The World Bank warns Sri Lanka faces a looming employment disaster, with one million young people entering the job market in the next decade but only a fraction of positions available. Without private sector growth and foreign investment, the so-called recovery could collapse under the weight of unemployment.
Sri Lanka is once again staring at a crisis, and this time it is not about debt or inflation but jobs. According to the World Bank, the country is on the brink of a massive employment shortage that could upend its fragile economic recovery. Nearly one million young people are expected to enter the workforce over the next decade, yet only 300,000 jobs are projected to be created during that period.
This alarming gap of 700,000 highlights the urgency for structural reforms and private sector-led growth. The warning comes from World Bank Vice President Johannes Zutt, who issued the statement following his first official visit to Sri Lanka.
“The foundation for economic recovery has been laid. Now is the time to focus on jobs, investment, and inclusive growth. The World Bank Group stands ready to support Sri Lanka on this journey, with a focus on expanding services and creating jobs, mobilizing private capital, and attracting foreign direct investment,” Zutt declared. His remarks underline that macroeconomic stability alone is not enough; the country must shift its focus to employment generation if it hopes to sustain recovery.
During discussions with President Anura Kumara Dissanayake, the World Bank Vice President commended Sri Lanka for achieving hard-won stability after years of economic turmoil. But he was quick to stress that the challenge now lies in creating opportunities for the younger generation. With hundreds of thousands of young people entering the job market, the government risks facing social unrest, migration surges, and worsening inequality if reforms stall.
The World Bank noted that attracting private capital, strengthening competitiveness, and improving service delivery will be critical in bridging the employment gap. Simply relying on government employment or public sector expansion is no longer viable given the fiscal constraints Sri Lanka continues to face after its debt restructuring. Instead, the private sector must become the engine of job creation.
The World Bank Group has pledged to work in partnership with Colombo to modernize key sectors, attract foreign direct investment, and expand services. It also emphasized the need to improve business confidence and make Sri Lanka an attractive destination for both local and international investors.
Encouraging entrepreneurship, supporting small and medium enterprises, and reforming outdated regulations could also help unlock growth. Experts argue that failure to do so will not only stall economic recovery but also push skilled workers abroad in search of opportunities, draining the country of its human capital.
While the government has signaled its willingness to work with global partners, the scale of the challenge remains daunting. With a projected shortfall of 700,000 jobs in the coming decade, Sri Lanka faces a ticking time bomb that could determine the success—or collapse—of its recovery efforts.
