Bringing skilled workers into Sri Lan Is it a viable option?

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1 Bringing skilled workers into Sri Lan Is it a viable option? Nisha Arunatilake October 2018 Institute of Policy Studies of Sri Lanka

2 Sri Lanka is facing a labour shortage Construction sector - 20,224 Total - 497,302 Industry sector - 195,474, Services sector - 188,020 Tourism sector - 10,207 Plantation sector 3,037 Source: DCS, 2017

3 Science and engineering prof. Health prof. Teaching prof. Business and administration prof. ICT prof. Legal, social and cultural prof. Science and engineering asso.prof. Health asso. prof. Business and administration asso. prof. Legal, social, cultural and related ass. prof. Information and communication technicians Sri Lanka is facing a skill shortage 160, , , ,000 80,000 60,000 40,000 20,000 - Post graduate degree Tertiary level - vocational training Degree Less than tertiary level Source: IPS, DCS, Census 2012

4 Why are we facing labour shortages?

5 1.The demand for high skilled workers is increasing Total Managers, Senior Officials and Legislators Professionals Technicians and Associate Professionals Clerks and Clerical support workers Services and Sales workers Skilled Agriculture Forestry and Fishery Craft and Related Trades workers Plant and Machine operators and Assemblers Elementary occupations Armed Forces Occupations & unidentified Growth ( ) Share of total

6 Labour force growth is slowing down Labour Force (15-64) IPS, based on Census 2012 and LFS data

7 Labour Force (15-64) Population (15-64) partly due to population trends Labour Force (15-64) Population (15-64) Source: IPS

8 Sex Age group Location Level of education partly due to lower participation rates Post Graduate Degree Passes A/L Secondary completed Below Secondary Primary Estate Rural Urban Adult (30 to 64) Youth(15-29) Female Male Total Percentage point difference in LFPR 2006* -2014* Source: IPS, LFS data

9 3. Labour force is ageing Employed, by age group * Source: IPS, LFS 2016 ; Note: * Excludes NP

10 4. Labour force is getting more educated, but slowly Employed, by level of education Primary or below Lower secondary O-Levels 2008* A-levels or above Source: IPS, LFS 2016 ; Note: * Excludes NP

11 But education participation is not at the tertiary level year olds School Vocational/ Technical Institution Does not Attend University Other Edu Institution

12 5. Reasons for labour shortages People not interested in job Too much competition Poor terms and conditions of job Salaries/payments demanded are too high Low number of qualified applicants (DCS, 2017)

13 Labour shortages are not unique to Sri Lanka

14 USA

15 USA changed migration policy around 1990 Demographic Factors Difficulties in increasing FLFP Increasing demand for skilled workers US Council, 1990

16 USA migration policy trends Prior to 1990 After 1990 Trends Immigration on humanitarian grounds, Illegal workers Immigration on economic grounds Increased demand for skilled workers Policies Visa s for skilled workers and students

17 US Foreign-Born Population Foreign-Born Population (No. millions) Source: US Census Bureau, 2014

18 USA immigration visas Alien worker Alien Entrepreneur Visa type Employment based immigration Green card through investment Comments Sponsored by US employer $1,000,000 USD business investment Other Alien Green card through lottery high school graduate or have two years of work experience within the past five years Other Family based immigration

19 UK

20 Work permits issues by UK Source: Balch (2010)

21 UK immigration trends Trends Pre (about 33%) of immigrants from USA (less than 10%) Japan, India, Australia and New Zealand Post % - USA 19% - India % - India 13.5% - USA Policy change Zero-immigration Managed migration - Reduce irregular migrants/ asylum seekers - Attract high skilled workers (point based system)

22 UK immigration visas Type of visa Comments Five tier visa system Tier 1 Tier 2 High-value migrants from outside European Economic Area (EEA) Skilled workers' from outside the EEA (e.g., entrepreneurs, investors) Workers of an international company Workers to fill shortages Tier 3 Low-skilled workers Fill temporary lowskilled worker shortages Tier 4 Tier 5 Other visas Students Special category temporary workers Visitor, family, business Six sub-tiers of temporary workers (e.g., sporting, etc.) Source:

23 Spain

24 Foreign residents in Spain (No.) Source: Balch (2010)

25 Spain immigration trends 1980s -1990s Trends Increase in irregular migrants Policy changes Governed by EU laws Immigration - temporary Quotas by country of origin Employer sanctions for irregular workers 1991 Increase in irregular migrants Regularization of immigrants 1994 Family reunification Post 2004 managed migration Rapid increase in regular migrants On Economic grounds Low skilled workers (agriculture, construction, tourism)

26 Spain immigration visas Type A Type B Initial Type B Renewed Type of Visa Temporary and/or seasonal workers (9 months) Long term (maximum one year) Long term (maximum two years) Comments Renewable (leads to next visa type) Leads to Type C visa) Type C Long term (indefinite), renewable every 5 years Only employers are allowed to apply for work visas! Source:

27 South Korea

28 South Korea immigration trends Migration trends Prio to 1980s Labour Exporter West Germany - mining and nursing Middle East - construction Post 1980s Economic development, industrialization, demographics Less workers for go ddd (dirty, dangerous, difficult) jobs Foreign workers increased. Policies Industrial Training Program for Joint Ventures (JVTP) Industrial and Technical Training Program (ITTP) to import labor in 1993 Since 1990s Labour Shortages MOUs with labour exporting countries

29 Sri Lanka

30 Sri Lanka immigration trends 1980s - Now Current Migration trends Increase in emigration of workers Some immigrants in BOI companies (Director & Managerial and Technical & Skilled workers) A large number of foreigners from India, China and Bangladesh are already working in different sectors Policies Promote foreign employment Workers come under 1) Intra-company transfers, 2) Contractual suppliers, 3) Business visitors

31 Solutions to labour shortages

32 Coping with skills labour shortages - Increase LFP Example Train available workers Improve incentives to attract more workers Mechanization Improve labour management (e.g., informal workers, public sector workers) Foreign workers Source: Pai et. al., 2013

33 If promoting immigration

34 What are the consequences? Loss of jobs in Sri Lanka? Lowering of wage rates Religious/ cultural issues National security Illegal immigration Abuse of visa

35 What type of policies? What type of workers (skilled/ unskilled)? Temporary or permanent? Under what type of visa? What institutional setup?

36 Certification of professionals Local certification Act 16 (Foreign qualified doctors) Final law college exam (Foreign qualified lawyers) Mutual recognition Agreements (MRAs) E.g., MRAs in ASEAN countries (e.g., nurses, etc.) Source: IPS, State of the Economy, 2017

37 Other issues to consider Rights of migrant workers (UN convention) How to manage illegal workers Public health considerations Social protection for foreign workers Families of foreign workers

38 Summary Sri Lanka is facing a labour/ skill shortage situation Training, increasing LFP, better utilization of workers can ease labour shortages, but to a limited extent But labour shortages are likely to increase in future If bringing in foreign workers, policies must be carefully drafted so as not to destabilize the local labour market

K.W.S. Saddhananda. Deputy Director Statistics. Department of Labour, Sri Lanka. Member of the National Statistical Office (DCS)

K.W.S. Saddhananda. Deputy Director Statistics. Department of Labour, Sri Lanka. Member of the National Statistical Office (DCS) Regional workshop on strengthening the collection and use of international migration data in the context of the 2030 Agenda for Sustainable Development from 31 January to 3 February 2017 in Bangkok, Thailand.