Browsing by Author "Patabendige, S.S."

Now showing 1 - 5 of 5

Financial Reforms and Its Impact on Household Investment Portfolio
(University of Kelaniya, 2007) Patabendige, S.S.
The early contributors to the development theory such as Rosenstein Rodan, Nurkse, Lewis, Prebish, Singer and Myrdal argued that there was a widespread 'market failures' in developing countries, justifying government intervention. in almost all the economic activities, including those of the domestic financial market. They firmly prescribed low and controlled interest rate policies and credit rationing to be followed for developing countries. Accordingly, a policy of administered rate of interest was followed in Sri Lanka also up to the introduction of the economic reforms in 1977, making interest rate significantly lower than inflation throughout this period. This negative real interest rates penalized savers and encouraged the public to hold a larger proportion of their savings in non financial physical assets such as in real estate, consumer durables, precious metals, gems, art works, and whenever possible foreign currency deposits. This phenomenon, contrary to the conventional wisdom, as shown by McKinnon-Shaw Hypothesis (1973) led to reduce the amount of funds that went to banks and the supply of loanable funds becoming the financial market repressed and shallow, requiring credit to be rationed. As such, negative interest rates through government direction for lending to priority sectors encouraged sub-optimal investment at the cost of optimal projects. These trends were idcntilied by many economic and business reviewers as the root course for experiencing an economy-wide inefficiency and macroeconomic instability leading to low rate of financial savings and hindering of achieving a higher economic growth. Thus, the dismal economic performance shown in the dirigist policy regime paved the way to introduce a far reaching set of economic policies from 1977 onwards including financial sector reforms. Accordingly, at the beginning period of the reforms, bank rates were increased for converting negative real rates to positive real interests. A background was created for some competition in deposit mobilization and interest by facilitating of setting up of branches of foreign banks; opening of foreign currency banking units (FCBUs); permitting merchant banks, leasing companies and unit trusts to be opened; and expanding the secondary market for treasury bills. As a result of these expansions, a larger number of financial instruments such as certificates of deposits, commercial papers, treasury bills, unit trusts etc compared to those in controlled period were available, and the introduction of these instruments permitted the general public to provide with more opportunities to have higher investment in financial assets rather than investing in non-tradables. In this background, this study attempts to assess how far financial reforms have affected to changing the households' investment portfolio based on the available secondary sources of data, particularly the data available in the Consumer Finance and Socio Economic Surveys carried out in 1981/82, 1986/87, by the Central Bank of Sri Lanka. The data analysis shows that only in the period just after the economic reforms in 1977 (that is only up to 1982) investment in financial assets has shown a positive value among households, but in the entire ensuing period it continuously shows negative values. Contrary, after the mid 1980s, households have continuously increased their investment in the physical assets, by going against the expectation of the finical market reforms. Thus, increasing investment in physical assts (non-tradable) suggests that financial reforms carried out in the post reform period have failed to motivate the general publics to invest more in financial assets. This study attributes this failure to the inability of the monetary authorities to contain inflation and maintain positive real interest rate continuously.
Job Opportunities Available for Special Degree Management Graduates: A survey carried out based on newspaper advertisements
(University of Kelaniya, 2008) Patabendige, S.S.; Jayawickramarathna, W.
Unemployment among the educated youths is relatively higher than those of the less educated. This problem is more acute for graduates, particularly among the art graduates. But, management graduates are also finding difficulties in obtaining suitable jobs without waiting for a considerable length of time after their graduation. Various reasons have been put forward for analyzing graduate unemployment. Among them skills mismatch, inadequate economic growth and queuing up for the public sector or the good private sector jobs are prominent. In this setting, there is a research gap with regards to the identification of various job opportunities available for graduates. This study, therefore, aims at filling this gap with a view to guiding educational and other relevant policy makers to mitigate this prolong problem. For this purpose, this study carried out a survey of news paper advertisements based on Sunday Observer and Sunday Times News Papers for a period of one month starting from 27th of July 2008. This gave a good snapshot situation of the job opportunities available for educated youths commonly for all (both non-graduates and graduates) in the Sri Lankan labour market. According to this survey, it could be found that 2 1 % of all job opportunities were related to the field ofMarketing, 13.5% of job opportunities to the field of Accounting and 12% of job opportunities to the field of General Management. Further analysis of the survey data revealed that job opportunities available only for Management graduates give a different picture. Accordingly, 23% of job opportunities were opened to General Management graduates, while 9% and 8% of job opportunities were available for Marketing and Accounting graduates respectively. In this scenario, what is needed is producing more general graduates rather than producing graduates with specializations in narrower fields. But, this study finds that this trend is inconsistent with the way Commerce and Management Degree Programmes are being expanded by almost all the Faculties of Commerce and Management studies in the University system. These faculties are on the move to introduce more and more specialized programmes, and as a result, this study concludes that this phenomenon will not ease the graduate unemployment or reduce their waiting time for obtaining employment.
