In 2016 LIRNEasia went to Jaffna for fun. Finally there was a hotel big enough to house our large group so we decided on Jaffna as the location of our annual trip. Many interactions followed, for example on our work on online freelancing. This longer piece was first published in Tamil in Thinakkural. It is interesting that the Tamil paper carried the data tables, but the Financial Times chose to delete them (correction: deleted only in the online version).
Sri Lanka’s unemployment rate is low (4.4 percent in 2016), yet its youth (15-24 yrs) unemployment rate is 22 percent. Unemployment among the more educated (above GCE AL) is 8.3 percent, almost double the overall rate. The participation of women in the labor force is 34.
This post is part of series of responses to observations made during a discussion on the “Aluth Parlimenthuwa” show on TV Derana. Read Part II here. There is value in engaging with people with different worldviews. I had such an opportunity during a rare television talk show on ICT issues on Derana. A senior policymaker in the science and technology policy area stated that ICT-related exports were not in the top ten only to be quickly corrected by two other panelists.
Ahilan Kadiragamar is an articulate spokesperson of the Collective for Economic Democratisation in Sri Lanka. Therefore, I looked forward to an exchange of views on the proposed economic and technological cooperation agreement (ETCA) with India, organized by the Church and Nation Committee of the Sri Lanka Methodist Church. The slides that I used are here. It was a little disappointing to hear that the alternative policies being advocated by these well-meaning people boiled down to import controls and juche. The problem was encapsulated by a question from the audience: In which countries are these import control policies being implemented?
I’ve been asked to comment on a brewing storm in a tea cup, the supposed opening of the gates to hordes of Indian IT workers. At this time, all that the government is considering is a Framework Agreement, or an agreement to work in a time-bound manner toward a technical and economic cooperation agreement. I was involved in the early stages of negotiation but have little knowledge of current state. Not having the time to engage with the issues in detail, I thought, I’d paste below the transcript of a talk I gave at the National Chamber of Commerce, along with the slideset. Addressing an audience of who I took to be diehard protectionist types from the world of commodities and goods, I had highlighted how much we had benefited from unilateral but incomplete (one still had to grovel before the BoI for most permissions) liberalization that allowed us to grow the telecom and IT & ITES sectors over the past two decades.
We have this interest in cellar dwellers. Cuba has been in the bottom 10 of mobile and Internet for long. But entrepreneurs are still exporting services from that country. The NYT story does not spell out how they receive payments. There must be a workaround for that too.
Except for our work on agriculture, most of our activities contribute to the development of the service sector. This is partly because it is the sector that is most dependent on ICT services and because that’s where the investment and growth is, in the countries that we work in. But every so often, industrial policy, or the notion that governments should promote specific industries, including by spending taxpayer money on them, raises its head. I wrote http://www.lankabusinessonline.
I’ve been harping on the value of focusing on earnings per employee if we are to pay decent salaries. This was in the context of the IT and ITES sectors in Sri Lanka, where I have the data, but the argument applies to the entire service sector (where most of the jobs of the future will be) and to all countries. A recent report on Apple’s earnings per store employee v salaries paid to those employees, highlights the issues again: By the standards of retailing, Apple offers above average pay — well above the minimum wage of $7.25 and better than the Gap, though slightly less than Lululemon, the yoga and athletic apparel chain, where sales staff earn about $12 an hour. The company also offers very good benefits for a retailer, including health care, 401(k) contributions and the chance to buy company stock, as well as Apple products, at a discount.
Though not part of LIRNEasia’s funded research, we have kept an eye on, and engaged with, issues related to services trade liberalization, partly because ICTs form a critical element of international services trade and the success of telecom reform exemplifies what can be achieved by liberalization of Mode 3 trade in services. In debates around the Comprehensive Economic Partnership Agreement between India and Sri Lanka, I recall someone raising the question as to why I was not advocated the optimal solution of multilateral agreements to liberalize trade. I answered “Doha is dead and SAARC is comatose, this is the best we got.” Now finally it appears that the death of Doha is being officially recognized. Contrary to the declarations made at the G20 summit meetings in earlier years, the world leaders seem to have finally given up on the possibility of concluding the trade talks within the parameters on which they had launched them as a single undertaking.
We’re generally in favor of budget business models, but export industries that do not earn enough per employee to pay a decent wage have to be an exception. Here is some analysis I did on the Sri Lanka software export and offshoring BPO industries, based on official figures: The total software earnings of USD 294 million are produced by 27,000 people. That is LKR 99,825 per employee per month. Lower than I expected. On the BPO side, 13,000 people produce USD 98 million.