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Thursday December 8th, 2022

Sri Lanka school dropout crisis of poor kids could worsen from Coronavirus: think tank

ECONOMYNEXT – Sri Lanka’s Coronavirus school closures could aggravate the plight of poor kids who already form the overwhelming majority of school dropouts, an analysis by Colombo-based Institute of Policy Studies had warned.

“Although Sri Lanka has provided universal free education since 1939, around one-fifth of poor children drop out of school after the age of 14 years and another-two thirds after the age of 16 years,” Wimal Nanayakkara, Senior Visting Fellow at IPS.

“With the closure of schools following the COVID-19 outbreak and the sudden shift to online learning, poor children with no access to e-learning opportunities risk falling even further behind.”

Based on the 2016 Household Income and Expenditure Survey of the Department of Census and Statistics of Nanayakkara estimated that 4.7 percent of poor kids left school between the ages of 5 and 14, compared to 0.7 percent for kids from non-poor households.

Between the ages of 15 and 16, 19.6 percent of poor kids had dropped out compared to 7.2 percent for non-poor.

By the age of 17-18 around 64.3 percent of poor kids were not attending any type of education institute compared to 30.3 percent for kids from non-poor households.

Compared to a HIES survey in 2012/2013 the ratio had improved by only 4.2 percent.

“Among poor children aged between 17-18 years, this figure has remained almost unchanged at
nearly 65 percent,” Nanayakkara said.

“The corresponding percentages for non-poor children are much lower “.

Out of the poor children (15-16 years) who leave the education system, more than 66 percent had left due to ‘poor educational progress/not willing to attend, 36.6 percent due to ‘financial problems’ 22.1 percent, or to ‘help in housekeeping /other activities of the household’.

According to published data, 621,000 students (including those sitting twice) had applied to sit for the GCE Ordinary Level exam this time.

But only 362,824 sat for the GCE A/L exams, where 319,485 students were in the new syllabus and 43,339 were sitting for the old syllabus class.

Scholl drop outs were higher in male students compared to female students.

“A 73.6 percent of poor boys aged 17-18 years are out of school compared to 53.9 percent of poor girls’ inthis age group,” Nanayakkara said. “The corresponding percentages for the 16-17 age group are 24.5 and 14.2 respectively.”

Only 48 percent of Sri Lankan households with school-aged children owned a smartphone or computer – essential for online learning – at the start of 2019, and only 34 percent had an internet connection, a majority of whom are connected via mobile phones, survey data had showed, IPS said.

“Further, these are average figures, meaning that poorer, rural households are even worse-off ”

“Not all children have the necessary facilities for onlinelearning during prolonged curfews, lockdowns or when schools are kept closed indefinitely.

“According tothe Computer Literacy Survey –2019 (DCS), only 22.2% of the households in Sri Lanka own adesktop/laptop computer (Urban: 38.3%; Rural: 19.9% and Estate: 3.8%).

The use of smartphones, while growing would be limited particularly in rural areas.

IPS said, the budget 2021 has some proposals which, if implemented, could solve most of the issues in the education system that had taken to a severe level during the pandemic.

“They will benefit the poor and vulnerable children, who are facing difficulties in continuing their
education,” the report said.

“The early implementation of these proposals could pave the way to breaking the vicious poverty
trap through equitable education and ensuring that no child is left behind.”

Education Equity in Sri Lanka: A Pathway out of Poverty

By Wimal Nanayakkara

Although Sri Lanka has provided universal free education since 1939, around one-fifth of poor children drop out of school after the age of 14 years and another-two thirds after the age of 16 years. Comparison of estimates based on the Household Income and Expenditure Survey (HIES)-2012/13 and HIES-2016, conducted by the Department of Census and Statistics (DCS), show only a marginal improvement.

With the closure of schools following the COVID-19 outbreak and the sudden shift to online learning, poor children with no access to e-learning opportunities risk falling even further behind. In this context, some proposals made in Budget 2021 to improve the education system and reduce poverty will benefit poor children who have been disproportionately affected by the pandemic. This blog highlights some of the education-related difficulties faced by poor children in Sri Lanka based on HIES data and the recent budget proposals which could help them to overcome these difficulties.

