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The growth and variations of rural non-farm activities in Sri Lanka since independence Hasbullah, Shahul Hameed 1989

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THE GROWTH AND VARIATIONS OF RURAL NON-FARM ACTIVITIES IN SRI LANKA SINCE INDEPENDENCE by SHAHUL HAMEED HASBULLAH B.A., University of Peradeniya, S r i Lanka. M.A., University of B r i t i s h Columbia. A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES DEPARTMENT OF GEOGRAPHY We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA OCTOBER 1989 (c) Shahul Hameed Hasbuilah, 1989 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department The University of British Columbia Vancouver, Canada Date | ? Ay*>L>S*-DE-6 (2/88) Abstract The encouragement of r u r a l non-farm a c t i v i t i e s (RNA), as part of a general development programme, i s an a l t e r n a t i v e strategy for progress i n Less Developed Countries (LDCs). A s h i f t of labour from low productive a g r i c u l t u r a l employment to non-agricultural employment i n the r u r a l areas of LDCs could enhance incomes i n those countries. This thesis focuses on S r i Lanka as an example of a Less Developed Country and analyses the growth pattern of RNA from S r i Lanka's independence i n 1948 to the present day. The t h e s i s poses several questions. Why were employment changes slow during the l a s t four decades? Why were there v a r i a t i o n s i n the regional growth of RNA? What factors contributed to the patterns of s p a t i a l d i s t r i b u t i o n and regional growth i n RNA? This thesis proposes a conceptual scheme of RNA growth and tests several hypotheses to answer these questions. Data used i n t h i s thesis were derived from three l e v e l s of magnitude: macro (national), meso (regional), and micro ( v i l l a g e ) . The macro and meso l e v e l information were obtained from secondary sources. The micro l e v e l (information came from a f i e l d survey conducted i n S r i Lanka during 1986 and 1987. The data were analysed using the S t a t i s t i c a l Package for Social Science (SPSS:X) at the University of B r i t i s h Columbia. The t h e s i s finds that the growth of RNA varies r e g i o n a l l y and i s concentrated i n two contrasting occupational categories. The f i r s t category i s characterized by low l e v e l s of productivity, s k i l l s and income. The second category i s often government-related and employs persons with higher status and education. Regionally s i g n i f i c a n t growth i n both types was seen i n f r i n g e areas of the c i t y of Colombo and i n areas of state investment f o r a g r i c u l t u r a l development. RNA growth was largely due to the changes i n the age structure of the population. Population grew r a p i d l y i n 1950s and 1960s which led to rapid labour force growth i n 1970s. Slow s t r u c t u r a l change and poor performance of the economy retarded the expansion of employment opportunities leading to open unemployment, under-employment and landlessness. Household employment strategies varied i n the r u r a l areas. The increased labour force among the low income households encouraged part-time, seasonal and low paying RNA. The middle and upper income groups using educational f a c i l i t i e s provided by the state i n the r u r a l areas q u a l i f i e d for government related occupations. By providing s o c i a l and economic welfare benefits f o r the r u r a l people, by expanding the state sector employment opportunities and by encouraging migration of labour to a g r i c u l t u r a l development areas, the post-independence S r i Lankan governments influenced the employment s i t u a t i o n and the growth of RNA. Direct government intervention f o r the creation of RNA has not always had the desired e f f e c t because RNA expansion i s also influenced by s o c i a l , ethnic and p o l i t i c a l considerations which often lead to unexpected consequences. Therefore, conclusions derived from the analysis of S r i Lanka's RNA growth alone may not be adequate to develop p o l i c y prescriptions for the implementation i n other LDCs. Table of Contents Abstract i i L i s t of Tables v i L i s t of Diagrams i x Acknowledgments x i Chapter One: Introduction 1 Chapter Two: The Conceptual and Methodological Issues i n the Study of Rural Non-Farm Employment 29 Chapter Three: Rural Non-Farm A c t i v i t i e s i n Asia, 1950-1980 60 Chapter Four: The Structural Changes i n Economy and Employment i n S r i Lanka since Independence 97 Chapter Five: The Growth of Rural Non-Farm A c t i v i t i e s i n S r i Lanka 161 Chapter Six: The Spatial D i s t r i b u t i o n of Rural Non-Farm A c t i v i t i e s and the Variations i n t h e i r Regional Growth i n S r i Lanka 208 Chapter Seven: Case Study: RNA i n Ketakumbura Grama Sevaka Divi s i o n of Kandy D i s t r i c t 2 68 Chapter Eight: Conclusion 317 Bibliography 323 Appendix One 3 60 Appendix Two 368 Appendix Three 373 L i s t of Tables l . l a Population by Religious Groups, 1981 12 1.1b Religious Composition of Ethnic Groups, 1981 12 1.2 The Changes i n Social Indicators During the Post-independence Period i n S r i Lanka 21 3.la Economic and Demographic Indicators for Selected Countries i n Asia (Selected Years) 62 3.1b The Factors associated with RNA i n Asia 63 3.2 Employment Conditions i n LDCs, 1960-1980 73 3.3 Rates of Employment Change by sectors i n Selected Asian Countries, 1960-80 74 3.4 Percentage of Rural Persons Who Consider RNA as Their Main Source of Income i n Selected Asian Countries 77 3.5 The Share of Off-Farm Income of Farm Households i n East Asia 81 3.6 Relative Contribution of to Family Income of Diff e r e n t Income Sources i n Rural India 81 3.7 Share of Different Categories of RNA i n Selected South and Southeast Asian Countries 86 4.1 Sectoral D i s t r i b u t i o n (%) of Gross Domestic Product (GDP) i n S r i Lanka - 1961, 1973, 1980 and 1985 99 4.2 The D i s t r i b u t i o n and Change i n Employment by Sectors, S r i Lanka - 1953, 1971 and 1981 102 4.3 Absolute Change i n Employment i n Rural and Urban Areas by Industry d i v i s i o n , 1971-81 104 4.4 Growth rates of Population and Labour Force and Changes i n A c t i v i t y Rates, Census Years After 1953 106 4.5 Changes i n Labour Force, Employed and Unemployed Population, 1953-1981 107 4.6 Ten Industry Divisions i n Ranking Order (3 D i g i t a l Group) Which Show Increase i n Total Employment, 1953-71 and 1971-81 117 4.7 Ten Industry Divisions i n Ranking Order (3 D i g i t a l Group) Which Show Decline i n Total Employment, 1953-81 and 1971-81 133 4.8 Employment Change i n Rural Manufacturing Sector (3 D i g i t a l Group), 1971-1981 ...147 4.9 Estimated Unemployment (% of Labour Force) i n S r i Lanka, 1962 - 1982 154 5.1 The D i s t r i b u t i o n and Change i n Farm and Non-Farm Occupations i n the Rural Areas of S r i Lanka 1963-1981 164 5.2 Rural Employment Change by Major Occupational Categories, 1971-1981 166 5.3 Sixteen Occupational Categories (2 D i g i t a l Group) Absorbing Nearly 90 Per Cent of Total Employment Increase During 1971-1981 168 5.4 Occupational Categories i n Which 90 per cent of Employment Growth Occurred i n Rural areas, 1971-81 (Re-Grouped Using Table 5.3) 170 5.5 Ten Occupational categories i n Ranking Order Which Showed Decline i n Total Employment, 1971-1981 173 5.6 Average Monthly Income (Per Person) by Major Occupational Categories, 1981/82 176 5.7 Highest and Lowest Income Receivers by Occupations (2 D i g i t a l Group) i n Rural Areas, 1981/82 177 5.8 The Expansion of State Sector A c t i v i t i e s and Growth i n Employment, Selected Years 192 6.1 The percentage of Employed Population Engaged i n Non-Farm A c t i v i t i e s by D i s t r i c t , Selected Years 211 6.2 Rural Non-Farm Employed by White-Collar, Blue-C o l l a r and Service Occupations, 1981 213 6.3a RNA and Related Variables by Agro-Ecological Zones, 1981 214 6.3b RNA Growth and Related Variables by Agro-Ecolog i c a l Zones, 1953-1981 214 6.4 The Percentage Changes i n Employment by D i s t r i c t , 1963-71 and 1971-81 216 6.5 Relationships Between Selected Demand and Supply Factors (1981) and the Structure of RNA i n 1981....221 6.6 Multiple Regression Analysis of Selected Demand and Supply Factors i n 1981 and Structure of RNA i n 1981 221 6.7 Relationships Between Selected Demand and Supply Factors and the Growth of RNA , 1963-1981 225 6.8 Multiple Regression Analysis of Selected Demand and Supply Factors and the Growth of RNA, 1963-81 225 6.9 RNA Growth Regions 230 6.10 The Changes i n RNA arid the Background variables by Re-Grouped d i s t r i c t s 231 6.11 Selected Independent variables by Re-Grouped D i s t r i c t s 232 7.1 The Increase of Rural Establishments i n the Study Area 283 7.2 Employment Size of the Surveyed Establishments i n the Study Area 283 7.3 The Changes i n Type of Rural Industries and Employment i n the Study Area 285 7.4 The Changes i n Type of Rural Commercial Establishments and Employment i n the Study Area 285 7.5 The Growth of Employment i n Rural Establishments 1948-1987 296 7.6 D i s t r i b u t i o n of Male, Female and Children Employed i n the Surveyed Rural Establishments 296 7.7 The Occupational D i s t r i b u t i o n of Selected Households Heads 3 01 7.8 Employment History of the Heads of the Households 301 7.9 The Main and Other Occupations of the Heads of the Households Selected for t h i s Study 305 7.10 Other Sources of Income and Income Levels of the Selected Households 305 L i s t of Diagrams 1.1 Agro-ecological Regions of S r i Lanka 13 1.2 Population D i s t r i b u t i o n by D i s t r i c t , 1981 ....14 2.1a Conceptual Scheme of RNA Growth 45 2.1b The Role of State i n RNA Growth 45 4.1 The Structural Change i n Population, 1950-80 110 6.1 S r i Lanka: Administrative D i s t r i c t s at the Time of 1971 Census 210 6.2 The D i s t r i b u t i o n of Re-Grouped D i s t r i c t s by RNA Growth Regions ' 233 6.3 Life-Time Migration Stream i n S r i Lanka, 1981 265 6.4 The D i s t r i b u t i o n of State Investment i n S r i Lanka Since Independence 266 7.1 The Location of the Study Area 272 7.2 RNA and Related Aspects i n the Rural Areas of the Kandy D i s t r i c t 274 7.3 The Changes i n the Land-Use i n the Study V i l l a g e ...278 7.4 The Location of Establishments at the Time of the Survey, 1987 ...284 7.5 Establishments Before 1965 284 7.6 Establishments Between 1966-76 290 7.7 Establishments Between 1977-87 290 7.8 The D i s t r i b u t i o n of Work P a r t i c i p a t i o n of Family Members of the Households During One Year Period 3 08 i x To my Parents for t h e i r guidance, support and encouragement i n a l l my endeavours Acknowledgments I am indebted to the University of Peradeniya ( S r i Lanka) for granting me leave to undertake my graduate studies and to the University of B r i t i s h Columbia for providing me with a stimulating environment during my studies. I am very g r a t e f u l to my supervisor Professor Terry McGee and other members of my d i s s e r t a t i o n committee -Professors Nancy Waxier Morrison, Trevor Barnes and Barrie Morrison f o r t h e i r encouragement and guidance i n my graduate work. I wish to thank Professor Morrison for h i s f i n a n c i a l assistance i n the f i e l d survey and for the Marga I n s t i t u t e for allowing me to use t h e i r v i l l a g e study materials i n my research. In S r i Lanka, I am thankful to a number of i n d i v i d u a l s who assisted me i n the f i e l d survey. I am very thankful to Sandy Lapsky, V i j i t h a Rajendran, Saman Fernando, Kandiah Selvaratnam and R.S. Gunawardene fo r t h e i r assistance i n the development of t h i s d i s s e r t a t i o n . Special thanks to Professors, graduate students and s t a f f members at the Department of Geography for t h e i r assistance and support during my stay at the University of B r i t i s h Columbia. F i n a l l y , I am g r a t e f u l to my wife Suatha f o r her patience and encouragement and the s u f f e r i n g she had to undergo i n S r i Lanka during my graduate studies. I am also thankful to my family members and friends whose encouragement helped me to continue my studies up to t h i s l e v e l . 1 C H A P T E R O N E : I N T R O D U C T I O N The features of the growth of r u r a l non-farm a c t i v i t i e s (hereafter RNA) i n S r i Lanka form the main theme of t h i s t h e s i s . The period of t h i s study i s from the date of S r i Lanka's independence (1948) to the present day (1988) . In t h i s t h e s i s a l l r u r a l economic a c t i v i t i e s are divided broadly into farm and non-farm a c t i v i t i e s . The former i s concerned l a r g e l y with agriculture but includes f i s h i n g and fo r e s t r y while the l a t e r relates to industry, trade and service.(1) 'Rural' and 'Urban' are f l e x i b l e terms of un i v e r s a l a p p l i c a t i o n . However, these terms pose considerable problems i n s c h o l a r l y analyses (Moore, I984b:6). Lipton (1984:155) says that the rural/urban d e f i n i t i o n i s not a categorization of space alone. The d i s t i n c t i o n involving the categorization of rural/urban areas i s more complex and overlapping. In S r i Lanka, ' r u r a l ' r e f e r s to geographical areas where economic a c t i v i t i e s are predominantly farm-related. Rural areas are often characterized by lower population d e n s i t i e s and less dynamic socio-economic change when compared with urban areas. The growth of RNA i s assumed to be an important i n d i c a t i o n of change i n the r u r a l economy and i s often assumed to be associated with increasing household income. The growth of RNA i s often accompanied by other socio-economic and s p a t i a l modifications which indicate 2 a g r i c u l t u r a l change and increasing integration of r u r a l areas with the rest of the economy. An important feature of the recent development strategies i n Less Developed Countries (LDCs) i s the emphasis on the development of the non-farm sector i n r u r a l areas (ILO, 1983a and 1987). Growth-oriented p o l i c i e s to stimulate RNA were vigorously promoted by i n t e r n a t i o n a l a i d agencies (e.g., the World Bank, the International Labour Organization) and implemented by a number of i n d i v i d u a l governments i n LDCs (Chuta and Liedholm, 1979). The ra t i o n a l e behind the emphasis on the development of RNA i s the r e a l i z a t i o n of the existence of the problem of r u r a l poverty. Seventy two out of 126 countries are grouped as developing countries (or LDCs)(2) by the World Bank's World  Development Report of 1985. The economies of a number of LDCs s t i l l remain agrarian characterized by a low Gross National Product (GNP) and other unsatisfactory socio-economic conditions (e.g., low l i t e r a c y l e v e l , low l i f e expectancy, poor n u t r i t i o n among others). The LDCs are located i n Asia, A f r i c a and Latin America and they c h a r a c t e r i s t i c a l l y d i f f e r from the newly developing countries such as Taiwan and South Korea. Most of the people i n the poorer developing economies l i v e i n r u r a l areas and are engaged i n farm-related a c t i v i t i e s . Rural areas of the poorer LDCs display s o c i a l and economic stagnation. The changes i n population growth, a g r i c u l t u r a l 3 modernization and i n f r a s t r u c t u r a l development that have occurred i n many LDCs have not generally led to a marked improvement i n the qua l i t y of l i f e for the majority of the r u r a l population. The deteriorating employment s i t u a t i o n (increasing unemployment and underemployed) i s considered to be one of the most c r u c i a l contemporary problems f o r those poor LDCs. The development p o l i c i e s which were adopted i n the 1950s and 1960s were par t l y responsible for the increasing employment problems of the LDCs. A major thrust of the development p o l i c i e s i n the 1950s centred on economic growth a n t i c i p a t i n g ^ t r i c k l e down' ef f e c t s did not have the expected b e n e f i c i a l impact on the r u r a l poor. So also were the e f f e c t s of import substitution and i n d u s t r i a l i z a t i o n p o l i c i e s on which the LDCs placed t h e i r hopes i n the early stages. These p o l i c i e s were inadequate to ease the problems of growing demand for employment. The development p o l i c i e s i n the 1960s focused on improving the use of more advanced technologies and intensive use of inputs. These changes, generally described as the "Green Revolution", were able to increase food production and a g r i c u l t u r a l incomes but t h e i r benefits were not f e l t by a l l persons i n the r u r a l community. Development ef f e c t s were unevenly d i s t r i b u t e d over space. While the ri c h e r farmers benefited, the condition of the poorer farmers appears to have worsened. Studies i n some countries point to an increase i n landlessness and unemployment as a consequence (De Koninck, 4 1979 and Byres, 1982). However, i n other regions (e.g., East Asia), r u r a l income increased causing an increasing demand for wage labour(Oshima, 1984). The uneven impact of development p o l i c i e s i n the 1950s and 1960s subseguently led p o l i c y makers to emphasize the importance of the development of the r u r a l non-farm sector as a way to activate "integrated r u r a l development" and increase income and employment opportunities i n the r u r a l areas. Ho (1985) explains t h i s as follows "...Interest i n r u r a l non-agriculture development has been growing among the p o l i c y makers and development economists. One reason for t h i s i s that economic development based on large-scale, urban-centred and c a p i t a l intensive industries has not had the desired impact on employment and equity. Thus, the development of r u r a l non-farm a c t i v i t i e s , as a part of a general development programme, i s seen as an a l t e r n a t i v e strategy f o r development" (1985: 1). I t has been argued that the development of the r u r a l non-farm sector would increase income i n r u r a l areas. More employment could be created for landless and land-poor who were generally defined as r u r a l poor (Johnston and Clark, 1982: 10). By encouraging non-farm a c t i v i t y , income d i s p a r i t i e s could be reduced i n the r u r a l areas. The r u r a l income flow to the urban areas could be slowed down by increased consumption of the r u r a l l y produced items, and through the "backward" and "forward" linkages between farm and non-farm sectors within the r u r a l economy i t s e l f , r u r a l 5 development can be advanced at a much fa s t e r pace (Sethuraman and Bangasser, 1984; Chuta and Liedholm, 1979; APO, 1985). In order to tes t these assumptions concerning RNA growth-oriented p o l i c i e s i n d i f f e r e n t LDCs, i t i s important to understand the features of the r u r a l non-farm sector and employment i n LDCs. The empirical research i n t h i s respect i s i n i t s infancy i n several LDCs including S r i Lanka. This study using a geographical research framework attempts to i d e n t i f y the growth patterns of RNA and examine how f a r they have been successful i n r u r a l areas over a period of three decades. l . l Geographical Approach to Development Issues Geographers have been increasingly involved i n the study of development and underdevelopment i n LDCs i n recent years. Geographers suggest that many of t h e i r own concepts and techniques may have considerable relevance to the study of development. Forbes (1981), McGee (1974), De Souza and Porter (1974) and Brookfield (1973) have documented i n d i v i d u a l geographers' contributions to development issues. Geographers have attempted to understand the process of development through d i f f e r e n t approaches. Some of them t r i e d to explain development as r e s u l t i n g from a process of d i f f u s i o n of innovations and modernization. Some approaches 6 attempt to r e l a t e uneven regional development to v a r i a t i o n s i n the d i s t r i b u t i o n of factors of production. Geographers, using already established development theories (e.g., modernization, Marxist and neo-Marxist theories) have analysed the d i f f e r e n t issues of development geography. Each of these t h e o r e t i c a l schemes has contributed to development theory. But perhaps more important i s the fact that geographers have continued to carry out d e t a i l e d empirical studies of countries undergoing development thus providing an important body of data based on country studies. Each of these approaches has i t s merits and may be u t i l i z e d f o r t h i s study. Pattison (1964: 211) was of the view that geography as a d i s c i p l i n e had acquired four great t r a d i t i o n s . The four great t r a d i t i o n s are the s p a t i a l t r a d i t i o n , the area studies t r a d i t i o n , the man-land t r a d i t i o n and the earth-science t r a d i t i o n . Therefore, geographical methods and techniques are centred around s p a t i a l and regional analysis. With regard to development geography, the geographical approach which emphasizes the s p a t i a l v a r i a t i o n s i n economic a c t i v i t i e s can make an important contribution. This i s , i n part, because many other d i s c i p l i n e s are not concerned with t h i s aspect of the development process presenting arguments at the non-spatial l e v e l . This r e s u l t s i n gene r a l i z a t i o n which often has limited v a l i d i t y at the regional l e v e l . Isard (1968) i n his study of Location and Space Economy indicated that the analysis of geographical d i s t r i b u t i o n and 7 va r i a t i o n s of economic factors provide a f u l l e r explanation of s p a t i a l economic a c t i v i t i e s . The geographers who used modernization and dependency theories i n t h e i r analyses found that the geographical approach i s h e l p f u l i n explaining the process of development and p a r t i c u l a r l y uneven economic development i n LDCs (e.g. De Souza and Porter, 1974; R i d d e l l , 1970; Armstrong and McGee, 1985). Though the geographic perspective has been u t i l i z e d to study the labour market and employment-related issues (see Van Der Laan and Van Der Meulen, 1987 for a summary and see also Freeman and N o r c l i f f e , 1984a and 1984b), i t has great p o t e n t i a l to be used with the major t h e o r e t i c a l approaches to labour market studies (neo-classical, post-Keynesian and neo-Marxist) (Van Der Lann,1987: 325-338). The study of s p a t i a l mobility was one of the most important contributions of geographers to the study of the labour market s i t u a t i o n i n LDCs. Such extensive studies were conducted i n various parts of LDCs: R i d d e l l (1981) i n West A f r i c a ; McGee (1982a and 1982b) and Hugo (1982) i n South and Southeast Asia. These geographers and also others have e f f e c t i v e l y analysed the labour mobility and labour market s i t u a t i o n using a geographical approach. In the analysis of West A f r i c a n migration, R i d d e l l (1981) emphasized the weakness of the ex i s t i n g approaches and suggested new d i r e c t i o n s i n which the future migration research could be conducted. Likewise, McGee (1982a and 1982b), Hugo (1982) and Forbes (1984) indicated that the patterns of Asian 8 labour mobility i n f a c t have s i m i l a r i t i e s to the features of ' c i r c u l a t o r y ' migration already observed i n A f r i c a . Off-Farm employment i n terms of c i r c u l a t o r y migration i s an important phenomenon throughout the Third World. Geographical analysis i s an important t o o l f o r employment-related research for the following reasons. F i r s t , space (distance) presents an important constraint on the e f f e c t i v e matching of the demand for, and supply of labour. Secondly, the a n a l y t i c a l framework based on a geographical approach provides f l e x i b i l i t y i n data c o l l e c t i o n and i n data analysis. Such an exercise enables the researcher to interpret the causal factors associated with the v a r i a t i o n s i n the labour market behaviour. F i n a l l y , i t enables the i d e n t i f i c a t i o n of regions of varying rates of labour force and occupational changes. In t h i s respect, the s p a t i a l i n t e r p r e t a t i o n of labour market and employment-rel a t e d issues can be a d i s t i n c t contribution to the broader study of the labour market formation i n less developed countries. 1.2 The Study of the Growth of RNA i n S r i Lanka, 1948-88 The study of employment change during the post-independence period of S r i Lanka provides an excellent case study of the changes i n RNA. During t h i s period, S r i Lanka, l i k e several other developing countries, experienced serious employment-related problems such as increasing 9 unemployment, decreasing productivity of labour and the stagnation of spatial and sectoral labour movements. The causes of the employment problems were basically demographic and economic. However, socio-ethnic, demographic and p o l i t i c a l developments during the post-independence period of Sri Lanka also contributed to the employment change. The central aim of this research i s a study of the features of the growth of RNA. The overall growth of RNA during the reference period was slow and proportionately insignificant. However, the regional variations in the growth of RNA during the same period appear to be significant. For example, RNA growth was rapid in some regions while stagnant in others. The understanding of the geographical variations of the growth of RNA w i l l lead to a better explanation of the factors associated with RNA growth. In order to present the major features characterizing RNA growth in this thesis, i t is important to identify the major socio-economic, demographic and p o l i t i c a l developments of post-independence Sri Lanka and also to provide related background geographical information about the country. 1.3 Land and People ( 3 ) Sri Lanka i s an island of approximately 25,000 square miles in area and i s located in the Indian Ocean (south of the Indian Sub-Continent) within 5 and 9 degrees latitude 10 north of the equator. However, the true t r o p i c a l c h a r a c t e r i s t i c s a r i s i n g from location are overshadowed by the South-Asian monsoonal c l i m a t i c conditions. The r a i n f a l l d i s t r i b u t i o n varies geographically. The south-west region (the coastal and h i l l y areas) of the i s l a n d receives more than 100 inches of r a i n f a l l per annum mainly from the south-west monsoon. Most of the north and eastern parts of the country receive less than 75 inches of r a i n f a l l per annum. Geomorphologically, S r i Lanka i s divided into two major d i v i s i o n s : coastal low lands and central h i l l y lands. The elevation gradually increases towards the i n t e r i o r of the country. The elevation (including s o i l types) and r a i n f a l l together determine the nature of natural vegetation. Combining climate, geomorphology and s o i l , S r i Lanka i s divided into four major and twenty one minor agro-ecological zones. The four major agro-ecological zones are the wet-zone low country, the wet-zone h i l l country, the intermediate zone and the dry zone. The geographical d i s t r i b u t i o n of agro-ecological zones i s shown i n Diagram 1.1. Agro-ecological factors influence land-use patterns, the nature of economic a c t i v i t i e s and the d i s t r i b u t i o n of population i n S r i Lanka. As Diagram 1.2 shows, the v a r i a t i o n s i n population d i s t r i b u t i o n are c l o s e l y associated with agro-ecological factors. The population concentration i s much higher i n the low-country wet-zone where agro-e c o l o g i c a l factors are more favourable to a g r i c u l t u r e -r e l a t e d economic a c t i v i t i e s . Rural population density i s 11 much higher i n t h i s zone. The concentration of population decreases towards the dry-zone areas where de n s i t i e s are low. Economic a c t i v i t y i n the wet-zone low country i s dominated by r i c e c u l t i v a t i o n . Rice c u l t i v a t i o n i s c a r r i e d on i n small holdings. The plantation agri c u l t u r e crops (tea and rubber) are concentrated i n the central h i l l y areas and are c a r r i e d out on a large scale. At the same time, the domestic a g r i c u l t u r e a c t i v i t i e s (the c u l t i v a t i o n of r i c e , vegetable and spices) are commonly found i n r i v e r v a l l e y s and low-lying areas of the central h i l l y lands. Rice i s the major crop i n the dry-zone but i n s u f f i c i e n t r a i n f a l l makes i t d i f f i c u l t to c u l t i v a t e r i c e without i r r i g a t i o n . Because of the low r a i n f a l l a highly complex system of i r r i g a t i o n has developed over the years i n the dry zone of S r i Lanka (Leach, 1980). The t o t a l population was estimated at 17 m i l l i o n s i n 1988. Approximately two-thirds of the t o t a l population l i v e i n the r u r a l areas. The population i s divided into d i f f e r e n t ethnic and r e l i g i o u s groups (see Table 1.1a and 1.1b). The followers of four r e l i g i o n s (Buddhism, Hinduism, C h r i s t i a n i t y and Islam) are grouped into three major (Sinhalese, Tamil and Moor) and other minor (Malays, Veddas and Burghers) ethnic groups. Buddhists are e t h n i c a l l y Sinhalese and t h e i r i d e n t i t y i s based on the Sinhala language and culture. Hindus are Tamils. While Muslims speak the Tamil language, they are e t h n i c a l l y of a Table l . l a : Population by Religious Groups, 1981. Religion Population % Buddhists 10,288,325 69.3 Hindus 2,297,806 15.5 Muslims 1,121,717 7.5 Roman Catholics 1,023,713 6.9 Other Christians 106,855 0.7 Other 8,334 0.1 A l l Religions 14,846,750 100.0 Table 1.1b: Religious Composition of Ethnic Groups, 1981. Relig i o n Ethnic Group Sinha-lese S r i Lanka Tamil Indian Tamil S r i Lanka Moors Burge rs Malay Others Buddhists 93.3 1.8 1.8 0.2 2.9 2.1 7.5 Hindus 0.1 80.7 90.0 6.7 0.4 3.4 15.3 Muslims 0.1 0.7 0.5 92.6 1.6 89.2 48.7 Roman Catholics 6.0 14.3 6.2 0.3 79.5 2.2 11.6 Other Christians 0.4 2.4 1.4 0.1 15.1 0.6 12 .1 Other 0.1 0.1 0.1 0.1 0.5 2.5 4.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Department of Census and S t a t i s t i c s , 1986c. 13 Diagram 1.1: Agro-Ecological Regions of S r i Lanka Source: Based on the Map of Agro-Ecological Zones of S r i Lanka. Diagram 1.2: Population Di s t r i b u t i o n by D i s t r i c t , 1981 • 5,000 Persons • 20,000 Persons O 100,000 Persons MILES } DISTRICTS A - Colombo B - Gampaha C - Kalutara 0 - Kandy E - Matale F - Nuwara Eliya G - Galle H - Marara 1 - Hambantota J - Jaffna K- Mannar L - Vavuniya M-Mullairivu N- Barticaloa 0 - Ampara P - Trineomalee Q- Kurunegala R- Puffalam S - Anuradhapura T - Polonnaruwa U-Badulla V - Moneragala W- Rafnapura X- Kegalla SCALE:-Source: Based on 1981 Population Census, S r i Lanka. Department of Census and S t a t i s t i c s , Various Years. 15 d i f f e r e n t stock. There are both Sinhalese and Tamil speaking Christians. The Buddhist Sinhalese constitute about two-thirds of the t o t a l population. They are predominant i n most of the country except i n the north and east. The Sinhalese are sub-divided into two groups: the coastal and the Kandyan. The Kandyans are mainly concentrated i n the h i l l y part of t h i s country. Tamils too constitute two groups: S r i Lankan Tamils (about 13%) and Tamils of Indian o r i g i n (5.5%). Indian Tamils are descendants of plantation estate workers (tea and rubber) who were brought from India during the l a t e nineteenth and early twentieth centuries. The S r i Lankan Tamils are mostly concentrated i n the Northern and Eastern Provinces. The Muslims (7.5%) l i v e mainly i n urban and suburban areas and are equally d i s t r i b u t e d i n both Sinhalese and Tamil areas. The geographical d i s t r i b u t i o n of the two major ethnic groups (Sinhalese i n the south and centre and the Tamils i n North and East) strengthen t h e i r ethnic i d e n t i t y and help to perpetuate the d i v i s i o n s between the two groups. This view i s substantiated by others (Pounds, 1972 and Freeberne, 1968) when they argue that the regional concentration of ethnic groups i s an important factor which helps to preserve and maintain ethnic i d e n t i t i e s . The ethnic f a c t o r has played a major r o l e i n l a t e r p o l i t i c a l development i n t h i s country. 