Four priorities to inform post-COVID recovery efforts
A new report from the World Bank, Sri Lanka Poverty Assessment: Accelerating Economic Transformation, presents the drivers of success of Sri Lanka’s recent efforts to improve the livelihoods of its people. It also carefully analyzes the initial impact of the COVID-19 crisis on livelihoods and poverty.
The first priority is to increase agricultural productivity and income. Structural transformation is happening, but quite slowly. It will be important to support the transition of farmers to higher value-added export-oriented crop mixtures as farmers are much more likely to be poor. The sector could also benefit from a set of programs that support the adoption of climate-smart technologies, improved agro-logistics or expanded access to value chains.
The second priority is to tackle the constraints on access to remunerative non-farm jobs in rural areas. Non-farm activities are an increasingly important and potentially productive source of livelihood. Education plays a key role in deciding livelihoods: the better educated are significantly more likely to work in non-farm sectors than in agricultural sectors, and in non-farm sectors, in jobs more profitable. This implies that diversifying into low-yielding activities will not help increase income. Although the non-agricultural sector is diverse, strategic investments in tourism could support rural income growth, given its potential to create jobs for low-skilled and vulnerable groups.
The third priority is to support broader reforms to increase labor productivity and create jobs who could finally help improve the quality of jobs. In Sri Lanka, informality is widespread, estimated at around 70 percent, and strongly associated with inferior working conditions, limited job security and increased risk of poverty due to low income. In line with international evidence, reforms could aim to address the causes and consequences of informality rather than targeting informality itself.
The final priority is to promote spatial transformation and strengthen inclusion. This includes priorities to reduce spatial disparities and improve access to basic services. “Investments in human capital (health, education and social protection) are essential to unlock the potential of Sri Lankan children and boost future productivity and economic growth â, said Chiyo Kanda, Country Manager for Sri Lanka and Maldives.
As Sri Lanka emerges from the crisis, economic growth will be key to restoring livelihoods. . Considerations are needed to help the poor and vulnerable get back on their feet and prevent long-term scarring – for example, massive school closures have resulted in significant learning losses and growing disparities in human capital that could undermine growth and reduce social mobility in the long run.