Three Ways Sri Lanka Can Deal With Covid-19-Induced Poverty

Global poverty is expected to increase for the first time in over 20 years, due to the COVID-19 pandemic. Up to 115 million people worldwide will fall into extreme poverty this year.

- Faris Hadad-Zervos

So, this particular ‘End Poverty Day’ was marked not with celebration as in years past but with reflection and recommitment. We can reflect on the achievements of this island nation over the past few decades.

Indeed, Sri Lanka has carved out a special place in the region. Its economy has undergone important transformations. Sri Lanka ranks the highest in the South Asia region in the World Bank Human Capital Index for the second time in a row.

In Sri Lanka, as in other countries, the loss of jobs and incomes incurred by the pandemic has been severe. While workers in almost every sector have been affected, informal workers, who make up about 70 percent of the workforce and especially those in the industries and low-end services such as trade, are likely to be the most affected.

The apparel industry, which employs about half a million workers, has been reportedly forced to cut a significant number of jobs. Tourism, an emerging driver of jobs and growth in recent years, has taken a sizeable hit, just when it was recovering from the shock of the devastating April 2019 attacks.

As a result, poverty levels (measured by the World Bank’s US $ 3.20 poverty line in 2011 Purchasing Power Parity terms) are expected to rise to 13 percent, up from 8.9 percent in 2019. This implies that about 890,000 more people would become newly poor and many of them from the poorest regions in Sri Lanka. This is a significant setback that would imply a reversal of more than five years’ worth of progress in improving welfare.

The Government of Sri Lanka took swift action to enact measures to safeguard people’s health and counter their reversal of fortunes. Now, moving forward, the focus is rightly on building back better and rebuilding people’s lives.