16 There have been three phases of S r i Lankan h i s t o r y (Farmer, 1966). F i r s t , a Sinhalese Buddhist c i v i l i z a t i o n t h r i ved and flourished before the tenth century. This c i v i l i z a t i o n was centred around the north c e n t r a l part of the i s l a n d . The Sinhalese kings provided well-developed i r r i g a t i o n f a c i l i t i e s for r i c e c u l t i v a t i o n i n t h i s area. I t i s believed that recurrent South-Indian invasions of t h i s i s l a n d and widespread malaria forced the Sinhalese population to move towards the south where the present Sinhalese population i s concentrated. As a r e s u l t , tanks and other i r r i g a t i o n schemes i n north-central part were abandoned and l e f t i n ruins a f t e r the tenth century. Secondly, a f t e r 1505, the island was ruled by European colonizers. However, u n t i l 1815 the Kandyan area remained independent. The Portuguese who were the f i r s t European colonizers ruled S r i Lanka between 1505 and 1658. The Dutch who followed the Portuguese remained i n power u n t i l 1795. The B r i t i s h ruled the country for one hundred and f i f t y years (1795 - 1948). During the B r i t i s h period (1795-1948), the economy was transformed into a plantation export-oriented economy. Tea and rubber c u l t i v a t i o n was ca r r i e d on, on a large scale by the B r i t i s h investors i n the h i l l y part of the country. The plantation exports provided a s i g n i f i c a n t income fo r the c o l o n i a l r u l e r s . The development of the plantation sector led to a well-developed transport network between plantation areas and the port of Colombo. Cheap labour was brought 17 from South India to work on tea and rubber estates. Since the establishment of the plantation sector, the country has j become a major exporter of tea and rubber to the world market. The impact of the plantation economy on the l o c a l (Kandyan) people was great. As Bandarage (1983) indicates, the B r i t i s h c a p i t a l i s t expansion i n the form of plantation a g r i c u l t u r e l i m i t e d the economic development and expansion of the t r a d i t i o n a l Kandyan v i l l a g e s . At the same time, the immigrant Indian estate workers were confined to the estate areas which as Moore (1983) indicates created a dichotomy (ru r a l and estate) i n the Kandyan areas and also led to mutual antagonism between these two communities (Robinson, 1975). S r i Lanka was considered to be a model colony of the B r i t i s h Empire (Namasivayam, 1948). B r i t i s h administration i n S r i Lanka was almost undisturbed unlike i n neighbouring India. The B r i t i s h administration introduced a number of p o l i t i c a l (e.g., introduction of universal suffrage i n 1931), economic (e.g., building of railways, a g r i c u l t u r e c o l o n i z a t i o n schemes) and s o c i a l (English education f o r the urban rich) reforms i n the early twentieth century. The educational and employment p o l i c i e s of the B r i t i s h c o l o n i a l r u l e r s have had a s i g n i f i c a n t impact on society. Regional d i s t r i b u t i o n of educational f a c i l i t i e s was uneven with some regions, e s p e c i a l l y the Colombo, Jaffna, Golle and Kandy d i s t r i c t s , receiving greater benefits (Tambiah, 1955) . The 18 unequal educational opportunities were to have economic, s o c i a l and p o l i t i c a l repercussions i n the post-independence period. 1.4 Changes since Independence At the time of independence, t h i s country i n h e r i t e d a well-developed agriculture-based export economy and a parliamentary p o l i t i c a l system along with other socio-economic and p o l i t i c a l legacies which have been the r e s u l t of four hundred years of c o l o n i a l r u l e . The parliamentary system was based on the multi-party concept. The members of parliament were elected by popular vote exercised by a l l persons over 21 years (4) of age and who were c i t i z e n s (5) of the country. The country was divided into several electorates. The electorates were demarcated on the basis of area as well as the s i z e of the population. The densely populated wet-zone area where the population belonged to the Sinhalese ethnic group was well represented i n Parliament. The p o l i t i c a l party having the majority i n parliament formed the government led by a Prime Minister and h i s cabinet.(6) Each government, once elected, could continue up to a period of f i v e years.(7) The post-independence governments were formed by the two major p o l i t i c a l p arties (the United National Party and S r i Lanka Freedom Party) which were overwhelmingly dominated by the Sinhalese community and had small number representing 19 other ethnic groups. The largest minority ethnic group (Tamils) came to be represented by Tamil p o l i t i c a l p a r t i e s as well. The ethnic-oriented p o l i t i c a l developments have had great impact on the employment changes i n the post-independence era. Since the ultimate decision making i n the p o l i t i c a l process ( i . e . , achieving p o l i t i c a l control of one party) was l e f t to the people of t h i s country, the p o l i t i c a l p a r t i e s were d i r e c t l y responsible to the electorate. The party agenda and e l e c t o r a l p o l i t i c s were centred around popular issues such as s o c i a l welfare. These issues were vigorously exploited by a l l the major p o l i t i c a l p a r t i e s . The post-independence governments focused i n p a r t i c u l a r on the development of domestic agriculture and the promotion of s o c i a l services for the people. The problems of the smallholder i n the wet zone where landlessness and under-employment were becoming worse received greater attention i n the post-independence a g r i c u l t u r a l development programmes. V i l l a g e expansion schemes i n which new a g r i c u l t u r a l lands were open up and alienated to landless people were implemented i n many areas. Another p o l i c y was to develop new ag r i c u l t u r e lands i n underpopulated dry-zone areas. M u l t i - m i l l i o n rupee massive i r r i g a t i o n projects were undertaken i n the c o l o n i z a t i o n schemes to improve the condition of the farmers. Landless persons from the wet zone were s e t t l e d i n these c o l o n i z a t i o n schemes. The idea of opening up the dry zone which had once 20 been the centre of Sinhala c i v i l i z a t i o n was an encouragement in pursuing these colonization schemes and r e - s e t t l i n g that region. The domestic a g r i c u l t u r a l development i n the dry zone encouraged labour movements from densely populated wet zone to the dry zone where about 100,000 wet zone f a m i l i e s (mostly Sinhalese) were given c u l t i v a b l e land and homes i n the dry zone areas (Wickramasekara, 1985) . The dry zone a g r i c u l t u r a l development contributed greatly to increased r i c e production i n the country. The s o c i a l developments, on the other hand, were concerned with the up-grading of the health and education of the people. In t h i s respect, free education up to u n i v e r s i t y , free medical f a c i l i t i e s and even free food(8) were provided for the people. The state spent a s i g n i f i c a n t proportion of i t s income, around ten per cent of the GNP during the post-independence period, on welfare programmes either as d i r e c t grants or as i n d i r e c t benefits (Bhalla, 1988: Table 92). The c a p i t a l needed for both a g r i c u l t u r e and s o c i a l investment had been mainly extracted from the earnings of plantation a g r i c u l t u r a l exports and foreign donors. The state investments and the promotion of ph y s i c a l and s o c i a l q u a l i t i e s of l i f e of the people have produced s i g n i f i c a n t changes within a short period of time. As the aggregated s t a t i s t i c s indicate (Table 1.2), health ind i c a t o r s (e.g., infant mortality, l i f e expectancy) improved remarkably. Morris (1979), using a physical q u a l i t y 21 Table 1.2: The Changes i n Social Indicators During the Post Independence Period i n S r i Lanka. Year Literacy Infant L i f e Per Capita Total Rate (%) Mortality Expect- A v a i l a b i l i t y Open Rate (per tancy of Crop Land Unempl-1000s) (Years) (Acre) oyment (No.) 1940 39.9 149 31.7 1950 69.0 82 56.5 1.0 1960 77.0 57 62.0 0.4 526000 1970 78.5 48 64.0 0.4 839264 1982 87.2 32 69.0 0.2 897249 '-' Information not available Source: Column 1,2 and 3 are from Bhalla and Glewwe, 1986; for column 4, figures for 1950 and 1970 are from Department of Census and S t a t i s t i c s , 1983a and for 1960 and 1982 are from Asian Development Bank, 1986; for column 5 i s (for 1971 and 1981) from Department of Census and S t a t i s t i c s , 1986c and (for 1963) ESCAP, 1976. 22 of l i f e index, ranked S r i Lanka as f i r s t among the world's forty-two low income countries (those distinguished by a GNP of under $300 US). The s o c i a l indicators such as education l e v e l , l i t e r a c y rates also showed an improvement during t h i s period (Table 1.2). However, the above mentioned development e f f o r t s also led to some undesirable consequences. The improvements i n the physical q u a l i t y of l i f e of the people, p a r t i c u l a r l y the sudden decline i n mortality rates i n the absence of a corresponding decline i n the b i r t h rates accelerated population growth. The t o t a l population of t h i s country almost doubled within 25 years of independence (between 1948 and 1971). Such a population "explosion" resulted i n i t i a l l y i n a rapid increase i n the number of children and as they matured, the demand for employment rose s t e a d i l y . As a r e s u l t , the incidence of open unemployment increased to about 20 per cent of the t o t a l labour force. The r u r a l economy also suffered from increasing under-employment. Secondly, the creation of Sinhala colonies under the a g r i c u l t u r a l development projects, some of which were established i n the predominantly Tamil areas, created ethnic tensions (Kearney, 1988 and Ponnambalam, 1983). While employment problems were increasing, the o v e r a l l economic performance weakened. The poor economic performance during t h i s period was due to several f a c t o r s including worsening world market conditions for a g r i c u l t u r a l exports, an unchanged economic structure where a g r i c u l t u r e 23 remained the major productive sector and the slow economic growth. These problems have been studied i n depth by Isenman, 1980; Gunasinghe, 1984 and others. Further, i t has been indicated that weak economic p o l i c i e s and management aggravated t h i s already worsening s i t u a t i o n (Samarasinghe, 1980). With regard to the employment problems, the economy was not able to change s t r u c t u r a l l y from low value primary production to secondary and t e r t i a r y sector industries which could provide additional employment. Thus increasing unemployment became the ca t a l y s t for an "explosive s i t u a t i o n " i n 1971 i n the form of the Sinhalese r u r a l youth upr i s i n g . Immediately a f t e r t h i s uprising, the government introduced some economic reforms including the introduction and implementation of the Land Reform Law 1972 i n which the a g r i c u l t u r a l lands acquired under the land reform programme were d i s t r i b u t e d among the unemployed Sinhalese youth. This and other reforms increased the state's r o l e i n the day-to-day economic a c t i v i t i e s of S r i Lanka but did not provide an e f f e c t i v e s o l u t i o n to employment problems. The lack of adequate p o l i t i c a l representation of Tamils i n the c e n t r a l government resulted i n the neglect of Tamil in t e r e s t s i n the national agenda. As Appathurai (1983) indicates, the post-independence state's language, c i v i l service, education, e l e c t o r a l and resource a l l o c a t i o n p o l i c i e s were against the Tamils' int e r e s t s and alienated Tamil society from the mainstream of S r i Lankan society. 24 Radical elements grew among the Tamil youth as a r e s u l t of l i m i t e d higher educational opportunities and increasing unemployment. In 1977 and 1983 ethnic r i o t s against Tamils further aggravated t h e i r f r u s t r a t i o n . This led to a x c i v i l war s i t u a t i o n ' and a demand for a separate homeland fo r Tamils, the Tamil Eelam. The ethnic problems of S r i Lanka have been analysed mainly from the p o l i t i c a l , ethnic and h i s t o r i c a l perspectives (e.g., Kearney, 1985 and 1988; De S i l v a , 1982; Arasaratnam, 1979) . The economic, demographic and geographic aspects of the ethnic problems were not adequately studied. As i s evident i n t h i s study the roots of the present ethnic c o n f l i c t can probably be traced to the changes i n the economic and demographic s i t u a t i o n during the post-independence period. The geographical d i s t r i b u t i o n of the two major ethnic groups i s c r u c i a l . The r o l e of the state too appears to have been very s i g n i f i c a n t i n aggravating the socio-ethnic and employment s i t u a t i o n during t h i s period. The state p o l i c i e s were often short-term targeted and were not h e l p f u l on solution to the worsening long term problems of unemployment and ethnic enmities. With regard to the r o l e of p o l i t i c s i n the ethnic c o n f l i c t , Phadnis (1979) said that "...over the decades, an acute competition for p o l i t i c a l resources and scarce economic opportunities has been the major cause of exacerbation of in t e r - e t h n i c group c o n f l i c t s i n the p o l i t i c s of S r i Lanka. In such a competition, the p o l i t i c a l leadership of both the 25 Sinhalese and the Ceylon Tamils manipulated ethnic symbols to underline the p o l i t i c a l i d e n t i t y of the respective groups and thereby mobilize community consciousness" (1979: 205) . The post-independence governments i n S r i Lanka gradually strengthened the state's economic power by accumulating lands through land reform laws and the n a t i o n a l i z a t i o n of private corporations (foreign and l o c a l owned). As Gunasinghe (1984) suggests, the economy of S r i Lanka during the period 1956 to 1977 may be c a l l e d a state regulated economic system. This state domination continued even a f t e r 1977 though the new government elected i n 1977 attempted to encourage the private sector and i t s investments. The state was the major employer and the rate of private sector employment was less s i g n i f i c a n t . According to the 1981 population census report, 25 percent of the t o t a l employed population i n S r i Lanka were employed i n the state sector. More than 90 per cent of the t o t a l of employees were i n government service and were r e c r u i t e d mainly i n the recent decades. This points to the increasing employment absorbing capacity of the S r i Lankan state sector during the study period has important implications f o r the growth of RNA i n r u r a l areas. However, while the employment absorbing capacity of the government has continued to increase continuously, the open market economy which was introduced by post-1977 government has contributed to the expansion of employment capacity outside the state sector. This study i s concerned with the growth aspects of 26 employment (RNA) r e s u l t i n g from both state and privat e sector a c t i v i t i e s . 1.5 The Organization of the Thesis Chapter Two presents a conceptual model of RNA growth which i s based on the empirical evidence of LDCs p a r t i c u l a r l y from the Asian countries. The features of RNA growth i n Asian countries are described i n Chapter Three. The purpose of that chapter i s to i d e n t i f y the s p a t i a l variations of RNA growth and to i d e n t i f y the major factors associated with d i f f e r e n t types of RNA growth i n Asia. Chapter Four considers the major changes i n the population and economy of post-independence S r i Lanka. While i d e n t i f y i n g the major socio-economic, demographic and employment changes during the study period, the r o l e of the state and i t s economic and employment p o l i c i e s are examined. Chapter Five analyses the growth of RNA between 1948 and 1981 using macro-level s t a t i s t i c s . I t i d e n t i f i e s the o v e r a l l h i s t o r i c a l patterns of RNA growth during that period. Chapter Six looks at the s p a t i a l v a r i a t i o n s of RNA growth i n S r i Lanka. The d i s t r i c t l e v e l (meso) s t a t i s t i c a l information i s used to analyse d i s t r i c t v a r i a t i o n s of RNA growth and i d e n t i f i e s the regional patterns of RNA growth. 27 Chapter Seven presents a v i l l a g e case study to show how the study of employment features of RNA at the micro l e v e l enable more informed interpretation of macro-and meso-s t a t i s t i c s . F i n a l l y , Chapter Eight concludes the analysis of RNA growth i n S r i Lanka while summarizing the major findings of t h i s study i n t h e i r t h e o r e t i c a l and empirical contexts. 28 Notes 1 The terms 'farm' and 'non-farm' are defined and explained i n Chapter Two Section 2.4. 2 The term Less Developed Countries (LDCs) r e f e r s to countries other than 'developed market economy' and 'c e n t r a l l y planned developed economy' countries. I t i s used interchangeably with "Third World" and "Developing Countries". LDCs have a low per capita GNP according to the World Bank categorization of countries. 3 For a more det a i l e d account of the aspects of geography of the S r i Lanka see Farmer (1957), P e i r i s (1977). 4 The minimum age of e l i g i b i l i t y to vote was changed from 21 years to 18 years i n 1957. 5 The Ceylon Citizenship Act of 1948, the Indian and Pakistani Residents Act of 1949 and the Parliamentary E l e c t i o n (amendment) Act of 1948 removed the vast majority of Indian Tamils from the e l e c t o r a l r e g i s t e r (De S i l v a , 1982: 161). 6 The co n s t i t u t i o n of S r i Lanka was amended i n 1977 providing for an elected executive president. 7 Since 1977, the period of parliament has been s i x years. 8 For many years i n S r i Lanka, a f t e r World War 11, a s p e c i f i e d quantity of r i c e was supplied free to a l l poor fa m i l i e s i n S r i Lanka. The quantity and the method of d i s t r i b u t i o n varied over the years. 2 9 C H A P T E R T W O : T H E C O N C E P T U A L A N D M E T H O D O L O G I C A L I S S U E S I N T H E S T U D Y O F R U R A L N O N - F A R M E M P L O Y M E N T This thesis studies the RNA growth mechanisms i n S r i Lanka. Like several other less developed countries (LDCs), S r i Lanka has faced a number of employment-related problems p a r t i c u l a r l y during the l a s t forty years. The changes i n employment i n LDCs have been c l o s e l y connected with the changes i n the population and the economy. For example, the rate of population growth rose s i g n i f i c a n t l y and, as a r e s u l t , the labour force population increased r a p i d l y . The increased supply of labour resulted i n growing unemployment and under-employment i n many developing countries where economic growth performance was poor. S r i Lanka's experience of population growth, economic performance and employment creation were characterized by many of these features. This t h e s i s investigates the changing s p a t i a l features of the labour market, the growth of RNA, and the facto r s which contributed to the growth of RNA i n S r i Lanka. The period under study i s between 1948 and 1988. In a broad sense, the s t r u c t u r a l changes i n population and economy determine the formation of the labour market. However, the employment changes are complex and vary geographically. In order to i d e n t i f y the h i s t o r i c a l as well as geographical changes i n RNA growth, t h i s thesis proposes a conceptual scheme which w i l l guide the analysis of the process of RNA 30 change i n S r i Lanka. This chapter presents the conceptual scheme of RNA growth. 2.1 Issues on the Growth of Population, Economy and Employment i n LDCs Population, economy and employment are c l o s e l y i n t e r r e l a t e d i n t h e i r impact on each other. Such re l a t i o n s h i p s have been examined for LDCs i n recent decades. Several researchers (e.g., Gregory, 1979; Dixon, 1982a) have argued that the issues r e l a t i n g to "employment" i n LDCs are more complex than i n developed countries. Conventional d e f i n i t i o n s of employment do not cover a l l the s a l i e n t features of the nature of employment i n these countries. Employment a c t i v i t i e s are often influenced by family and other s o c i a l groups and do not depend s o l e l y on i n d i v i d u a l choice (Caldwell 1982: 360-62). The nature of work p a r t i c i p a t i o n by i n d i v i d u a l family members too i l l u s t r a t e s the complexity of work behaviour p a r t i c u l a r l y i n the r u r a l LDCs. Family members, regardless of age or sex, contribute to the household income. The complexity of work p a r t i c i p a t i o n i n r u r a l s o c i e t i e s i s p a r t l y due to h i s t o r i c a l factors such as the r o l e and status of an i n d i v i d u a l i n the family as well as i n the society and p a r t l y due to the recent changes i n population and the economy. In fact, the actual work p a r t i c i p a t i o n by i n d i v i d u a l workers i s not well represented i n s t a t i s t i c a l 31 information such as censuses which are too general to include such detailed information of work inputs i n r u r a l areas. For instance, Dixon (1982a and 1982b) suggest that the women i n r u r a l s o c i e t i e s are " i n v i s i b l e workers" whose work p a r t i c i p a t i o n i s systematically excluded i n the s t a t i s t i c a l c o l l e c t i o n of r u r a l labour r e s u l t i n g i n a consistent underestimation of female labour. Similar s i t u a t i o n s p r e v a i l regarding children's work p a r t i c i p a t i o n (Nag, et a l . , 1978). These features of labour u t i l i z a t i o n i n LDCs have led to the common b e l i e f that the labour markets of LDCs are of a "d i s t o r t e d type".(l) This idea has been supported by the fac t that the function of the LDCs' labour market i s associated with non-wage employment p a r t i c u l a r l y i n agr i c u l t u r e and open urban unemployment and disguised unemployment i n the r u r a l areas. However, recent studies (e.g., Berry and Sabot, 1978; Gregory, 1979) show that the desc r i p t i o n of LDCs labour market as being ^ d i s t o r t e d ' i s not correct. For example, Berry and Sabot (1978) say that ". a closer look at open unemployment, disguised unemployment and other possible types of labour market malfunctioning suggests that they may be less serious misallocations than they appear, and only i n part can such misallocations be attributed to poor labour market functioning" (1978: 1199). In fact, i t may well be the case that i n the LDCs, though the labour market mechanism i s 32 loosely organized, i t i s neverthelesless functioning rather well . Population growth i s the major supply source for employment a c t i v i t i e s . But t h i s term masks a much more complex set of variables r e l a t i n g to d e c l i n i n g infant mortality and increasing b i r t h rate which have a pronounced e f f e c t on the numbers of people entering the labour force and remaining within the labour market. Therefore, changes i n the population structure d i r e c t l y and i n d i r e c t l y influence the employment structure and i t s c h a r a c t e r i s t i c s . Rapid population growth has been common i n many LDCs during the l a s t three to four decades. The rate of population growth i n most LDCs was about two and a half per cent per annum during the l a s t four decades (United Nations, 1986) which was enough to double the t o t a l population within 28 years. The t o t a l population increase i n LDCs had much impact on the employment s i t u a t i o n . In the early stage (1960s), rapid population growth resulted i n the rapid increase i n the dependent population which was an economic burden on the working population. In the middle and l a t e r stages of the demographic t r a n s i t i o n , the labour force growth resulted i n increasing numbers of people entering the labour force and led to growing unemployment, under-employment and poverty i n many low income countries i n LDCs (Coale, 1983: 828-832) . Economic growth i s the major factor creating the demand  for labour. The performance of the economy a f f e c t s the l e v e l and the nature of employment absorption. The o v e r a l l 3 3 economic growth has been slow i n many low income LDCs. As t h e World Bank R e p o r t s (World Bank, 1971 t o 1988) i n d i c a t e , t h e growth i n GNP i n LDCs remained low and f l u c t u a t e d w h i l e t h e p r i m a r y s e c t o r c o n t i n u e d t o be t h e major c o n t r i b u t o r t o t h e GNP. Both i n d i c a t o r s show t h e poor o v e r a l l p erformance of t h e s e economies and t h e i r s l ow s t r u c t u r a l change. As a r e s u l t , t h e c a p a c i t y f o r l a b o u r a b s o r p t i o n d i d not improve when t h e s u p p l y o f l a b o u r i n c r e a s e d r a p i d l y a f t e r t h e s i x t i e s . D e s p i t e improvements i n a g r i c u l t u r a l p r o d u c t i v i t y , d i s p a r i t i e s i n income w i t h i n r u r a l a r e a s and between r u r a l and urban a r e a s i n c r e a s e d c a u s i n g r u r a l urban m i g r a t i o n . F i n a l l y , i t must be shown t h a t p o p u l a t i o n growth and economic performance a r e v e r y c l o s e l y i n t e r r e l a t e d . The p o s i t i v e and n e g a t i v e a s p e c t s o f t h e i n t e r r e l a t i o n s h i p s between p o p u l a t i o n growth and economic performance a r e w e l l documented i n t h e development l i t e r a t u r e (see F r e d e r i c k s e n , 1969 and Freedman, 1979). The s t u d i e s w h i c h s y n t h e s i z e t h e i n t e r r e l a t i o n s h i p s o f p o p u l a t i o n growth, economic performance and employment i n LDCs a r e numerous. Four major approaches a r e b r i e f l y c o n s i d e r e d h e r e . F i r s t , t h e d u a l i s t i c s e c t o r a l model w h i c h bases i t s argument m a i n l y on economic i n d i c a t o r s was i n t r o d u c e d by Lewis i n 1954 t o e x p l a i n t h e n a t u r e o f underdevelopment and t h e s e c t o r a l employment s i t u a t i o n i n LDCs. The main argument of t h i s model i s t h a t t h e s u r p l u s l a b o u r s i t u a t i o n r e s u l t i n g from p o p u l a t i o n i n c r e a s e and 3 4 underdevelopment of the o v e r a l l economy i n the t r a d i t i o n a l sector keeps wage rates below the r e a l wage. Such a low wage s i t u a t i o n f a c i l i t a t e s the increase of investors' p r o f i t and i s c a l l e d " c a p i t a l i s t surplus". This c a p i t a l i s t surplus, according to Lewis' model, would be re-invested i n the modern sector of production and would ultimately absorb the surplus labour from the t r a d i t i o n a l subsistence sector (Lesson, 1979). This assumes that surplus labour could f i n d a place i n a growing modern sector within a LDC but a correspondingly increasing modern sector i s often non-existent. Surplus labour i s therefore not removed from the t r a d i t i o n a l sector. Secondly, a number of other researchers have conceptualized the population growth factor as the major mechanism of employment change. In t h i s respect, Geertz's (1963) " A g r i c u l t u r a l Involution" thesis argues that i n the absence of economic development, population growth r e s u l t s i n shared work (disguised unemployment and under-employment) and shared poverty. Contrary to t h i s , Boserup (1965) and others argue that population growth stimulates technological progress and employment capacity. Synthesizing t h i s l a t t e r type of argument, Bloom and Freedman (1986) indicated that ". . . population growth may enhance the a b i l i t y of an economy to s h i f t workers among sectors" (1986: 398) . Thi r d l y , employment changes are also analysed from the occupational m u l t i p l i c i t y point of view. The main argument 35 of t h i s approach i s that the rapid labour force growth i n LDCs has s i g n i f i c a n t l y increased the labour force work p a r t i c i p a t i o n outside the formal sector of the economy. This has led to the s i g n i f i c a n t increase of occupations i n a large v a r i e t y of a c t i v i t i e s . For example, White's (1976) research on r u r a l Java i l l u s t r a t e s the m u l t i p l i c i t y i n occupational a c t i v i t i e s as well as the s i g n i f i c a n t work p a r t i c i p a t i o n ( d i f f e r e n t age and sex groups) of r u r a l household members. He (1976) says "Each household survives on a basis of extreme 'occupational m u l t i p l i c i t y ' and highly f l e x i b l e d i v i s i o n of labour among household members" (1976:280). Likewise, Hart's (1973) research i n urban Accra indicates the emergence of the informal sector as the form of occupational m u l t i p l i c i t y . He (1973) says "The magnetic force of the town may be derived from the m u l t i p l i c i t y of income opportunities rather than merely from wage l e v e l s " (1973:88). F i n a l l y , the geographers' approach to employment changes has focused mainly on s p a t i a l mobility and d i s t r i b u t i o n of labour which results from the changes i n economic and population structure of a country or a region. Further, the geographical approach integrates the major employment approaches i n the s p a t i a l context. It argues that labour mobility between sectors and regions i s the r e s u l t of the unequal s p a t i a l economic development and population growth. The commonly analysed aspect of labour mobility by geographers was r u r a l to urban migration. McGee (1978b and 3 6 1982a), Forbes (1984) and Hugo (1982 and 1984) i n t h e i r analyses of Asian labour mobility indicated that the nature of slow urbanization and the persistence of t r a d i t i o n a l modes of production encouraged the ' c i r c u l a t o r y ' migration between urban and r u r a l areas. The employment changes i n LDCs during the l a s t three to four decades then, have been very c l e a r l y associated with the changes i n economy and population. The pace of population growth has been rapid which made a s i g n i f i c a n t impact on employment change. 2 . 2 Studies i n RNA i n LDCs The emphasis on the development of RNA as one of the development strategies i n LDCs i s a recent one. The development p o l i c i e s i n the 1950s were centred on "economic growth" and " t r i c k l e down" approaches. The implementation of those p o l i c i e s f a i l e d to solve e x i s t i n g problems i n low income countries. Instead, they aggravated unequal income d i s t r i b u t i o n , unemployment and poverty (Seers, 1977: 3). The f a i l u r e of those p o l i c i e s led to "bottom-up" or " r u r a l l e d " growth strategies i n order to eliminate poverty, provide basic needs and achieve s e l f - r e l i a n c e i n LDCs. In t h i s respect, the development of RNA was aimed at curbing the increasing unemployment and under-employment among the r u r a l poor by increasing income opportunities i n r u r a l areas. In fac t , the promotion of t h i s development strategy i s l a r g e l y 37 external. Chuta and Liedholm (1979) say 11. . . i n t e r n a t i o n a l donor agencies and the governments of many developing countries have recently begun to devote increasing attention to the development p o l i c i e s and programmes for expanding productive employment and earning opportunities i n various r u r a l non-farm a c t i v i t i e s undertaken i n the developing countries" (1979: 1). The new emphasis on the development of RNA has promoted research i n which the international aid agencies play an important r o l e . For example, the World Bank's publications.Development Issues on Rural Non-Farm Employment (1978a) and Rural Enterprise and Non-Farm Employment (1978c), are important contributions. The International Labour Organization (ILO) also published several books and a r t i c l e s on RNA i n LDCs such as Promotion on Employment and  Income fo r Rural Poor Including Rural women Through Non- Farm A c t i v i t i e s (1983a), Rural Small-Scale Industries and  Employment i n A f r i c a and Asia (1987). Furthermore, the Asian and P a c i f i c Development Centre (APDC) recently published two volumes containing research work on t h i s subject. A number of conference reports (e.g., Chiang-Mai (Thailand) Conference, Asian Productivity Organization (APO) Conference (New Delhi)) were organized and published by those a i d agencies and private organizations which synthesized the growth of RNA. A number of recent studies on RNA covering a broad spectrum of RNA-related subjects and 38 geographical areas (Asia, Africa(2) and Latin America) have been important contributions i n t h i s respect. A number of case studies also were published. Research work which sponsored and done by Asian Regional Team for Employment Promotion (ARTEP), a branch of ILO, i s very important. Secondly, several i n d i v i d u a l researchers a f f i l i a t e d with aid agencies have also contributed to the study of RNA. These works include those of Oshima (1984 and 1985a), Anderson and Leiserson (1980), Chuta (1979 and 1984) and Islam ( 1984 and 1985) a f f i l i a t e d with ADB, the World Bank, the ILO, and ARTEP respectively. The geographical approach to RNA i s not widespread. However, two notable contributions i n t h i s regard are important. F i r s t , Freeman (1984a and 1984b) and N o r c l i f f e (1980 and 1984a) have analysed the d i f f e r e n t aspects of RNA using a geographical approach. Secondly, McGee (1987) looked at the s p a t i a l changes of employment a c t i v i t i e s from the point of view of the operation of economic processes a f f e c t i n g a g r i c u l t u r a l and i n d u s t r i a l changes i n the r u r a l areas of Asia. He i d e n t i f i e d c e r t a i n areas close to major urban centres i n which there has been a marked acceleration of employment i n non-agricultural a c t i v i t i e s . This i s often associated with an increase i n household income and other features of economic growth. He emphasized that those areas should be given greater attention by the i n d i v i d u a l governments due to t h e i r importance i n the economic development of those countries. 39 These studies have i d e n t i f i e d the employment problems of the r u r a l areas and highlighted the r o l e of the r u r a l non-farm sector i n that aspect of the process of r u r a l development. In t h i s respect, these studies indicated that the growth of RNA increases the income of the r u r a l poor and i t can lead to a decrease i n income i n e q u a l i t i e s (Chuta and Sethuraman, 1984). Secondly, they have attempted to provide a d e f i n i t i o n a l framework for the study of RNA. For example, the ILO (1983a) study attempted to define non-farm and off-farm a c t i v i t i e s i n r u r a l areas. Oshima (1984 and 1985a) and also Mukhopadhyay and Lim (1985) provided a comprehensive d e f i n i t i o n of RNA. The World Bank study (1978a) analysed RNA using a broader d e f i n i t i o n of r u r a l areas.(3) Thirdly, these studies also provided methodological guidance i n the study of RNA. F i n a l l y , they have provided comprehensive secondary s t a t i s t i c a l materials for comparative research i n t h i s area. However, the major l i m i t a t i o n of these studies i s the absence of a c r i t i c a l assessment of the growth mechanism of RNA. I t i s evident that a number of recent studies have attempted to assess the quantitative and q u a l i t a t i v e s i g n i f i c a n c e of the non-farm sector i n terms of employment and income i n r e l a t i o n to other sectors i n the i n d i v i d u a l economies of A f r i c a n and Asian countries. The main purpose of these studies was to measure the absolute and proportional growth of RNA. However, they lack a consistent conceptual and d e f i n i t i o n a l framework f o r any comparison. 