Poor Children Out of School

A large proportion of poor children are dropping out of school after 14 years, and the percentage of poor children (15-16 years) not attending school has declined only by 4.2, between the two survey periods. Among poor children aged between 17-18 years, this figure has remained almost unchanged at nearly 65%. The corresponding percentages for non-poor children are much lower (Table 1).

Out of the poor children (15-16 years) who leave the education system, more than 66% left mainly due to “poor educational progress/not willing to attend” (36.6%), “financial problems” (22.1%), or to “help in housekeeping /other activities of the household” (8.6%). The corresponding percentages of poor children (17-18 years) were 49.5, 15.8 and 20.0 respectively. One of the reasons for poor education progress could be inadequate nutritional intake. The HIES-2016 shows that the per capita energy consumption of poor households with children (5-18 years) is less than 75% [or 1513 kilo calories per capita a day (kcpcad)] of the recommended energy requirement (2030 kcpcad).The corresponding consumption of non-poor households is 2081 kcpcad, above the recommended requirement.

Gender Gap of Early School Leavers

As there is a possibility for some of the near-poor children to slip into poverty, due to the effects of COVID-19, it is important to consider both poor and near-poor. Figure (1) showsthe proportions of early school leavers are very high for poor and near-poor children compared to non-poor. There is also a significant gender gap, especially among the poor and near-poor.

Figure 1: Proportions of Children (Non-poor, Poor, Near-Poor) Not Attending School by Age and Sex *Note: Multi-dimensionally poor (MDP) households (HHs)- [HHs with weighted deprivation score of 33.3% or more]; Near IP HHs [ HHs within 20% above the NPL]; Near MDP HHs [HHs with weighted deprivation score 20% or higher, but less than 33.3%]; Near Poor children [children in Near IP HHs and/or Near MDP HHs]
Source: Author’s estimates based on HIES-2016, DCS

For example, 73.6% of poor boys aged 17-18 years are out of school compared to 53.9% of poor girls in this age group. The corresponding percentages for the 16-17 age group are 24.5 and 14.2 respectively. A similar pattern is observed for near-poor children and even non-poor children, although the proportions are significantly low for non-poor.

Inadequacy of Facilities for Online Learning

Inequality in education can be further widened as not all children have the necessary facilities for online learning during prolonged curfews, lockdowns or when schools are kept closed indefinitely. According to the Computer Literacy Survey –2019 (DCS), only 22.2% of the households in Sri Lanka own a desktop/laptop computer (Urban:38.3%; Rural: 19.9% and Estate: 3.8%).

According to the Telecommunications Regulatory Commission (TRC) of Sri Lanka, there were a total of 1.53 million fixed internet subscribers and 5.73 million mobile subscribers in 2018. However, the use of smartphones would be limited, especially in remote rural areas, where broadband internet facilities are weak and there is no information on the extent of smartphone users among the poor.

‘E-Thaksalawa’ the national e-learning portal of the Ministry of Education (MoE), is facilitating e-learning for students (Grade 1 to Advanced Level). But some children, cannot access them at present due to the lack of facilities or means. Broadband internet facilities, a computer/laptop or a smartphone and sufficient data are essential to download available study material.

As highlighted in a previous IPS blog, the best option therefore would be to use television (TV) as 86% (HIES-2016) of households in the country own TVs (Urban: 88.9%; Rural: 86.1% and Estate: 81.2%). The ‘Guru Gedara’ distance learning programme of the MoE broadcast by Channel Eye/Nethra TV, ART TV and Ada Derana, for students from Grade 3 to GCE (A/L) are both in Sinhala and Tamil. The SLBC is also broadcasting these lessons for the benefit of children who do not have access even to a TV.

This is an excellent and innovative way for poor children to continue their studies in a stream of their choice, who may be leaving education prematurely due to lack of facilities, especially teachers, to teach science/ technology subjects, mathematics, languages, etc., in rural/estate schools and non-national schools.

Budget Proposals

Budget 2021 has some proposals which, if implemented, could solve most of the issues highlighted above. They will benefit the poor and vulnerable children, who are facing difficulties in continuing their education, explained above. The proposals are also aimed at developing the entire education system with special emphasis on skills development, to meet the ever-increasing demand for high skills and also to provide necessary facilities.

