well as the Economic significant role in the important to look at the 22 and Technological recruitment process of differences in women’s Cooperation Agreement migrant workers from Sri needs and priorities from (ETCA) with India that is Lanka. There is increasing different settings, in being negotiated, there has interest in Sri Lanka to order to introduce more been wide public debate formalise Sub Agents and effective development on the issue of allowing hold them accountable for efforts. their conduct. free movement of people across borders. IN A NUTSHELL 39 40