40 Several other case or country studies have analysed the i n t e r r e l a t i o n s h i p between the a g r i c u l t u r a l sector and the non-farm sector. Oshima's (1984) comparative study of East Asian countries proved to be an important contribution i n t h i s respect. He analysed the t r a n s i t i o n of farm households to non-farm a c t i v i t i e s i n Japan, Taiwan and South Korea using macro-level s t a t i s t i c s . Similar types of work were done by Chada (1985) on India, Kasryno (1985) on Indonesia and Shand (1985) i n Malaysia. The approach to the study of the r e l a t i o n s h i p between i n d u s t r i a l i z a t i o n and RNA i n the LDCs has also been changing since 1950. In the f i f t i e s , many developing countries placed emphasis upon import s u b s t i t u t i o n forms of i n d u s t r i a l i z a t i o n . But l a t e r r u r a l i n d u s t r i a l i z a t i o n and i t s employment po t e n t i a l received more attention. Recent studies i n t h i s area conclude that r u r a l i n d u s t r i a l development has p o s i t i v e l y contributed to the employment growth of RNA and to the development of the national economy. Ho (1979 and 1982), analysed the h i s t o r i c a l growth of r u r a l industries i n Taiwan and South Korea and confirmed that the development of r u r a l industries i n those countries supported p o l i c i e s aimed at integrated r u r a l development and the growth of RNA. Minami and Makino (1985) noted that the technological d i f f u s i o n of power looms i n Japan was of s i m i l a r importance. F i n a l l y , several studies attempted to synthesize the Asian experience of RNA. It was noted that ". . . the 41 off-farm a c t i v i t i e s increase with the progress of Asian countries from low to higher stages" (Oshima, 1985a:12). Such a growth pattern has been synthesized into several stages of RNA growth. This synthesis i s referr e d to i n the writings of Oshima (1984 and 1985a) and i n the 1983 Chiang-Mai (Thailand) conference report on Off-Farm Employment i n  the Development of Rural Asia. The Chiang-Mai conference report indicated four stages of employment t r a n s i t i o n from agriculture to industry and then to service sectors i n the r u r a l areas. According to the conference report, the f i r s t stage i s a "low l e v e l equilibrium stage". The r u r a l economy i n t h i s stage i s predominantly a g r i c u l t u r a l . About 2/3 or 3/4 of the t o t a l labour force i s engaged i n a g r i c u l t u r a l a c t i v i t i e s i n the f i r s t stage (Oshima, 1985a and 1985b). A g r i c u l t u r a l p r o d u c t i v i t y i s low and the technical changes proceed very slowly and do not r e s u l t i n major productivity breakthroughs at t h i s stage. The r o l e of non-farm income i s e s s e n t i a l l y supplementary at t h i s stage. In the second stage, changes may be brought about by improved productivity through changes i n technology, crops and i n f r a s t r u c t u r e . Labour absorption i n a g r i c u l t u r e i s l i k e l y to increase. However, the non-farm sector would s t i l l t y p i c a l l y be less productive than a g r i c u l t u r a l a c t i v i t i e s . The t h i r d stage begins with the major transformation i n the economy. Rising a g r i c u l t u r a l production and income w i l l generate a demand for a g r i c u l t u r a l inputs, consumer 42 goods and services. As a r e s u l t , new forms and sources of employment are created which lead to the changes i n the r u r a l economy. In t h i s s i t u a t i o n , the non-farm a c t i v i t i e s are competing with the farm a c t i v i t i e s . The f i n a l stage i s the rapid decline of labour i n agriculture; the majority of those i n the labour force i n r u r a l areas w i l l now be employed i n the non-farm sector. Oshima (1985a) attempted to categorize the Asian countries into the above stages of RNA development. In h i s words, "Japan has completed the l a t t e r stage with the labour force i n the services exceeding the i n d u s t r i a l labour force i n the l a t e r 1970s. Taiwan and South Korea have completed the a g r i c u l t u r a l and i n d u s t r i a l t r a n s i t i o n and are now i n the early stage of the i n d u s t r i a l - s e r v i c e t r a n s i t i o n , with Malaysia i n the l a t e r stage of the former. The P h i l i p p i n e s , Thailand, Indonesia, and S r i Lanka i n the middle stage and China, India, Burma, Bangladesh, Laos, Nepal, Vietnam s t i l l i n the early stage" (Oshima, 1985a: 21). 2.3 Conceptual Model of the Growth of RNA The conceptual scheme of the growth of RNA, based on empirical experience of LDCs, i s used to guide the analysis of RNA i n S r i Lanka. The schematic representation of t h i s model i s shown i n Diagram 2.1a and 2.1b. This scheme helps* to explain the short-term employment changes i n S r i Lanka. 4 3 Diagram 2.1a shows demand and supply factors as a f f e c t i n g the growth of RNA. Intervention of the state as an a d d i t i o n a l factor influencing demand and supply e f f e c t s on RNA i s shown i n Diagram 2.1b. The rel a t i o n s h i p s of the background variables i n these two diagrams are seen as u n i d i r e c t i o n a l . In r e a l i t y , the re l a t i o n s h i p s between factors of RNA are not u n i d i r e c t i o n a l since the factors involved i n t h i s process are i n t e r r e l a t e d . The aim of presenting the u n i d i r e c t i o n a l r e l a t i o n s h i p of variables i n a schematic form i s to i l l u s t r a t e the s i m p l i f i e d process of the changes i n RNA. The necessary q u a l i f i c a t i o n s to the l i m i t a t i o n s of t h i s model are given i n the i n t e r p r e t a t i o n of the analysis of RNA growth. The assumptions regarding the growth of RNA r e l a t e c l o s e l y to Oshima's four stages of the growth of RNA i n that one may expect RNA to grow when a country undergoes economic growth from "low l e v e l " equilibrium dominated by a g r i c u l t u r e to a more urbanized developed country i n which most employment i s i n services and i n industry. Where the model d i f f e r s from more conventional model of labour force change i s i n emphasizing three elements. 1) The importance of the rate of population growth and i t s e f f e c t s on the labour supply i n r u r a l areas. 2) The important r o l e of state that i n j e c t s investment which increases demand for labour i n r u r a l areas. 3 ) The importance of improvements i n transport which make non-farm a c t i v i t i e s more accessible to r u r a l people. 4 4 As Diagram 2.1a shows, RNA could expand through an increase of demand on the one hand and supply on the other. F i r s t , the early stages of rapid expansion of population adds to the t o t a l number of dependants while a f t e r a few years when these persons reach adulthood they i n f l a t e the numbers i n the labour force. In the absence of s i g n i f i c a n t economic growth, the increase i n the labour force i s l a r g e l y r e l a t e d to the growth i n RNA through the surplus labour supply i n the labour market. This s i t u a t i o n encourages disguised unemployment or under-employment. Though the wage rates are low and employment i s not e a s i l y found, the labourers need some kind of income through any a c t i v i t y since the work means sur v i v a l to them. The RNA growth i n t h i s s i t u a t i o n i s due to the supply of labour and so i s c a l l e d supply determined RNA growth. In the Supply Determined RNA Growth Situation, labour p a r t i c i p a t i o n i s mostly part-time, seasonal and has the c h a r a c t e r i s t i c s of under-employment. Even the f u l l - t i m e RNA employed are poorly paid. The return for the work done i s low. Such a s i t u a t i o n i s not conducive to the improvement of s k i l l , q u a l i t y of work and even the health conditions of the worker because i n a s i t u a t i o n of over-supply of labour wages tend to be depressed (Lipton, 1983: 97-99). The pr o d u c t i v i t y performance of the r u r a l establishments which Diagram 2 1a: Conceptual Scheme of RNA Growth RNA Growth T 3 ai c CL a. IS) Surplus Labour (Rural unemployment and under-employment Diminishing Resources (e.g. Less Land Available per family ) t Population Increase (Dependant and Labour Force Population Increase) Demand for RNA Labour ( skilled and unskilled ) t Demand for Non -farm products and services t Economic Growth (Structural change ) a ro 3 a T1 CL a <2_ a o » 3 n> ex Diagram 2• 1 b-. Role of State in RNA Growth Population Change RNA Growth Economic Growth State 4 6 employ those RNA-related workers i s also poor due to low labour productivity and the l e v e l of technology. RNA growth i n t h i s s i t u a t i o n i s said to be of a "distre s s type" (Islam, 1984) and such RNA encourages " m u l t i p l i c i t y " i n employment a c t i v i t i e s (White, 1976). In the second s i t u a t i o n (see Diagram 2.1a), the labour force growth associated with economic development has created quite a d i f f e r e n t s i t u a t i o n i n the growth of RNA. The s t r u c t u r a l changes i n economy increase the demand f o r labour p a r t i c u l a r l y for the non-farm workers. The growth of RNA i n that s i t u a t i o n w i l l be through new entrants to the labour force (young age labour force) and/or the s e c t o r a l movement of labour from farm to non-farm sector. This type of RNA growth i s of a progressive type and i s c a l l e d demand  determined RNA growth. The r u r a l non-farm sector i s more competitive and more e f f i c i e n t i n t h i s s i t u a t i o n than i n the previous s i t u a t i o n . The competitiveness of t h i s sector comes from the higher p r o d u c t i v i t y of t h i s sector. Higher productivity i s achieved through advanced technology, increased c a p i t a l investment and other improvements. These types of establishments may require both s k i l l e d and un s k i l l e d labourers. Wages i n t h i s s i t u a t i o n are higher and a t t r a c t labour from other sectors e s p e c i a l l y from farm a c t i v i t i e s . Those workers i n RNA-rel a t e d work earn a r e l a t i v e l y higher income i n r e l a t i o n to time spent. Increasing household income encourages increased l e v e l of schooling for children and since the cost 47 of c h i l d - r a i s i n g i s high, there i s a tendency to reduce the s i z e of f a m i l i e s . Decreases i n the population growth and subsequent decline i n labour force increase the demand for labour i n the labour market. The factors indicated under the demand s i t u a t i o n lead to the expansion and d i v e r s i f i c a t i o n of economic a c t i v i t i e s . Sectoral integrations are associated with "backward" and "forward" production linkages i n the r u r a l economy (Chuta and Leidholm, 1979) . The expansion of e x i s t i n g r u r a l non-farm establishments and the creation of new establishments lead to a further demand for r u r a l workers. If the p a r t i c u l a r economy exhibits s i g n i f i c a n t growth i n terms of resources, c a p i t a l and technology, the employment i n the secondary sector grows faster. In the l a t e r stage, the t e r t i a r y sector's employment overtakes the secondary sector's employment (Gregory, 1979). The integrated s e c t o r a l r u r a l development and the d i v e r s i f i c a t i o n of r u r a l resource u t i l i z a t i o n encourage the growth of the non-farm sector. The external demand for products from the r u r a l areas i s undoubtedly important for the growth of RNA (Ho, 1985). Apart from demand and supply of RNA growth, one of the most i n f l u e n t i a l factors stimulating economic growth, population changes and employment changes i n LDCs i s the d i r e c t and i n d i r e c t intervention of the state. A s i m p l i f i e d schematic representation of the state's r o l e within the 4 8 process of demand and supply RNA growth mechanism i s shown in Diagram 2.1b. Several studies (e.g., Chenery, 1979; Armstrong and McGee, 1985; K o h i l i , et a l . , 1984 and R i d d e l l , 1985b) have found that the impact of government p o l i c i e s on the re-d i s t r i b u t i o n of resources and a c t i v a t i o n of economic growth i s s i g n i f i c a n t i n the LDCs p a r t i c u l a r l y i n recent years. For example, K o h i l i , et a l . (1984) i n t h e i r study on 'Inequality i n the Third World' found that the short-term changes i n Third World countries are often best explained by the nature and p o l i c i e s of the state. Some governments i n LDCs are democratic while others are authoritarian. As K o h i l i , et a l . (1984) indicated, regardless of the form of government i n LDCs "...the state a u t h o r i t i e s p e r i o d i c a l l y u t i l i z e the autonomous authority they possess to mould processes of s o c i a l change" ( K o h i l i , et a l . , 1984: 303). In t h i s respect, the state's interference often a f f e c t s the whole economy. With regard to the state's action i n the economic aspects R i d d e l l (1985b) says "... I t acts i n numerous fashions so as to r e d i s t r i b u t e from one part of the p o l i t i c a l economy to another: through the establishment of government corporations; by means of taxation p o l i c i e s ; v i a minimum wage l e g i s l a t i o n ; through d i f f e r e n t i a l import, duties, and the l i k e " (1985b: 541). As a number of cr o s s - s e c t i o n a l (e.g., K o h i l i , et a l . , 1984) and country studies (e.g., R i d d e l l , 1985b; Moore, 1985b; R a t c l i f f e , 1978) show the 4 9 short-term impact of state p o l i c i e s was s i g n i f i c a n t i n LDCs. The changes i n employment are no exception i n t h i s respect. Previously described hypothetical demand and supply si t u a t i o n s of RNA growth need to be q u a l i f i e d to s u i t the proposed conceptual scheme i n r e a l s i t u a t i o n s . I t should be noted that instead of one type, both types of RNA growth are evident i n most places i n LDCs. In most cases, both types of RNA e x i s t side by side i n LDCs p a r t i c u l a r l y i n the densely populated resource-scarce countries. What i s more s i g n i f i c a n t at t h i s point would be the d i s t r i b u t i o n of RNA whether i t i s supply-based or demand-based or i s a combination of both. As indicated, the geographical v a r i a t i o n s i n RNA growth are also important i n determining the answer to t h i s question. Therefore, a research design which incorporates the analyses of the s p a t i a l aspects of RNA growth greatly aids the understanding of t h i s process. With these aims i n view, the thesis proceeds with a research design that attempts to analyse how the supply and demand factors operate to influence the regional v a r i a t i o n s i n the growth of RNA i n S r i Lanka. 50 2.4 The D e f i n i t i o n of RNA 2.4.1 The Problems of D e f i n i t i o n of RNA No uniform d e f i n i t i o n i s available for RNA. The d e f i n i t i o n s which were used by d i f f e r e n t researchers have varied according to the purpose of t h e i r analysis. A recent ILO study (1983a: 7) acknowledged that the analysis of RNA i s hampered by an absence of a c l e a r and consistent d e f i n i t i o n a l framework. D e f i n i t i o n a l problems a r i s e when RNA i s defined i n terms of type of occupation, economic a c t i v i t y and the place where RNA i s c a r r i e d out. With regard to the occupational categories of RNA, Oshima (1984: 30) stated that the employment i n r u r a l areas not included i n the farm a c t i v i t i e s are RNA. The farm a c t i v i t i e s include agriculture, f i s h i n g , animal husbandry and f o r e s t r y and thus, RNA includes the broad occupational categories such as manufacture, trade, transportation and services. RNA i s also defined by the source of household income. The non-farm household income comes from the sub-sectors of RNA such as industry, trade and services. The income i s received from two main sources. One i s the net earnings from self-employment and the second i s the wages and s a l a r i e s which are received from non-agricultural work. This d e f i n i t i o n excludes a number of other sources from where the non-farm income could be received. For example, the t r a n s f e r 51 of income (remittance, subsidies) and property income (rent, earnings from fi x e d assets, interest) must also be considered as non-farm income (Ho, 1985: 6; Chiang-Mai Conference Report, 1985: 28) . The second d e f i n i t i o n a l problem i s the d i f f i c u l t y of d i s t i n g u i s h i n g between farm and non-farm a c t i v i t i e s . At the r u r a l l e v e l , the occupational a c t i v i t i e s are i n t e r r e l a t e d and overlap with one another. In many cases, farm and non-farm a c t i v i t i e s are ca r r i e d out by the same person or by a d i f f e r e n t member of the same household. In that s i t u a t i o n , i t i s d i f f i c u l t to separate and categorize the performed employment a c t i v i t y and put the worker into a broader employment category. Since the s p a t i a l context of the actual work done i s also involved i n the above s i t u a t i o n , the occupational categories are i d e n t i f i e d as "on-farm" work and "off-farm" work. On-farm and off-farm a c t i v i t i e s are usually equated with farm and non-farm a c t i v i t i e s respectively. There i s further confusion when the terms "off-farm" and "non-farm" are used synonymously. The reason i s that by d e f i n i t i o n on-farm means self-employed i n agriculture and off-farm means employed by others either i n paid a g r i c u l t u r a l a c t i v i t i e s or non-farm employment (Choe, 1985:319). So, non-farm occupations defined e a r l i e r are not the same as off-farm occupations. However, both terms (non-farm and off-farm) have been used i n the l i t e r a t u r e without being c l e a r l y defined. 52 The term 'rur a l area' i s another confusing concept i n the f i e l d of r u r a l studies. Conventionally, r u r a l areas are defined as the areas which are not included i n the urban areas. This method of d e f i n i t i o n i s c a l l e d the "residual approach" which has been followed world-wide (Choe, 1985: 315). S t a t i s t i c a l c o l l e c t i o n s are made i n several countries by government agencies for administrative purposes. The d e f i n i t i o n of 'ru r a l area' which was used i n many population censuses and surveys i s limited i n t h i s respect. Population s i z e i s often used as the primary c r i t e r i o n . However, the si z e of the population which i s used to separate r u r a l areas from urban areas varies from 5,000 i n India to 10,000 in the Philippines. This i s often associated with a p o l i t i c a l d e f i n i t i o n of urban and r u r a l . In some cases, an occupational c r i t e r i o n whereby an area with more than a cert a i n percentage of the population engaged i n a g r i c u l t u r a l a c t i v i t i e s i s designated as r u r a l (Mukhopadhyay and Lim, 1985: 5). On the whole, the o f f i c i a l d e f i n i t i o n of r u r a l area varies considerably from country to country. As Mukhopadhyay and Lim (1985) indicate, 11. . . i f one has to understand the structure of linkages of RNA with the r e s t of the system, one has to look beyond ' r u r a l areas' s t r i c t l y o f f i c i a l l y defined, to small town and ' r u r a l centres' with a predominantly r u r a l hinterland" (Mukhopadhyay and Lim, 1985: 5). Many researchers used t h i s r e f i n e d d e f i n i t i o n of r u r a l area and found a quite d i f f e r e n t 53 and useful r e s u l t i n t h e i r analysis (e.g., Ho, 1985; Choe, 1985; Anderson and Leisseron 1980). There i s great v a r i a t i o n i n the types of commodities, services and production a c t i v i t i e s that can be grouped into the r u r a l non-farm sector. Mukhopadhyay (1985) attempted to group those a c t i v i t i e s into two sub-sectors. The f i r s t sector 11. . . runs more or less on a stable basis with an eye on surplus generation and growth using hired labour and c e r t a i n degree of technological s o p h i s t i c a t i o n " and at the same time, the second sector runs seasonally with the help of unpaid family workers, using primitive technology. The author, however, acknowledges that there are always border-l i n e cases. 2.4.2 The D e f i n i t i o n and the Measurement of RNA i n t h i s Study The d e f i n i t i o n of RNA depends on the scope of the research. As indicated, the numerous changes i n r u r a l economic a c t i v i t i e s i n many LDCs have been rapid and complex. As a r e s u l t , the conventional d e f i n i t i o n of RNA l i m i t s the scope of the study of RNA. The d e f i n i t i o n must go beyond the conventional categories of RNA. This research i s based on the following d e f i n i t i o n of RNA i n the study of the growth of RNA i n S r i Lanka. A c t i v i t i e s outside agriculture, f i s h e r i e s , and f o r e s t r y i n the r u r a l areas are r u r a l non-farm a c t i v i t i e s . Such 54 a c t i v i t i e s include manufacturing, construction, service, and transportation that are located i n the r u r a l areas. In addition to these, some non-traditional a c t i v i t i e s such as dairy farming and poultry r a i s i n g are also included i n RNA. The reason for including these a c t i v i t i e s i s that generally they are increasingly c a p i t a l intensive and bear greater s i m i l a r i t y to a factory than a farm. In the S r i Lankan context, such a c t i v i t i e s as yet form only a small proportion of economic a c t i v i t i e s i n r u r a l areas. Though these a c t i v i t i e s may also occur together with other a g r i c u l t u r a l a c t i v i t i e s of peasants they are ra r e l y regarded as major a g r i c u l t u r a l a c t i v i t i e s by the censuses. The r u r a l areas are geographically larger than the " o f f i c i a l " d e f i n i t i o n . In t h i s research, r u r a l areas include small towns and market towns because i t has been found that economic a c t i v i t i e s and resource mobilization occur within areas broader than the designated r u r a l f or census purposes. Since RNA i s diverse, usually small-scale, seasonal and part-time, and i s performed by farm and non-farm households on farms and i n small farms i n r u r a l areas. This i s a legitimate expansion of the geographical d e f i n i t i o n . The empirical study of RNA also involves problems i n the measurement and categorization of RNA-related a c t i v i t i e s . As indicated, r u r a l economic a c t i v i t i e s are in t e r r e l a t e d . Some of the d i f f e r e n t tasks of these a c t i v i t i e s are ca r r i e d out by the same person or household i n the r u r a l areas. In addition, most of the RNA-related 55 a c t i v i t i e s are found to be part-time and seasonal. Therefore, separating the d i f f e r e n t types of a c t i v i t i e s i s one of the a n a l y t i c a l problems i n the study of RNA. The problems rel a t e d to the categorization of occupational a c t i v i t i e s (farm and non-farm) increase further when the RNA study i s based on macro l e v e l s t a t i s t i c a l materials. For example, the macro-level s t a t i s t i c a l materials provide employment a c t i v i t i e s by primary occupation which do not permit the measurement of the occupational m u l t i p l i c i t y commonly found i n many LDCs. Si m i l a r l y , such problems e x i s t i n the measurement and categorization of r u r a l areas and source of income as well. In order to tackle these problems the study proposes the following research framework based on three l e v e l s of data c o l l e c t i o n , processing and analysis. The three l e v e l s are macro (national), meso (regional) and micro ( v i l l a g e ) . The aim of proposing t h i s research framework i s f i r s t , to analyse the geographical variations of RNA i n order to investigate the usefulness of the model. The second part of the study uses the data generated at a l l three l e v e l s i n order to a r r i v e at a more accurate and r e l i a b l e p i c t u r e of the growth and extent of RNA i n S r i Lanka. The macro-and meso-level analyses are mainly based on the secondary materials. The analysis recognizes the weakness of the nature of s t a t i s t i c s at those l e v e l s and s t a t i s t i c s have been re-grouped i n order to meet the requirements of the d e f i n i t i o n of RNA described e a r l i e r . 56 The research at the v i l l a g e l e v e l provided greater f l e x i b i l i t y i n the c o l l e c t i o n , processing and analysis of the s t a t i s t i c s and permits some c r i t i c a l evaluation of the v a l i d i t y of the macro and meso data. 2.5 The Study of RNA i n S r i Lanka Research on the growth of RNA i n S r i Lanka i s i n i t s early stages. On the available macro-level s t a t i s t i c a l information, i t appears that i n 1950, more than a quarter of the t o t a l labour force was engaged i n RNA-related a c t i v i t i e s . The S r i Lankan l e v e l of RNA at that time was higher than i n several other countries.(4) The proportion of RNA, however, grew slowly during the three decades since 1950 and i t was much less than population and labour force growth i n the period.(5) The S r i Lankan experience of low RNA growth r a i s e s a number of questions. F i r s t , has the S r i Lankan employment structure "frozen" as i n several densely populated resource scarce LDCs? I f so, what factors have led to such stagnation? Does the growth of RNA seem slow as a r e s u l t of the d e f i n i t i o n used? Secondly, how are the growth of RNA and the factors associated with the RNA growth translated into the s p a t i a l context? Does the focus on s p a t i a l v a r i a t i o n s i n RNA growth provide better understanding i n the analysis of the growth of RNA? 57 This study analyses the growth of RNA i n S r i Lanka since the early 1950s and i d e n t i f i e s the patterns of growth over a period at the macro-level. This analysis attempts to examine the reasons for the slow growth of RNA between 1950 and 1980. The thesis also analyses the geographical v a r i a t i o n s and i d e n t i f i e s the possible s p a t i a l patterns of RNA i n order to explore the accuracy of macro generalization concerning the growth of RNA. The thesis u t i l i z e s the conceptual model to help explain the main factors that have contributed to the growth of RNA at the national as well as regional l e v e l s i n S r i Lanka. F i n a l l y , the data i n v i l l a g e study i s u t i l i z e d to t e s t the v a l i d i t y of macro data. In respect of these aims, the study proposes the following hypotheses. 2.6 Major Hypotheses The following are some of the major hypotheses which have been tested i n the the s i s . S p e c i f i c hypotheses are presented and tested at each l e v e l (national and regional) of analysis. 1. At the national l e v e l , i n the absence of s i g n i f i c a n t economic growth, the changes i n the population and i t s age structure largely contribute to the growth of RNA. 2. At the regional l e v e l , however, the population f a c t o r i s not consistently related to the growth of RNA. 58 Instead, the variations i n d i f f e r e n t types of RNA are influenced by agro-ecological, socio-economic and p o l i t i c a l f a c t o r s. 3. The d i r e c t and i n d i r e c t intervention of the state s i g n i f i c a n t l y contributed to the growth of RNA. The study requires both quantitative and q u a l i t a t i v e data i n the areas i d e n t i f i e d e a r l i e r . Since t h i s study i s concerned with growth and variations of RNA, i t requires h i s t o r i c a l as well as s p a t i a l information. The information from macro (national) meso (regional) and micro (vil l a g e ) l e v e l s are necessary to test the hypotheses of t h i s study. Therefore, the type of s t a t i s t i c a l information needed f o r t h i s study prompted a f i e l d survey i n S r i Lanka. The f i e l d survey i n S r i Lanka was conducted between July 1986 and October 1987. This survey included the following major areas of data c o l l e c t i o n : 1) a l i t e r a t u r e survey on employment t r a n s i t i o n i n S r i Lanka, 2) c o l l e c t i o n of s t a t i s t i c a l materials from secondary sources, and 3) i n -depth f i e l d observation and data c o l l e c t i o n i n s p e c i f i c r u r a l locations i n S r i Lanka. The methodology used i n t h i s f i e l d survey i s described i n Appendix 1 of t h i s t h e s i s . 5 9 Notes 1 " D i s t o r t i o n " referred to here re l a t e s to the imperfection i n the operation of supply and demand factors of labour because of several c u l t u r a l and other influences. 2 A good example to t h i s i s a recent work by Page and Steel (1984) on Small Enterprise Development: Economic Issues from A f r i c a n Experience. 3 These d e f i n i t i o n s are discussed i n section 2.4.1. The d e f i n i t i o n of RNA used i n t h i s thesis i n explained i n section 2.4.2 below. 4 For example, i n the early s i x t i e s the proportion of employed engaged i n RNA i n S r i Lanka was 3, 15, 16 and 21 per cent higher than the proportion i n Pakistan, India, South Korea and Bangladesh respectively. 5 During the period 1948 to 1988, population grew at a rate of two per cent per annum while RNA grew by less than one per cent. 60 CHAPTER THREE: RURAL NON-FARM ACTIVITIES IN ASIA, 1950-80 This chapter presents an overview of the s p a t i a l v a r i a t i o n s of RNA growth i n Asia. The main aims of t h i s chapter are to i d e n t i f y the geographical v a r i a t i o n s of RNA growth and to i d e n t i f y RNA growth mechanisms which have contributed to d i f f e r e n t types of RNA growth patterns i n Asia. This analyses the processes of RNA i n S r i Lanka i n the Asian s e t t i n g . Asia consists of 25 small and large countries (excluding the Middle East) which comprise more than h a l f the t o t a l world population. These countries vary i n geographic, economic, s o c i a l , c u l t u r a l and h i s t o r i c a l aspects. The usual geographic d i v i s i o n of Asia includes South Asia (eight countries) , East Asia (seven countries) and Southeast Asia (ten countries). In terms of economic standards (using World Bank's per capita GNP(l) as a measure), the Asian countries are re-grouped into t h i r t e e n low income (per capita GNP less than US $410 i n 1982) , eleven middle income (per capita GNP US $410-1650) and one (Japan) i n d u s t r i a l market economy (per capita GNP US $10,120). A l l the countries i n South Asia are low income economies but the majority of the East and Southeast Asian economies are either o i l exporting or o i l importing middle income economies according to the World Bank c l a s s i f i c a t i o n . The World Bank grouping i s used to analyse the c h a r a c t e r i s t i c s of RNA change over a period i n d i f f e r e n t 61 countries. S r i Lanka f a l l s within the South Asian region and i s grouped with the low income developing countries. This examination of RNA growth i n Asia focuses on selected countries due to the n o n - a v a i l a b i l i t y of comparable s t a t i s t i c s f or a l l of them. The discussion i n t h i s chapter r e f e r s to the period 1950-80. 3.1 Changes i n Asia Tables 3.1a and 3.1b give some basic socio-economic ind i c a t o r s f o r selected countries i n Asia. These i n d i c a t o r s have been presented to show how population growth, economic performance and the employment s i t u a t i o n have been i n t e r -r e l a t e d over a period of t h i r t y years. The following observations may be made regarding the changes i n Asia during the l a s t three decades. F i r s t , i t i s evident from these tables that there were only minor differences i n the socio-economic and demographic indicators i n the early nineteen f i f t i e s among these Asian countries. However, by the nineteen eighties marked variations i n these i n d i c a t o r s had emerged. For instance, East Asia was r a p i d l y developing while economic growth was slower i n many other Asian countries. T a b l e 3 . 1 A E c o n o s u and Deeographic i n d i c a t o r s f o r S e l e c t e d C o u n t r i e s i n A s i a , 1950-1980 ( S e l e c t e d Y e a r s ) . 1 -1 o 4 5 6 7 8 9 10 11 12 T o t a l '/. of E c o n o s i c Crop L a n d Average Annual p o p u l a t i o n I I n c r e a s e I of R u r a l A c t i v e P o p u l a t i o n Per C a p i t a Real Growth Rate Open U n e s p l o y a e n t • a i l l i o n > P o p u l a t i o n P o p u l a t i o n i n A g r i c u l t u r e (ha.) of GDP Per C a p i t a O v e r a l l I Change C o u n t r y 1980 1950-1980 1960 1980 1960 1980 1970 1980 1950-60 1970-80 7. P e r i o d B a n g l a d e s h 37.8 114 95 89 87 84 0.13 0.10 NA 1.5 NA I n d i a 675.2 92 82 78 74 63 0.30 0.25 2.0 1.5 400 1970-82 I n d o n e s i a 143.0 96 85 80 75 59 0.15 0.13 1.9 5.3 336 1973-82 K o r e a (South) 38.1 87 72 43 66 39 0.07 0.06 3.0 7.2 50 1970-82 M a l a y s i a 13.7 120 75 71 63 48 0.53 0.31 O.B 5.2 -12 1974-80 Nepal 14.0 70 97 95 95 93 0.17 0.16 1.0 -0.5 NA P a k i s t a n 82.1 126 78 72 61 54 0.29 0.23 NA 1.9 -23 1971-81 P h i l i p p i n e s 48.3 131 70 64 61 46 0.19 0.20 3.3 3.4 53 1970-82 S r i Lanka 14.7 92 82 73 56 53 0.16 0.14 1.3 3.0 37 1970-75 Taiwan 17.7 124 64 30 56 28 0.11 0.08 6.0 8.4 -44.0 1970-81 T h a i l a n d 46.5 125 87 86 84 75 0.38 0.38 2.9 4.6 139 1972-80 NA - Not a v a i l a b l e For Taiwan, C o l u a n s 9, 10, 11, and 12 are fro» S t a t i s t i c a l Yearbook o f R e p u b l i c of China, 1987. Per C a p i t a GDP Growth f o r Taiwan i s between t h e p e r i o d 1950-55 and 1976-80. S o u r c e s : C o i u a n s 1, 4, 6, 7, B a r e fro« A s i a n Developnent Bank, 1986. C o l u t n 3 i s f r o c U n i t e d N a t i o n s , 1975. C o l u m s 5, 9, 10 a r e f r o i World Bank, 1983. Colu n n 2 i s c a l c u l a t e d f r o d A s i a n Development Bank, 1986, and World Bank, 13B6. C o l u i n 11 i s f r o s H a r r i s and R a s h i d ^ •. T a b i e S . lB .The Factors Associated with RNA in Asia 1 3 4 j 6 7 t 1 9 X Oecime Average Annual Secondary School Ka. of Railway and X Growth of Econoaic Active Growth Rate of Enrol 1 lent Ratio Road Per Sq. Ka. Agricultural Population in Labour Force (X) (Xi X Increased X of Change Production Agriculture Country 1%5-BO 1980-85 1960 1360-80 1980 1960-80 1960-70 1970-76 1960-80 Banglaoesh 1.9 2.8 8 88 0.06 NA 1.7 0.7 4 India 1.7 2.0 20 50 0.48 139 2.1 1.5 15 Indonesia 2.1 2.4 6 367 0.08 30 1.7 3.7 21 Korea (South) 2.B 2.7 27 196 0.50 60 5.7 3.7 41 Malaysia 3.4 2.9 19 168 0.18 80 5.3 5.4 23 Nepal 1.6 2.3 6 250 0.04 NA 0.4 1.0 2 Pakistan 2.6 3.2 11 36 0.06 NA S.2 1.7 12 Philippines 2.5 2.5 26 142 0.50 235 3.2 6.0 25 Sri Lanka 2.2 1.6 27 89 0.40 30 2.7 • -0.4 6 Taiwan NA NA NA NA NA NA 4.5 3.0 44 Thai land 2.8 2.5 13 123 0.06 64 5.4 3.9 11 NA - Not available Sources: Coluan 1 and 2 are froa World Bank, 1987. Coluan 3 is iron World Bank, 1983. Coluan 4 is calculated froa World Bank, 1983. Coluan 5 is calculated froa United nations. 