While sustained high rate of economic growth is a necessary condition for poverty reduction, it is not sufficient. Experience from a number of countries has shown that a high rate of productive employment is critical for transforming the benefits of economic growth to the poor. In Sri Lanka, employment growth during the last few decades has been much lower compared to both GDP and labour force growth. Although unemployment has shown a declining trend, it still remains at a high level, with youth unemployment being a long-standing problem in the country. Moreover, the employment content of economic growth appears to have declined in recent years. On the other hand, though the incidence of poverty has declined at the aggregate level, it remains high particularly in rural and estate sectors. The objective of the study is to look at the link between economic growth, employment and poverty reduction in Sri Lanka. Trends in output and employment, labour market outcomes such as productivity, real wages and employment elasticity of output for the key sectors and sub-sectors of the economy are analyzed.
