Sri Lanka's income inequality worsens in 2020: World Bank

• Poorest suffered the largest proportionate earnings shock • Mobility restrictions created unequal opportunities favouring higher-income earners • Poverty levels estimated to have increased from 9.2% in 2019 to 11.7% in 2020 • People living extreme poverty doubled in 2020 to 1.2 percent of the population

Sri Lanka’s income inequality further worsened last year as the poorest suffered the largest proportionate earnings shock, while the smallest proportionate income losses were suffered by the rich due to mobility restrictions imposed to contain the COVID19 pandemic, which resulted in unequal opportunities favouring higher-income earners.

“The richest tend to have formal, secure jobs and better access to digital technology that allows them to conduct wage work or business operations remotely. They are also more likely to be working in the services sector, which suffered the smallest aggregate impact,” a recent World Bank (WB) report said.

In 2020, the Gini index that measures income inequality slightly increased to 39.8 in 2020 from 39.3 percent in the previous year.

“This is concerning given that Sri Lanka had relatively high inequality in comparison to peers even before the crisis,” the WB remarked.

According to the household income and expenditure survey 2016, Sri Lanka’s richest 20 percent enjoyed over half the total household income of the country, while the poorest 20 percent got only 5 percent.