1984. Coluan 6 is calculated froa United Nations, 1969 and 1984. Coluans 7 and 8 are froa the Econoaist, 1980. Coluan 9 is calculated froa World Bank, 1985. 64 If the percentage decline of a g r i c u l t u r a l employment i s used (Table 3.1b) as a crude measurement(2) of RNA growth, two emerging regional patterns of RNA are evident i n Asia. They are East and South and Southeast Asia. F i r s t , the East Asian countries have shown a s i g n i f i c a n t decline i n a g r i c u l t u r a l employment (e.g., Taiwan 44% decline and South Korea 41% decline) over two decades between 1960 and 1980. Such a rapid decline i n a g r i c u l t u r a l employment was associated with s i g n i f i c a n t improvements i n i n f r a s t r u c t u r a l and other socio-economic indicators i n the r u r a l areas of East Asia. The following section i s p a r t i c u l a r l y concerned with the changes i n South and Southeast Asia where rapid population and labour force growth occurred while the performance of the economy was slow. As Table 3.1a shows, the t o t a l population grew s i g n i f i c a n t l y over 30 years i n South and Southeast Asia. The population growth was mainly due to natural growth. Secondly, the proportion of the r u r a l population remained r e l a t i v e l y high and the changes over a 30 year period were slow. Third l y , except i n India the economic growth as measured by per capita GDP(3) was higher i n the 1970-80 period compared to the economic performance between 1950 and 1960. F i n a l l y , the majority of the employed population continued to be concentrated i n the a g r i c u l t u r e sector (except i n the Philippines) . The o v e r a l l unemployment s i t u a t i o n has been worsening i n most of these countries due 65 to the rapid labour force increase and the slow changes i n the economic structure. According to the FAO'S population estimate, the t o t a l r u r a l population of South and Southeast Asia grew at an annual rate of 2.03-2.23 per cent between 1950-80 (ILO, 1983a: 17-18). This implied that the time i n which the t o t a l r u r a l population doubles i s less than 35 years. The rapid population growth i n these countries was due to a sudden decline i n mortality rates. The population growth was at i t s peak l e v e l (2.3 per annum) between 1960-70 i n many low income countries compared to the period 1970-82 where the annual average growth was 1.9 (World Bank, 1983). The rapid population growth i n the s i x t i e s resulted i n increases i n the dependent population p a r t i c u l a r l y the group aged between 0-14 years. As Bloom and Freedman (1986: 390) indicated, the dependency burden i n the LDCs was a hindrance to development i n two main ways. F i r s t , the high dependency burden meant that the majority had to be sustained by the labour of a minority. Secondly, there was a greater need to invest i n the s o c i a l i nfrastructure such as schools and hos p i t a l s due to the rapid growth i n the numbers of the young. The f e r t i l i t y l e v e l s i n many LDCs began to decline around the seventies which resulted i n the o v e r a l l decline i n the rates of t o t a l population increase. Such changes i n the younger age groups of the population resulted i n a proportionately greater growth of labour force population (aged 15-65). According to the World Bank publications 66 (1983), the labour force population i n low income countries grew at a rate of 2.0 per cent per annum between 1970-82 compared to 1.7 per cent per annum during the previous decade (1960-70). This rapid growth of labour force worsened the unemployment s i t u a t i o n (Table 3.1b). The countries under review (South and Southeast Asia) have predominantly a g r i c u l t u r a l economies except for Singapore and Brunei. The majority of the employed population are dependent on agriculture as t h e i r main economic a c t i v i t y (Table 3.1a columns 5 and 6). The a g r i c u l t u r a l sector i t s e l f experienced a s i g n i f i c a n t advance i n terms of technology and production during the l a s t three decades which had i t s e f f e c t s on the employment s i t u a t i o n i n the r u r a l areas. The changes i n the a g r i c u l t u r a l sector began i n the early 1950s with the introduction of a new technology c a l l e d the "Green Revolution". This technology comprised new high-y i e l d i n g v a r i e t i e s (HYVs) of cereals, e s p e c i a l l y wheat and r i c e i n association with chemical f e r t i l i z e r s , agro-chemicals, a controlled water supply and new methods of c u l t i v a t i o n including mechanization (Farmer, 1986). The new technology slowly but s t e a d i l y penetrated the r u r a l a g r i c u l t u r a l economy. Marginal (and/or new) lands were brought under c u l t i v a t i o n through i r r i g a t i o n and the e x i s t i n g c u l t i v a b l e lands were c u l t i v a t e d i n t e n s i v e l y through the use of modern inputs. The r e s u l t was seen i n the rapid increase i n a g r i c u l t u r a l production. For example, the 67 Asian countries i n general showed a remarkable increase i n food grain production during the l a s t two decades (Table 3.1b columns 7 and 8), food production doubled i n Malaysia, P h i l i p p i n e s and Thailand between 1953 and 1975 (ADB, 1978: 39) . Likewise, South Asian countries also showed a considerable increase i n food production during t h i s period (Farmer, 1986). Ishikawa (1978, 1980 and et a l . , 1982) describes the changing labour u t i l i z a t i o n i n Asian r i c e c u l t i v a t i o n as follows: technological innovation ( b i o l o g i c a l , chemical and mechanical) i n a g r i c u l t u r a l a c t i v i t i e s gradually changed the t r a d i t i o n a l labour inputs; labour absorption increased i n some types of a g r i c u l t u r a l a c t i v i t y p a r t i c u l a r l y i n transplanting and harvesting. These changes occurred i n the e a r l i e r stages of the "Green Revolution" period. However, the rate of labour absorption declined i n the l a t e r years. Empirical analyses i n Japan, China, Taiwan (Ishikawa, et a l . , 1982), India (Misra, 1985), and S r i Lanka (Wickramasekara, 1977 and Amerasinghe, 1977) generally confirm Ishikawa's view. Secondly, the expansion of a g r i c u l t u r a l lands attracted migrants towards r u r a l areas and absorbed a s i g n i f i c a n t amount of labour i n agriculture and related a c t i v i t i e s . Much of t h i s labour absorption i n agriculture occurred i n Thailand, Philippines, Indonesia and S r i Lanka where new lands were avail a b l e for expansion. Labour mobility to newly developed c u l t i v a b l e lands i n these countries, to some 68 extent, eased the population pressure i n densely populated areas (Forbes, 1984 and Hugo, 1984). In the long term, however, the new development i n agr i c u l t u r e often negatively affected the labour absorption i n a g r i c u l t u r a l - r e l a t e d a c t i v i t i e s . F i r s t , the introduction of new seeds (HYVs) and f e r t i l i z e r increased the "input cost" of a g r i c u l t u r a l a c t i v i t i e s . As a r e s u l t , the small holders who were poor farmers were unable to continue t h e i r farm a c t i v i t i e s . In many cases, due to the inheritance system i n these countries land was sub-divided among the chi l d r e n causing fragmentation. Often fragmented land was sold because of i t s uneconomic s i z e . In both s i t u a t i o n s , increasing landlessness of small-holders was the r e s u l t . For example, land holdings below one acre rose from 35.2 per cent (1962) to 42.6 per cent (1973) i n S r i Lanka and to 56.5 per cent i n India. At the same time, new "entrepreneur groups" who emerged from already r i c h r u r a l families began to have greater access to the new technology and to increase t h e i r income as well as to expand t h e i r holdings by bringing up other small holdings (De Koninck, 1979). The increasing s i z e of the c u l t i v a b l e land was advantageous for the implementation of the new technology including mechanization. This to some extent reduced labour absorption i n agri c u l t u r e . Several macro-and micro-level studies (e.g., Byres, 1982 and Cleaver, 1974) report that extensive mechanization i n a g r i c u l t u r e reversed employment absorption by reducing 69 the labour intake i n a g r i c u l t u r a l a c t i v i t i e s . For example, Chapman (1982) noted increased landlessness due to the introduction of a g r i c u l t u r a l technology and new commercial crops i n Thailand. Bhalla (1977) i n India and Morrison (1979) i n S r i Lanka also noted s i m i l a r changes. Similar changes were also noted i n other South and Southeast Asian countries. Increasing population pressure on land and the absence of land reforms led to rapid growth i n the landless and 'land-poor' population i n many r u r a l areas. In addition to the open unemployment (Table 3.1a, column 11 and 12) , under-employment and disguised unemployment increased r a p i d l y i n the r u r a l areas (For further d e t a i l s see Uphoff and Esman, 1974: Table 12). While there i s a surplus of labour i n the r u r a l areas, slow economic expansion i n the urban sector prevented t h i s surplus labour from moving into that sector. So, increasing poverty was noted i n r u r a l Asia. According to an estimate, for the la t e seventies and early e i g h t i e s , 43 to 70 per cent of the r u r a l people s u f f e r from poverty i n Bangladesh, India, Pakistan, P h i l i p p i n e s and S r i Lanka (Hewawitharana, 1987: l) . The largest group of the r u r a l poor i s landless labourers and 'land-poor' people who constitute more than half the t o t a l population (Khan and Lee, 1983). Unemployment and under-employment are very common i n t h e i r case (Lipton, 1983 and Das Gupta, 1986). For example, Misra (1985: 2) reports that i n 1980, about 21 70 m i l l i o n people were unemployed i n r u r a l India, about 55 per cent of them being r u r a l a g r i c u l t u r a l labourers. On the other hand i n East Asia, the economic growth, (using GDP as a crude measure of economic development), has been rapid compared to the rest of Asia. Secondly, the d i v e r s i f i c a t i o n i n economic a c t i v i t i e s i s evident from the r a p i d l y d e c l i n i n g agriculture population. T h i r d l y , r a p i d l y growing urbanization has had a great impact on the r u r a l development as well as on the growth of RNA. Likewise, other socio-economic indicators such as l i t e r a c y , schooling and transportation too are r e l a t i v e l y higher and have shown a s i g n i f i c a n t growth over the 30 years since 1950. F i n a l l y , the r o l e of the state and export-oriented economic p o l i c i e s were favorable to economic development (see Tables 3.1a and 3.1b). 3.2 The o v e r a l l Employment s i t u a t i o n and the Growth of RNA i n Asia 3.2.1 Overall Employment s i t u a t i o n Rapid labour force growth and poor performance of the economy i n low income countries led to a common assumption that the "employment conditions" had been d e t e r i o r a t i n g i n the LDCs since 1950. The accuracy of t h i s proposition has been investigated by Gregory (1979), Berry and Sabot (1978), Harris and Rashid (1984) and Bloom and Freedman (198 6). 7 1 They a l l found that t h i s assumption of d e t e r i o r a t i n g "employment conditions" i n LDCs i s not e n t i r e l y j u s t i f i e d . The following section reviews the o v e r a l l employment s i t u a t i o n i n LDCs and p a r t i c u l a r l y i n Asia using the above findings. Changing employment situations over two decades (in 1960s and 1970s) are given i n Table 3.2. The employment-rel a t e d information i n t h i s table i s based on two d i f f e r e n t studies (Gregory, 1979 and Harris and Rashid, 1984) i n LDCs. Using four employment-related c r i t e r i a (sectoral and occupational d i s t r i b u t i o n of employment, employment status and unemployment rate), the performance of LDCs' labour market s i t u a t i o n was projected by them (see column 2 of Table 3.2). Each of these projections indicates the major c h a r a c t e r i s t i c s of the labour market of LDCs. The analyses of employment performance of these two d i f f e r e n t groups of researchers were based on the cross-s e c t i o n a l s t a t i s t i c s for about 40 countries i n Asia, L a t i n America and A f r i c a . The o v e r a l l finding f o r s i x t i e s by Gregory (1979) was that on the basis of h i s c r i t e r i a , there was no evidence showing a worsening of employment conditions. On the basis of these c r i t e r i a , Harris and Rashid (1984) found that except i n respect of open-unemployment, the labour market s i t u a t i o n was improving i n the seventies. The employment performance can be seen from the changes i n the rates of employment sectors over time as well. The t o t a l and sectoral employment changes for selected Asian 72 countries are tabulated from the above two findings for the s i x t i e s and seventies and are reported i n Table 3.3. Table 3.3 indicates the following: F i r s t , the rates of t o t a l employment growth were high i n many reported countries i n the seventies compared to the s i t u a t i o n i n the s i x t i e s . Secondly,the movement of labour from primary to other sectors (as the f i r s t proposition indicated i n Table 3.2) i s evident i n most of the Asian countries. Thirdly, the growth of the secondary sector has been much faster i n East Asian countries where rapid i n d u s t r i a l i z a t i o n absorbed a s i g n i f i c a n t proportion of the t o t a l labour force. F i n a l l y , the growth of the service sector was r e l a t i v e l y higher i n both South and Southeast Asia where the creation of white-c o l l a r employment and the emergence of intermediate and low le v e l s service occupations was prevalent. With regard to the occupational categories (proposition No. 2, Table 3.2), a combination of production r e l a t e d -e s p e c i a l l y i n manufacturing industry- and white-c o l l a r occupations grew ra p i d l y i n East Asia where the o v e r a l l changes i n GDP per worker and for each sector were much higher between 1960 and 1980 (Bloom and Freedman, 1986: Tables 11, 12 and 13) . On the other hand, the number of service and sales workers increased dramatically i n South Asia but there was no appreciable increase i n production-r e l a t e d workers. Table 3.2: Eiployient Conditions in LDCs, 1360-1980. Gregory's Criteria and Reasoning Criteria Reasoning For 1960s by Gregory Findings > For 1970 * by Harris and Rash id Sectoral A transfer of labour froi agricultural to non-agricultural Not Distribution occupations indicates an iiproveient in average Deteriorating of Eiployient eiployient situation and living standard. Iiproveient Occupational 'Explosive' growth in sales and service occupations Distribution indicates increased nuiber of eaployed in of Eiployient low productivity/low incoie jobs. Not Deteriorating Iiproveient Eiployient Status of Eaployed Labour Force Rapid growth in unpaid faiily workers or self-eiployed Not indicates a deterioration in eiployient conditions. Deteriorating Iiproveient Uneiployient Rate Increasing uneiployient rates indicates deteriorating labour conditions. Not Deteriorating Worsening Source: Colums 1, 2, and 4 are froi Harris and Rashid, 1984 Tables 1 and 4. Colum 3 is froi 6regory 1979. 74 Table 3.3; Rates of Employment Change by Sectors i n Selected Asian Countries, 1960-1980. Countries Period Rates of Employment Change Total Primary Sector Secondary T e r t i a r y Sector Sector Bangladesh 1975-81 6.6 3.3 6.7 7.4 India 1975-82 2.6 1.8 2.6 2.6 Indonesia 1961-71 1.5 0.6 3.8 4 . 5 Korea(South) 1960-70 1971-81 3.3 3.3 1.0 -0.5 11.1 7.4 5.1 5.8 Malaysia 1957-70 1970-80 2.3 3.4 0.7 0.7 2.6 4.0 2.9 4 . 7 Pakistan 1951-71 1972-82 2.7 3.6 2.5 2.5 3.8 2.6 3.1 3.6 Ph i l i p p i n e s 1965-75 1971-78 3.5 4.1 2.7 4.4 3.9 3.2 5.0 4.2 S r i Lanka 1963-71 1973-80 3.3 0.3 1.1 -0.8 1.9 1.2 5.6 Taiwan 1950-71 2.7 0.3 5.0 4.4 Thailand 1960-70 1972-80 2.0 4.3 1.5 4.0 5.2 4.5 3.7 5.2 Note: primary sector contains farm related a c t i v i t i e s only. Secondary sector includes mining, manufacturing, e l e c t r i c i t y , gas, construction, transportation, storage and communication. T e r t i a r y sector includes trade, restaurant, ho t e l , finance, r e a l estate, business service and community and personal services. "-" denotes the information not reported Source:Information for 1960 i s tabulated from Gregory, 1979, Table 1:680-81 and for 1970s i s tabulated from Harris and Rashid, 1984, Table 2:275. 75 F i n a l l y , open-unemployment rates as the measure of d e t e r i o r a t i n g labour force conditions have been increasing p a r t i c u l a r l y i n South (Table 3.1a). As a number of studies confirmed, the under-employment s i t u a t i o n i s much worse i n the countries where agriculture i s the dominant sector i n the labour absorption (e.g., Uphoff and Esman, 1974: Table 12). Though the above findings provide an o v e r a l l pattern of employment changes i n LDCs, they have to be used cautiously due to the nature of data used i n the analyses. Writers (e.g., Gregory, 1979 and Harris and Rashid, 1984) acknowledge the l i m i t a t i o n of available c r o s s - s e c t i o n a l s t a t i s t i c s i n terms of the small sample and d e f i n i t i o n a l problems. Further, a comprehensive analysis of t h i s type must look into the q u a l i t a t i v e nature of employment creation including labour productivity, wage and the q u a l i t y of labour. 3.2.2 The Growth of RNA i n Asia The movement of labour from farm to non-farm sectors was noted i n the previous section. The performance of the growth of RNA i n Asia i s discussed i n t h i s section. The cross-sectional analysis of RNA growth faces a number of conceptual and d e f i n i t i o n a l problems. Table 3.4 provides the s t a t i s t i c a l information on growth of RNA for selected countries i n Asia. This s t a t i s t i c a l information i s 76 compiled from a number of reliable sources. In most cases, the information was taken from national surveys of employment covering the entire country. However, these types of surveys usually underestimate the quantitative significance of RNA since the basis of measurement of employment is the main occupation. Much of the non-farm related work in agrarian dominant economies i s done on a part-time and seasonal basis. Secondly, the variations in definitions of rural areas and RNA too make i t d i f f i c u l t for any cross-sectional comparison of the available s t a t i s t i c s . Using the Main Occupation as the criterion (as reported in Table 3.4), a quarter of the total rural employed are engaged in RNA in Asian countries. It i s significant that Sri Lanka has by far the larger proportion of RNA of rural labour among the selected Asian countries. However, the shi f t in the proportion of RNA over the period has varied within each country and sometimes a distinct regional pattern may be discerned. In this regard, Chuta and Liedholm (1979: 18) indicate that the South Asian countries such as India experienced only about 4 per cent growth while Taiwan, (an East Asian country), experienced a 10 per cent growth of RNA during the period 1950 to i960. Anderson and Leisserson (1980) and Ho (1985), using a broader definition of rural areas (which includes rural  towns), found a significantly higher proportion of RNA 77 Table 3.4: Percentage of Rural Persons Who Consider RNA as Their Main Source of Income i n Selected Asian Countries. Country Year % Of Source of Information RNA Bangladesh 1961 14 NA 1979 26 National Manpower Survey, 1979. India 1966/67 20 NA NA NA NA Pakistan 1961 32 Census of Population,1963. 1978/79 35 Labour Force Survey S r i Lanka 1963 37 Census of Population,1963. 1981 42 Census of Population,1981. Malaysia 1970 32 NA 1980 28 Census of Population,1980. Korea(South) 1960 19 Census of Population,1960. 1980 28 Census of Population,1980. Ph i l i p p i n e s 1972 25-30 National Sample Survey of Household. 1982 32 Household Survey. Indonesia 1980 35 Census of Population,1980. 'NA' Not a v a i l a b l e Source:Bangladesh for 1961 by Ho,1985 and for 1979 by Ahmad and Ahamed, 1985:81; India for 1966/67 by Ho, 1985; Pakistan for 1961 and 1978 by Chaudhry, 1985; S r i Lanka f o r 1963 and 1981 are calculated from the reports of the respective Census of Population (Department of Census and S t a t i s t i c s 1967b and 1983b); Malaysia for 1970 and 1980 are subtracted from Lim, 1985c:407; Korea by Choe, 1985:407; P h i l i p p i n e s for 1972 from Fabella, 1985c:407 and Indonesia f o r 1980 by Kasryno, 1985:14. 78 compared to the proportion under the previous d e f i n i t i o n . For example, according to Anderson and Leisserson's (1980) estimates, RNA increased by four per cent for India, f i v e per cent for Malaysia, six per cent for South Korea and 12 per cent for the Philippines. Islam (1984), on the other hand, analysed RNA using the time spent on RNA-related a c t i v i t i e s . According to h i s analysis, which included eleven v i l l a g e s i n s i x Asian countries, the contribution of RNA to the t o t a l labour time spent varied from 40 per cent i n a predominantly a g r i c u l t u r a l v i l l a g e i n central Thailand to 89 per cent i n a v i l l a g e with rain-fed agriculture i n the Punjab region of Pakistan (Islam, 1984: 309). F i n a l l y , many researchers (Chuta and Liedholm, 1979; Oshima, 1985a; McGee, 1988) used the source of income as the c r i t e r i o n f o r the analysis of RNA growth. Oshima's (1985a) analysis on East Asia and Mukhopadhyay and Lim's (1985: 7) computation of income s t a t i s t i c s for South and Southeast Asian countries confirm that the share of income from RNA income sources has been increasing s i g n i f i c a n t l y i n recent decades. Chada (1985: 10) indicates that the income o r i g i n a t i n g i n the a g r i c u l t u r a l sector grew by 92 per cent during the period 1950/51 to 1980/81 i n India while that o r i g i n a t i n g from the non-farm sector grew by as much as 312 per cent during the same period. McGee (1988: 5) c i t i n g Ho (1985) indicates that the proportion of off-farm as a proportion of farm income increased from 12.2 per cent i n 7 9 1921 to 70.8 per cent i n 1980 i n Japan, and from 31.4 per cent i n 1952 to 79.2 per cent i n 1980 i n Taiwan. As the above analysis indicates, the growth of RNA i s s i g n i f i c a n t throughout Asia. But the growth of RNA as a contributor to r u r a l income i s more rapid i n East Asia than i n South and Southeast Asia. 3.3 The Growth of RNA i n East Asia The discussion on the growth of RNA i n East Asia i s focused on Taiwan and South Korea. Japan's experience too i s included whenever relevant. The socio-economic and demographic aspects of these two countries were, to a large extent, s i m i l a r to those of the densely populated Asian countries at the beginning of the nineteen f i f t i e s . However, the changes i n those indicators over three decades are remarkable i n these countries (see Tables 3.1a and 3.1b). Oshima (1985b: 1) shows that East Asia (Japan, Taiwan and South Korea) had reached f u l l employment, experienced r i s i n g r e a l wages and higher rates of GDP by the early 1980s. The growth of RNA to some extent resembles the o v e r a l l economic development. Table 3.5 shows the dramatic increase of o f f -farm income which was a r e s u l t of accelerated i n d u s t r i a l i z a t i o n and the implementation of the 'Green Revolution' i n r u r a l areas. Other more important aspects of a g r i c u l t u r a l t r a n s i t i o n i n these countries were the d i v e r s i f i c a t i o n i n farm 8 0 a c t i v i t i e s along with a g r i c u l t u r a l development. The successful land reform programme and re l a t e d developments (including i r r i g a t i o n f a c i l i t i e s ) i n Taiwan, for example, activated multiple cropping, inter-cropping and d i v e r s i f i c a t i o n of farm a c t i v i t i e s to include vegetables, f r u i t , l i v e s t o c k and poultry. Further, the a g r i c u l t u r a l d i v e r s i f i c a t i o n provided a fundamental basis f o r the development of food processing, manufacturing, and eventually export expansion i n the nineteen s i x t i e s (Ho, 1982). The nature of a g r i c u l t u r a l transformation i n East Asia d i d not adversely a f f e c t peasants by causing displacement and landlessness as i n South Asian countries. The r u r a l economy i n East Asia expanded and provided employment opportunities for farm and non-farm households outside a g r i c u l t u r e . Many workers found employment (part and fu l l - t i m e ) i n r u r a l industries and others commuted to nearby towns for employment during the slack season. However, as Oshima (1984:22) indicates, the a g r i c u l t u r a l incomes s t i l l remained s i g n i f i c a n t even when the off-farm incomes were overtaking the on-farm incomes i n Japan i n the nineteen-sixties, i n Taiwan and South Korea i n the seventies. Such integrated r u r a l economic growth was associated with a rapid f a l l i n the rate of unemployment i n the r u r a l areas. The increased income leve l s of farm and non-farm households also increased the domestic savings and the 81 Table 3.5: The Share of Off-Farm Income of Farm Households i n East Asia Countries Period 1965 1975 1980 Japan Taiwan Korea(South) 54 27(1966) 16 66 48 16 79 66 20 Source: Compiled from Oshima, 1984: Tables 1, 2 and 3. Table 3.6: Relative Contribution to family income of Di f f e r e n t Income Sources i n Rural India, 1970-81. Gross Estimated Total Shares i n T o t a l T o t a l Cropped % of Income Income Area(ha) Families (Rs) Crops A g r i . Others* 0 41 1865 37.7 62 . 3 100 Less than 1.0 15 1630 39.0 27.0 34 . 0 100 1.0-2.5 21 2450 59.0 14.0. 27.0 100 2.5-4.5 12 3640 81.0 5.0 14 . 0 100 4.5-6.5 5 4550 81.0 3.5 15.5 100 6.5-8.5 2 5580 89.0 2 . 0 9.0 100 8.5-10.5 2 6710 92.0 1.0 7.0 100 10.5-14.5 1 8480 95.0 0.3 4.7 100 14.5& More 1 14330 97. 0 0.4 2 . 6 100 A l l Cases 100 2650 52.0 17.0 31.0 100 '*' Other income source includes remittance, penson, d i v i d e d income, rents and income from non-farm a c t i v i t i e s . Source: ILO, 1983a:Table 4:42. 8 2 domestic demand for non-farm products i n East Asia. The development i n Taiwan, South Korea and Japan are examples of t h i s trend. For example i n Taiwan, the r a t i o of domestic saving to net-investment increased from 48.6 per cent i n 1951 to 111.1 per cent i n 1971. Individuals, corporations and the government which invested i n i n d u s t r i a l a c t i v i t i e s including r u r a l industries contributed towards t h i s change. Uneven s p a t i a l development i n South Korea was p a r t l y due to past as well as present economic p o l i c i e s . In the past, Japan emphasized development of mainly the southern part of Korea while r u r a l areas remained l a r g e l y undeveloped. In recent decades (1960s and 1970s), government p o l i c i e s were mainly focused on heavy industries and export oriented growth. Some of the " r u r a l i n d u s t r i a l estates" (e.g. Saemul factory system) were located c l o s e r to the urban centres. As a r e s u l t , the growth of non-farm a c t i v i t i e s was s i g n i f i c a n t l y lower i n South Korea compared to other East Asian countries. In Japan, the small and medium siz e i n d u s t r i e s are located i n the small towns. We11-developed transportation while sub-contractors to move t h e i r goods also provides more mobility to the male members of the farm household who i commute to the towns for part-time and seasonal employment. Women have taken over some farm a c t i v i t i e s which were formerly done by males (Oshima, 1984). A s i g n i f i c a n t recent trend i n Japan i s the movement of small and medium sized 83 industries to r u r a l areas i n search of cheap labour. This has contributed to the further growth of RNA. These developments i n r u r a l East Asia were accompanied by rapid urban as well as socio-economic and demographic changes. The r u r a l areas closer to the urban centres were the sources of labour for i n d u s t r i a l production of export oriented market economies of East Asian countries. McGee(1987) indicated that the increasing i n t e r a c t i o n between r u r a l and urban areas has created an "intermixed" zone (Kotadesa zone) where the economic a c t i v i t i e s are d i v e r s i f i e d and the proportion of non-farm income i s s i g n i f i c a n t l y higher. He i d e n t i f i e d such a mixed zone along the west-coast of Taiwan i n a region between Ta i p e i and Kaoshiong. 3.4 The Growth of RNA i n South and Southeast Asia The geographical region of South and Southeast Asia includes a large number of countries with varying of socio-economic and other c h a r a c t e r i s t i c s . The purpose of t h i s review i s to i d e n t i f y some of the more general RNA growth patterns i n the densely populated a g r i c u l t u r a l countries where conditions are closest to those of S r i Lanka. This review i s based on c h a r a c t e r i s t i c s of employment changes described i n section 3.1 above. The employment conditions i n these areas were influenced by the rapid growth of labour and the poor 84 performance of the economy. In these economies, r u r a l non-a g r i c u l t u r a l a c t i v i t i e s were dominated by part-time and seasonal work. Here the lack of new c u l t i v a b l e land and population pressure created a s i t u a t i o n i n which the poor have no option but to seek additional or a l t e r n a t i v e occupations outside agriculture. For example, Table 3.6 shows that i n India the lower income groups have a higher proportion engaged i n RNA than the higher income groups. This i s further i l l u s t r a t e d by Islam (1984) i n his study of eleven v i l l a g e s i n s i x Asian countries: Bangladesh, India, S r i Lanka, Thailand, Pakistan and Indonesia (study based ILO/ARTEP country studies). Some of the major findings relevant to our discussion are as follows. F i r s t , the o v e r a l l inverse r e l a t i o n s h i p between farm siz e and non-farm income i s confirmed; that i s , the higher the land si z e the lower the RNA income. But the exceptions to t h i s are the households with r e l a t i v e l y large farms and also with a high proportion of non-farm income. This i s because families owning large farms have high incomes and therefore are able to penetrate the organized sector of the r u r a l economy and fin d r e l a t i v e l y prestigious occupations there (Mukhopadhyay and Lim, 1985). Secondly, the decline  of self-employment r e s u l t i n g from increased wage employment has been noted throughout the v i l l a g e s under Islam's study. This decline i s evident i n the cross-country s t a t i s t i c a l analysis as well (Gregory, 1979; Harris and Rashid, 1984). 85 The structure and the growth of r u r a l i n d u s t r i e s too i l l u s t r a t e the nature of RNA growth i n these countries. S t r u c t u r a l l y , the r u r a l non-farm a c t i v i t i e s are dominated by manufacturing a c t i v i t i e s based on food processing and other basic a c t i v i t i e s . As Table 3.7 i l l u s t r a t e s , the manufacturing sector consists of a large proportion of the t o t a l RNA i n the reported countries with the exception of Malaysia and the Philippines where the service sector i s equally important i n terms of t o t a l RNA. In the manufacturing sector i n the sense defined by Mukhopadhyay and Lim (1985), tobacco and beverage manufacturing appear to be the most important a c t i v i t y i n the r u r a l i n d u s t r i e s i n Malaysia (61.7 per cent) and India (47.5 per cent). T e x t i l e and foot wear manufacture i s more dominant i n Bangladesh (58.2 per cent) Pakistan (39.6 per cent) and the P h i l i p p i n e s (46.4 per cent). The two broad categories of manufacturing sectors (food, tobacco and beverages; and t e x t i l e s and foot wear) together comprise more than 75 per cent of the t o t a l RNA i n Bangladesh (81 per cent) and India (75 per cent). The continuing high proportion of employment i n the above categories of manufacturing may be an i n d i c a t i o n of adherence to t r a d i t i o n a l r u r a l industries i n South Asia. Southeast Asian countries show a d i f f e r e n t pattern of r u r a l i n d u s t r i a l i z a t i o n where non-traditional manufacturing a c t i v i t i e s have shown a rapid increase. For example, metal production i n Malaysia (11 per cent of t o t a l manufacturing) 86 Table 3.7: Share of Different Categories of RNA i n Selected South and Southeast Asian Countries c i r c a 1980's. Countries Sub- Sectors Manufac- Constr- Trade+ Transp- Service Other turing uction Comme- ort+ rce Communi-cation-t-Storage Bangladesh 43.3 3.9 26.4 3.6 12 . 2 10.6 India 39.0 4.9 15. 0 5.4 33.1 2.6 Malaysia 21.4 7.1 19.0 7.1 38. 