Sri Lanka’s Young Graduates Face a Growing Jobs Gap

Nearly one million young people are expected to enter Sri Lanka’s formal workforce during the next decade, while current trends suggest the economy could create only around 300,000 formal jobs.

For young Sri Lankans such as economics graduate Batya Peters, finishing university is no longer followed by the same sense of certainty that previous generations may have expected, as questions about finding meaningful work, earning enough to live independently and building a future at home become increasingly difficult to answer.

Nearly one million young people are expected to enter Sri Lanka's formal workforce during the next decade, while current trends suggest the economy could create only around 300,000 formal jobs. That gap could leave seven out of every 10 new entrants without a formal employment opportunity, creating pressure on a generation that has invested years in education with the expectation that qualifications would open doors.

Sri Lanka has made progress in stabilising its economy following successive crises, with economic growth returning and inflation easing. For young people preparing to enter working life, those improvements carry greater meaning when they lead to jobs with reasonable wages, security and room to develop a career.

Graduates find their qualifications do not always match jobs

Sri Lankan universities produce roughly 25,000 to 30,000 graduates each year, yet employers continue to report difficulty finding people with the skills required for available positions, while graduates frequently discover that their academic qualifications do not closely match what companies are seeking.

Peters, a recent University of Colombo graduate and former President of its Economics Students Association, described the uncertainty facing people who can spend years studying before entering the workforce at 25, 26 or 27 with little practical experience. Employers may expect digital knowledge, communication abilities, adaptability and workplace experience that students have had limited opportunities to develop during their university education.

The problem becomes more serious when young adults are trying to become financially independent, find suitable housing or think about starting families, since securing any job is not necessarily enough when wages and career prospects fail to provide a reasonable standard of living.

Around 70 percent of Sri Lanka's workforce remains in informal employment, where workers can have less access to stable incomes, social protection and structured career development.

Young women face an even steeper employment challenge

The gap between education and employment is particularly striking for women. Women represent more than 60 percent of university graduates in Sri Lanka, yet only around one in three participates in the labour force, placing the country among the lowest in South Asia for female workforce participation.

Creating better prospects for this educated group will require more than increasing the number of vacancies. Businesses need conditions that allow them to expand and hire, while students need stronger connections between university courses and the practical skills required in modern workplaces.

Internships, closer partnerships between universities and employers, entrepreneurship opportunities and greater exposure to real working environments could give graduates experience before they complete their studies, making the move from university to employment less difficult.

The World Bank-supported AHEAD initiative offers one example of efforts to bring higher education closer to labour market needs. The programme helped increase enrolment in science, technology, engineering and mathematics fields by more than 60 percent between 2017 and 2023, expanding the pool of graduates trained in areas expected to play a larger role in the economy.

Better jobs could give young people a reason to stay

Sri Lanka has several strengths that could support employment growth, including an educated young population, its location along major trade routes and industries with room to expand. Tourism, agribusiness, logistics, manufacturing and technology are among the sectors that could generate more work if investment and business growth translate into opportunities for local workers.

The World Bank Group's wider jobs agenda focuses on helping countries turn economic growth into employment by investing in infrastructure and skills, improving conditions for businesses and attracting private capital. The challenge extends far beyond Sri Lanka, with about 1.2 billion young people in developing countries expected to reach working age over the next 10 to 15 years while only around 400 million jobs are projected to be created.

For Peters and thousands of young Sri Lankans approaching the same stage of life, the issue is deeply personal. They want work that values their education, provides a path towards independence and gives them confidence that staying in Sri Lanka can lead to the future they have worked to build.