Covid-19 has inflicted wide-ranging and long-lasting effects on the world population impacting social life, livelihood, working conditions, and even personal freedom. One of the worst effects of the pandemic is the increasing youth unemployment. This is expected to last many years, if not addressed promptly. Youth in Sri Lanka is experiencing significant disruptions to education, job losses, and other psychological issues. The projected rise in economic inequality and decrease of employment opportunities would have a negative impact on youth particularly and on the future of the country as a whole.
Every year approximately 300,000 youngsters look forward to enter the labour force, and the figure escalates yearly. If employment is not available for these youth, the number would accumulate. Regrettably, none of the past governments had a proper action plan to address this all-important issue until President Gotabaya Rajapaksa introduced strategies through his manifesto last year.
However, due to the emergence of the virus, he was unable to take continuous and constructive action. Nevertheless, amid the crisis, despite the financial constraints, he managed to give some relief to unemployed youth by providing 100,000 jobs in the Government to deserving families, and another large number to the unemployed graduates. Due to the ongoing pandemic situation, his original action plan described in the manifesto may have to be amended to face the new challenge.
According to the latest figures, youth unemployment stands at approximately 27 percent and is increasing. Those between the age of 18 and 25 are the most affected group (United Nations classification of youth is the age between 15 and 24) in Sri Lanka. This group is commonly referred to as ‘NEET’ that is, “not in employment, education, or training” and described as those not gaining experience in the labour market nor earning an income.
The causes of unemployment are complex. In Sri Lanka, it is mostly due to the disparity in education, inflexible labour market, dependency on parents, and so forth. Many youngsters tend to avoid employment and continue to depend on their parents even when they can find jobs. Often, these youngsters expect white-collar jobs at the beginning of their careers forcing employers to keep away. Many business leaders that this writer interviewed had this negative view based on their experiences.
Youth employment
For example, one employer said he offered a job to an unemployed youngster in the sales sector whereby he could earn a substantial income, but the applicant had turned down the offer saying that the job was too hard and that he was looking for an easier job. Many other employers, including myself have had similar experiences. This is similar to graduates looking for government jobs without stress and in comfortable surroundings. Even when youngsters are made aware of the difficulties of the post-Covid-19 job market, they tend to ignore the reality.
Long before the emergence of the Coronavirus pandemic, youth employment was a pressing issue in Sri Lanka fluctuating between 20 and 28 percent during the past two decades. The effect of Covid-19 would be devastating if at least a quick short term solution is not found as employment generation has decreased to a low in the private sector. Employment in sectors such as tourism, retail, imports, transportation, and other trades will be scarce in the next few years. If the trend continues for long it could lead to dangerous social unrest which the country has experienced several times.
With the fast aging population, it is imperative to find ways and means to engage youth productively in economic activities. As President Rajapaksa continuously emphasises, it would be more appropriate for the young generation to create self-employment rather than searching elsewhere for jobs. He has pledged to provide adequate income-generating assistance to those willing to do so. The President believes that youth entrepreneurship can provide more productive results than economic benefits to society.
Lay-offs
Adding to the woes of the new entrants, lay-offs due to the setback created by the pandemic has also become a grave issue. Many job losses in various fields such as tourism, wholesale and retail trade, accommodation, and food services sectors are being reported. The worst scenario is that some of these private sector establishments will not re-open even when the pandemic is fully controlled. The worst-hit are those between 20 to 30 years who are often the ‘first out’. These youngsters fear the uncertainty of the future. Creating new employment opportunities for both these segments would be a daunting task for the authorities.
While the primary responsibility lies with the government, the most effective solution can be given ‘only’ by the private sector. The Government has limited options in providing jobs as public funds are utilised to pay salaries. They cannot keep on adding to the already over-crowded public sector. Particularly, considering the economic slowdown, foreign debts, and enduring health expenditure, the State cannot provide government employment to youth in the coming years. Therefore, the only pragmatic solution at present is to provide maximum cooperation, assistance, and concessions to the existing private sector establishments that can generate business. Also, encouraging young entrepreneurs to start their own businesses will reduce the burden to a large extent.
Assisting SMEs and encouraging potentials to start a business is one of the best remedies available to meet the challenge. The government has already introduced various concessions to the SME sector even though their functionality needs to be monitored. President Rajapaksa recently said that he will establish a Development Bank to disburse loans based on project viability instead of collateral.
This move will be one of the best decisions taken on the SME sector by any Head of State so far. If the implementation is monitored properly, it will produce great results to solve the unemployment crisis. However, proper plans must be introduced to leverage current skills and capabilities, fast track issuance of authorizations if required, and offer maximum technical support where necessary.
New entrepreneurs
Even when the Government’s stance is clear that the utmost backing should be given to new entrepreneurs, the red tape that prevails in the public sector and state financial institutions is a hindrance. The Government must introduce a monitoring arm to supervise and regulate these institutions. The SME sector is already making a sizeable contribution by way of employment, much more than large scale organisations.
At this time of emergency, an economy that is driven by young entrepreneurs would be an effective solution to minimise unemployment in the long run. The Presidential manifesto has pledged assistance through the establishment of counselling centres, support technology through relevant ministries, financial advice and assistance through ‘National Youth Fund’, and concessional loan schemes.
Regrettably, thus far, there is no visible action on any of these for the interested entrepreneurs. Even the various institutions that existed before seem to be inactive. Therefore, an eagle eye scrutiny is essential at this crucial moment.
A prompt response to tackle youth employment post-Covid-19 is essential. A separate task force must be established, perhaps under the economic revival task force, to find a lasting solution.
Even when a cure that the whole world is looking forward to is available, the impact created by the deadly virus would exist for a considerable time. However, looking at the issue optimistically, history has shown that humans always overcame all previous pandemics and recovered normalcy. Hence, a systematic, short, and long term answer is needed to meet the challenge.