1 7.3 Pakistan 32.4 14.2 20.9 8.8 21.3 2.4 P h i l i p p i n e s 28.6 8.8 17.0 9.5 32.0 4.3 Thailand 34.5 9.5 23.6 7.2 25.1 0.1 Source: Extracted from Mukhopadhyay and Lim, 1985: Table,1.2:10. and machinery and equipment i n Philippines (13 per cent) account f o r a s i g n i f i c a n t proportion of r u r a l employment (observation based on the c a l c u l a t i o n of Table 1.1 i n Mukhopadhyay and Lim, 1985). Several major c h a r a c t e r i s t i c s of r u r a l i n d u s t r i a l i z a t i o n i n South and Southeast Asia may also be noted. F i r s t , the majority of the industries are small i n  s i z e i n terms of the number employed. In many cases they are household industries with fewer than f i v e employees. Secondly, the majority of industries are e i t h e r handicrafts or are based on agro-resources. With regard to the agro-resource based industries, the i n d u s t r i a l 87 a c t i v i t i e s are concentrated during the post-harvesting period. As a r e s u l t , employment which i s provided i n these industries i s seasonal. The proportion of hired labour i n r u r a l i n d u s t r i a l a c t i v i t i e s i s high when compared with family labour. Islam (1985) computed the p a r t i c i p a t i o n of hired labour i n Bangladesh, India and Nepal, and showed that the proportion of hired labour i s s i g n i f i c a n t l y high even i n the t r a d i t i o n a l industries. The productivity l e v e l of r u r a l industries i s associated with the capital/labour r a t i o of i n d u s t r i e s (Mukhopadhyay and Lim, 1985; Chuta and Liedholm, 1979; Islam, 1985). Though the productivity l e v e l varies among the d i f f e r e n t r u r a l industries, the majority of the t r a d i t i o n a l and small-scale industries show a low l e v e l of  p r o d u c t i v i t y . At the same time, the poor performance of r u r a l i n d u s t r i e s i s due to the low l e v e l of s k i l l of labour. The growth performance of r u r a l industries v a r i e s . Rural i n d u s t r i a l a c t i v i t i e s have declined i n some countries while i n others the a c t i v i t i e s have increased. For example, the percentage of labour force i n r u r a l i n d u s t r i a l a c t i v i t i e s has declined by 0.8 per cent between 1960/61 and 1977/78 i n Pakistan, by about 10,000 workers between 1972/73 and 1977/78 i n Nepal. On the other hand, r u r a l i n d u s t r i a l employment i n Bangladesh showed an increase of 2.2 per cent between 1961 and 1980. In India, Khadi ( i n d u s t r i a l estate) and v i l l a g e industries have registered a f a i r l y rapid rate of growth i n terms of output and employment while the growth 88 o f r u r a l i n d u s t r i e s i n g e n e r a l has shown s i g n i f i c a n t v a r i a t i o n s between d i f f e r e n t r e g i o n s ( I s l a m , 1985: 7 ) . Other s t u d i e s a l s o i n d i c a t e t h e e x i s t e n c e o f a r e g i o n a l v a r i a t i o n . F o r example, Gupta (1984) shows an i n c r e a s i n g p a t t e r n o f r u r a l i n d u s t r i a l u n i t s and employment i n Punjab and H a r i y a n a s t a t e s w h i l e Chada (1985) i n d i c a t e s a s h a r p d e c l i n e o f r u r a l i n d u s t r i e s a t t h e n a t i o n a l l e v e l . I t has been s u g g e s t e d t h a t consumer and o t h e r p r o d u c t s w h i c h used t o be s u p p l i e d by t h e r u r a l i n d u s t r i a l s e c t o r e a r l i e r a r e now b e i n g s u p p l i e d e i t h e r by urban i n d u s t r i e s o r by i m p o r t s . The r u r a l i n d u s t r i e s w h i c h produced " i n f e r i o r " ( 4 ) i t e m s c o u l d not compete w i t h i m p o r t s . T h i s i s one o f t h e re a s o n s f o r t h e d e c l i n e o f h o u s e h o l d i n d u s t r i e s i n many d e v e l o p i n g c o u n t r i e s . The s e r v i c e s e c t o r appears t o be prominent i n t h e r u r a l economy o f South and S o u t h e a s t A s i a ( T a b l e 3.7). I n r e c e n t y e a r s , t h e s e r v i c e s e c t o r has grown r a p i d l y i n many d e v e l o p i n g c o u n t r i e s ( G r e g o r y , 1979 and H a r r i s and R a s h i d , 1984). I t was s u g g e s t e d t h a t i n c r e a s i n g open unemployment, under-employment and p o v e r t y i n LDCs l e d t o a "low" t y p e o f s e r v i c e o c c u p a t i o n ( 5 ) . F a b e l l a (1985c) i n d i c a t e d t h a t i n t h e P h i l i p p i n e s , i t i s t h e i n f o r m a l s e c t o r such as s m a l l s c a l e t r a d i n g and d o m e s t i c and p e r s o n n e l s e r v i c e s w h i c h forms an i m p o r t a n t segment of RNA. I n c o u n t r i e s l i k e S r i Lanka, where f r e e e d u c a t i o n i s a v a i l a b l e , e d u c a t e d r u r a l poor seek g o v e r n m e n t - r e l a t e d s e r v i c e employment. G r e g o r y (1979) i n h i s a n a l y s i s o f 46 d e v e l o p i n g c o u n t r i e s found t h a t 8 9 the growth of the service sector was not always a sign of prosperity and development. So c i a l s t r a t i f i c a t i o n (e.g., caste categories) i s strongly associated with the occupational categories i n South,Asian countries. Caste differences are often based on occupational categories. Many have found that the caste system was la r g e l y subsumed under the cl a s s structure ( B e t e i l l e , 1965). Service-oriented non-farm a c t i v i t i e s are la r g e l y c a r r i e d out by so c a l l e d "lower" caste people. Production, trade and transportation-related a c t i v i t i e s are performed by those belonging to higher caste groups. Hirashima (1978) analysed the non-farm occupations and caste o r i e n t a t i o n i n a Pakistani v i l l a g e and found a strong r e l a t i o n s h i p between them. However, a s i g n i f i c a n t r e l a x a t i o n has been noticed i n the r i g i d i t y of the caste system during recent decades. I t has been found that the r i g i d i t y of the caste system has been d i s s o l v i n g even i n t r a d i t i o n a l r u r a l s o c i e t i e s i n India (Tharamangalam, 1980; Gough, 1981). The r i g h t to own property, the spread of a monetary economy, wage employment and other changes i n production r e l a t i o n s led to the breakdown of the caste structure (Djurfedt and Lindberg, 1975). These changes may be seen i n the adoption of 'low status' occupations such as handicraft and pottery by people with s k i l l i r r e s p e c t i v e of caste and also i n the upward mobility of 'low caste' persons into 90 higher status occupations through educational attainments as may be seen i n S r i Lanka. Public works such as road building, r e p a i r of i r r i g a t i o n canals or tanks are an important source of income for the r u r a l poor i n South and Southeast Asian countries. I t has been indicated that d i f f e r e n t types of programmes ( i r r i g a t i o n , roads, i n f r a s t r u c t u r a l development) introduced by the i n d i v i d u a l governments with the assistance of i n t e r n a t i o n a l a i d agencies provide employment to the r u r a l poor i n LDCs (ILO, 1983a: 61). These programmes are provided during the o f f - a g r i c u l t u r a l seasons which allow the r u r a l poor to supplement t h e i r a g r i c u l t u r a l income. The impact of overseas employment i s another important aspect of RNA i n South and Southeast Asia. For example, i t i s evident that there i s continuing out-migration from South Asia to the Middle East e s p e c i a l l y from the r u r a l areas. In Pakistan f o r example, such migration, i n f a c t , eased the employment pressure by taking an estimated 7 per cent of the r u r a l labour force (Hewavitharana, 1987: 4). Similar out-migration takes place elsewhere. For example, Indonesian farmers cross the Malaysian border, usually i l l e g a l l y , for employment i n non-farm a c t i v i t i e s . F i n a l l y , the export processing zones and foreign financed industries employ a s i g n i f i c a n t number of r u r a l persons -both male and female- i n several Southeast Asian countries. The income earned from these a c t i v i t i e s has an impact on the r u r a l economy and l i f e s t y l e s . Two recent 91 research works (McGee, 1986; Wolf, 1984) investigated t h i s issue and found that the impact on labour demand i s of importance i n regions i n which these zones had been established. Though overseas and export processing-related employment i s not a feature discussed i n t h i s t h e s i s , the impact of the income received from these forms of employment i s found to have a s i g n i f i c a n t influence on the r u r a l income d i s t r i b u t i o n of the countries under discussion. 3.5 The Factors Associated with RNA Growth The growth of RNA i s found to be associated with the following factors i n Asia. F i r s t , v a r i a t i o n s of RNA growth are associated with the agro-ecological factors. Oshima (1984 and 1985a) indicated that the v a r i a t i o n s i n r a i n f a l l patterns i n Asia are c l o s e l y associated with regional v a r i a t i o n of RNA i n Asia. According to him, the length of the off-monsoonal period encourages the off-farm a c t i v i t i e s of farm and non-farm households i n these countries. T r a d i t i o n a l l y , the off-farm a c t i v i t i e s are much higher i n East Asia where the off-monsoonal season i s r e l a t i v e l y long. The combination of agro-ecological factors and v a r i a t i o n s i n RNA were investigated by a team of researchers i n India. This aspect investigated by Raghupati and Reddy (1985) i n West-Bengal and Swami, et a l (1985) i n Tamil Nadu. They found that the economic a c t i v i t i e s were w e l l - d i v e r s i f i e d i n resource-rich West-Bengal compared to 9 2 semi-arid Tamil Nadu. Further, they indicated that the semi-a r i d Tamil Nadu provided low productive and low income RNA compared to West-Bengal. Secondly, the growth of the p r o d u c t i v i t y of the  a g r i c u l t u r e sector i s found to be p o s i t i v e l y associated with the growth of RNA (e.g., Chada, 1985 on India; Oshima, 1984 and 1985a on East Asia; Kasryno, 1985 on Indonesia). At the same time, the studies emphasize the importance of "backward" and "forward" production linkages (Ho, 1985). The forward linkages involve farm outputs serving as inputs to the non-farm sector. Backward linkages from the non-farm sector r e f e r to the l i n k with the output of the farm sector (Chuta and Liedholm, 1979: 24). I t has been demonstrated (e.g. Chuta and Liedholm, 1979; Ho, 1985) that the linkages increase as the r u r a l economy develops. Papola (1986: 64) indicated that the rapid a g r i c u l t u r a l growth i n some parts of India has led to the growth of new r u r a l i n d u s t r i e s based on the processing of a g r i c u l t u r a l products. I n f r a s t r u c t u r a l development (transportation, education i r r i g a t i o n water, r u r a l e l e c t r i f i c a t i o n , f i n a n c i a l i n s t i t u t i o n s , etc.) are found to influence d i r e c t l y and i n d i r e c t l y the growth of RNA. A number of studies (Hainsworth, 1982; Fabella, 1985a and 1985c; Barnes and Binswanger, 1984) have found a s i g n i f i c a n t c o r r e l a t i o n between i n f r a s t r u c t u r a l variables and the growth of RNA. Though the o v e r a l l transportation f a c i l i t i e s were poor i n the r u r a l areas of these countries, the a v a i l a b l e f a c i l i t i e s 93 were very e f f e c t i v e l y used by the r u r a l non-farm sector i n comparison with the farm sector. For example, as Barwell, et a l (1985: 131) reports, transport f a c i l i t i e s were u t i l i z e d more in t e n s i v e l y by the non-farm sector i n the r u r a l areas than by the farm sector (e.g., 10 times higher i n India and 8 times higher i n Bangladesh) . Fabella (1985a) i n h i s study of RNA and modernization i n the Philippines found that transport was one of the two most important influences i n labour absorption i n the r u r a l areas of that country. F i n a l l y , we may note as an exception that there are instances when the i n f r a s t r u c t u r a l factors negatively influence the growth of RNA. For example, i t has been argued that the introduction of a new technology such as e l e c t r i f i c a t i o n would eliminate more jobs than w i l l be created as i s evident i n the P h i l i p p i n e s . Likewise, Mizoguchi (1985: 319) indicated that when wages for u n s k i l l e d labourers rose s i g n i f i c a n t l y i n the 1960s i n South Korea labour supply from r u r a l areas lagged behind because parents encouraged t h e i r children to attend school f o r a longer period of time. Another factor a f f e c t i n g the growth of RNA i s proximity  to the urban centres. In many Asian countries the v i l l a g e s closer to urban centres have had greater opportunities for linkages i n marketing and employment and show a higher proportion of RNA than other regions. Ho (1985: 20-21) shows i n his comparative analysis of four d i f f e r e n t types of r u r a l locations i n Japan that the r u r a l 9 4 locations which are closer to the urban areas not only have a higher proportion of RNA but importantly the q u a l i t y of r u r a l involvement i n non-farm a c t i v i t i e s appears to be higher. However, the urban factor might, i n some other circumstances, contribute to the decline of RNA a c t i v i t i e s p a r t i c u l a r l y i n the r u r a l areas. For example, Quizone and Binswanger (1984) s t a t i s t i c a l l y found "unfair" terms of trade between urban and r u r a l areas. Urban traders with t h e i r superior trade practices could e f f e c t i v e l y sabotage the growth of r u r a l non-farm a c t i v i t i e s , e s p e c i a l l y i n industry and t h i s can lead to decline i n RNA employment. Chuta and Leidholm (1979: 20) note that shoe and leather production and pottery declined i n India as a r e s u l t of competition from "superior" products which were supplied by the urban sector. The proximity of c i t i e s also may tempt small and medium r u r a l industries to move towards urban centres f o r easier access to c a p i t a l and services thus depriving the r u r a l areas of employment opportunities. F i n a l l y , the r o l e of the state i s another important fac t o r associated with the growth of RNA. The state through plans for regional development, economic p o l i c i e s , f i s c a l c o n trol, p r i c e manipulation and employment creation d i r e c t l y and i n d i r e c t l y influences the growth of RNA. The r o l e of the state i n r u r a l development and growth of RNA has been studied by a number of researchers (Moore, 1985a; Mizoguchi, 1985) . Mizoguchi (1985) has found that the state 9 5 development p o l i c i e s have made a s i g n i f i c a n t impact on income d i s t r i b u t i o n i n Southeast Asian countries. To summarize, the above analysis i d e n t i f i e d two types of RNA growth i n Asia. The f i r s t i s the Japan-Korea-Taiwan type. This type i s associated with rapid economic growth and increasing demand for RNA-related labour. The second i s e s p e c i a l l y prominent i n the South Asian region. RNA growth i n these countries i s associated with a rapid increase i n the labour force population without a corresponding growth i n the economies and may be described as being i n a "low l e v e l equilibrium". This analysis suggests that f o r most of the period under consideration S r i Lanka's has been a s i t u a t i o n s i m i l a r to that of other south Asian countries such as Bangladesh and India. The next chapter w i l l analyse t h i s aspect i n depth with more detailed data. 96 Notes 1 Gross National Product (GNP) i s defined as the market value of a l l f i n a l goods and services produced by an economy in one year's time (Ruffin and Gregory, 1983: 301). The per capita GNP derived by div i d i n g GNP by the t o t a l population of that economy. The GNP indicator i s one of the commonly used measures of economic standard. 2 The percentage decline of a g r i c u l t u r a l employment indicates increasing employment a c t i v i t i e s i n the non-a g r i c u l t u r a l sector. This also mean the d i v e r s i f i c a t i o n i n economic a c t i v i t i e s . However, the decline of a g r i c u l t u r a l employment does not necessarily mean acceleration of the RNA growth. I t may also be an indicati o n of urban growth and expansion of employment there. 3 Gross Domestic Product i s defined as the t o t a l value of goods and services excluding transaction with foreign countries (Ruffin and Gregory, 1983: 301). This i s also a commonly used measure of economic development. 4 " I n f e r i o r " because they are of poor q u a l i t y or because people assume that l o c a l l y produced goods are i n f e r i o r to imported goods. 5 A "low" status type of occupation i n developing countries i n t h i s study ref e r s mainly to those occupations that lack s e c u r i t y or bring a low income with low prestige. Domestic servants, d a i l y paid manual labourers and c e r t a i n categories of service occupations such as laundrymen, sweepers f a l l into t h i s category. 97 CHAPTER FOUR: STRUCTURAL CHANGES IN ECONOMY AND EMPLOYMENT IN SRI LANKA SINCE INDEPENDENCE P o l i t i c a l independence i n 1948 marked the beginning of a new chapter i n S r i Lankan history. Many noteworthy socio-economic and demographic changes have occurred during the f o r t y years since independence. The structure and the c h a r a c t e r i s t i c s of employment also underwent s i g n i f i c a n t change. Such changes i n employment occurred i n a d i s t i n c t socio-ethnic and p o l i t i c a l environment. This chapter deals with the issues related to the changes i n employment during the post-independence period. We w i l l attempt to i d e n t i f y the s t r u c t u r a l changes i n the economy and i n employment during the l a s t four decades. We w i l l also i d e n t i f y t h e i r major causes and assess the employment s i t u a t i o n i n the r u r a l areas r e s u l t i n g from changes i n the economic and employment structure. 4.1 The changes i n Economy and Employment The performance of an economy and s e c t o r a l labour absorption i n a country are c l o s e l y i n t e r - r e l a t e d . The following section looks at the s t r u c t u r a l change i n employment i n S r i Lanka during the post-independence period and i l l u s t r a t e s the performance of the economy at the sub-se c t o r a l l e v e l . Employment s t a t i s t i c s are a v a i l a b l e up to 98 1981. The data for the post 1981 years have been obtained from f i e l d surveys. 4.1.1 Economic Change The changes i n the S r i Lankan economy and i t s structure have been i l l u s t r a t e d using the two economic in d i c a t o r s of the proportional contribution by sectors to the Gross Domestic Product (GDP) and the annual growth rates of GDP. F i r s t , the growth rates of GDP indicate the l e v e l of the o v e r a l l economic performance of a country. The average annual GDP growth rate was around f i v e per cent per year before 197 0 (Gunasekera, 1974) but during the period between 1970-77, the growth rate f e l l to three per cent per year. Subsequently, the growth rate reached a record l e v e l of 6 to 8 per cent between 1977 and 1980 and then declined again (People's Bank, Various Years). Thus growth patterns indicate a s i g n i f i c a n t economic change during the early period of the post-1977 period though the changes have not been uniform. The GDP growth rates have s i g n i f i c a n t l y varied between the d i f f e r e n t sectors of the economy. These differences are r e f l e c t e d i n the changes of the sectoral contribution to the GDP over the period. Table 4.1 shows the s e c t o r a l contribution of GDP for selected years. As t h i s table indicates, s i g n i f i c a n t proportional changes have occurred i n the selected dominant sectors of the economy: 99 Table 4.1; Sectoral D i s t r i b u t i o n (%) of Gross Domestic Product (GDP) i n S r i Lanka- 1961, 1973, 1980 and 1985. Major Sectors GDP D i s t r i b u t i o n (%) 1961 1973 1980 1985 Agriculture, Forestry, Hunting and Fishing 40.7 32 . 6 24.3 25.0 Mining and Quarrying 0.5 2.5 NA 1.4 Manufacturing 11. 6 13.6 13.7 19.4 Construction 4.2 3.0 5.4 5.0 E l e c t r i c i t y , Gas and Water 0.1 0.3 NA 0.6 Transport, Storage and Communication 9.0 10. 0 9.4 10.4 Wholesale and R e t a i l Trade 3.5 13.0 19.7 26.0 Banking, Insurance, Real Estate 0.9 1.4 NA 2.0 Ownership of Dwellings 3.5 3.0 NA 1.6 Public Administration and Defence 5.2 5.4 4.9 NA Service 12.2 13.0 13.1 N/A 'NA' Not a v a i l a b l e Note: 1) Figures f o r Reported Years do not add-up to 100%. Proportionally Smaller Sectors were not included i n the Sources from where these information were taken. 2) Figures for 1980 are at 1970 constant factor cost p r i c e . The figures for 1961 and 1973 are at 1961 constant fa c t o r p r i c e . 3) Wholesale and r e t a i l trade percentage d i s t r i b u t i o n f o r 1961 i s very low compared with that of other years i n the table. This i s explained by the fact that the wholesale and r e t a i l trade category i n 1961 did not include a l l the sub-sectors that were included i n subsequent years. Source: The figures for 1961 and 1973 are from Gunasekera, 1974:85, figures for 1980 are from Gafoor and Kooyman, 1985: 497 and figures for 1985 are from the Department of Census and S t a t i s t i c s , 1986d. 100 (1) a g r i c u l t u r e , forestry, hunting and f i s h i n g , (2) manufacturing and (3) wholesale and r e t a i l sale. The a g r i c u l t u r a l - r e l a t e d sector has shown a gradual decline i n the proportional contribution to the GDP while the trade sector has shown a s i g n i f i c a n t increase (see Table 4.1). The increasing importance of trade and manufacturing sectors of the economy are more evident during the post-1977 period when the economy had taken a d i f f e r e n t d i r e c t i o n with the introduction of "open market" p o l i c i e s . This aspect i s considered i n section 4.2.2 of t h i s chapter. When considering s t r u c t u r a l change we see that, except i n the a g r i c u l t u r a l sector, they were not very s i g n i f i c a n t before 1970. On the other hand, the post 1977 period i s one of major s t r u c t u r a l adjustment i n the o v e r a l l economy. Among the most s i g n i f i c a n t changes are those r e l a t e d to r u r a l trading, manufacturing and construction. 4.1.2 Employment Change Employment changes during the post-independence period e x h i b i t an i d e n t i f i a b l e pattern. The t o t a l number of people employed increased over the period but additions to employment vary between sectors. Two m i l l i o n jobs were created within the 28 year period between 1953 and 1981. Employment creation was much higher during 1971-81 than i n the previous period (1953-71). For instance, the average 101 yearly labour absorption during 1971-81 was double that of the 1953-71 period. Secondly, the a g r i c u l t u r a l sector remained the dominant sector of employment concentration although the proportional s i g n i f i c a n c e of t h i s sector declined from 52.9 per cent of the t o t a l employed population i n 1953 to 45.8 per cent i n 1981 (see Table 4.2, Columns 1-3). The labour absorbing capacity of the primary sector, however, has been d e c l i n i n g since 1963. The primary sector which absorbed the largest proportion of the t o t a l employment increase (35%) during the 1953-71 period absorbed only about one-tenth of the t o t a l increase during the 1971-81 period. At the same time, t e r t i a r y and secondary sectors of the economy expanded r a p i d l y and absorbed about two-thirds of the t o t a l employment increase during the recent decade (1971-81) (see Table 4.2 Column 5). Changes i n employment are evident at the sub-sectoral l e v e l s as well. Two major sub-sectors of the primary sector such as plantation and domestic a g r i c u l t u r e show a quite d i f f e r e n t pattern of labour absorption. The labour absorption i n plantation (mainly tea and rubber c u l t i v a t i o n ) a g r i c u l t u r e declined i n absolute numbers. At the same time, domestic agricu l t u r e showed an increase i n employment absorption. Within domestic agriculture, the majority were employed i n r i c e c u l t i v a t i o n . However, recent increases i n 102 Table 4.2: The D i s t r i b u t i o n and Changes i n Employment by Sectors, S r i Lanka for Selected Years, 1953, 1971 and 1981. Major Sectors D i s t r i b u t i o n of Employed % of Absolute Population (%) Growth 1953 1971 1981 1953-71 1971- 81 Primary 52.9 49.6 45.8 35.1 11 .5 Secondary 16.0 17.4 18.8 23.3 31 .4 T e r t i a r y 24.4 24.4 26.3 24.9 43 .5 Unspecified 6.7 8.6 9.1 16.7 13 .6 Total Employed 100.0 100.0 100.0 100.0 100 . 0 Agriculture and Livestock 100.0 100.0 100.0 - 100 . 0 Agri.(Plantation) NA 41.8 37.2 NA -312 .4 Agri.(Domestic) NA 58.2 62.8 NA +412 .4 Secondary Sector 100.0 100.0 100.0 100.0 100 .0 Mining and Quarrying 2.7 2.0 4.5 -0.4 17 . 1 Manufacturing 63.2 52.7 50.7 22 . 5 51 .7 Elect.,Gas,Water 0.7 1.5 2.1 2.7 3 .7 Construction 11.7 15.9 17 . 3 29.0 14 .2 Transport,Storage, and Communication 21.7 27.9 25.4 46.2 13 . 3 T e r t i a r y Sector 100.0 100.0 100.0 100.0 100 .0 Wholesale and R e t a i l Trade 38.4 38.0 40.3 54.3 42 .9 Finance and Insurance 2.4 2.7 5.3 7 .4 Community,Social Personal Service 59.2 59. 3 54.4 45.7 49 .7 'NA' denotes Not Available '*' 1953-71 Finance and Insurance data are incorporated with Wholesale and R e t a i l Trade i n the l i n e above. Source: Calculated from the Census of Population, 1953,1971 and 1981. Department of Census and S t a t i s t i c s , 1960, 1967b, 1976 and 1983b. 103 labour absorption i n domestic agriculture are i n the area of vegetable and spice growing. While the expansion of employment i n the t e r t i a r y sector was confined to selected occupational categories, the employment change i n the secondary sector showed a d i f f e r e n t pattern. The manufacturing sector which comprised more than 50 per cent of the t o t a l employment i n the secondary sector declined i n proportion between 1953-81 though the absolute number increased. To understand the t o t a l change i n employment, i t i s important to investigate the s p a t i a l , age and sex changes i n the employment structure. S p a t i a l l y , there have been differences i n labour absorption between urban and r u r a l areas. As i s evident from Table 4.5, the labour absorption i n urban areas has been r e l a t i v e l y higher than i n r u r a l areas during the study period. In addition, the growth of employment i n urban areas has been much higher i n most of the sub-sectors of the economy except i n a g r i c u l t u r e and mining and quarrying as the available information indicates. The emerging patterns of sectoral labour absorption during the post-independence period are f i r s t , rapid employment expansion i n domestic a g r i c u l t u r a l sector during the early period and secondly, concentration of labour i n trade-related a c t i v i t i e s i n recent decades. The manufacturing sector, however, shows slow employment growth. 104 On the whole, the employment structure d i d not change s i g n i f i c a n t l y during the period under study. Table 4.3: Absolute Change i n Employment i n Rural and Urban Areas by Industry Division, 1971-1981. Industry D i v i s i o n Total Urban Rural Change Share Change Share Change Share (Total) (%) (Total) (%) (Total) (%) Agr i.Hunting and Fishing 46576 11. 2 -10209 9 . 2 56785 19. 2 Mining and Quarrying 21235 5. 3 1280 1. 2 19955 6. 8 Manufacturing 52176 12. 9 41797 37. 6 10379 3. 5 El e c t . Gas Water 6240 1. 5 2326 2. 1 3914 1. 3 Construction 31063 7. 7 9573 8. 6 21490 7. 3 Trade Restaurants Hotels 91331 22. 5 50109 45. 1 41222 14. 0 Transport,Storage Communication 16858 4. 2 -1755 -1. 6 18613 6. 3 Finance, Rent and Real Estate 32487 8. 0 17777 16. 0 14710 5. 0 Service 52658 13. 0 22051 19. 9 30607 10. 4 Not Stated 55402 13. 7 -21884 -19. 7 77286 26. 2 Total 406026 100. 0 111065 100. 0 294961 100. 0 Source: Calculated from Population Censuses 1953, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 105 4.2 Factors of Employment Change The patterns of labour absorption i n a country are influenced mainly by the demand and supply of labour. The changes i n the employment structure were influenced by actual and p o t e n t i a l capacity of labour absorption among the various sectors i n an economy. Such sectoral p o t e n t i a l and capacity are dependent upon the growth of population, production, techniques used, labour s k i l l s , a v a i l a b i l i t y of inputs and the p o l i c i e s adopted by the government. In addition, a number of other socio-economic, p o l i t i c a l and c u l t u r a l factors also play a r o l e i n the process of labour absorption as w i l l be discussed l a t e r . 4.2.1 The Population Factor S r i Lanka experienced rapid population growth during the f i r s t two decades since independence. The average annual growth rates of population were more than 2 per cent between 1953 and 1971 (Table 4.4). In other words, the s i z e of annual additions to the t o t a l population was more than 255,000 people per annum during the above int e r - c e n s a l periods (1953-71). This increase was much higher when compared with the period before 1953 and a f t e r 1971. Within t h i s 18-year period, the highest annual average growth occurred between 1953 and 1963. As a r e s u l t , the age 106 Table 4.4: Growth Rates of Population and Labour Force and Changes i n A c t i v i t y Rates, Census Years After 1953. Annual Average Growth A c t i v i t y Rate Rate* Census Total Population Labour Year Populat- Aged 15-59 Force ion 15-19 1953 Total 2.8 2.2 2 .1 60.1 Male 2.7 2.1 1.7 87.9 Female 2.9 2.3 3.7 27.8 1963 Total 2.7 2.1 1.5 66.3 Male 2.5 1.8 1.7 85.2 Female 2.5 2.4 0.4 30.7 1971 Total 2.2 4.2 4.4 59.9 Male 2.1 4.1 3.6 85. 0 Female 2.4 4.4 6.9 33.2 1981 Total 1.7 2.5 1.3 54.4 Male 1.6 2.3 1.4 79.0 Female 1.8 2.7 1.1 29.1 A c t i v i t y Rate i s Defined as the Proportion of Labour Force i n the Total population. Source: Figures for 1953 and 1963 are from ESCAP,1976:19 and figures f o r 1971 and 1981 are from Department of Census and Statistics,1986c. Table 4.5: Changes i n Labour Force, Employed and Unemployed Population, 1953-81 Change i n Employment Inter-Census Labour Force Employed Unemployed Period (30.0) (14.4) (59.5) 1953-63 Total 458358 195973 NA Urban NA 149946 NA (32.7) Rural NA 46027 NA (30.0) (14.4) (59.5) 1963-71 Total 1036432 459553 313000 (52.2) (28.2) (59.5) Urban 349495 172005 177490 (24.7) (11.1) (198.0) Rural 686937 287548 399389 (11.8) (12.9) (6.9) 1971-81 Total 528434 470449 57985 (8.5) (14.3) (-10.6) Urban 86611 111960 -25349 12.7 (12.5) (19.9) Rural 441823 358489 83334 'NA' Denotes Not Available Figures i n parentheses indicate percentage change between census years. The d e f i n i t i o n of labour force d i f f e r s between census years (See Appendix 1) Source: Calculated from Census of Population, 1953, 1963, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 108 structure of the population of S r i Lanka changed from that of 1953. Many factors led to the rapid population growth. During the t h i r t i e s and f o r t i e s , s i g n i f i c a n t r e s u l t s were achieved i n the control of malaria and other epidemics which caused high death rates i n pre-independent S r i Lanka (Cullumbine, 1950; Gray, 1974). Subsequently, a number of measures improved the health and l i v i n g conditions of people, e s p e c i a l l y a f t e r independence (Selvaratnam and Meegama, 1971) which contributed to a s i g n i f i c a n t reduction i n the number of deaths which had begun to decline well before independence. About 50, 55 and 66 per cent reductions were achieved i n crude death rates, infant mortality and maternal mortality rates respectively between 1933 and 1953. The pattern of decline i n crude death rates, f o r example, changed from 30 deaths per 1000 i n population i n 1933 to 29 i n 1946 and 11 i n 1953. The declining trend continued even a f t e r 1953 (ESCAP, 1976 and Peebles, 1984). The b i r t h rate remained as high as 25-30 per thousand population during the period 1948 to 1953 and a s i g n i f i c a n t reduction i n the b i r t h rate began only a f t e r 1970. In the absence of in-migration to S r i Lanka, natural increase of population was the major factor i n the rapid population increase between 1953 and 1971. The post-independence rapid population growth had a major impact on the age structure of population and on the s i z e of the labour force, employment and unemployment i n the period af t e r 1971. 