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Labor

The total labor force in Sri Lanka increased from 5.8 million in 1991 to 8.3 million in 2001. During the same period, employment in the agricultural sector declined from 43 percent to 42 percent, while employment in the industrial sector increased from 15 percent to 23 percent. Other sectors, including services, accounted for the remainder of employment. The unemployment rate stood at 14.7 percent in 1991. In 2000 7.7 percent of the workforce was unemployed.

Labor unions were first established in Sri Lanka in the late 1800s. After the end of World War II in 1945, a large proportion of the labor force was unionized. Since the economic liberalization of the late 1970s, however, labor unions have lost membership and bargaining power. Most trade unions in Sri Lanka are affiliated with political parties. There are nearly 1,500 registered trade unions with a combined membership of about 250,000.

Agriculture

Tea, rubber, and coconut are the chief export-oriented commercial crops. Rice and a variety of tropical vegetable and fruits are grown primarily for domestic consumption. A variety of spices also are cultivated, including chilies, cinnamon, cardamom, pepper, cloves, and nutmeg.

Commercial crops are cultivated both in large plantations with hired labor and in owner-operated smallholdings. In the 1990s most government-owned plantations were put under the management of private companies. Among the commercial crops, the largest production of tea comes from the central highland regions. Rubber cultivation is concentrated mainly in the southwestern and western wet zone of the island. While the coconut palm grows in most of the coastal regions, its highest concentration is in the lowlands of northwestern Sri Lanka.

About 30 percent of the country’s total land area is cultivated, and at least half of the cultivated area is dedicated to the growing of rice. Rice is the staple food and primary subsistence crop in Sri Lanka. The majority of Sri Lanka’s rice is grown in relatively small plots of land. Beginning in the late 1970s, the construction of dams on the Mahaweli River created a reliable supply of water for rice irrigation in the north central dry zone. The amount of land under rice cultivation increased substantially, and Sri Lanka nearly achieved self-sufficiency in the grain. The annual output of rice increased from about 450,000 metric tons in the early 1950s to 2.8 million metric tons in 2002.

Forestry and Fishing

A large proportion of Sri Lanka’s remaining forest cover is not considered commercially valuable. Estimates indicate that no more than 20 percent of the remaining forests (including forest plantations) are high- and medium-yield sources of timber. The majority of harvested timber is used as firewood, which most households use for cooking.

Fishing is a traditional industry in Sri Lanka’s coastal waters. Marine fishing accounts for almost 90 percent of the total fish catch. Civil unrest in the country has made some areas of the coast inaccessible to fishing, causing declines in the fishing industry in the 1980s and 1990s.

Mining

Sri Lanka possesses a variety of economically useful minerals such as gemstones, graphite, ilmenite (a mineral sand), industrial clays, limestone, monazite, salt, titanium, and zircon. Local industries producing ceramics, cement, bricks, glass, and salt are based on extracted minerals. Sri Lanka is a leading exporter of gemstones.

Manufacturing

In the 1960s and 1970s the government of Sri Lanka pursued an economic policy in accordance with a model called import substitution industrialization. Under this model, the government bought controlling interests in many manufacturing industries. Policies such as import controls favored domestic products.

In 1977 the government embarked on an economic liberalization program to draw foreign investment in export-oriented industries. The program encouraged the private sector to play a dominant role. Free-trade zones, also known as investment promotion zones, were set up to give generous tax concessions to foreign companies. Garments, textiles, and electronics dominate manufacturing in the free-trade zones. About 70 percent of the factory employees are women.

In 1990 the government launched an ambitious privatization program to transfer state-owned industries to the private sector. Privately owned industries now manufacture such products as steel, fertilizers, rubber, and cement.

Tourism

Sri Lanka’s tropical climate, scenic beaches, and historical sites are prime tourist attractions. By the 1970s, sizeable investments were devoted to the building of infrastructure for the tourism industry, including hotels and resorts. Tourism declined after 1983 as a result of the civil war and related security concerns. About 337,000 tourists, mostly from Europe and India, visited Sri Lanka in 2001.

Energy

An estimated 47 percent of energy requirements of Sri Lanka are met by noncommercial biomass energy sources. These sources include crop residues such as coconut shells, coconut leaves, and paddy husks. Petroleum provides about 30 percent of the country’s total energy needs, and hydroelectricity provides about 23 percent. Since the early 1980s, the construction of dams on the Mahaweli has made a significant contribution to the hydroelectric power capacity. The dams generate about one-half of the country’s total output of hydroelectric power. Sri Lanka has experienced periodic power shortages since 1994. The immediate cause of the energy crisis was low reservoir levels due to the failure of monsoons to bring adequate rainfall.

From: Encartar