Skill Development among University Undergraduates: Why it is necessary and what is so far achieved?
(Research Symposium 2009 - Faculty of Graduate Studies, University of Kelaniya, 2009) Patabendige, S.S.
Unemployment rate in Sri Lanka compared to the other countries in the region has been the highest during the last few decades. This is more severe among the educated youths, especially among graduates. Mismatch hypothesis has been emphasized as a major reason for appearing such a high level of unemployment since it was first identified by the ILO team came to Sri Lanka in 1971. Mismatch or the skills mismatch hypothesis indicates that the types of work which educated youths are willing and able to do, do not match the pattern of opportunities that are available (ILO, 1971). This is further substantiated by the World Bank Economist, Martin Rama (1994) stating that although the Sri Lankan labour force may be highly educated but not particularly skilled. The ILO team primarily attributed this mismatch to the educational structure of the labour force and the ‘formidable rate of educational expansion’, drawing the attention to the quality and content of the education as well. Thus, this hypothesis highlights that skills of educated youths particularly our graduates are not matched, especially to the private sector employers’ requirements under a policy environment of recognizing the private sector as the engine for growth. In this setting, the study defines what ‘skills’ are. There are two types of skills, namely ‘hard’ skills and ‘soft’ skills. Technical know how can be considered as a hard skill. Commonsense, an analytical and innovative mind, a global outlook, leadership, and language abilities and communication abilities are the examples for soft skills which are now highly sought after. Then, we can see how far undergraduates have these features. Certain positive attributes are identified among the university students. On the other hand, the employers have identified certain negative features. They are the lack of self confidence, lack of decisiveness, avoiding risk taking, not have adversity, insufficiency in communication skills, and having very mild competitive values (Mendis, 2004). Having realized the obligation of improving skills among graduates by the university authorities this study, mainly based on secondary data, searched for evidence to determine whether the university 171 Proceedings of the Annual Research Symposium 2009-Faculty of Graduate Studies, University of Kelaniya authorities have made a substantial effort to make their study programmes more appropriate. System of the university education prior to mid 1990s was teacher centered, and examinations were held at the end of the year. Continuous assessment method was not followed, and students did not have opportunities to improve their skills and expose themselves to outside business world. Dassanyake and Karunaratna (1996) reading a paper emphasized at a workshop organized by the UGC on ‘Undergraduate Teaching Methodologies’ that there was a great need for a change in the existing methods of teaching, particularly for Commerce and Management undergraduates proposing to introduce a number of steps. Among them the following recommendations were significant: arranging staff development programmes for lecturers; adopting continuous evaluation methods with the introduction of course unit systems; providing opportunities for students to evaluate their lecturers and making collaborations with the industry. Evidence found by this study shows that within a period less than a decade from making these recommendations they have been successfully put into practice by almost all the faculties in the university system. These effort have been further augmented by the World Bank funded IRQE project first phase of which has now been completed providing a competitive grant worth of Rs.4800 million to a large number of academic departments, and now, this project is about to implement its second phase from 2010. The Quality Assurance and Accreditation Council (QAAC) under the University Grants Commission as a part of the IRQUE project also has been set up with the objective of ensuring study programmes’ quality and appropriateness. So far, 82 % of subject reviews under the supervision of QAAC have been completed. Thus, study concludes that university authorities have fully recognized the importance of inculcating skills among undergraduates and has taken a number of effective steps with a considerable degree of success of implementing them.
Skills Mismatch and Identification of Job Skills Expected by Employers
(University of Kelaniya, 2008) Patabendige, S.S.