109 The age structure of the S r i Lankan population began to change s i g n i f i c a n t l y a f t e r independence. For example, the percentage of the t o t a l population below 14 years of age (dependant population) which was about 37 per cent at the time of independence increased to 39.7 per cent i n 1953 and 41.5 per cent i n 1963. Since 1971, however, the percentage contribution of t h i s age group began to decline and reached 35.2 per cent i n 1981 due to r e l a t i v e l y slow population growth between 1971 and 1981 (ESCAP, 1976 and the Department of Census and S t a t i s t i c s , 1976 and 1986c). The age group 15-29 (young labour force age population) exhibited d i f f e r e n t growth patterns during the post-independent period. The proportion of t h i s age group i n the t o t a l population was 25 per cent i n 1963, 28.4 per cent i n 1971 and 29.6 per cent i n 1981 (ESCAP, 1976 and the Department of Census and S t a t i s t i c s , 1976-1986). This meant that labour from the younger age groups has increased considerably i n recent years. The demographic changes during the post-independence period resulted i n two major changes i n the structure of population which are very relevant to our discussion. The f i r s t change was the s i g n i f i c a n t increase i n the number of dependants i n the f i r s t h a l f of the post-independence period and the second change was the increase of the labour force i n the l a t t e r period (see Diagram 4.1). From the available s t a t i s t i c a l information, the growth i n the population and labour force varied during the post-Diagram 4.1: The St r u c t u r a l Changes i n Population 1950-1980 THE STRUCTURAL CHANGES IN POPULATION 1950 - 80 I Source: 13ased on Information from Population Censuses, 1953 and 1981. I l l independence period(1) (Table 4.5). For the purpose of discussion i n t h i s section, the post-independence period i s divided into two parts, i) the period before 1963 and i i ) the period a f t e r 1963. During the f i r s t period (1946-53), the population grew by 3.4 per cent per annum while the labour force grew by 1.9 per cent. During the second period (1953-81) the population growth was 2.2 per cent per annum while the labour force grew at 2.5 per cent per annum. Such labour force growth would appear much higher during the second period i f the refined work force age group 15-59 i s taken into account (Table 4.4). The rapid growth i n the labour force during the second period was due to the entry of the younger age groups into the working population. The growth of the labour force i s determined not only by the changes i n the age structure but also by a number of socio-economic and c u l t u r a l factors. For example, male labour force p a r t i c i p a t i o n i s usually higher i n many developing countries. S r i Lanka i s no exception to t h i s pattern. However, i n recent years, the o v e r a l l female labour force p a r t i c i p a t i o n has been ra p i d l y increasing i n S r i Lanka. I t i s the younger women who p a r t i c i p a t e more i n the workforce. Apart from the demographic changes, changes i n female labour force are due to the changing r o l e of women and increasing female schooling i n recent years i n S r i Lanka (Isenman, 1980; Jones and Selvaratnam, 1974) . The differences between urban and r u r a l labour force p a r t i c i p a t i o n are not very obvious though a s i g n i f i c a n t 112 v a r i a t i o n i n work force p a r t i c i p a t i o n i s evident across the age groups p a r t i c u l a r l y among women i n S r i Lanka. The r o l e of r u r a l female p a r t i c i p a t i o n i n work i s considered i n a l a t e r section of t h i s chapter. F i n a l l y , the growth of the labour force has never corresponded with the growth of employment opportunities during the post-independence period (Table 4.5). As Table 4.5 indicates, the t o t a l number of unemployed population has been increasing p a r t i c u l a r l y during the l a s t two decades. In addition to open unemployment, the number of under-employed has been increasing although the census does not provide such information (see section 4.3.6 of t h i s chapter for more d e t a i l s ) . This increase was due to the gap between the growth of the labour force and the new employment created during t h i s period. The r e l a t i v e gap between the labour force and employment has varied between urban and r u r a l areas. The growth of the labour force was r e l a t i v e l y higher but employment creation was lower i n the r u r a l areas. Such d i s p a r i t y i n employment creation between urban and r u r a l areas could be seen i n decreasing unemployment trends during 1971-81 i n the urban areas when compared with the r u r a l areas (Table 4.5.). 113 4.2.2 Government P o l i c i e s , Employment Creation and Economic Performance During the Post-Independence Period Employment creation during the post-independence period was greatly influenced by the government's economic p o l i c i e s . Government po l i c y was influenced by i n t e r n a l p o l i t i c a l and external foreign exchange factors. This section looks at the impact of government p o l i c y i n employment creation and the employment s i t u a t i o n during the post-independence period with s p e c i a l emphasis on the v a r i a t i o n s between the periods before and a f t e r 1970. 4.2.2.1. The Period Before 1970 During t h i s period (1948-70), f i v e governments (excluding s h o r t - l i v e d interim governments) formed mainly by two major p a r t i e s , the United National Party (UNP) and the S r i Lanka Freedom Party (SLFP) ruled the country. The UNP's power base was mainly urban, English-educated, land-owners and the medium and large entrepreneur c l a s s , while the SLFP's power was based largely on the r u r a l , landless, Sinhala educated people. Both parties and governments were well supported by the Sinhalese population. The performance of the economy was uneven during t h i s period. U n t i l 1956, the economy performed reasonably well sustained by the accumulated s t e r l i n g reserves from war time. The GDP was growing at an annual rate of 5 per cent 114 and the country experienced a foreign exchange boom during the 1950-51 Korean war(2) period (Gunasekera, 1974). Between 1956 and 1960, a moderate downturn of export p r i c e s and r a p i d l y increasing import volume caused economic problems (Snodgrass, 1974:120). During 1960 and 1964, the foreign exchange c r i s i s deepened. S r i Lanka experienced an adverse trade balance which worsened over the years. The trade balance index which stood at 100 per cent i n 1958 declined to 86 per cent i n 1964 (Ponnambalam, 1980: Table 3.2). However the economy picked up again during the 1965-70 period. The o v e r a l l growth of GDP during t h i s period was 6.1 per cent per annum as against 3.7 per cent during 1960-66 (Corea, 1971:19). State p o l i c y had an impact on employment changes. F i r s t , the development of domestic a g r i c u l t u r e was given greater p r i o r i t y and within t h i s sector r i c e - c u l t i v a t i o n was given major attention i n development p o l i c i e s . The UNP government which ruled from 1948 to 1952 concentrated on large-scale a g r i c u l t u r a l development schemes including establishment of a g r i c u l t u r a l settlements i n the dry areas where abundant land resources were av a i l a b l e f o r r i c e c u l t i v a t i o n . According to Karunatilake (1971:20) between 1947 and 1951, nearly 5580 families were s e t t l e d i n the dry zone areas. For t h i s purpose, 118, 438 acres of crown land were all o c a t e d f o r major colonization schemes i n 1953 (Wickramasekara, 1985:Table 8.5). The largest multi-purpose 115 project, the Galoya scheme, was inaugurated i n 1949. According to Ponnambalam (1980:22) the amount invested i n the Galoya scheme was Rs 910 m i l l i o n which was equivalent to the t o t a l average annual government revenue i n the 1950s. In addition, a number of development plans were implemented i n the wet zone. For example, through v i l l a g e expansion schemes, about 309,000 acres of crown land were al l o c a t e d to the landless, by 1953 (Wickramasekara, 1985: Table 8.5). The a g r i c u l t u r a l development p o l i c i e s of the SLFP (1956-65) d i f f e r e d , to some extent, from those of the previous regime. The SLFP was also committed to domestic ag r i c u l t u r e development but concentrated on small-holdings p a r t i c u l a r l y i n the wet-zone areas. The SLFP also sponsored col o n i z a t i o n on a small scale i n the wet-zone highlands to a l l e v i a t e the problems of the landless (Swan, 1983:137). This government was responsible for The Paddy Lands Act  (1956) which made provision for securing tenure f o r paddy c u l t i v a t o r s and made a great impact on the r u r a l s o c i a l structure (Robinson, 1975 and Moore, 1985a). Another important stage i n the development of r i c e -c u l t i v a t i o n was introduced by the new UNP government which returned to power i n 1965. I t sponsored a plan with a new approach c a l l e d The A g r i c u l t u r a l Development Proposals 1966- 70. based on i n t e n s i f i e d agriculture b u i l t round a 'package' of inputs, a l l designed to move i n unison. The package included 1) high-yielding seed v a r i e t i e s , 2) chemical f e r t i l i z e r s , 3) tr a c t o r and other a g r i c u l t u r a l machinery, 4) 116 use of agro-chemicals, 5) increased extension services and 6) a g r i c u l t u r e c r e d i t s (Ponnambalam, 1980:62). Increased state investment i n domestic a g r i c u l t u r a l development has contributed to a s i g n i f i c a n t employment growth i n t h i s sector e s p e c i a l l y between 1953 and 1963. I t has been shown that the primary sector absorbed 35 per cent of the t o t a l employment increase between 1953 and 1971 (see Table 4.2). If we look at labour absorption more c l o s e l y at the 3 d i g i t a l group l e v e l (Table 4.6 Part A), i t was r i c e c u l t i v a t i o n which absorbed a large proportion of labour within the primary sector. The female employment creation i n a g r i c u l t u r e ( p a r t i c u l a r l y r i c e - c u l t i v a t i o n ) was 1/3 of the t o t a l increase i n agriculture employment. Apart from agriculture development p o l i c i e s , a number of welfare (anti-poverty) p o l i c i e s were implemented during the post-independence period. Wickramasekara (1985:250) l i s t e d such welfare p o l i c i e s as 1) land p o l i c i e s , peasant resettlement schemes, tenancy reform and land reform; 2) integrated r u r a l development programmes; 3) target-group oriented programme (food stamps scheme, supplemental feeding programmes, public assistance), 4) general minimum needs programmes (food subsidies, education fees and health p o l i c i e s ) . Of these welfare programmes, education and health had a far-reaching impact on society and i n p a r t i c u l a r on the employment s i t u a t i o n . F i r s t , free education was introduced i n 1945. Since independence there had been a Table 4.6: Ten Industry Divisions i n Ranking Order ( 3 D i g i t a l Group) Which Show Increase i n Total Employment, 1953-71 and 1971-81. a) Period 1953-71 Employment Change Group Industry D i v i s i o n Total Rural % Share No. Increase Increase (Rural) 011/012 Agri.+Livestock Produc. 188877 154412 46.1 831 Education Service 68281 39446 11.8 400 Construction 46875 32160 9.6 810 Pub. Admi. and Defence 46543 25313 7.6 611 Land Transport 40436 14287 4.3 030 Fishing 39340 29988 9.0 510 Wholesale Trade 27600 15821 4.7 531 Restaurants, Cafes 25215 8401 2.5 833 Medical, Dental 22355 6559 2.0 231 Manu. of Wood 14944 8400 2.4 Total 520466 334787 100.0 b) Period 1971-81 520 R e t a i l Trade 81113 49026 22 . 8 810 Pub. Admi. and Defence 51376 40769 19. 0 831 Education Service 44572 33902 15. 8 222 Manu. of Wearing Apparel. 31260 12270 5. 7 400 Construction 30407 20809 9. 7 030 Fishing 19245 16034 7. 5 710 Fi n a n c i a l I n s t i t u t i o n 16974 9067 4. 2 532 Hotels, Rooming Houses.. 16898 5727 2 . 7 611 Land Transport 14863 15754 7. 3 211 Food Manufacturing 14339 11516 5. 3 Total 321047 214874 100. 0 Source: Calculated from Census of Population, 1953, 1971 and 1981. Department of Census and S t a t i s t i c s , 1960, 1967b, 1976 and 1983b. 118 rapid expansion of educational f a c i l i t i e s at a l l l e v e l s . Government expenditure on education increased nearly f i v e -f o l d during the f i r s t two decades from Rs. 1057 m i l l i o n i n 1950/51 to 5120 m i l l i o n i n 1967/70. School enrolment increased during the same period from 1.336 m i l l i o n to 2.679 m i l l i o n and the number of teachers increased from 39,200 to about 100,000 (The Government of Ceylon, 1971:109). As a r e s u l t , educational f a c i l i t i e s were avail a b l e even i n the remote areas of S r i Lanka. Health f a c i l i t i e s were also improved. During t h i s period an average of 2 per cent of the GDP and 7 per cent of t o t a l government expenditure was on health-related f a c i l i t i e s . The expansion of the service sector by the state led to an increase i n the number of state employees i n t h i s sector. According to the population census information, the second most important sector i n the labour absorption was the service sector during the,period under review (see Table 4.6). Within the service sector, the educational services alone absorbed 27 per cent (or 68,281 persons) of the t o t a l employment increase. In s p i t e of the World Bank recommendation i n favor of the establishment of small-scale i n d i v i d u a l entrepreneurs (Karunatilake, 1971:32), UNP governments which were i n power before 1955 did not attempt to e s t a b l i s h a sound manufacturing sector i n S r i Lanka. Though the SLFP government i n 1956 proposed a comprehensive economic development programme i n which the r o l e of the manufacturing 119 sector was stressed, such a plan never materialized due to the p o l i t i c a l problems at the time. However, a f t e r 1956, the government implemented a deliberate p o l i c y of i n d u s t r i a l i z a t i o n i n which the government sector i t s e l f assumed the chief r o l e i n s e t t i n g up heavy in d u s t r i e s (Balakrisnan, 1977) which led to the rapid employment increase i n state owned i n d u s t r i a l corporations (Laksman, 1979). The foreign exchange c r i s i s prevented any further development i n t h i s regard. The manufacturing sector before 1970 thus contributed a r e l a t i v e l y small proportion (around 10 percent) to the GDP (Table 4.1) and presumably provided employment to a lesser degree compared with other sectors of the economy. The patterns of labour absorption during 1953-71 thus confirm that the impact of the post-independence government p o l i c i e s were very s i g n i f i c a n t i n the o v e r a l l employment growth. The state's i n t e r e s t i n domestic a g r i c u l t u r a l development and welfare has contributed to a s i g n i f i c a n t proportion of employment growth i n paddy c u l t i v a t i o n and s e r v i c e - r e l a t e d a c t i v i t i e s during the f i r s t period under review. I t i s important to assess the q u a l i t a t i v e performance of employment-creation during the period under review. The annual growth of r e a l value added per worker i n a g r i c u l t u r e a c t i v i t i e s was 1.3 per cent between 1963 and 1973. This i s much less than the rate for industry, construction and service a c t i v i t i e s (Muthubanda, 1975: Table 2). Furthermore, 120 within the area of a g r i c u l t u r a l a c t i v i t i e s the r e a l value added per worker i n r i c e - c u l t i v a t i o n was Rs 73 i n 1971 while for other a g r i c u l t u r a l a c t i v i t i e s the rates were much higher (e.g., coconut Rs 1137, rubber Rs 204 and tea Rs 135) (Muthubanda, 1975: Table 3) . Rice c u l t i v a t i o n - r e l a t e d workers were the lowest paid because of low pric e s paid for paddy and the large inflow of labour into the r i c e a g r i c u l t u r a l sector. There were several other c r i t i c i s m s of the nature of employment creation during t h i s period. F i r s t , employment creation was biassed towards r i c e - c u l t i v a t i o n and c u l t i v a t o r s . The highland crop c u l t i v a t o r s (e.g., onion, c h i l l i e s and other chena crops) received no encouragement from government p o l i c i e s . Such exclusion s e r i o u s l y affected the r u r a l Sinhalese c u l t i v a t o r s and the Jaffna Peninsula commercial farmers (Ponnambalam, 1980; Moore, 1985a). The second c r i t i c i s m was that the welfare p o l i c i e s which were vigorously promoted during t h i s period did not benefit those who were r e a l l y poor (Isenman, 1980; Ponnambalam 1980; Swan, 1983; Moore, 1981b; Richards and Gooneratne, 1980). Instead, the welfare of middle and lower middle c l a s s people was the aim of these p o l i c i e s (Swan, 1983). On the whole, the period under review was characterized by r a p i d l y increasing unemployment e s p e c i a l l y among educated youth, increasing landlessness among the r u r a l poor and increasing socio-economic tension i n the country. 121 4.2.2.2 The Period 1970-81 Unemployment rose rapidly during the nineteen s i x t i e s because of slow economic growth due to a number of s t r u c t u r a l problems. Increase i n the unemployment rate reached i t s peak l e v e l i n the early seventies. According to a v a i l a b l e s t a t i s t i c s , open unemployment increased from 340,000 persons (10.5 % of the labour force) i n 1959/60 to about 546,000 persons (13.9% of the labour force) by 1969/70 (Kearney, 1975: 735). The majority of the unemployed were young (15-25) and had received some education. This was a d i f f i c u l t challenge i n the nineteen seventies. The f i r s t period (1970-77) begins with the c o a l i t i o n government under the leadership of Mrs. Bandaranaike (SLFP). Two other p a r t i e s which were i n the c o a l i t i o n governments were the Lanka Sama Samaja Party (LSSP) and the Communist Party (CP). The p o l i c i e s of t h i s government leaned towards the l e f t . I t s f i v e year plan presented i n 1971 was an attempt to face up t o t h e c r i t i c a l economic s i t u a t i o n i n the country. The serious economic problems eventually contributed to youth unrest that manifested i n a v i o l e n t form i n the insurrection of 1971. The youth u p r i s i n g i n 1971 has been analysed from a number of perspectives, s o c i a l and c u l t u r a l (e.g., Kearney, 1975 and Obeyesekere, 1974) and p o l i t i c a l (e.g., Wilson, 1982 and Keerawella 1980). I t i s generally agreed that the main reason for the u p r i s i n g was the rapid increase i n the number of unemployed youth. 122 The 1971 uprising compelled the l e f t - o r i e n t e d c o a l i t i o n government to implement quickly some r a d i c a l reforms i n the economic structure i n order to ease increasing unemployment and landlessness. The 1972 Land Reform Lav was one of these. This law put a c e i l i n g on the ownership of land by i n d i v i d u a l s and others. By implementing t h i s law, the government was able to acquire over 200,000 hectares of land located mainly i n the wet and intermediate c l i m a t i c zones and r e d i s t r i b u t e these for the benefit of the poor. The alienated lands were given to i n d i v i d u a l s (5%), co-operatives and c o l l e c t i v e s (45%) and to government agencies and corporations (50%) (Swan, 1983:143). The largest proportion of the acquired lands remained i n government hands. The government was also able to use these lands f o r youth settlement schemes p a r t i c u l a r l y for educated youth. At the end of 1974, about 51 such youth settlement schemes had been established and about 4500 youths were given d i r e c t employment (Sanderatne, 1977: 293). In the process of a g r i c u l t u r e development and employment, the government also inaugurated the diversion of Mahaweli water to dry zone areas i n 1976 at P o l g o l l a . The colonization of land under the development schemes was encouraged. The government's Five Year Plan 1972-76 proposed a plan i n which a t o t a l of 269,100 acres of new lands were to be given i r r i g a t i o n i n the dry zone areas (People's Bank, 1986: Table 3) . In addition, greater emphasis was given to the i n d u s t r i a l 123 sector to increase employment absorption. F i n a l l y , the government hired as many of the unemployed population as possible into i t s cadres. While the c o a l i t i o n government was t r y i n g to ease the d e t e r i o r a t i n g employment problem, several external and i n t e r n a l factors were making i t harder for the government. Herring (1987:327) has summarized those factors as slow growth, a u s t e r i t y budgets, mounting i n t e r n a l and external debts and high unemployment. He also argued that such economic c r i s e s were largely external i n o r i g i n . The f i r s t r e a l shock to the S r i Lankan economy came from the o i l - p r i c e hike i n the i n t e r n a t i o n a l market. O i l prices (in the international market) increased by 500 per cent between 1973 and 1974 (Fernando, 1986). S r i Lanka as a dependent country for i t s o i l on the world market paid high p r i c e s f o r o i l and a l l o i l - r e l a t e d products. Many researchers have shown that the i n t e r n a t i o n a l c a p i t a l i s t economy suffered i t s f i r s t generalized recession since the end of World War II which "brought down production and increased unemployment and pushed-up the cost of l i v i n g i n the developed countries leading to an upward movement of export p r i c e s " of those countries (Fernando, 1986: 17). Such an increase had a disastrous impact on S r i Lanka 1s economy which dependent on imports of e s s e n t i a l raw materials, spare parts and c a p i t a l goods (Moore, 1985b:1088). As a r e s u l t , S r i Lanka experienced the worst terms of trade between 1974 and 1975 (Herring, 1987: Table 124 2) . S r i Lanka's foreign debt doubled during 1970 and 1975 and the debt service r a t i o reached an a l l - t i m e record of 2 3 per cent (Fernando, 1986: 17) . Internally, the agriculture sector experienced the worst drought during 1975/75 and 1975/76 p a r t i c u l a r l y i n 1975 Maha season (People's Bank, 1978). The drought which was responsible for more than 90 per cent of the crop f a i l u r e during t h i s period severely affected food production. Rice production, for example, decreased by 2.1 per cent per annum and the area under r i c e - c u l t i v a t i o n and y i e l d s also declined by 1.4 and 0.7 per cent per annum between 1971 and 1976 (People's Bank, 1978: Table 5). As a r e s u l t of the external and i n t e r n a l constraints, the rate of growth of the S r i Lankan economy was the lowest since independence. The annual growth rate of GDP was 2.9 between 1970-77 (Bhalla and Glewwe, 1986: Table 5). The growth of domestic a g r i c u l t u r e was even worse during t h i s period (Table 4.1 and 4.2). The government attempted to reduce the increasing economic c r i s i s by adopting a number of a u s t e r i t y measures during the d i f f i c u l t period. For example, the government imposed r e s t r i c t i o n s on food and other imports. A s i g n i f i c a n t reduction i n food imports and the decline i n l o c a l food production aggravated the food a v a i l a b i l i t y s i t u a t i o n i n the country as a whole. Limited production led to increased p r i c e s of food and other consumer items which affected severely the wage earners who constituted more than 125 two t h i r d s of the t o t a l employed population i n S r i Lanka. Such a s i t u a t i o n made the c o a l i t i o n government unpopular at that time and resulted i n a landslide v i c t o r y f o r the UNP at the 1977 general e l e c t i o n . I t i s important to note that some of the a u s t e r i t y measures introduced by the c o a l i t i o n government encouraged growth i n a number of r u r a l based small-scale production units during t h i s period. The "food production war" declared by the government to increase l o c a l food production was, to a large extent, to encourage the producers (farmers) by o f f e r i n g higher prices for t h e i r products. Secondly, the number of rural-based small-scale industries such as jaggery (confectionery), and non-metallic manufacturing mushroomed and provided employment for a s i g n i f i c a n t number of the r u r a l poor (ILO, 1983b) . During the l a s t period of the c o a l i t i o n government, the o v e r a l l economic s i t u a t i o n improved. For example, the terms of trade was improving (Moore, 1985b: Table 1), food production was picking up and a u s t e r i t y measures began to work p o s i t i v e l y towards better economic performance. However, the e f f e c t s were f e l t too l a t e f o r the c o a l i t i o n government to win at the e l e c t i o n . In 1977 at the beginning of the Second Period (1977-81) , the new government (UNP) came to power with a two-t h i r d s majority i n the Parliament. The economic growth which had already started to improve accelerated during the early period of t h i s government. The annual growth rate of GDP reached i t s h i s t o r i c high l e v e l of 8.2 per cent per annum i n 126 1978. Though the rate declined to 6.2 per cent per annum i n 1979, i t remained around 5 to 6 per cent per annum u n t i l 1981 (Table 4.1). How was such a high rate of growth achieved immediately af t e r the government came to power? What factors contributed to t h i s growth? The new government introduced a number of economic reforms immediately af t e r i t came to power. Such economic reforms were entered on "exports and investment" which were i d e n t i f i e d as the key sectors to activate i n order to stimulate economic growth. To f a c i l i t a t e t h i s , a l l r e s t r i c t i o n s on imports and foreign exchange were removed. In e f f e c t , an "open economy"(3) p o l i c y was adopted i n place of the "closed economy" p o l i c y of the previous seven years" (Gafoor and Kooyman, 1985: 493). Such an "open economy" p o l i c y contains the following elements: 1) the a b o l i t i o n or l i b e r a l i z a t i o n of foreign exchange and import controls 2) the devaluation of the exchange rate 3) domestic a n t i -i n f l a t i o n a r y programmes which increased controls i n the banking system and the control of government and foreign investment (Fernando, 1986: 18-19) 4) a reduction i n s o c i a l welfare p o l i c i e s - health, education, etc. as well as the r i c e subsidy & kerosene and i n e l i g i b i l i t y f o r "food stamps". These "open economy" p o l i c i e s resulted i n the s e c t o r a l growth of the economy during the f i r s t two years since implementation. Between 1978 and 1979, trading, construction and manufacturing grew at a rate of 26.3, 15.4, 127 and 10.1 per cent respectively. (People's Bank, 1980: Table 2). However, such high growth movements did not l a s t f o r a long period and the growth performance began to slow down af t e r 1980. Taking the high growth period (1978-79) f i r s t , a number of external and int e r n a l factors have contributed to such type of growth. F i r s t , the highest GDP growth i n trading-related a c t i v i t i e s during t h i s period was due to the removal of r e s t r i c t i o n s on imports. Such an opportunity enabled l o c a l entrepreneurs to engage i n a number of small and medium l e v e l trade-related a c t i v i t i e s which were considered to be an "easy way" of money-making. Improving terms of trade (since 1976) and the assistance from the i n t e r n a t i o n a l f i n a n c i a l agencies (IMF and World Bank) helped to increase the import lev e l s (Herring 1987:329). Secondly, the l i b e r a l i z e d approach of the new government towards migration and employment overseas and the massive demand for expatriate labour f o r the development a c t i v i t i e s i n the Middle East attracted labour from S r i Lanka to Middle Eastern countries (ILO/ARTEP, 1985: 1) . Such overseas employment was available only since 1978. For example, according to an estimate the annual flow of Middle Eastern employment increased from 2500 persons i n 1976 to 50,000 i n 1979 and 70,000 i n 1980 (ILO/ARTEP : 1985: Table). As a r e s u l t , remittances from Middle East employment increased from Rs 198.4 m i l l i o n i n 1979 to Rs 2044.3 m i l l i o n i n 1981. An ILO/ARTEP study on labour migration to the 128 Middle East indicated that i n 1983 such remittances reached a figure which was almost second to tea as a foreign exchange earner (1985: 119). Such out-labour migration has made a great impact not only on l o c a l labour s i t u a t i o n but also on l o c a l consumption and investment as well. Thir d l y , during the same period, the a r r i v a l of t o u r i s t s increased rapidly due to the increasing a t t r a c t i o n of S r i Lanka to the Western t o u r i s t s and the constant e f f o r t of the government to b u i l d t h i s industry as a source of foreign exchange earnings. I t resulted i n tourism-oriented employment opportunities. Fourthly, the new government encouraged foreign investment by l i b e r a l i z i n g foreign exchange and devaluation the S r i Lankan rupee. For t h i s purpose, an Investment Promotion Zone (IPZ) was created i n 1978 and the foreign investors were i n v i t e d to es t a b l i s h f a c t o r i e s i n t h i s zone to produce goods exclusively for export (Gaffoor and Kooyman, 1985: 493). A special commission, the Greater Colombo Economic Commission (GCEC), was created with wide powers to implement such a plan. According to a v a i l a b l e s t a t i s t i c s , a t o t a l of 147 projects were approved by GCEC by 1981. The average si z e of projects approved rose from a figu r e of Rs 23 m i l l i o n per project i n 1978 to Rs 54 m i l l i o n i n 1981. The proportion of garment industry i n t h i s plan was very high (around 40%) during the f i r s t three year period.(4) A t o t a l of 14,742 people were d i r e c t l y employed i n t h i s export processing zone and the majority (50%) of 129 them were employed i n the garment industry. The people employed i n the garment industry were mainly female (90%) and semi-skilled labourers (Ramanayake, 1983). F i f t h l y , the new government also undertook a large development programme for i r r i g a t i o n and hy d r o e l e c t r i c power generation. The UNP government decided to accelerate the Mahaweli Development Project and complete i t i n a period of s i x years under the Accelerated Mahaweli Development Programme. Co-operation from the i n t e r n a t i o n a l community was sought for c a p i t a l requirements of t h i s massive project and the response from the developed countries was encouraging. The investment on the Mahaweli Development Project increased several times between 1978 and 1981. F i n a l l y , massive urban development and housing programmes (100,00 houses i n f i v e years) too were undertaken by the government. As a r e s u l t of the establishment of the export processing zone, tourism, Mahaweli development and housing development, the construction industry grew r a p i d l y during t h i s period. The construction industry was second to trade a c t i v i t i e s (15.4%) i n GDP between 1978 and 1979. Such rapid growth i n construction suddenly declined i n 1981 due to the completion of those works. Though the growth of the i n d u s t r i a l sector was r e l a t i v e l y higher than that of the a g r i c u l t u r a l sector, i t s performance was not as high as expected. Much of the growth that occurred i n the i n d u s t r i a l sector was i n urban areas which was stimulated by 130 import l i b e r a l i z a t i o n . Employment growth during the period under review (1971-81) i s associated with the socio-economic and p o l i t i c a l development of t h i s country at that time. From the a v a i l a b l e information, the impact of the post-1977 trade l i b e r a l i z a t i o n p o l i c i e s have had a s i g n i f i c a n t p o s i t i v e impact on the employment s i t u a t i o n . We noted e a r l i e r that the l i b e r a l i z e d trade p o l i c i e s encouraged trade-related a c t i v i t i e s which grew at a rapid rate a f t e r 1977. The employment opportunities as a r e s u l t of t h i s have also increased i n trade-related a c t i v i t i e s . As the recent census information (1971 and 1981) indicate (see Table 4.6 Part B) , the r e t a i l trade sector absorbed 81,113 persons and emerged as the highest employment absorber during t h i s period. In addition, the trade p o l i c i e s have also d i r e c t l y and i n d i r e c t l y contributed to the employment growth i n other sectors such as manufacturing and transportation. For example, as Table 4.6 Part B indicates, the manufacture of wearing apparel increased by 31,260 persons. These types of manufacturing a c t i v i t i e s quickly emerged as the r e s u l t of l i b e r a l i z a t i o n of import markets. A number of urban based ( p a r t i c u l a r l y Colombo) and small and medium industries used labour intensive methods (cheap labour) to assemble and manufacture a number of imported consumer products. The development p o l i c i e s adopted by the state at the time also contributed to employment growth. In t h i s 131 respect, the employment opportunities i n construction industry p a r t i c u l a r l y i n the Mahaweli development areas, i n investment promotion areas, i n state housing projects and i n urban development s i t e s absorbed more than 30,000 employees during the period under review (see Table 4.6). The service sector, p a r t i c u l a r l y education and r e l a t e d welfare sectors, employed a large number of people (Table 4.6) which showed the continuous concern of the government for the electorate (Moore, 1983 and Herring, 1987). F i n a l l y , an important s t r u c t u r a l change which was seen from the pattern of labour absorption between 1971 and 1981 was the declining significance of the a g r i c u l t u r e sector as the dominant sector i n labour absorption (Table 4.6) . Though the UNP's "open market" p o l i c i e s encouraged some of the sectors of the economy to expand and employ more people, such p o l i c i e s also contributed negatively to the labour absorption i n some other sectors which were mostly rural-based. The removal of import r e s t r i c t i o n s badly h i t the small-scale r u r a l industries which produced " i n f e r i o r type" of products. Some of the badly e f f e c t e d r u r a l i n d u s t r i e s were the handloom industry, beedi making and jaggery making. Table 4.7 indicates the d e c l i n i n g state of some of these r u r a l industries which s i g n i f i c a n t l y reduced 1 the number of people employed i n RNA r e l a t e d - a c t i v i t i e s . 