A summary of some of the most important proposals are:

‘GamataSannivedanaya’ to provide 4G/Fiber broadband facilities to cover all GramaNiladhari divisions; internet facilities to all schools.

‘E-Thaksalawa’ learning portal to be strengthened further to minimise the difficulties faced by students in rural / estate and non-national schools.

‘Guru Gedara’ programme to be made available to all students, by providing TV sets to schools in difficult areas.

Improving and expanding the opportunities for vocational/technical education, which will be extremely useful in developing the necessary skills in a rapidly changing environment.

The early implementation of these proposals could pave the way to breaking the vicious poverty trap through equitable education and ensuring that no child is left behind.

Wimal Nanayakkara is a Senior Visiting Fellow at the Institute of Policy Studies of Sri Lanka (IPS) with research interests in poverty, and is a specialist in sampling. He was previously engaged at the Department of Census and Statistics, where he functioned as the Director General for 12 years. He received his BSc in Mathematics and Physics from the University of Peradeniya and holds a Postgraduate Diploma in Applied Statistics from the University of Reading, UK.(Talk to Wimal – wimal@ips.lk)

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Sri Lanka in deep talent drain in latest currency crisis

ECONOMYNEXT – Sri Lanka businesses are facing a drain of talent, top business executives said as the country suffers the worst flexible exchange rate crisis in the history of its intermediate regime central bank and people lose hope.

“We are seeing a trend towards migrating,” Krishan Balendra, Chairman of Sri Lanka’s John Keells Holdings told an economic policy forum organized by the Ceylon Chamber of Commerce.

“We have seen an impact mainly on the tourist hotels side, quite an exodus of staff (migrating) to countries we have not seen in the past. 

“We have seen people go to Scotland, Ireland. It has usually been the Middle East and Maldives. Australia seems like a red hot labor market at the moment.”

Sri Lanka’s rupee collapsed from 200 to 360 to the US dollar after macro-economists printed money to suppress rates.

Sri Lanka operates a ‘flexible exchange rate’ where errors in targeting interest rates are compensated by currency depreciation especially after the 1980s.

Classical economists and analysts have called for the power to mis-target rates and operate dual anchor conflicting monetary regimes should be taken away to prevent future crisis.

Currency crises are problems associated with flexible exchange rate central banks which are absent in hard pegs and clean floats.

“Something new we are seeing is that older people, even those in their 50s, which was a surprise, are looking at migrating,” Balendra said.

Businesses are trying to retain talent as real wages collapse.

Balendra said as businesses they see some stability returning and based on past experience growth is likely to resume, and they were communicating with the workers.

“We have a degree of conviction that the economy should get better, its the stability phase now and it will get better going forward so without the way our businesses are placed we should see good growth,” Balendra said.

“We can’t chase compensation that’s just not practical and we are not trying to do that especially if people are looking to immigrate but what we can do is show the career opportunities in the backdrop of the situation that people would rather stay here because its home.” 

Sri Lanka unit of Heineken says it is also trying to convince workers not to leave, with more success.

“We are all facing the effects of brain drain and it’s not just the lower levels… What we are doing is a balance of daring and caring,” Maud Meijboom-van Wel – Managing Director / CEO, Heineken Lanka Ltd told the forum.

“Why I say daring is, you have to be clear in what you can promise people, when you make promises you have to walk the talk. So with the key talents and everyone you need to have the career and talent conversations.

“I am a bit lucky because I am running a multinational company so my career path goes beyond Sri Lanka so I can say if you acquire certain skills here, then you can move out of here and then come back too, that is a bit easier for me but it starts with having a real open conversation with walking the talk – dare and care.” (Colombo/Dec7/2022)

 

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Despite losses, Sri Lanka to resume “park & ride” transport after complaints  

ECONOMYNEXT –  Sri Lanka’s state-run Transport Board will resume its loss-making City Bus service from January 15, 2022 Cabinet Spokesman Bandula Gunawardena said, after the service abruptly discontinued with the state-run firm’s director board citing losses.

The City Bus service was introduced in 2021, under the government of former President Gotabaya Rajapaksa, from Makubura to Pettah and Bambalapitiya.

