Overview
Sri Lanka’s accomplishments in the area of social policy and human development surpass most developing countries, as evidenced by universal primary education, gender parity at primary and secondary education levels, and low child and infant mortality rates. However, Sri Lanka’s performance on poverty reduction has been modest, dampened by growing inequality. Aside from poverty, Sri Lankan face considerable vulnerability to income shocks. Major individual risks faced by families are unemployment, disability/sickness/death of a family member, and displacement due to conflict. The main community wide (aggregate) shocks include natural disasters, drought and crop failure. Moreover, Sri Lanka has one of the most rapidly aging populations in South Asia. Over the next 25 years, the share of the population over 60 will double from about 10 to 20% and this demographic trend will have an aggregate impact on the economy.
Social Protection Challenges
Akin to social protection systems in middle income countries, Sri Lanka’s SP system comprises three main elements: employment protection and promotion; social security/insurance, and safety nets. Social protection expenditures were approximately 3% of GDP in 2004 (2% for pensions and 1% for safety nets)—but are an underestimate as they do not include the large implicit debt of the pension system (estimated at 60% of GDP).
- However, as social security is only available for formal sector works, and safety net benefits are largely mis-targeted, the incidence of social protection expenditures is skewed towards the non-poor.
- The systems’ coverage is much more extensive than in other South Asian countries, with up to a third of the workforce having employment protection from labor and employment laws and social security, and about 40% of households covered in the case of the largest safety net program (Samurdhi).
- However, coverage of other safety net programs, e.g. social welfare and care services (such as community based rehabilitation or care for the elderly) and employment promotion services (job counseling/job information, labor market training) are virtually non-existant.
- Moreover, most programs have limited administrative capacity (e.g. targeting, record keeping, skills, MIS sytems,).
- Given these constraints, Sri Lanka’s social protection system is neither financially sustainable, nor actually reaching the most vulnerable groups.
The weaknesses of Sri Lanka’s social protection system are accentuated by the civil conflict and in times of natural disasters. Safety net benefits are generally discontinued when families get displaced, whether they were displaced and whether they were able to stay in their homes, there is limited assistance to help them re-integrate to the labor market through technical and entrepreneurial skills development, and job search/ job information to compete successfully in the labor market.
The ability to the system to respond to natural disasters through a combination of cash transfers, social welfare and care services and employment based programs is also constrained, as evidenced by the recent Tsunami. Sri Lanka’s National Development Strategy highlights the importance of developing effective social protection and livelihood interventions in helping the chronic poor and the vulnerable benefit from economic growth.
RSS