21st April 2011, www.lankabusinessonline.com
Labour productivity in Sri Lanka's industry rose 10.6 percent in 2010 racing ahead of economy-wide gains which were dragged down slower increases in agriculture and services, according to official data.
Overall labour productivity in all three sectors rose 6.6 percent from a year earlier to 343,000 rupees. Labour productivity is measured as gross domestic product per worker in constant 2002 prices.
Sri Lanka's industry is largely private sector driven and large portion of factory industry is export oriented, making it subject to global competition. Some domestic industrialists who are close to rulers however are lobbying for protection.
The Central Bank says more efficient and reliable transport and power could help industry improve productivity.
Productivity growth in agriculture was 5.1 percent. In Sri Lanka there is a close nexus between rulers and farmers including landowners.
Each year the sector gets about 25 billion rupees in fertilizer subsidies and there is also heavy protection from imports leading to volatile prices and food insecurity for the entire population.
With high and volatile food prices, rulers have asked workers in industry and services to farm their backyards, front yards and grow vegetables instead of flowers, a situation not seen in Sri Lanka since the closed economy days of the 1970s.
Analysts say farmers in India and Pakistan are able to produce better quality food at much lower prices than Sri Lanka's farmers.
"There is further room to increase the productivity in the Agriculture sector through use of improved seed varieties, new technologies and innovations, and mechanisation, which could be promoted through farmer awareness by way of an effective extension service," the Central Banks said in its 2010 annual report.
"In addition, increasing value addition by promoting agro-based processing industries, improving awareness on proper usage of fertilizer, rehabilitation of irrigation networks, and infrastructure facilities would also help increase the productivity in the Agriculture sector."
The services sector showed the smallest improvement in productivity at 4.6 percent. Most of the government, rulers and state workers are in the services sector. There was no separate breakdown of the productivity of government.
GDP in government services is measured in terms of salaries as there is no measurable output in some state services. Last year however wages were restrained and total state workers fell slightly.
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