ECONOMYNEXT – Sri Lanka may need to look at ways to soften the shock on factory workers who may lose their jobs as a result of Trump tariffs, but measures to improve productivity can help keep them in work, a former Presidential Advisor and ex-Treasury Secretary H H R Samaratunga said.
If there is no immediate solution to the tariff issue Sri Lanka stands to lose most of export orders to countries that have lower tariffs, and ‘thousands of jobs’ are at risk the Joint Apparel Association Forum has said.
The apparel industry has said it is particularly vulnerable as orders could be shifted easily and margins are thin.
Sri Lanka already has a scheme called Aswesuma, set up when Samaratunga was the economic advisor to ex-President Ranil Wickremesinghe, which has been used to help transient segments of people in distress.
One way of helping compete against higher tariffs is to help companies boost productivity, Samaratunga said.
Sri Lanka has problems with productivity compared to some East Asian countries, partly due to the work ethic but also due to other factors like a high number of holidays, he said.
Holidays not only keep workers idle but also factories and machinery. Sri Lanka has 25 official public holidays compared to 11 in Vietnam. Bangladesh also has high number of religious holidays like Sri Lanka.
“Productivity is key factor in being able to compete,” Samaratunga said. “If the worker output is higher, a country can still compete.”
Compared to 44 percent in tariffs slapped on Sri Lanka, competing countries like Bangladesh were slapped a lower 37 percent and a Vietnam a higher 46 percent.
India has been charged a much lower 27 percent.
Some countries like Turkey, where wages are higher, are still competitive goods like apparel, with higher levels of automation.
Sri Lanka’s wages have been higher in dollar terms than countries like Bangladesh, especially before the rupee collapsed from 184 to 300 to the US dollar in 2022.
But Sri Lanka also has high food prices, including basics like rice, due to protectionism, as well as maize, which is a key ingredient in producing low cost proteins, which is vital to reduce childhood malnutrition.
In Sri Lanka food protectionism has come from autarky or self-sufficiency and import substitution due to monetary instability. East Asian countries have free trade has better central banks and monetary stability. (Colombo/Apr08/2025)