Financial Times

High literacy rate highlights skills imbalance
Sri Lanka is the only country in the South Asian region with almost one hundred percent literacy but its surfeit of unemployed graduates highlights the growing imbalance between the demand for and supply of skilled workers, Dr. Ishrat Husain, governor of the State Bank of Pakistan said.

There is a surfeit of highly educated graduates who are not employable and a shortage of workers who can carry out routine technical jobs in production and service, he said. Sri Lanka's near full literacy level highlights the stark imbalance between the demand for skills imposed by market economic forces and the supply of skills produced by educational institutions, Husain said.

He spoke on the future challenges facing South Asian economies at a recent lecture organized by the Central Bank. India produces good quality science and engineering graduates every year who can cater to the high end of the job market but lack of attention to non-university technical education and its quality have created wide gaps at the middle end of the job market, Husain said.

"Sri Lanka has no problem with the numbers but high level of unemployment among university graduates testifies to this mismatch in the skills. "The widespread frustration among the parents and graduates on one hand and a high level of dissatisfaction among the employers in finding the right persons for the right jobs are further evidence of the imbalance in labour market."

Husain also said South Asian countries should tap the enormous potential of their large expatriate population in mobilizing investment capital, foreign exchange earnings, skilled manpower and exports of ethnic products and services.

India, Pakistan, Bangladesh and Sri Lanka together receive about $20 billion of remittances from their workers annually but their contribution in domestic capital formation is insignificant.

Unlike the overseas Chinese community that has played a substantial role in foreign direct investment, non-resident Indians have been a source, to some extent, of professional, technical and managerial skills but not much in terms of large financial outlays.

The non-resident deposits transferred to India account for only a miniscule proportion of their wealth holdings abroad. These flows are quite stable in nature and should be able to augment domestic savings for accelerating the pace of investment without creating future debt obligations.

"Innovative products and investment vehicles to attract the savings of non-resident South Asians should be encouraged with the help of regulatory agencies," Husain said.

Back to Business