In fact, only 20% of workers held high-skilled jobs in 2023, down from 23% in 2018, partly due to the emigration of skilled workers seeking better wages abroad.

The IPS highlighted that this economic situation has created a 'low productivity trap', which hinders recovery efforts across various sectors.

All sectors, including agriculture, industry, and services, have experienced negative labor productivity, although the ICT sector reported the highest output per worker.

Youth inactivity has been linked to disruptions in education, underscoring the need to enhance Technical and Vocational Education and Training (TVET) and promote youth entrepreneurship.

To retain skilled workers, it is essential to offer competitive salaries and benefits, alongside support for knowledge-based industries and professional development.

The IPS recommends investing in technology, infrastructure, and skill development, particularly in the agriculture sector, to improve overall productivity.

Moreover, a new public management approach is suggested to balance public sector size and salary adjustments for more effective governance.

Finally, the IPS emphasized the importance of improving public sector efficiency and addressing the declining government expenditure on investments.

The Institute of Policy Studies (IPS) recently launched its 'State of the Economy 2024' report, which addresses critical issues in the education sector, labor market, and public sector.

Key concerns in the labor market include rising inactivity, declining productivity, and a decrease in high-skilled employment.

Sri Lanka has faced six consecutive quarters of negative economic growth, leading to lower wage rates and a decline in workforce participation.

This economic downturn has resulted in a drop in the labor force participation rate from 51.8% in 2018 to 48.6% in 2023, with the employment-to-population ratio also falling from 49.5% to 46.3%.