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Graduate unemployment in Sri Lanka

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One of the main criteria for measuring the development of a country is education. It is also a major determinant of a nation’s wealth and prosperity. One of the main objectives of education, especially higher education, is to prepare students for various careers in a country. University education is the core of higher education. Universities should be social institutions that facilitate the higher intellectual needs of a community, both in terms of academic knowledge and professional training. Therefore it should respond to social aspirations for higher education and respond to social changes according to the economic review. Newman (1974) as in Senadheera (1997) defines a university as an institution that teaches and disseminates all knowledge. Ballantine (1997) describes universities as communities with overall academic programs, centralized physical settings, a form of governance and a range of services.

Generally, graduates are considered as one of the most important human capital of a country. They are expected to work in middle or high management providing services to the society in various ways. Therefore, there is a significant demand for higher education in Sri Lanka. So getting a place in a national university is a big challenge for students. However, many students who are fortunate enough to be admitted to universities face many challenges, especially when it comes to finding suitable jobs after graduation (Ariyawansa, 2008).

As compared to other emerging nations, Sri Lanka’s economic history after 1960 has a unique position due to its high Human Development Index (HDI) and low per capita income. The country’s free supply of health care and education was mostly to blame for this. The major social reforms were facilitated with the granting of universal franchise in 1931, introduction of free of charge education in 1945 and the introduction of university education in Sinhala and Tamil languages in 1959. Although the student admission and the graduate output increased rapidly, expenditure on university education as a percentage of government expenditure increased by only 1.9%. Graduate unemployment was not an issue until about 1960 mainly due to the fact that the number coming out from the universities was not very high and they were able to be absorbed to both the private sector and public sector positions. In fact, in early years, a sizable portion of them were able to getting to the private sector positions through the relations their parents had with the private companies while the balance was absorbed to the public sector for such posts as medical officers, engineers, lawyers, officers in the administrative services, academic staff in universities, secondary school teachers and various positions in other sectors. However, with the expansion of university education, this situation has changed and many graduates who had obtained degrees in the stream of Arts and Humanities left unemployed for few years (Sankha & Ranepura, 2022).

In many situations, the reality is that the qualification along does not help enough to find a job because of the mismatch between the demand and the supply of the job market. Therefore, some graduates have to be engaged in irrelevant jobs mostly under low salaries while some of them have to be unemployed and waiting for a long time mostly until the government provides opportunities. The effects of this would be arisen as frustration, youth unrest, violence, and other forms of anti-social behaviors. Furthermore, consequences of this would be prevailing in society as short term or/and long term social, cultural, economic, demographic and political issues. Within this context, it is important to identify why graduates cannot find suitable jobs as soon as they pass out from universities. And why is the country’s employment sector not capable to absorb such graduates into the development process? (Ariyawansa, 2008).

However, graduate unemployment is still a global problem. According to the International Labor Organization’s annual report, the percentage of young graduates entering the workforce is still declining. Similarly, the share of employed youth is declining. Various aspects of higher education and related issues have an impact on employment. It was also stated that many higher education graduates around the world face unfavorable employment prospects due to various factors such as the functioning of higher education institutions, dynamic technological changes and the crisis in the concept of employment in highly developed societies.

Graduate unemployment is seen as diminishing returns on a country’s investment in higher education. More specifically, according to Chan and Tweedie, unemployment causes individuals to suffer from financial difficulties that affect families, relationships, and communities. When they do, consumer spending, one of the main drivers of growth in the economy, falls, leading to or without a recession. Problems such as depression reduce consumption and purchasing power, resulting in lower profits for businesses and the need for budget cuts and workforce reductions. Individuals facing unemployment often face long-term loss of earnings and complex psychosocial issues (Demissie et al., 2021).

The unemployment rate among Sri Lankan graduates is high compared to developing countries such as Singapore, Malaysia and Thailand. Furthermore, the average overall employment rate in Sri Lankan universities is 54% (Nawaratne, 2012). Unemployment is high in arts and management faculties with 76% and 36% of unemployed graduates respectively, while in 2012 medicine and engineering were 10% and 7% respectively. Universities in Sri Lanka lag far behind compared to developed and some developing countries. (Wickramasinghe, 2010).

