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Despite Sri Lanka upgraded to a middle income country as the per capita income increases, substantial amount of people in the country remain in poverty. According to the data from Department of Census and Statistics, the poverty headcount ratio is 6.7% in 2012, when household income and expenditure survey was last conducted.
According to the Department of Census and Statistics, poverty headcount index for 2012/13 was 6.7 and was decreased from 8.9 in 2009/10. From 1990/91 to 2012/13 the long-term overall poverty index has shown a downward trend. In 2012/13 approximately 1.3 million individuals were in poverty, For the previous survey year 2009/10, it was 1.8 million. This represents a 0.5 million decline from 2009/10 to 2012/13. The total poor households were 5.3 per-cent from total and it was approximately 0.3 million households in 2012/13.

Meanwhile, the World Bank notes that the rural sector accounted for over three quarters of the country’s population and over 85 per-cent of poor Sri Lankans nationwide in 2012/13.
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HIES data highlights an issue with educational qualifications among the bottom 40 per-cent, and unemployment in this group tends to be exceptionally high.  If this pool of abundant, young, and cheap labour is not fully utilized, the combination of high youth unemployment and a young poor population has the potential to threaten social stability.
Critically, among those poor and near-poor that are employed, a large proportion is engaged in agriculture—a field with typically fewer opportunities to add value to products and lower wages than service or industrial jobs. Agriculture still employed about 28 per-cent of the working population in 2015. This reinforces the case to accelerate Sri Lanka’s structural transformation, and ensure that young people have the means and ability to obtain work in more productive jobs in the industry and service sectors,” World Bank stated.

As World Bank very correctly highlighted there are huge regional discrepancies in Sri Lanka. The poverty head count ratio in rural and estate sectors are lot higher than the poverty headcount ratios in urban areas. In that context, efforts to further improve living standards of the poor should focus on promoting further structural transformation and urbanization. As per statistics, around 28 per-cent of the workforce, and about half of the working poor, toil in the agriculture sector although the production of the agriculture sector amounts to around 8 per-cent of the GDP.

‘Many of the poor live in peri-urban areas – over half of the poor are estimated to live within 30 km of a main agglomeration area. Policies that help connect these workers to productive employment opportunities off the farm can contribute to sustainable poverty reduction. This is a long-term agenda, however, and it will take years if not decades to reduce agricultural employment below 10 percent” World Bank stated.

It was noted that poor farmers and agricultural labourers need help to generate the income to allow them to invest in the human capital of their children. Some of these farmers were hit hard by bans on slash and burn agriculture. This was necessary to protect the environment and regulate land use, but in some cases limited agriculture to one growing season per year. Farmers and agricultural labourers could benefit greatly from practical infrastructure investments, such as water storage tanks, irrigation facilities, fertilizer and seeds, electricity, and roads that would make them more productive. In addition, microfinance programs that offer loans at reasonable interest rates that can be repaid post-harvest, rather than every month, could also facilitate productive investment among smallholder farmers.

In order to overcome the issue of poverty, the government had initiated social protection schemes such as Samurdhi. Household Income and Expenditure Survey collects the social protection information of 12 social protection programmes launched by the government mainly under the social assistance and social insurance.

The areas of the social protection covered by HIES in 2012/13 indicates that the total social protection transfer (sum of total social insurance and social assistance transfers) reduced the poverty from 9.6 per-cent to 6.7 per-cent. That is the social protection transfer lifted 2.9 per-cent poor people above poverty line. The most contributory significant factor was the pension scheme. In the absence of pension, poverty headcount index would increase to 8.3 per-cent and Poverty Gap index would be increased to 2.1. Poverty Severity index might be increased to 1.0. This result is evidence that the social protection programmes in Sri Lanka are progressing. The focus, however, needs to be on reducing poverty.

When a person is unable to feed himself, you can help him either by providing a fish to eat or provide a fishing rod to catch a fish. Poverty is pretty similar. What we have been providing to the public is only fish, so that they remain vulnerable. When fishing rods are provided, those are sold and fish were bought. So reducing poverty requires not only government will, but also the attitude change of the public.