According to the Organization for Economic Co-operation and Development (OECD) Unemployment is the person above a specific age (usually 15) not being in paid employment or self-employment but currently available for work during the reference period.

And also, we can say unemployment is the term referring to individuals who are employable and seeking a job but are unable to find a job. Furthermore, it is those people into a workforce or pool of people who are available for work that does not have an appropriate job. Unemployment is a key economic indicator because it signals the ability (or inability) of workers to readily obtain gainful work to contribute to the productive output of the economy. More unemployed workers mean less total economic production will take place than might have otherwise. And unlike idle capital, unemployed workers still need to maintain at least subsistence consumption during their period of unemployment. This means an economy with high unemployment has lower output without a proportional decline in the need for basic consumption. High, persistent unemployment can signal serious distress in an economy and even lead to social and political upheaval.



There could be several reasons for unemployment, such as;

  • An individual has left the job and is looking for a new job.
  • The company has laid off its employees due to the economic slowdown. ● The latest technology has replaced manpower.
  • The individual has returned from maternity leave or some education leave and has not been assigned any position yet.
  • The employees were retrenched due to a lack of work.
  • The skillset of an individual has become outdated and must possess new skills to get hired.





Structural Unemployment

Structural Unemployment is the situation when the jobs are available, and also the workers are willing to work, but they don’t have the required job skills to qualify for the vacant positions.

Frictional Unemployment

Frictional Unemployment also called Search Unemployment refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs.

Cyclical Unemployment

Cyclical Unemployment refers to the change in the employment rate due to the change in the economic cycle, such as recession and inflation. Simply, the change in employment due to the fundamental shifts in the economy is called as cyclical unemployment.



Voluntary Unemployment

Voluntary Unemployment refers to the situation when the worker deliberately chooses not to work because of a low wage scale or is not being able to find out suitable employment for him.

Casual Unemployment

Casual Unemployment is when the worker is employed on a day-to-day basis for a contractual job and has to leave it once the contract terminates. Simply, the inevitable time delay when a worker transits from one job to another due to the expiration of a previous job contract is called casual unemployment.

Seasonal Unemployment

Seasonal Unemployment means the demand for a specific kind of work and workers change with the change in the season. Simply, the period when the demand for manpower as well as the capital stock reduces because of a decreased demand in the economy at a particular point in time in a year causes seasonal unemployment.

Technological Unemployment

Technological Unemployment is caused when individuals lose their jobs due to technological advancement. Simply, the substitution of labor with technology results in technological unemployment.

Disguised Unemployment

Disguised Unemployment refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity such that if they are removed the total level of output remains unchanged.

Chronic Unemployment

Chronic Unemployment means prolonged unemployment in the economy. In other words, chronic unemployment is caused due to long-term unemployment persisting in the economy.







According to the sector-wise unemployment, there are three types of unemployment

  • Urban unemployment
  • Rural unemployment
  • Estate unemployment



Following this table appear it.




According to this graph, there are percentages of urban-rural and estate unemployment through male and female





The unemployed are people of working age who are without work, are available for work, and have taken specific steps to find work. The uniform application of this definition results in estimates of unemployment rates of that are more internationally comparable than estimates based on national definitions of unemployment. Unemployment rates are shown for two age groups: people aged 15 to 24 (those just entering the labor market following education); and people aged 25 and over. This indicator is measured in numbers of unemployed people as a percentage of the labor force and it is seasonally adjusted. The labor force is defined as the total number of unemployed people plus those in civilian employment. However, in Sri Lanka, there are 3 sectors in the unemployment sector.

  • Age 15-24
  • Age 25-29
  • Age 30 or more







This topic shows the unemployment rate of people according to their level of education: high secondary, high secondary non-tertiary or tertiary. Unemployed are defined as those who do not have a job but are actively looking for a job and are about to start work. Among the different types of employment problems, as seen in less developed countries, is the prevalence and importance of educated unemployment. Educated unemployment gains its importance not only from the number of unemployed but also from the impact of social and political unrest in particular. Sri Lanka is important as a place of research. They categorize the various socioeconomic variables inherent in open and educated unemployment in different parts of the developed world. Namely, severe land shortages, rural population proletariat, high-wage employment opportunities, rapid population growth. There are 4 sectors in unemployment sectors in Sri Lanka.





Unemployment has become a burning issue in Sri Lanka. The number of unemployed is increasing day by day. According to the Central Bank, that number is around 700,000, and 55% of us are women. In addition, about 80% of the unemployed are in the rural sector. Unemployment is highest among the 20- to 30-year-olds. 



There is a significant youth unemployment problem in Sri Lanka. Although past authors consider unemployment to be particularly high among the highly educated, the positive link between education and unemployment disappears for urban youth and significantly weaker for rural youth once we control gender, sector, and age. Even the relationship between rural youth is questionable when we take into account the unemployment period. The average unemployment period is four years or more and the duration is not related to education. Age control, more educated young people have a higher unemployment rate because they have recently dropped out of school.

A number of factors in society have led to unemployment. Some say the situation is due to an outdated education system and lack of skills. The existing curriculum should be modified to suit current needs. There seems to be a large number of jobs in the private sector, especially in the technical and industrial sectors. If the reason for the high unemployment in the country is the lack of skills, it is difficult to understand how a large number of people found jobs abroad. Young people cannot show skills when they leave school or university. Employers need to understand this situation. They should be given the opportunity to acquire skills only based on “job training”. This is why many employees are recruited as probationers. The Vocational Training Authority, technical colleges, and other institutions should take steps to impart these skills to the youth.




As we go through the job advertisements in the newspapers, it seems that all employers expect English to be fluent. Almost everyone in Sri Lanka can speak Sinhala, Tamil, or both. Therefore, English is not essential for day-to-day activities in the country. In this situation, many of our rural youth are rejected in interviews due to a lack of knowledge of English. Although they are very talented and have very good academic and other qualifications. This is a very situation.



Sri Lanka: Unemployment rate from 1999 to 2019






The data are based on statistical surveys with error margins. Pre-war data could not be directly compared, as the North and East Statistics Office had not been active before. After the war, there was a partially funded construction boom in China, which added demand to the economy.

However, major financial instability has plagued the country since 2012, and the balance of payments crisis has accelerated amid the worsening of cyclical printing by the central bank. This put an end to the relative financial stability seen in the country from 2000 to 2011. 



Sri Lanka’s unemployment rate has risen to around 4 percent over the past three years amid massive financial instability, price controls, rapid policy, and tax fluctuations that have led to a precarious business environment (regime uncertainty).

The Department of Import and Export Control of Sri Lanka, a major driver of the economy in the 1970s, the Midnight Gazette, and the Consumer Affairs Authority are the main sources of regime uncertainty. The previous administration replaced the Central Bank with a new price control authority, the National Inland Revenue Authority. Analysts say the NMRA now offers periodically controlled price increases when the central bank prints money or devalues money for real or explicit REER targets. 



In 2011, Sri Lanka was acquired by private companies, including BOI-approved companies, through an advertising law, and in 2015 a series of ‘super profits’ and acquisition taxes further aggravated property rights, policy stability, and the rule of law. Every time the central bank prints money and provokes money trouble, policy deteriorates with worsening trade restrictions.

With the collapse of the rupee, a large number of Sri Lankans went abroad for employment under difficult conditions in the Middle East from the 1980s. The embargo in the 1970s helped reduce domestic unemployment by nearly 20 percent. 2018 also began with more regulatory uncertainty, with tax reversals and credit bans as the economy recovered from a balance of payments crisis.

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