132 4.2.2.3 The Period After 1981 The UNP has remained i n power u n t i l the w r i t i n g of t h i s t h e s i s (1988) . The "open market economy" p o l i c y has remained. However, the performance of the economy has s i g n i f i c a n t l y declined. For example, the average annual GDP growth has declined from 8.2 per cent per annum i n 1978 to around 4 per cent i n 1988 (Table 4.1). A number of other economic indicators (per capita GDP and GNP) as well confirmed d e c l i n i n g economic performance. The poor performance of the economy has been att r i b u t e d to external and i n t e r n a l challenges which the S r i Lankan economy has faced since 1981. The trade balance has not been favorable since 1981. The increase i n the prices of import . goods and a decrease i n the export prices have caused an increasing trade d e f i c i t which grew by 400 per cent between 1978 and 1986 (Ministry of Finance and Planning, 1987: Table 1.6). The balance of trade d e f i c i t accelerated by dependence on foreign funding. On an average, over 54 per cent of the o v e r a l l budget d e f i c i t was foreign-financed (Ministry of Finance and Planning, 1987: 13). The UNP government came under increasing pressure from the i n t e r n a t i o n a l finance agencies to cut the spending on subsidies. Though the government t r i e d to do t h i s p a r t i a l l y , i t was not able to implement these p o l i c i e s for fear of p o l i t i c a l consequences (Herring, 1987). The second external factor was the 133 Table 4.7: Ten Industry Divisions i n Ranking Order ( 3 D i g i t a l Group) Which Show Decline i n Total Employment, 1953-81 and 1971-81. a) Period 1971-81 Employment Decline Group Industry D i v i s i o n No. (ISIC) 221 Manufacture of Text i l e s 853 Repair Service n.e.c. 531 Restaurant Cafes... 214 Tobacco Manufacturing 852 Laundries, ... 510 Wholesale Trade 612 Water Transport 832 Research 282 Manu. of Machinery 021 Forestry Total b) Period 1953-81 853 Repair Service n.e.c. 732 Business Service 852 Laundries, 284 Manu. of Trans. Equipment 232 Manu. of Furniture and.. 839 Other Social & Related Communi. Service 731 Real Estate 835 Business ,Professional and Labour Association 221 Manu. of T e x t i l e s 290 Other Manu. Industries Total Source: Calculated from Population Census 1953, 1971 and 1981. Department of Census and S t a t i s t i c s , 1960, 1967b, 1976 and 1983b. Absolute Total Total Total Rural Rural Decline Decl. Decl. (%) -30408 -31553 -48.4 -15353 -7038 -10.7 -11176 -8290 -12.7 -9900 -8263 -12.6 -9654 -7316 -11.2 -7156 -2122 -3.3 -3246 +1171 +1.8 -1404 -1550 -2.4 -651 +93 +0.1 -593 -346 -0.5 -89541 -65214 100. 0 -73073 -52027 -41.5 -25368 +471 +0.4 -17881 -15830 -12 . 6 -12931 -6714 -5.5 -12776 -11451 -9.2 -7254 -7321 -5.8 -7167 -4140 -3.3 -6822 -4791 -3.8 -4910 -17438 -13.9 -2251 -6053 -4.8 170433 -125294 100.0 134 decreasing terms of trade i n export processing a c t i v i t i e s . The government could not a t t r a c t more investors to the export processing a c t i v i t i e s which would give the S r i Lankan economy a boost. As Ramanayake (1983) indicated, the garment industry which was the largest contributor to investment and employment i n the export processing zone', began to decline a f t e r 1979. Internally, S r i Lanka faced the worst challenge to i t s existence as a united country. Since 1983, the armed m i l i t a n t Tamil youth has been f i g h t i n g f o r an independent homeland - Tamil Eelam. S r i Lanka faced t h i s challenge by increasing i t s defence budget from 3.2 per cent i n 1982 to 13.6 per cent i n 1986 of the t o t a l budget expenditure. The government too channelled a l l i t s resources into the "war". A l l development projects were postponed or cancelled. On the whole, economic growth slowed down s i g n i f i c a n t l y since 1983. The i n t e r n a l i n s t a b i l i t y badly h i t the t o u r i s t industry which was emerging as one of the major foreign exchange earners since 1978. The number of t o u r i s t s s i g n i f i c a n t l y declined and the t o u r i s t industry and employment on the whole faced a grave s i t u a t i o n . Secondly, several droughts affected food production. A minor drought i n 1983 and a major one which lasted two years appreciably reduced a g r i c u l t u r a l output and income i n 1986 and 1987. I t was estimated that about 2.4 m i l l i o n people i n eight d i s t r i c t s were affected by t h i s drought. Apart from the drought, most of the c u l t i v a b l e lands i n the Northern and Eastern 135 provinces were not cu l t i v a t e d due to the "war" s i t u a t i o n i n those areas since 1983. Another economic a c t i v i t y which was badly affected by the "war" i n the Northern and Eastern part of S r i Lanka was the f i s h i n g industry. In short, the employment s i t u a t i o n during the post-1981 period has not been good. The "employment boom" i n the construction industry was almost over with the completion of major construction projects such as export processing zone and housing completed i n 1980. Secondly, Middle Eastern employment and income slowed down since 1985 due to decreasing o i l prices i n the international market and the Iran-Iraq war. In d u s t r i a l growth was concentrated only on selected sectors - t e x t i l e s and chemical products. Trade a c t i v i t i e s continued to be dominant i n employment growth but i t i s recognizable that the qual i t y and quantity of employment creation i n t h i s sector was poor. The only v i s i b l e area where labour was s i g n i f i c a n t l y absorbed was the m i l i t a r y sector. 4.2.3 Over-View of Trends i n Labour Absorption During the Post-Independence Period The discussion on labour absorption during the post-independence period i n S r i Lanka i d e n t i f i e s the following patterns. A. The structure of the economy has changed slowly 136 but at the sectoral l e v e l , s i g n i f i c a n t growth has occurred i n the domestic agriculture and service sector while plantation agriculture sector has declined. B. A s i g n i f i c a n t s p a t i a l labour r e d i s t r i b u t i o n did occur with almost 100,000 persons r e - s e t t l e d i n the i r r i g a t e d area of the dry zone over a 50 year period (193 0-80) . C. The government welfare sector (education, health-r e l a t e d infrastructure) emerged as the second most important sector of employment absorption. D. The public sector (government sector) became the major source for employment creation and the government remained the major employment creator. The 1972 Land Reform Law, the establishment of a public i n d u s t r i a l sector, and the expansion of the government bureaucratic machine f a c i l i t a t e d such employment creation. E. Most of the employment created during t h i s period (e.g., a g r i c u l t u r e and some r u r a l industries) were low labour productive occupations. F. The t r a d i t i o n a l r u r a l sectors (service-oriented sectors and blacksmiths) were disappearing due to the increasing market penetration of manufactured goods into the r u r a l economy. G. The sudden population growth between 1948 and 1963 and the subsequent labour force increase since l a t e 1965 have contributed to the increasing pressure on the a v a i l a b l e land resource i n an a g r i c u l t u r a l country and created under-137 employment and open unemployment. H. The s p a t i a l and sectoral employment changes during the study period was largely due to the state's employment and economic p o l i c i e s . 4.3 Employment and Unemployment i n Rural Areas Structural changes i n employment are evident at the sub-sectoral l e v e l . Such changes were more prominent i n the r u r a l areas (Table 4.2). This section looks at the changes i n labour absorption at the sub-sectoral l e v e l i n the r u r a l areas. The purpose of t h i s section i s to f i n d out whether there have been s i g n i f i c a n t changes i n labour absorption at the sub-sectoral l e v e l and also to f i n d out the impact of such employment s t r u c t u r a l changes on labour and the labour market s i t u a t i o n i n the r u r a l areas. Such an analysis w i l l provide us with a basis for our discussion of the growth of non-farm a c t i v i t i e s i n r u r a l S r i Lanka. More than two-thirds of the 5 m i l l i o n labourers i n 1981 l i v e d i n the r u r a l areas. Nearly 17 per cent of the t o t a l r u r a l labour force was described as open unemployed. The growth rates of population and the labour force were r e l a t i v e l y higher while employment creation was lower i n the r u r a l areas. The v a r i a t i o n s i n the growth of s e c t o r a l labour absorption were evident between r u r a l and urban areas and also they were i d e n t i f i e d i n the movement of labour towards 138 domestic agriculture, service sector and i n f r a s t r u c t u r e -r e l a t e d a c t i v i t i e s i n r u r a l areas (Table 4.3.). Due to the open-market p o l i c y of the post-1977 government, the r u r a l employment s i t u a t i o n has been badly affected i n the recent years. The following section discusses the labour absorption within and between the sub-sectors of r u r a l economy and also i d e n t i f i e s the r u r a l population which has not benefited from employment creation and which has been affected by p o l i c y reforms. 4.3.1 Agriculture Sector Within the a g r i c u l t u r a l sector, plantation a g r i c u l t u r e which includes the major crops of tea, rubber, coconut comprised 37 per cent of the t o t a l a g r i c u l t u r e employment i n 1981. Of t h i s , the tea plantation sector employed more than two thi r d s of the t o t a l p l a n t ation employed population. The proportion of female p a r t i c i p a t i o n i n t h i s a c t i v i t y i s r e l a t i v e l y high compared with other economic a c t i v i t i e s due to the nature of tea c u l t i v a t i o n . In addition, more than two-thirds of tea plantation workers were Indian Tamil i n o r i g i n p a r t i c u l a r l y at the beginning of independence (People's Bank, 1980b). Total employment i n t h i s sector grew less than 10 per cent i n the 25 years between 1946 and 1971. Between 1971 and 1981, the t o t a l number of employed population declined by 60724 persons. More than 50 per cent of such decline was among female 139 workers (32556 persons) (Department of Census and S t a t i s t i c s , Various Years). The majority of the people who l o s t t h e i r employment were of Indian Tamil o r i g i n . There were a number of factors contributing to the slow growth i n employment i n the tea sector between 1946 and 1971. Prices of tea i n the international market fluctuated for a long time. (5) This and other factors resulted i n a lack of incentive to the development of t h i s sector during the post-independence period. However, the tax revenue from tea exports was invested i n domestic a g r i c u l t u r e . The decline i n the absolute number of the employed population i n the tea sector between 1971 and 1981 was mainly due to the 1972 Land Reform Law which displaced a s i g n i f i c a n t number of tea workers. Though the Land Reform Law guaranteed land and employment for the people who worked on the land, the people of Indian Tamil o r i g i n were not given land because they were not c i t i z e n s and they were displaced from tea plantations. Of the group of displaced tea estate workers, those of Indian o r i g i n were sent back to India under the Sirima-Shastri Pact, others migrated to the Northern and Eastern part of S r i Lanka where they found a g r i c u l t u r a l labour employment and many others ended up i n the informal sector of the urban economy. The domestic food crop sector consisted of paddy and other food crops. The proportion of the employed population i n paddy was about 78 per cent of t o t a l domestic a g r i c u l t u r a l l y employed population. Paddy i s p r i m a r i l y a 140 small-holding sector and 44 per cent of the paddy holdings are below one acre. One t h i r d of the paddy lands were under some form of share cropping according to the 1982 a g r i c u l t u r e census. This sector was c l o s e l y associated with " r u r a l l i f e " and t r a d i t i o n s and culture of S r i Lanka. Therefore, the paddy sector was given much attention i n the development plan during the post-independence period. Such attention has not only contributed to the development of t h i s sector but also to an increase i n the t o t a l labour absorption capacity. The labour absorption i n paddy c u l t i v a t i o n has varied between 1946 and 1981. A s i g n i f i c a n t increase i n labour absorption was noted before 1971. But between 1971 and 1981, the absolute number employed i n t h i s sector declined. I f we take the period of increased labor (1946-71) f i r s t , the largest share of labour absorption i n t h i s sector occurred between 1953 and 1963. We noted e a r l i e r that some of the f a c t o r s such as heavy investment i n i r r i g a t i o n works, in f r a s t r u c t u r e and dry zone colonization schemes contributed to the post-independence domestic agricu l t u r e development. If we take only the period between 1953 and 1965, about 355,000 acres of crown lands were allocated to domestic ag r i c u l t u r e and 80 per cent of those lands were under the major col o n i z a t i o n schemes (Wickramasekara, 1985 Table: 8.5). The people who mostly benefited from t h i s development were landless wet-zone peasants who were mostly Sinhalese. A number of factors contributed to the decline i n 141 the labour absorption i n paddy c u l t i v a t i o n a f t e r 1971. F i r s t , increasing fragmentation of land reached the point where the marginal peasants had to f i n d other jobs. A number of studies confirmed an increasing landlessness i n the r u r a l areas (Hameed, et a l . , 1977; Morrison, 1979; ILO/ARTEP, 1986b and others). Secondly, S r i Lanka recorded a very high l e v e l of farm mechanization i n the use of t r a c t o r s fo r land preparation and threshing i n paddy sectors (ILO/ARTP, 1986b: VII). As a recent ARTEP study (1986: Table A. 6) indicated, such usage of fourwheeler t r a c t o r s rose from 10,736 i n 1970 and two-wheelers from 1311 i n 1973 to 23,229 and 21,496 i n 1983 respectively. Such an increase i n t r a c t o r usage, i n fact, increased very s i g n i f i c a n t l y during the post 1979 period. The study also indicated that the trade-related incentives were responsible for high l e v e l importation of t r a c t o r s . I t i s obvious that the increasing t r a c t o r u t i l i z a t i o n would displace a s i g n i f i c a n t number of paddy c u l t i v a t i o n labourers during the post 1977 period. Thir d l y , there was a marked expansion i n transplanting i n paddy c u l t i v a t i o n since 1961 which has s i g n i f i c a n t l y increased the female labour inputs i n r i c e - c u l t i v a t i o n . In recent years, however, a s h i f t i n the new v a r i e t y of seeds (shorter period) which did not need transplanting has affected the female labour absorption i n t h i s a c t i v i t y . F i n a l l y , the reluctance of the young educated to work i n the paddy f i e l d s i s also a contributing factor. Though the t o t a l employed persons i n the a g r i c u l t u r e 142 sector has declined i n recent years, the non-rice food crop sector (manioc-cassava, maize, c h i l l i e s , red onions and others) has shown a s i g n i f i c a n t increase i n labour absorption. The number of employed i n non-rice food crop c u l t i v a t i o n has increased from 231,500 to 3 60,2 00 between 1971 and 1981. Much of the labour increase occurred i n the vegetable growing sector, c h i l l i e s , onions, cowpeas, sesame. In addition to t h i s , the labour absorption i n l i v e s t o c k farming, p a r t i c u l a r l y i n poultry, also increased (by 1977 persons between 1971-81). These patterns of labour absorption i n agriculture indicate the increasing d i v e r s i f i c a t i o n of domestic agriculture i n recent years. However, i t i s the farmers who are i n s t i t u t i o n a l l y supported who benefit from t h i s development. 4.3.2 The Manufacturing Sector The manufacturing sector contributed 14 per cent of the t o t a l GDP and provided about 10 per cent of t o t a l employment i n 1981 (Table 4.1). The growth of t h i s sector has not been very impressive since independence. The f i r s t attempt to develop a sound manufacturing sector i n S r i Lanka was i n i t i a t e d i n the f i r s t ten year development plan. However, due to population growth and foreign exchange c r i s i s , the performance of the manufacturing sector was poor. During the decade from the mid-sixties to the mid-seventies, the structure of the i n d u s t r i a l sector changed 143 s u b s t a n t i a l l y i n favour of the public sector following the establishment and expansion of a number of p u b l i c sector i n d u s t r i a l corporations. The share of the private sector i n t o t a l i n d u s t r i a l production declined from 92 per cent i n 1968 to under 50 per cent i n 1976 (ILO, 1983b: 2). Though the contribution of the r u r a l manufacturing sector to the t o t a l GDP was r e l a t i v e l y low, the proportion of employment i n t h i s sector was 66 per cent of the t o t a l manufacturing employment i n 1981. The r u r a l i n d u s t r i e s were small i n s i z e and they used intermediate and low technology i n production. The si g n i f i c a n c e of very small r u r a l i n d u s t r i e s (household industries) were not known since many of them had not been registered o f f i c i a l l y and also d i d not operate throughout the year (work interrupted e i t h e r by seasons or f i n a n c i a l d i f f i c u l t i e s ) . The o f f i c i a l p o l i c y of promoting r u r a l i n d u s t r i e s had a long h i s t o r y . For example, the promotion of the handloom industry started as early as 1964 and t h i s industry had been given extra attention i n the development p o l i c i e s u n t i l recently. By about 1964, the number of handlooms had expanded te n - f o l d i n about as many years and by 1970 i t had doubled again, with s t i l l more expansion being planned at that time. In the 20-year period between 1951 and 1971, the number of people a c t u a l l y c l a s s i f i e d as weavers increased from 3,800 to over 60,000 excluding those who were tra i n e d but d i d not continue with t h i s a c t i v i t y (ILO/ARTEP, 1986a: 23) . However, u n t i l the establishment of the D i s t r i c t 144 Development Councils (DDC) i n 1971, the r u r a l manufacturing sector had not been properly developed. The establishment of the I n d u s t r i a l Development Board (IDB) i n the early 1970s was a step i n the coordination of r u r a l i n d u s t r i a l development. The po l i c y of promoting r u r a l i n d u s t r i e s remained the same even aft e r 1977 but due to the d i r e c t and i n d i r e c t impact of export l i b e r a l i z a t i o n p o l i c i e s the r u r a l i n d u s t r i a l sector and employment suffered s i g n i f i c a n t l y . Two ILO-ARTEP f i e l d surveys on the subject of r u r a l industries and employment i n S r i Lanka (Sethuraman, 1983; Rural Small Industries and Employment i n S r i Lanka and ILO/ARTEP, 1987 Rural Industries and Employment i n S r i Lanka done i n 1977 and 1986 respectively provide a c l e a r p i c t u r e of the r u r a l i n d u s t r i a l sector and employment i n S r i Lanka. Both surveys were conducted i n three selected d i s t r i c t s (Kalutara, Kandy and Ampara) which also enable a comparative analysis to be made. Some of the findings of these two surveys are relevant to our discussion. F i r s t , the r u r a l industries employed on an average 7.5 persons i n each a c t i v i t y . I t was found that at the l e v e l where four or f i v e employees were hired, the e f f i c i e n c y of the r u r a l industries was higher than at other l e v e l s of r u r a l i n d u s t r i e s . The proportion of the hired labour i n r u r a l manufacturing a c t i v i t i e s was higher; however, the number of unpaid family workers was also s i g n i f i c a n t i n the very small i n d u s t r i a l a c t i v i t i e s . Secondly, food processing, c o i r - f i b r e , brassware, wood, leather - r e l a t e d 145 products, bricks,spottery were the most common manufacturing a c t i v i t i e s . Thirdly, the linkages with the a g r i c u l t u r e sector were poor, though i n 1977 about 40 per cent of i n d u s t r i a l units were dependent on a g r i c u l t u r e raw materials. In addition, the t r a d i t i o n a l industries were more dependent on l o c a l resources while non-traditional were dependent on imported raw materials. The dependence on Colombo was p a r t i c u l a r l y great for entrepreneurs i n t a i l o r i n g , manufacturing of chemical, t e x t i l e s , copper and brassware. Fourthly, the i n s t i t u t i o n a l support f o r r u r a l i n d u s t r i a l a c t i v i t i e s was poor. F i n a l l y , the proportion of female labour force p a r t i c i p a t i o n was s i g n i f i c a n t l y higher e s p e c i a l l y i n l i g h t manufacturing a c t i v i t i e s (handloom, beedi making, etc.) compared with other manufacturing a c t i v i t i e s . The t o t a l employment i n the manufacturing sector increased on average by 2000 person per year between 1953 and 1971 and 5000 persons per year between 1971 and 1981. Such rapid employment creation i n manufacturing i n seventies (1971-81) was not shared by the r u r a l manufacturing sector. For example, the employment i n r u r a l manufacturing a c t i v i t i e s increased on average one thousand persons per year during the l a t e r period (1971-81). I t has been indicated e a r l i e r that changing government p o l i c i e s during t h i s period were responsible for the slow growth of r u r a l employment. However, i t i s necessary to support t h i s assertion with more evidence. 146 Table 4.8 illustrates the rural manufacturing employment changes between 1971 and 1981 at the 3 d i g i t a l level. The 3 d i g i t a l industrial categories which absorbed more than one thousand persons during the reference period are reported in this table. Given the overall slow growth of rural manufacturing sectors, the table il l u s t r a t e s the following growth patterns. First, employment absorption occurred in the manufacturing sectors which were deeply rooted and established and also dependent on the local raw materials. In this respect, food, beverages, pottery, & non-metallic products like bricks show an increase in employment though the growth rate was relatively slow. Secondly, some manufacturing sectors such as manufacture of wearing apparel, paper and paper products which had an urban link in the form of sub-contracting too show an increase in employment. At the same time several other rural industries were almost stagnant in production and employment particularly due to changing government policies. It was indicated earlier that the post-1977 government policies of opening-up import markets had resulted in a different pattern of manufacturing development between urban and rural areas. The opportunities which were created by the liberalization of imports were quickly util i z e d by urban based manufacturing firms due to the advantage of being in the urban areas. The poor institutional support (banking and capital) and lack of Table 4.8: Employment Change i n Rural Manufacturing Sector (3 D i g i t a l Group), 1971-1981. Employment Change Group No. Industry D i v i s i o n Total Male Female 211 Food Manufacturing 11514 8146 3368 213 Beverage Manufacturing 3525 3473 52 214 Tobacco Manufacturing -8263 -3713 -4550 221 Manufacture of Text i l e s -31553 4678 -36231 222 Manufacture of Wearing Apparel 12270 2006 10264 232 Manufacture of Furniture 2120 2393 -273 231 Manufacture of Wood... 1872 1164 708 241 Manufacture of Paper... 1884 1717 167 242 Pr i n t i n g & Publishing 1264 1092 172 252 Manufacture of Other Chemicals 2096 2021 75 261 Manufacture of Pottery 5747 3973 1774 269 Manufacture of Non-Metallic 9646 9097 549 281 Manufacture of Fabricated Metal 5009 4951 58 290 Other Manufactures 2552 1936 616 255 Manufacture of Rubber Product 2137 1820 317 Total 21820 44754 -22934 Source: Calculated from Census of Population, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 148 technology and marketing f a c i l i t i e s worked against the growth of the r u r a l manufacturing sector. The r u r a l industries could not compete with the constant inflow of imported consumer and other products. The open market p o l i c i e s adversely affected other manufacturing a c t i v i t i e s i n the r u r a l areas as well. For example, Table 4.7 indicates that handloom and tobacco manufacturing industries i n 1981 employed about 4 0,000 persons lower than the 1971 l e v e l . The loss of employment i n those two sections was confined to women (Table: 4.8). The handloom industry which enjoyed a p r i v i l e g e d p o s i t i o n during the pre-1977 period was adversely affected due to the l i b e r a l i z a t i o n p o l i c y and increasing number of powerlooms i n production. For example, there were about 111,000 looms i n the country before 1977; at present there are only 15,000 looms according to the estimates of the Ministry of T e x t i l e s (ILO-ARTEP, 1986a: 22). In the case of beedi ( l o c a l cigar) making a c t i v i t i e s , i t was the import r e s t r i c t i o n placed on the imported tobacco leaves that caused the decline i n tobacco manufacturing a c t i v i t i e s . The r u r a l industries were vulnerable to the changes i n government p o l i c i e s . Such v u l n e r a b i l i t y was due to production and p r i v i l e g e which were given to t h i s sector during the post-independence period. The major problem of r u r a l manufacturing was the lack of linkage between the r u r a l economy and the agriculture sector. Secondly, lack of linkage and coordination between small-scale r u r a l 149 industries and the large scale-urban based heavy in d u s t r i e s were also responsible. The post-independence government i n d u s t r i a l p o l i c i e s mainly aimed at short-term employment creation instead of long-term growth and employment generation. As a r e s u l t of the above, there was a rapid growth of r u r a l industries between 1970-77 under the umbrella of protection. When such protection was removed, the manufacturing sector could not face competition and disappeared. However, the st r u c t u r a l change i n the r u r a l manufacturing sector displaced a s i g n i f i c a n t number of r u r a l workers during the late 1970s and l a t e r . The people who l o s t t h e i r main source of income were the landless poor and un s k i l l e d labourers. According to the ava i l a b l e s t a t i s t i c s , i t was the female workers who mostly l o s t t h e i r main employment. However, the s a l i e n t feature of t h i s work displacement was the increasing unemployment i n the r u r a l areas p a r t i c u l a r l y among the poor fa m i l i e s and women workers. The r u r a l entrepreneurs, however, switched to the trading sector i n the r u r a l areas when the atmosphere for r u r a l manufacturing was not favorable. 4.3.3 Employment Changes i n Other Sectors I t has already been indicated that the t r a d i t i o n a l l y dominant sector i n labour absorption such as the a g r i c u l t u r e sector declined i n significance i n recent years. At the same 150 time, new employment was created i n other sectors of the r u r a l economy. Tables 4.2, 4.3 and 4.6 indicate that i t was i n four areas of the r u r a l economy where most of the employment was created between 1971 and 1981 period. They are r e t a i l trade, public sector (education, bank and administration), construction and transportation. Such employment creation had implications on the post 1977 p o l i c i e s as well. We noted that trade-related a c t i v i t i e s increased along with the l i b e r a l i z a t i o n of import trade. The r e t a i l trade sector grew fas t e r comparatively i n the r u r a l areas. The a c t i v i t i e s i n t h i s sector were mixed. However, two areas of r e t a i l trading emerged as s i g n i f i c a n t i n t h i s respect: i) meat, f i s h and vegetable and i i ) building materials. We have already also noted that the domestic a g r i c u l t u r a l production, r i c e and other food production, increased s i g n i f i c a n t l y a f t e r 1977. Such increase seems to have activated the trading a c t i v i t i e s between r u r a l and urban areas. On the other hand, the rapid growth of construction a c t i v i t i e s stimulated trading i n hardware and bu i l d i n g materials during t h i s period. Nearly 85 per cent of the employment creation i n t h i s sector was for men i n the r u r a l areas. We have already indicated the background development of the construction industry. This industry absorbed nearly 70 per cent of the r u r a l employment (Table: 4.8) and 90 per cent of them were men. The growth of trading and 151 construction industries stimulated the growth of the transportation industry i n the r u r a l areas. The f r e i g h t transport sector absorbed most of the employment created and the majority of them were again men (93%). Apart from the above types of employment creation, another sector which absorbed a s i g n i f i c a n t number of employment i n the r u r a l areas was the public sector. The government (or public) sector included education, banks and administration. Table 4.6 provides the absolute number of employment creation i n those three sectors. In t h i s respect, two aspects need to be emphasized here. F i r s t , employment creation benefited mostly middle and upper c l a s s educated people. I t was very l i k e l y that the educated urban or semi-urban people were posted to r u r a l areas f o r work i n the government sector. The second aspect i s that the proportion of women i n these sectors was r e l a t i v e l y higher. For example, the proportion of women i n the new employment creation i n public administration and defence, educational service and f i n a n c i a l i n s t i t u t i o n s was more than 50 per cent as compared with the t o t a l r u r a l employment creation i n these three sectors. At the same time, another pattern of employment change was occurring i n the r u r a l areas. The r u r a l t r a d i t i o n a l sectors such as blacksmith, pottery, caste-oriented sectors, etc. were d e c l i n i n g or disappearing i n the r u r a l areas. Table 4.7 c l e a r l y indicates the numerical s i g n i f i c a n c e of the employment l o s t i n these sectors. We speculated e a r l i e r 152 that the increasing competition from urban produced goods would have been responsible for such types of changes i n the r u r a l sector. I t could be further confirmed by a number of studies which indicated such a d i s s o l u t i o n of the t r a d i t i o n a l sector i n r u r a l S r i Lanka ( S i l v a , 1979; Gunasinghe, 1975; Brow, 1980; Alexander, 1982) . However, i t i s important to note that the majority of the people who l o s t t h e i r employment belonged to the poor and underprivileged community of the r u r a l society. 4.3.4 An Overall Assessment of Rural Employment Change The o v e r a l l s t r u c t u r a l changes i n the economy influenced employment i n the r u r a l areas. Such changes are summarized as follows: 1. Since the r u r a l economic sector performed poorly p a r t i c u l a r l y during recent years, the creation of employment was l i m i t e d . 2. The following r u r a l people were mostly affected by the s t r u c t u r a l changes i n the economy and employment: a) Indian Tamil tea estate workers; b) t r a d i t i o n a l caste-oriented workers; c) land poor or landless labourers. 3. The proportion of women among the affected people was r e l a t i v e l y high. 153 4.3.5 The Structural Changes i n Economy and Unemployment and Under-employment i n Rural areas The nature of unemployment and under-employment i s , to a large extent, the r e s u l t of change i n the economy. Table 4.9 i l l u s t r a t e s the trends of open-unemployment i n S r i Lanka since 1953. The unemployment rate which fluctuated during the reference period had been increasing i n the r u r a l areas. Besides the proportion of the labour force population, the t o t a l number and the c h a r a c t e r i s t i c s of the unemployed was also an important aspect of the unemployment. The t o t a l number of unemployed had been increasing r a p i d l y i n the r u r a l areas; at the same time, the c h a r a c t e r i s t i c s of the unemployed reveal a number of s a l i e n t features of the unemployment problem. As we have mentioned the majority of the unemployed were young and educated. Many studies i n recent years provide a comprehensive analysis of the c h a r a c t e r i s t i c s of the unemployed i n S r i Lanka (Srivasta, 1973; Jones and Selvaratnam, 1971). Those findings show the 154 Table 4.9: Lanka, 1962 Estimated Unemployment (% - 1982. of Labour Force) i n S r i Year Source A l l Island Rural 1959\60 ILO (1962) 10.5-12.8 9.8 1963 CB (1964) CFS 13.6 14.6 1964 ILO (1965) NA 12.5 1969\70 DCS (1969\70) SES 14.4 14.3 1971 DCS (1971) Census 18.7 17.3 1973 CB (1974a) CFS 24.0 24.5 1973 CB (1974b) LFPRS 18.8 18.3 1975 CB (1975) LLUS 19.7 NA 1978\79 CB (1983) CFS 14.75 14.75 1980\81 DCS (1982) LFS 15. 3 14.6 1981 DCS (1983d) Census 17.9 17. 3 1981\82 CB (1984) CFS 11.7 12 . 