More than four in 10 university graduates aged 15 to 24 in Sri Lanka are unable to find work, a level that stands out even against other major Asian economies. A mismatch between education and the labor market is cited as the reason.
Education Expands but Jobs Fail to Keep Pace
Sri Lankan media outlets including Ada Derana, citing an International Monetary Fund report, said on the 22nd that youth unemployment among those with a university degree or higher in Sri Lanka stood at about 43%, the highest rate in Asia.
India posted about 42% and Bangladesh 36%, similarly high levels. Rates in the remaining countries came in below 20%, according to the report. Singapore and Japan stood at about 8% and 4%, respectively.
Sri Lanka's overall youth unemployment rate was also about 22%, far above the roughly 4% rate for all age groups. Unemployment among highly educated workers of all ages was about 6%, making the gap with young people even more pronounced.
The IMF pointed to a mismatch between the skills developed through education and those employers need as the driver of high graduate youth unemployment in some South Asian countries. The number of university-educated workers has grown, but that supply has not lined up with actual hiring demand, the fund said.
Sri Lanka's youth employment problem weighs especially heavily because the country is still working to rebuild its economy after defaulting in May 2022, the report said. Years of policy failures compounded into an economic crisis, and the country is pursuing a recovery with IMF bailout funding.
The spread of artificial intelligence and automation was also cited as a factor accelerating a reshaping of the labor market. New technologies could raise productivity and create jobs, but workers who cannot keep pace with the change may face narrowing employment opportunities.
The IMF recommended that universities and vocational training institutions adjust what they teach to match shifts in the labor market. It also called for broader cooperation among companies, universities and vocational training institutions so that graduates acquire the skills employers demand.
Korea Also Sees Worsening Graduate Youth Employment
South Korea has likewise seen employment conditions for university-educated young people deteriorate from previous levels. In a recent report titled "Is AI to Blame for the Youth Employment Slump?" the employment research team at the Bank of Korea's Economic Research Institute found that the average unemployment rate for university-educated young people was 7.0% after November 2022, 1.6 percentage points higher than the 5.4% rate for young people with a two-year college degree or less.
From January 2019 through October 2022, before the generative AI tool ChatGPT emerged, average unemployment rates for the two groups were 8.2% and 8.0%, respectively — virtually identical. Employment conditions for university graduates have since wobbled more sharply by comparison.
The Bank of Korea was nonetheless cautious about attributing the recent youth employment weakness solely to AI. "Other factors, such as the spread of remote work after the pandemic, may also have played a role," the central bank said. "It is more appropriate to view the current contraction in youth employment not as a direct effect of AI but as the result of AI accelerating changes already under way in hiring practices."