The service was started to reduce the number of automobiles travelling to and from Colombo and suburbs by providing a comfortable, convenient and safe public bus transportation for passengers and riders who use cars and motorcycles as their means of transportation.

During the time period in which the service was initiated, there were 800 hundred vehicles that would be parked and would use the system, Gunawardena, who is also the Transport Minister, said.

The service was later collapsed due to inconsistencies in scheduling and it was completely stopped after

“Without informing the Secretary or the Minister of the relevant Ministry, the Board of Directors have come to a conclusion that this is loss making route and must be halted,” Gunawardena said.

“The users of the City Bus service brought to our notice and therefore I gave the Secretary to the Ministry of Transport the approval to start the City Bus service from January 15.”

“If we stop all loss making transport services then massive inconveniences will occur to the people in far parts of the island.”

The chairman of the state run Ceylon Transport Board has been asked to handover the resignation letter by the Minister Gunawardana citing that the head has failed to implement a policy decision approved by the government. (Colombo/ Dec 06/2022)

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Sri Lanka may see rates falling next year: President

ECONOMYNEXT – Sri Lanka’s interest rates are high and hurting small businesses in particular but interest rates are required to maintain stability, President Ranil Wickremesinghe said.

“One is, all of you want to know what’s going to happen to the interest rates?,” President Wickremesinghe told an economic policy forum organized by the Ceylon Chamber of Commerce.

“I wish I know. The governor has told me that the inflation has peaked. It’s coming down. You all understandably want some relief with the interest rates to carry business on.”

“I understand that and appreciate the viewpoint. It’s not easy to carry business on with such high interest rates. On the other hand, the Central Bank also has to handle the economy. So maybe sometimes early next year we will have a meeting of minds of both these propositions.”

Sri Lanka’s interest rates are currently at around 30 percent but not because the central bank is keeping it up. The central bank’s overnight policy rate is only 15.5 percent but the requirement to finance the budget deficit and roll over debt is keeping rates up.

Rates are also high due to a flaw in the International Monetary Fund’s debt workout framework where there is no early clarity on a whether or not domestic debt will be re-structured.

After previous currency crises, rates come down after an IMF deal is approved and foreign loans resume and confidence in the currency is re-stabilished following a float.

This time however there has been no clear float, though the external sector is largely stable and foreign funding is delayed until a debt re-structure deal is made.

Sri Lanka’s external troubles usually come because the bureaucrats do not believe market rates are correct when credit demand picks up and mis-uses monetary tools given in 1950 by the parliament to suppress rates, blowing the balance of payments apart.

The result of suppressed rates by the central bank are steep spikes in rates to stop the resulting currency crisis.

A reserve collecting central bank has little or no leeway to control interest rates (monetary policy independence) without creating external troubles, which is generally expressed as the ‘impossible trinity of monetary policy objectives’.

However, it has not prevented officials from trying repeatedly to suppress rates, perhaps expecting different results.

After suppressed rates – supposedly to help businesses – trigger currency crises, the normalization combined with a currency collapse leads to impoverishment of the population.

The impoverishment through depreciation leads to a consumption shock, which also leads to revenue losses in businesses.

The suppressed rates then lead to bad loans.

In the 2020/2022 currency crisis the sovereign default has also led to more problems at banks. Several state enterprises also cannot pay back loans.

“…[T]he bad debt that is being carried by the banks is mainly from the private sector or the government sector,” President Wickremesinghe said.

“Keep the government sector aside. We’re dealing with it. How do you handle it? Look, one of our major areas of are the small and medium industries. You can’t allow them to collapse, but they’re in a bad way.”

Classical economists and analysts have called for new laws to block the ability to central bank to suppress rates in the first place so that currency crises and depreciation does not take place in the first place.

Then politicians like Wickremesinghe do not have to take drastic and unpopular measures to fix crises and there will be stability like in East Asia.

Sri Lanka had stability until 1950 when the central bank was created by abolishing an East Asia style currency board. The currency board kept the country relatively stable through two World Wars and a Great Depression.

In 1948 after the war (WWII) was over “we stood second to Japan” Wickremesinghe said.

“But we started destroying it from the sixties and the seventies,” he said. :We started rebuilding an economy, which was affected by a (civil) war, and thereafter the way we went, is best not described here.”

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