Graduate Output20172018201920202021
Post graduate10,12110,959  9,991  7,50110,122
Graduate of Open University  6,442  7,211  6,795  5,674  7,802
External Degrees  5,280  8,480  6,007  7,465  6,802
Unemployment of the Graduate34,31643,32142,02443,07425,704
  1. Note: Excluding private university graduate statistics
  2. Sources:
  3. Graduate output: Sri Lanka university statistics (2017, 2018, 2019, 2020, 2021)
  4. Unemployment of the graduate: Sri Lanka Labor Force Survey Annual Reports (2017, 2018, 2019, 2020, 2021)

After the introduction of university education in 1942, graduates were guaranteed employment opportunities in the private and public sectors until the mid-1960s. From the late 1960s, graduates began to experience difficulties in finding employment in both sectors. A mismatch between the skills possessed by graduates and the skills demanded by the labor market creates a gap that leads to unemployment. This is a classic supply and demand situation. When private sector labor needs are not met by graduates, they prefer to hire non-graduates (Devarajan, Dr. Jeyaraman, Senior Lecturer in Management University of Jaffna, 2017). Almost every economy strives to achieve rapid economic growth to reduce poverty, reduce inequality, introduce new technology and reduce the unemployment rate. Unemployment is the most challenging in the economy. No economy in the world can make their unemployment rate zero. Unemployment in an economy can rise above the level of labor supply or demand. Several main reasons for unemployment in Sri Lanka have been identified.

  • Skill mismatch

Technology and skills are changing rapidly in the contemporary business world. Currently, many economies suffer from a skills mismatch between job requirements and employee skill sets. Here the economy has employment opportunities, but mismatches are common due to insufficient labor force for employment. Many private sector businessmen have identified the weakness of Sri Lanka’s higher education system as the reason for this mismatch. They complain that the content and quality of education available to inculcate modern skills, aptitudes and job orientation in the workforce is poor.

  • Economic depression

Economic stability and growth directly affect the employment rate of the economy. During periods of economic recession, the economy has to shrink its business operations, and this will lead to an increase in the unemployment rate in the economy.

  • Waiting in line.

Sri Lankans prefer a government job to a private sector job because of job security and post-retirement benefits. Thus, even if they get jobs in the private sector, people are waiting for government jobs.

  • Factor market distortion

Factors affecting market distortions include strict labor laws, union influence, and low labor productivity. Generally, labor is more expensive than machinery, which provides various incentives to promote industrialization. However, this condition is true only in case of unskilled workers, because that labor can be substantiated with machinery. On the other hand, the same is not true for skilled labor as machinery and skilled labors are complementary, resulting in capital intensity increasing employment for skilled labor.

  • Lack of innovation

Research and development is a key factor in economic growth and development. The prescribed rate for research and development for a developing country is 1% of the country’s gross domestic product. In Sri Lanka the ratio is only approximately 0.1% and this too is mainly related to the public sector. As a result, business expansion is very limited, resulting in less job creation (Los, n.d.).

However, the problems related to unemployed and underemployed graduates in Sri Lanka, which have been reported since the 1959 – 1960 academic year, are not a new phenomenon. The first batches of unemployed graduates were recruited by the United Front government in 1970 as development assistants. The last batch of unemployed university graduates was recruited in 2012 by the previous government. Unfortunately, four decades later, the products of local universities continue to be largely employed. In the public sector. The first recruitment group consisted of a few thousand graduates, while the last group exceeded 50,000 unemployed graduates. Even today, unemployed graduates are continuously picketing in various parts of the island, urging the government to hire them. Graduate unemployment in Sri Lanka is therefore a chronic socio-economic problem that has worsened over time. (Singam, 2017).


Ariyawansa, R. G. (2008). Employability of Graduates of Sri Lankan Universities. 2(1), 91–104.

Demissie, M. M., Herut, A. H., Yimer, B. M., Bareke, M. L., Agezew, B. H., Dedho, N. H., & Lebeta, M. F. (2021). Graduates ’ Unemployment and Associated Factors in Ethiopia : Analysis of Higher Education Graduates ’ Perspectives. 2021.

Devarajan, Dr. Jeyaraman, Senior Lecturer in Management University of Jaffna, S. L. (2017). Graduate Unemployment in Sri Lanka. Times Online. https://sundaytimes.lk/online/news/graduate-unemployment-in-sri-lanka/18-1022653#:~:text=A mismatch between skills possessed,classic demand and supply situation.

Los, U. M. D. E. C. D. E. (n.d.). UNEMPLOYMENT IN SRI LANKA.

Sankha, R., & Ranepura, W. (2022). GRADUATE UNEMPLOYMENT IN SRI LANKA : CAUSES AND POSSIBLE COLOMBO , SRI LANKA GARI International Journal of Multidisciplinary Research. May.

Singam, K. (2017). Review on Graduates’ Unemployment in Sri Lanka and the Globe. 17(8).

Diluka Bandara
Diluka Bandara
senior student, Rajarata university of Sri Lanka


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