Labour Law Reform in Sri Lanka: Revision of the Termination of Employment of Workmen Act and its Implications

  • Etsuyo Arai
Part of the IDE-JETRO Series book series (IDE)


Sri Lanka, known for its welfare-oriented policies, is characterized by the presence of an educated labour force, which strongly distinguishes it from other South Asian countries. In the sphere of economic management, it has followed public sector-dominated policies. However, when the country changed its course in the late 1970s towards economic liberalization, placing emphasis on private sector initiatives, the labour problem became one of its most formidable tasks. The labour protection and employment practices in the public sector affected the private sector as well, and strong opposition was raised against any move that would diminish the existing privileges of workers. After economic liberalization, Sri Lanka achieved an average economic growth rate of 5.4 per cent during the first half of the 1980s, 3.2 per cent in the second half of the 1980s, 5.3 per cent in the 1990s and 4.8 per cent between 2000 and 2006, in spite of ethnic conflict and natural disaster (Central Bank 2006). Nevertheless, it is argued that the growth is lower than its potential (Jayawardena 2004). Besides the decades-long ethnic conflict, distortions in the labour market are pointed out as one of the impediments to high economic growth (Yatawara 2004).


Labour Market Private Sector Trade Union Informal Sector Free Trade Zone 
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© Institute of Developing Economies (IDE), JETRO 2008

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  • Etsuyo Arai

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