Impact of COVID-19 pandemic on informal employees: The case of Sri Lanka

Abstract

The COVID-19 pandemic and associated counter measures have caused a number short- and long-term socio-economic consequences. This study aims at evaluating the impact of the above on informal wage employees in Sri Lanka. By employing both descriptive and regression techniques to nationally representative labour force survey data, a number of key findings were dervived. Informal employees account for nearly half of the total informal workforce and majority of them employed in sectors whose labour demand is highly elastic. There is a wage penalty factor for informal employees and wage penalty factor is much higher for low-skilled informal employees that that of their high-skilled counterparts. Above findings imply that informal employees are at a higher risk towards losing jobs and earnings due to the pandemic. Some of the negative impacts are already visible in recent data. Appropriate policy measures are urgently needed in improving labour market conditions of the above group.