In analyzing the unemployment problem confronted by the educated youths in Sri Lanka, 'skills mismatch' hypothesis, first articulated by the ILO Mission to Sri Lanka in 1971 is still highly emphasized as a major reason. Those who stress the orthodox view of the mismatch hypothesis believe unreservedly that although the economy has employment opportunities jobs expected by a large amount of job seekers are not adequately found or they do not fit to the prevailing jobs. Particularly, the private sector business leaders ascribe this mismatch primarily to weaknesses of the system of university education of the country. Taking these criticisms into consideration, the university authorities have taken a number of steps to develop skills of undergraduates. Dassanyake and Karunaratna (1996) emphasised that there was a great need for a change in the existing methods of teaching, particularly for Commerce and Management undergraduates proposing to introduce a number of steps. Among them the following recommendations are worth mentioning: arranging staff development programmes for lecturers; adopting continuous evaluation methods with the introduction of course unit system; providing opportunities for students to evaluate their lecturers and making collaborations with the industry. Anecdotal evidence shows that within a period of less than a decade from making these recommendations they have been successfully put into practice by almost all the Commerce and Management faculties in the university system. However, research attempts have not yet been directed sufficiently to find the kinds of skills expected by employers from job aspirants in the Sri Lankan labour market. Such assessment of skills is important for the university authorities as a kind of feedback to formulate their courses of study to narrow down the skills mismatch gap among undergraduates so that they can be readily employable. For this purpose, this study carried out a survey of 1360 news paper advertisements based on Sunday Observer and Sunday Times News Papers for a period of one month starting from 27th of July 2008. This gave a good snapshot situation of the skills expected from job aspirants with higher education by the employers. According to this survey, 38 % of job advertisement expect fluency I excellent I good communicational ability in English, 19 % of computer literacy, 8 % of excellent interpersonal skills, 4% of ability to work independently, 6% of ability ofhaving team work, 4% of achieving targets, 4% of willing to work long hours, 3 % to have leadership skills, 4 % of personal relations skills, 3 % of analytical skills, 1 % of customer relationship skills and 6 % to have motivated, young and energetic persons. In this scenario, it is vitally important to examine how far the current university education system has been successful in inculcating these skills among graduates for make them reaily employable by carrying out a more comprehensive research study.
Status of Employment in Sri Lanka: What does it reveal?
(Research Symposium 2009 - Faculty of Graduate Studies, University of Kelaniya, 2009) Patabendige, S.S.
Breaking down employment data by status in employment is useful for understanding both the dynamics of the labour market and the level of development of economies (ILO, 1999). If the majority of workers in a country are in the wage and salaried category, it indicates that the country is economically and socially more advanced. If the population of the self-employed and unpaid family workers is sizeable, it could be an indication of low job growth (low labour demand) in the formal economy and many have to depend on the informal sector for their living indicating a poor development with widespread poverty. Over the years and with economic growth one would expect to see a shift in employment from the agricultural to the industrial and to service sectors which, in turn, could lead to more wage and salaried workers in many countries. A corresponding shrinking share of agriculture would lower the share of unpaid family workers who are very widespread in the rural sector in developing countries (ibid, 1999). According to the ILO (1999) Report, developing countries are divided into three groups in regards to status in employment. In one extreme of this grouping, there are fast-developing economies where, over time, there has been a fall in the share of self-employed and unpaid family workers, and a rise in the share of wage and salaried workers with corresponding economic growth and rise in living standards. In the countries of the other extreme, what can be seen is a slow growth and lack of job creation in the formal sector resulting in declining numbers of wage and salaried workers and a rise in self-employment and the number of unpaid family workers. Then, the countries which are in the middle category in status in employment are the economies which have experienced a rise in the share of wage and salaried employees, as well as a rise in the self-employed. Based on these classifications using secondary data on status of employment in Sri Lanka this study attempts to make useful conclusions about the behaviour of the Sri Lankan labour market. As revealed by the data analysis of this study the percentage of total salaried employees in the Sri Lankan labour market dropped from 62.4 in 1991 to 59.0 in 2008 while the percentage of total non-salaried persons increased from 37.6 in 1991 to 41.0 in 2008. Further, data comparison 169 Proceedings of the Annual Research Symposium 2009-Faculty of Graduate Studies, University of Kelaniya shows that job creation in the formal private sector is not large enough to capture job losses in the public sector due to the privatisation and closure of some of the SOEs under economic reforms intensified after 1990. As such, the share of public sector employment declined from 26 per cent of the total employed labour in 1991 to 14.9 per cent in 2008 while the size of the private sector employees has only increased from 40.0 per cent to 41.1 per cent in the corresponding period. The size of the employers, category throughout the study period has fluctuated around 2.5 per cent of the workforce. As a whole, compared to the salaried employment, non-salaried employment in Sri Lanka has grown faster indicating that more and more people are engaged in low income and low productivity activities. As Betcherman (2002) highlights, this condition can be considered as a worsening of the labour market situation in Sri Lanka. This shows that the private sector under reforms, despite making it as the engine for growth, has not shown a substantial progress in demanding labour as expected. The manufacturing industrial sector especially shows a stagnant situation in absorbing labour after 1995. The share of labour absorption by this sector varies around 16.5 after 1995 (CBSL, various). The public sector’s employment share too cannot be expected to be increased substantially from the current level in the near future. Further, employers’ category has not increased throughout this period indicating a lack of real entrepreneurs in the economy. Taking these trends into consideration, the study highlights the requirement of increasing the size of employers’ category in the structure of the status of employment of the country (which has been very low around 2.5% of workforce) through promoting entrepreneurship for generating a substantial level of employment in the economy converting job seekers into entrepreneurs through various means including promoting entrepreneurship education in higher educational institutions such as universities.