0 CB - Central Bank of Ceylon, CFS - Consumer Finance Survey of the Central Bank, DCS - Department of Census and S t a t i s t i c s , SES Socio-economic Survey, LLUS - Land and Labour U t i l i z a t i o n Survey, 1975, LFPRS - Labour Force P a r t i c i p a t i o n Rates Survey of Central Bank, 1974. Source:ILO/ARTEP, 1986B. 155 d i f f i c u l t i e s of educated youth who had been undergoing economic and psychological hardship as the r e s u l t of increasing unemployment. The nature and the impact of unemployment varied between the d i f f e r e n t income groups of the r u r a l households. Moore (1981b) c o r r e c t l y points out that "the educated unemployed are mainly from the r i c h e r h a l f of the population. Their unemployment problem i s not the t o t a l unemployment problem: the youth from poorer households su f f e r equally, although they are far less choosy about the kind of work they are prepared to accept. The educated youth have managed to es t a b l i s h t h e i r employment problem near the top of the national p o l i t i c a l agenda, while the poor are not organized to push for t h e i r own inter e s t s , and indeed seem to a larger extent to accept the d e f i n i t i o n of s i t u a t i o n as one i n which public sector jobs ought to be provided to those with the best school c e r t i f i c a t e s " (1981b: 105). We have already i d e n t i f i e d some underprivileged r u r a l poor who belong to these unemployed. Hewavitharana (1986) analysed the poor unemployed population and indicated that " . . contrary to the widely held view that the poor cannot a f f o r d to be unemployed . . . , the lower per capita expenditure declines show higher rates of unemployment . . . they carry the heaviest unemployment burden which compounds t h e i r already heavy c h i l d dependency burden" (1986: 12). The leve l s of under-employment and labour p r o d u c t i v i t y would be the appropriate measurement of the 156 labour s i t u a t i o n i n an agrarian society. R e l i a b l e and comprehensive s t a t i s t i c s are scanty i n S r i Lanka i n t h i s respect. However, i t i s evident that the pressure of under-employment i s not a new phenomenon i n S r i Lanka. Professor Karunatilake i n 1971 said that the under-employment ". . . i s a cumulative e f f e c t of a process which began more than f i f t y years ago" (1971: 24) . He was probably r e f e r r i n g to the development of the plantation economy and the increasing population pressure on the domestic a g r i c u l t u r e at that time. However, hi s estimation of surplus farm f a m i l i e s (underemployed) i n the peasant agriculture i s a useful measure fo r understanding the unemployment s i t u a t i o n at the beginning of independence. According to h i s Table 5, 615,000 f a m i l i e s were found to be surplus farm f a m i l i e s i n the peasant sector i n 1946. Wilson (1975), using the number of hours spent on work, estimated that about 35 per cent of t o t a l r u r a l employed population i n 1959/60 and about 1,348,000 persons i n 1971 are underemployed i n S r i Lanka. Another ILO/ARTEP (1986b) recent study too found a higher proportion of underemployed population i n r u r a l S r i Lanka using 1978/79 and 1981/82 Central Bank's consumer finance survey. The above and other (Gunawardena, 1981; Abeysekera, 1976; Hewawithrana, 1986) studies confirm that the rate of under-employment had been much higher i n the r u r a l sector compared to the urban and estate sector and the magnitude of unemployment has been much higher i n the r u r a l sector due to the u n a v a i l a b i l i t y of land. 157 Another important aspect of r u r a l under-employment i s that such a s i t u a t i o n i s commonly found among the marginal peasants and the landless labourers. There has been a process of marginalization of small farmers i n the r u r a l sector of S r i Lanka (ILO/ARTEP, 1986b: 23). The data generated by the socio-economic survey of 1980/81 showed that 53 per cent of a g r i c u l t u r a l and animal husbandry workers did not own land and another 28 per cent owned less than 1 acre (ILO/ARTEP, 1986b: Table 2.6). A number of recent studies on the l e v e l of poverty i n S r i Lanka showed that the n u t r i t i o n a l l e v e l as a measure of poverty i s lowest among the landless labourers, marginal peasants and poor unemployed (Wickramasekara, 1985; Hewavitharana, 1986; Jayantha, 1985; Richards and Gooneratne, 1980). I t i s confirmed i n a number of studies (Jones and Selvaratnam, 1974; Karunatilake, 1971 and Hewavitharana, 1986) that the l e v e l of poverty i s c l o s e l y associated with the l e v e l of labour productivity. From our previous analysis, factors such as population and labour force growth, economic performance and government p o l i c i e s emerged as the prime causes f o r increasing unemployment, under employment and poverty i n r u r a l S r i Lanka. We noted that post- independence S r i Lanka began with a rapid population growth which l a t e r contributed to a rapid labour force growth. The post-independence p o l i c i e s , on the other hand, focused on the development of domestic a g r i c u l t u r e as a source of short-term employment 158 creation and for a long-term economic surplus. Though domestic agricu l t u r e grew in terms of production and employment t h i s sector f a i l e d to perform to the expected l e v e l so that the future integrated economic development could begin. The low return for higher investment and r e l a t i v e l y low labour productivity i n t h i s sector were responsible f o r the poor performance of t h i s sector. Given t h i s s i t u a t i o n , the labour force has continued to grow. Government p o l i c i e s focused on the short-term s o l u t i o n thereby aggravating the employment problem. Such short-term p o l i c i e s are unequally applied and badly implemented. E l e c t o r a l v i c t o r y was the main short-term goal of the post-independence government p o l i c i e s . P o l i t i c a l f a v o r i t i s m and nepotism (Gunasinghe, 1984) were the main c r i t e r i a for the recruitment of employment. The voiceless and underprivileged r u r a l poor and minority were l e f t without any immediate remedy for t h e i r increasing problem. Though the o v e r a l l structure of the economy and employment did not change s i g n i f i c a n t l y , the movements of growth towards domestic agriculture sector before 1977 and towards the urban sector during the post-1977 period ( i f i t could be c a l l e d a s t r u c t u r a l change) created a d i s t i n c t type of unemployment and under-employment i n the r u r a l areas. The movement (development) towards domestic a g r i c u l t u r e sector displaced Indian o r i g i n tea estate workers and on the other hand created and increased landless labourers and 159 marginal peasants i n r u r a l sector. The post-1977 l i b e r a l i z e d import p o l i c i e s while favoured i n the urban sector displaced a number of r u r a l poor wage earners whose main source of income was based on those occupations. Furthermore, the s e l e c t i v e nature of the government economic p o l i c i e s and employment creation had i t s other (ethnic and social) dimension as well. This issue w i l l be considered i n l a t e r chapters. In conclusion, the present employment s i t u a t i o n i n S r i Lanka i s the r e s u l t of a slow economic change and a rapid demographic change during the post-independence period. The r o l e of government p o l i c i e s , however, has been an important factor i n the economic and employment s i t u a t i o n of S r i Lanka today. 160 Notes 1 In the recent population census, the labour force (or economically active population) i s defined as those who are a c t u a l l y engaged i n production of economic goods and services and those p o t e n t i a l l y available for such work. The d e f i n i t i o n s of the labour force i n 1963 and e a r l i e r d i f f e r from those used i n the recent census. 2 During the Korean war (1950-51), prices for natural rubber rose. S r i Lanka earned a s i g n i f i c a n t amount of foreign exchange during t h i s period. 3 During t h i s period, S r i Lanka received much more generous development loans from the A i d - S r i Lanka Club. 4 Major investment i n the garment industry was foreign. Sudden growth i n S r i Lanka's garment exports i n 1978 to 1980 i s explained by i n f l u x of established Asian manufacturers into the country to take advantage of the s h o r t f a l l i n the t e x t i l e quota allowed for S r i Lanka by the USA and the EEC. 5 Moreover, the owners of the larger estates, both foreign and S r i Lankan, were reluctant to invest i n improvements as they feared n a t i o n a l i z a t i o n . 161 CHAPTER FIVE: THE GROWTH OF RURAL NON-FARM ACTIVITIES IN SRI LANKA This chapter evaluates the changes i n the r u r a l non-farm a c t i v i t i e s i n S r i Lanka since independence. The analysis i n t h i s chapter i s based on the availa b l e macro-l e v e l s t a t i s t i c s . National population censuses have been used as the main source for the employment-related information. Though employment-related s t a t i s t i c s have been availa b l e for a long time, only the recent population censuses provide detailed information on occupational categories at the r u r a l l e v e l . The occupational c l a s s i f i c a t i o n i s based on the ILO d e f i n i t i o n (1968) and has been adopted i n censuses a f t e r 1971. Population censuses provide occupational categories only by primary a c t i v i t i e s . The RNA analysis based on primary a c t i v i t i e s l i m i t s the extent of t h i s research. Further, the occupational categories given i n the population census do not allow for f l e x i b i l i t y i n regrouping farm and non-farm a c t i v i t i e s . These are some of the l i m i t a t i o n s inherent i n the census data. Using the population census, the major occupational categories of professional, t e c h n i c a l , administrative and production-related are defined as non-farm a c t i v i t i e s . Agriculture and i t s rela t e d occupational categories are treated as farm a c t i v i t i e s . Workers not c l a s s i f i e d by occupational category are 162 c o n s i d e r e d s e p a r a t e l y (see T a b l e 5.2 f o r major o c c u p a t i o n a l c a t e g o r i e s ) . I n a n a l y s i n g t h e r u r a l non-farm a c t i v i t i e s an a t t e m p t w i l l be made t o a s s e s s t h e performance o f t h e s e a c t i v i t i e s i n r e l a t i o n t o t h e o v e r a l l economic development and employment s i t u a t i o n . Three major hypotheses w i l l be t e s t e d i n t h i s a n a l y s i s . They a r e : a) t h a t t h e n u m e r i c a l growth o f RNA has been g r e a t e r a f t e r 1970; b) t h a t t h e e x t e n t o f q u a l i t a t i v e growth o f RNA (wage, income, s k i l l and p r o d u c t i v i t y ) has been l e s s s i g n i f i c a n t compared t o t h e n u m e r i c a l growth; and c) t h a t t h e s u p p l y - d e t e r m i n e d f a c t o r s ( i . e . , l a r g e l y r e s u l t i n g from p o p u l a t i o n e x p a n s i o n ) have m a i n l y c o n t r i b u t e d t o t h e growth o f RNA d u r i n g t h e s t u d y p e r i o d . T h i s c h a p t e r i s d i v i d e d i n t o t h r e e p a r t s . The growth o f RNA i s d i s c u s s e d and t h e p a t t e r n s o f growth a r e i d e n t i f i e d i n t h e f i r s t p a r t ; t h e f a c t o r s w h i c h c o n t r i b u t e d t o t h e growth a r e d i s c u s s e d i n t h e second; and t h e i d e n t i f i e d p a t t e r n s o f RNA growth a r e e v a l u a t e d i n t h e t h i r d p a r t . 163 5.1 The Growth of Rural Non-Farm A c t i v i t i e s This section analyses the numerical and q u a l i t a t i v e growth of RNA. The f i r s t two hypotheses w i l l be tested i n t h i s section. 5.1.1 Quantitative Changes i n the Growth of RNA The proportional contribution of RNA growth to the t o t a l r u r a l employment growth was 58 per cent between 1963-71 and the proportional contribution of RNA growth reached 80 per cent of the t o t a l r u r a l employment growth between 1971-81 (see Table 5.1). The numerical s i g n i f i c a n c e of RNA i n the t o t a l employment picture i n recent years was associated with f i r s t , the slackening of the growth momentum i n a g r i c u l t u r a l a c t i v i t i e s as the major employment absorber since the mid-s i x t i e s ; second, the surplus labour s i t u a t i o n which was created as the r e s u l t of the rapid growth of the labour force and t h i r d , the post-1977 economic p o l i c i e s which encouraged trade-related occupations i n the r u r a l areas. The increasing prominence of RNA i n the t o t a l income of indivi d u a l s i s seen i n the changes i n the structure of income sources. In t h i s regard, the Central Bank of Ceylon's Consumer Finance Survey. 1953, 1963, 1973, 1978/79 and 1980/81 indicates that the r e l a t i v e proportion 164 Table 5.1: The D i s t r i b u t i o n and Change i n Farm and Non-Farm Occupations i n the Rural Areas of S r i Lanka, 1963-1981. Farm % Non-Farm % Total % Occupational D i s t r i b u t i o n 1963 1609890 61 .9 960650 37 .0 2598760 100. 0 1971 1712001 59 .7 1101531 38 .4 2867689 100. 0 1981 1785481 55 .3 1378962 42 .8 3226123 100. 0 Inter-Census Increase 1963-71 102111 38 .0 140881 52 .4 268929 100. 0 1971-81 73480 20 .5 277432 77 .4 358434 100. 0 Male-Female Increase 1963-71 Male Female 25740 76371 17 62 .6 .2 99910 40971 68 33 .3 .4 146249 122680 100. 100. 0 0 1971-81 Male Female 107881 -34401-31 311 . 1 .3 235236 42195 67 381 .7 .8 347382 11052 100. 100. 0 0 Note: 1) The occupations that f a l l into 'not c l a s s i f i e d ' category are not shown i n t h i s table. But t h i s category included i n the t o t a l employment. 2) The d e f i n i t i o n s of farm and non-farm a c t i v i t i e s used i n the c a l c u l a t i o n of t h i s table are the same as those i n t h i s chapter. Source: Calculated from Censuses of Population, 1963, 1971 and 1981. Department of Census and S t a t i s t i c s , I960, 1967b, 1976 and 1983b. 165 contributed to household income by the major occupation has declined whereas the incomes derived from secondary occupations have increased continuously. This i s an i n d i c a t i o n of increasing involvement of r u r a l people i n RNA although agric u l t u r e remains the major a c t i v i t y . This trend has been more marked i n recent decades p a r t i c u l a r l y among the farm households (Consumer Finance Survey, 1964, 1983 and 1984a). The o v e r a l l changes i n the r u r a l employment are noted i n Table 5.2. This table i d e n t i f i e s the major occupational categories and the extent of growth i n each of them. The major non-farm occupational category includes production and re l a t e d workers and transport equipment operators. This category which includes approximately 25 per cent of the t o t a l r u r a l employment grew by 13,000 persons per year between 1971-81 while other occupational categories of RNA grew by less than 6000 (see Table 5.2.) This rate of growth seems to point to a s i g n i f i c a n t increase i n the RNA of production-oriented and production-re l a t e d sectors and probably indicates an improvement i n the labour market s i t u a t i o n i n recent years. But, employment growth i n the broader occupational categories does not indicate the true nature of RNA changes since broader categories include a number of i n d i v i d u a l occupations. In i d e n t i f y i n g the RNA occupational categories i n which growth has been rapid a f t e r 1970, the more detailed two-digital(1) 166 Table 5.2: Rural Employment Change by Major Occupational Categories, 1971-81. Occupational Category 1981-71 Total % Share Professional, Technical & 45036 12.6 Related Workers Administrative & Managerial 8140 2.3 Workers C l e r i c a l and Related Workers 50348 14.0 Sales Workers 20456 5.7 Service Workers 23210 6.5 A g r i c u l t u r a l , Animal Husbandry 73480 20.5 & Forestry Workers, Fishermen and Hunters Production & Related Workers, 130237 36.3 Transport Equipment Operators Workers Not C l a s s i f i e d by 7523 2.1 Occupation Total 358430 100.0 Source: Calculated from Census of population, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 167 occupational categories available i n the population census reports have been used i n t h i s study. Using the two-digital occupational categories of the census reports, the study, f i r s t , i d e n t i f i e s sixteen occupational categories which absorbed nearly 90 per cent of the t o t a l r u r a l employment growth during the census period 1971-81 (see Table 5.3). As the Table 5.3 indicates, the fastest growth i n employment occurred i n an occupational category which i s commonly referred to as the "labourer type". For example, according to the same table, the labourers not elsewhere c l a s s i f i e d (No. 9 9)(2) occupational category grew at a phenomenal rate i n recent years (1971-81). In percentage terms, the employment growth i n t h i s category (No. 99) was 2.8 per cent per annum and i n terms of absolute increase was twice as high as the next occupational category (Table 5.3). As the d e f i n i t i o n of t h i s occupational category reveals, those labourer type workers are u n s k i l l e d and not permanently attached to any p a r t i c u l a r non-farm sector i n the r u r a l areas. Though they are grouped as non-farm workers, the l i n k with the agri c u l t u r e sector (as part-time occupation) i s stronger with these labourers. They move from one job to another when available and do not have a regular employment or income. Table 5.3: Sixteen Occupational Categories ( 2 D i g i t a l Group) Absorbing Nearly 90 Per Cent of Total Employment Increase During 1971 and 1981. Group Occupation Total Rural % Share %Female No. (Rural) (Rural) 99 Labourers (Non-Farm) 73310 76217 27 20 13 Teachers 41999 31835 11 73 39 C l e r i c a l Workers 41798 28938 10 47 95 Constructing Workers 36528 23959 9 5 31 Govt. Supervisory 31423 ,18498 7 7 and F i e l d O f f i c e r s 71 Miners, Quarrymen 24206 22801 8 7 21 Managers 23474 9089 3 9 79 T a i l o r s , Dress Makers 22580 9708 4 90 96 Stationary Engine 20631 12245 4 21 Operators 41 Working Proprietors 20091 7938 3 -6 45 Salesmen and 15601 5286 2 54 Shop Assistants 98 Transport Equipment 14408 12928 5 1 Operators 85 E l e c t r i c a l F i t t e r s 9840 6146 2 3 77 Food and Beverage 9489 7017 3 30 Producers 02/03 Arch i t e c t s , Engineers 8324 4397 2 8 Total Increase 393702 277002 100.0 25.0 Source: Calculated from Census of Population, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 169 Another occupational category at the two-digital l e v e l which shows a s i g n i f i c a n t employment growth was that of teachers (No. 13, see Table 5.3). The employment growth i n the 'teachers' occupational category was 10 per cent of the t o t a l r u r a l employment increase during the same period. C h a r a c t e r i s t i c a l l y , 'labourers' and 'teachers' occupational categories d i f f e r greatly. For example, the labour type of occupation i s commonly associated with low productivity, low pay and employes persons from low-income r u r a l households while teaching i s government employment with higher incomes and greater prestige and providing employment to middle and upper income groups i n the r u r a l areas. In S r i Lankan v i l l a g e s , u n s k i l l e d labourer type of employment i s l e a s t prestigious while teaching i s perhaps the most prestigious occupation normally available to r u r a l people. Assuming that the low-income less desirable type of occupations and the high-income desirable type of occupations form the two extreme ends of the r u r a l employment spectrum, the sixteen type-categories of employment were re-grouped on a scale of income and d e s i r a b i l i t y . It was discovered that the increase i n RNA employment was highest at these two extremes. Employment increase i n the less desirable type at one extreme was 51 per cent. The increase at the high income desirable type on the other end of the scale was 40 per cent. Occupational categories f a l l i n g within these two extremes show a lower increase (Table 5.4). Table 5.4: Occupational Categories i n Which 90 Per Cent of Employment Growth Occurred i n Rural Areas, 1971-1981. (Re-Grouped Using Table 5.3). Re-Grouped Occupational Category % Total Increase Government Jobs 40 108841 Non-Governmental Low Paying RNA 51 137971 Other Employment 09 24044 Total 100 270856 Notes: This re-grouping i s based on the Table 5.3. The Government jobs include following the two d i g i t a l categories such as No. 13, 39, 31, 02/03, 9, 98 and 96 i n Table 5.3. Likewise, non-governmental low paying RNA category includes No. 99, 95, 71, 79, and 45 and other employment category includes No. 85, 41, 21 and 77 (see Table 5.3 for the description of occupational categories). Source: Re-Grouped and Calculated from Table 5.3 which i s based on the Census of Population, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. Another dimension of the increase of r u r a l non-farm a c t i v i t i e s i s the share of female labour i n the growth of d i f f e r e n t occupational categories. For example, ' t a i l o r s , dress makers' and s i m i l a r occupational categories ( r e l a t i v e l y poorly paid occupations) absorbed a t o t a l of about 10,000 employees i n r u r a l areas between 1971-81. Ninety per cent of these were female (see Table 5.3). Likewise, the school teacher occupational category too shows a higher proportion of female employment and increase (73 % ) . The category of t a i l o r s and dress makers i s less productive and i s associated with the labour surplus s i t u a t i o n while 'teacher' category i s associated with increasing educational opportunities i n the r u r a l areas. A number of other features of RNA growth also characterize recent employment changes. They are, f i r s t , that the manufacturing sector has been increasingly providing administrative (proportional change 8.1%) and c l e r i c a l - r e l a t e d occupations i n recent years e s p e c i a l l y between 1971 and 81. This shows that the units comprising the manufacturing sector have been expanding to require administrative and c l e r i c a l cadres. At the same time, there i s also seen a change i n the nature of manufacturing towards assembling of imported items and greater s o p h i s t i c a t i o n of the garment manufacturing industry. A l l these indicate that the r u r a l manufacturing sector i s moving towards more modern forms of production. This has been confirmed by ILO (1983b) and ILO/ARTEP (1987) studies as well. Likewise, the proportion of administrative and c l e r i c a l occupations has increased i n the finance-related sector which was the r e s u l t of the recent changes i n the economic p o l i c i e s . The above new patterns of sectoral occupational absorption d i s c l o s e the s t r u c t u r a l improvement i n parts of the r u r a l labour force i n recent decades. But, not a l l the r u r a l occupational categories have shown an increase i n numbers. Some occupational categories have shown a s i g n i f i c a n t decline p a r t i c u l a r l y during 1971 172 and 1981. This aspect i s shown i n Table 5.5 which shows that ten occupational categories i n ranking order which showed decline i n t o t a l employment. Employment decline i s found mostly i n t r a d i t i o n a l a c t i v i t i e s i n the r u r a l areas (e.g., blacksmiths, laundry workers and cottage t e x t i l e manufacture). The impact of t h i s employment decline i n the r u r a l areas and households was explained i n chapter 4. The displacement of labour from the t r a d i t i o n a l sectors of the r u r a l economy i s one of the important factors for the rapid growth of the 'undefined occupational categories' (No. 9) which were commonly associated with the low q u a l i t y of labour. The 'labourer' type referred to e a r l i e r i s included i n t h i s group. In other words, most of the displaced r u r a l labourers could not f i n d secure and steady occupations i n the r u r a l areas and as a r e s u l t they were included i n an undefined occupational category i n the population censuses. Numerically, t h i s category consisted of 277,000 persons i n 1981 i n the r u r a l areas. During the l a s t three decades, the t o t a l employed population i n t h i s category has been increasing p a r t i c u l a r l y i n the r u r a l areas. The above trend i n employment indicates the increasing numerical s i g n i f i c a n c e of RNA on the one hand and the increasing i n s t a b i l i t y and i n s e c u r i t y of those workers who were i n the not p r e c i s e l y defined category, on the other. This gives us reason to assume an increase of RNA because of a 173 Table 5.5: Ten Occupational Categories i n Ranking Order Which Showed Decline i n Total Employment, 1971-1981. Group Occupation No. Employment Decline Total Rural Rural Female (%) (%) 75 Spinners, Weavers and Knitters 54 Maid and Related Service Workers 78 Tobacco Preparers 56 Launderers and Related Workers 37 Mail D i s t r i b u t i n g Workers 94 Production and Related Workers Not Elsewhere Categorized Category 83 Blacksmith, Tool makers and Related Workers 60 Farm Managers and Related workers 20 L e g i s l a t i v e O f f i c i a l Related Category 57 Hairdressers, Barbers and Related Workers -35814 -33420 47.1 -14306 -6168 -6633 -1069 -5916 -5710 -4464 -3985 -3735 -3241 -1741 -3468 -979 •2234 8.7 1.5 2.5 4.9 1.4 3.1 98 27 10821 -9403 13.3 49.0 10788 -6754 9.5 29.0 4.0 8.0 99.0 7.0 5.0 0.0 2.0 Total •99703 -70946 100.0 66.0 Source: Calculated from Population Censuses, 1971 and 1981. Department of Census and S t a t i s t i c s , 1976 and 1983b. 174 concentration of persons i n occupations having less prestige. In summing up, we note large increases i n two opposite categories of employment consisting of low prestige types on the one hand and the high prestige types on the other. Increase i n high prestige types denote a q u a l i t a t i v e improvement i n r u r a l non-farm occupation. However, large expansion i n the lower grade show that the rate of q u a l i t a t i v e improvement has not kept pace with the rate of t o t a l growth i n RNA as explained below. 5.1.2 The Qu a l i t a t i v e Changes i n the Growth of RNA The q u a l i t a t i v e changes i n labour such as the improvements i n productivity, income and wage are more important for economic development than the numerical changes i n labour. An assessment of the q u a l i t a t i v e changes i n RNA growth i s d i f f i c u l t due to the lack of s t a t i s t i c a l data on labour performance. However, income and wage l e v e l s , s k i l l s and productivity of labour are used i n t h i s section to assess the si g n i f i c a n c e of the numerical growth of RNA i n S r i Lanka. The income l e v e l and wage rates are indicators of labour performance. Income and wage by occupation are l a r g e l y determined by ex i s t i n g market demand for and supply of labour. However, i n an agrarian and r u r a l society l i k e that of S r i Lanka, several non-market factors too play a 175 ro l e i n t h i s process. For example, i n the r u r a l sector where families are normally large, there i s a considerable amount of manpower available for employment. In family owned enterprises t h i s labour i s u t i l i z e d without actual f i n a n c i a l remuneration. Therefore, i t i s not possible to assess the value of thi s labour i n monetary terms. A further example may be seen where caste relationships are enforced. In the t r a d i t i o n a l r u r a l society, "lower" castes are required to provide s p e c i f i e d services by custom for which they are not remunerated f i n a n c i a l l y . Variations i n wage rates and income leve l s are evident i n S r i Lanka. There i s a marked difference between urban and r u r a l wage rates. The income levels are found to be higher i n a l l major occupational categories i n the urban areas compared to r u r a l areas (Table 5.6). Within r u r a l areas, white c o l l a r - r e l a t e d occupations (occupational categories 1 to 4 i n Table 5.7) received higher income than other occupational groups. The lower income occupational categories are production-related, agriculture and service occupations. The low income status of such occupations i s more pronounced at the two d i g i t income l e v e l . At t h i s l e v e l (two d i g i t ) , some of the lowest income groups are found to be "labourer" type of workers who s e l l t h e i r labour (Gunawardena, 1981:42). The Labourer type occupational group i s one of the most poorly paid i n the r u r a l areas (see Table 5.7). 176 Table 5.6; Average Monthly Income ( per Person) by Major Occupational Categories, 1981/82 ( S r i Lankan Rupees) Occupational D i v i s i o n A l l Urban Rural Estate Island Professional, Technical & Related Workers 815 1068 719 305 Administrative and Managerial Workers 2448 2780 2249 517 C l e r i c a l Related Workers 945 1034 871 1301 Sales Workers 1195 2065 969 750 Service Workers 684 850 567 395 Agriculture, Animal Husbandry & Forestry Workers, Fishermen, Hunters 551 934 602 333 Production & Related Workers, Transport Equipment Operators 674 1132 639 562 Workers Not C l a s s i f i e d by Occupation 446 493 435 313 Total 706 1094 665 347 Source: Calculated from Consumer Finance and Socio-Economic Survey, 1981/82. Central Bank of Ceylon, 1984b. 177 T a b l e 5.7: H i g h e s t and Lowest Income R e c e i v e r s by O c c u p a t i o n s (2 D i g i t a l Group) i n R u r a l A r e a s , 1981/82. a) Ten H i g h e s t Income R e c e i v e r s Group O c c u p a t i o n A v e r . M o n t h l y No. Income P e r P e r s o n (Rs.) 98 T r a n s p o r t Equipment O p e r a t o r s 2403 21 Managers 2307 15 A u t h o r s , J o u r n a l i s t s & R e l a t e d Workers 1830 70 P r o d u c t i o n S u p e r v i s o r s 1649 20 L e g i s l a t i v e O f f i c i . & Govt. A d m i n i s . 1550 30 C l e r i c a l S u p e r v i s o r s 1431 38 Telephone & T e l e g r a p h O f f i c i a l s 1285 50 M a n a g e r s ( C a t e r i n g & Lodging) 1261 41 Working P r o p r i e t o r s ( W h o l e s a l e and R e t a i l ) 1239 31 Govt. S u p e r v i s o r y & F i e l d O f f i c i a l s 1023 b) Ten Lowest Income R e c e i v e r s 91 Paper & Paper Board Makers 200 80 Shoemakers & L e a t h e r Goods Workers 200 63 A g r i c u l t u r e & A n i m a l Husbandry Workers 343 54 Maid R e l a t e d Housekeeping S e r v i c e s 354 75 S p i n n e r s and Weavers 369 78 Tobacco P r e p a r e r s 380 11 A c c o u n t s 388 14 Workers i n R e l i g i o n 440 62 L i v e s t o c k Farmers 463 56 L a u n d e r e r s 478 S o u r c e : C a l c u l a t e d from C e n t r a l Bank o f C e y l o n ' s Consumer F i n a n c e and Socio-Economic Survey (1981/82), 1984b. 178 The ' l a b o u r t y p e c a t e g o r y ' i s v e r y s i g n i f i c a n t i n t h e r u r a l economy f o r s e v e r a l r e a s o n s . F i r s t , i t i s e v i d e n t from t h e census i n f o r m a t i o n as i n d i c a t e d e a r l i e r and a l s o c o n f i r m e d by a number of m i c r o - l e v e l s t u d i e s (Moore and Wickramesinghe, 1980; P e r e r a and Gunawardena, 1980) t h a t t h e p r o p o r t i o n o f l a b o u r t y p e of p o p u l a t i o n i s r e l a t i v e l y h i g h i n t h e r u r a l s e c t o r . T h i s l a b o u r c a t e g o r y c o m p r i s e s l a n d l e s s and l a n d - p o o r w o r k e r s . Though t h e r e i s no d i r e c t e s t i m a t e o f t h e e x t e n t o f l a n d l e s s n e s s i n t h e r u r a l economy, i t has been r e p o r t e d t h a t l a n d l e s s l a b o u r e r s a c c o u n t f o r n e a r l y h a l f o f t h e t o t a l r u r a l l a b o u r f o r c e ( H e w a v i t h a r a n a , 1986; ILO/ARTEP, 1986b:22). The p r e s e n t f i e l d s t u d y showed t h a t a number of t h o s e l a b o u r e r s a r e dependent on non-farm work as t h e i r main o c c u p a t i o n i n t h e r u r a l a r e a s , w h i l e o t h e r s whose main o c c u p a t i o n i s a g r i c u l t u r e a r e employed i n RNA f o r p a r t o f t h e i r t i m e . The o v e r a l l r u r a l income has not improved o v e r t h e p e r i o d . I n s t e a d , t h e e s t i m a t e s o f t h e G i n i C o e f f i e n t based on one month income by income r e c e i v e r s w h i c h i n c r e a s e d from 0.41 i n 1973 t o 0.49 i n 1978/79 and 0.52 i n 1981/82 i n d i c a t e an i n c r e a s i n g i n e q u a l i t y i n t h e income d i s t r i b u t i o n i n S r i Lanka. I n a d d i t i o n , such i n c r e a s i n g i n e q u a l i t y i s more pronounced i m m e d i a t e l y a f t e r t h e 1978/79 p e r i o d ( C e n t r a l Bank o f C e y l o n , 1984a: 187; Colombage, 1986: 2 4 ) . N e i t h e r has t h e r e been any o v e r a l l improvement i n r e a l wages. ESCAP (1980: 100) i n d i c a t e d t h a t t h e r e has been a g e n e r a l d e c l i n e i n r e a l wages o v e r t h e 1963-71 p e r i o d . ILO-ARTEP s t u d y 179 ( 1986b: 106) c o n f i r m e d t h a t such f a l l i n g t r e n d s i n r e a l wages have c o n t i n u e d even a f t e r 1970 and was a g g r a v a t e d i n t h e e a r l y 1980s due t o t h e i n f l a t i o n a r y p r i c e i n c r e a s e s a t t h a t t i m e . A l t h o u g h t h e s e s t u d i e s r e l a t e t o t h e o v e r a l l s i t u a t i o n i n S r i Lanka, i t has been shown by o t h e r s t h a t t h e c o n d i t i o n s o f income r e c e i v e r s i n t h e r u r a l s e c t o r a r e g e n e r a l l y p o o r e r t h a n c o n d i t i o n s o f t h o s e i n t h e urban s e c t o r . The argument t h e r e f o r e a p p l i e s w i t h g r e a t e r f o r c e t o t h e r u r a l a r e a s . The d e t e r i o r a t i n g r e a l incomes and wages have a f f e c t e d t h e wage e a r n e r s g e n e r a l l y . However, t h e e f f e c t s on low income groups were more pronounced. The low income group were n u m e r i c a l l y l a r g e r , and r e c e i v e d v e r y low wages. F o r example, o n e - t h i r d o f t h e income r e c e i v e r s r e c e i v e d l e s s t h a n Rs 500 p e r month ( C e n t r a l Bank o f C e y l o n , 1984a). The m a j o r i t y o f t h e poor w o r k e r s were dependent on t h e i r main o c c u p a t i o n f o r most o f t h e i r t o t a l income. A c c o r d i n g t o 1981/82 Consumer F i n a n c e  and S o cio-Economic Survey ( C e n t r a l Bank of C e y l o n , 1984a: 179), f o r t h e l a s t income group Rs 0-200, t h e s h a r e o f income r e c e i v e d from t h e main o c c u p a t i o n was about 88 p e r c e n t whereas t h i s s h a r e g r a d u a l l y d e c l i n e d i n t h e h i g h e r income group and i t was o n l y 57 p e r c e n t f o r t h e income r e c e i v e r e a r n i n g more t h a n Rs 5000 p e r month. The most s t r i k i n g employment problem o f t h e r u r a l p oor i s t h e i n s t a b i l i t y and i n s e c u r i t y o f t h e i r employment. Gunawardena (1981: 43-44) i n d i c a t e d t h a t t h e r u r a l h i r e d w o r k e r s r e c r u i t e d on a c a s u a l b a s i s had no a s s u r a n c e o f 180 permanency i n employment. The workers who s p e n t l o n g hours i n t h e i r work had no l e g a l p r o t e c t i o n a g a i n s t r i s k s a t t a c h e d t o c e r t a i n d u t i e s . F u r t h e r m o r e , under-employment among t h e l a b o u r c a t e g o r y o f workers i s v e r y common due t o t h e l a b o u r s u r p l u s f a c t o r s and s e a s o n a l n a t u r e o f r u r a l a c t i v i t i e s ( f a r m and non-farm). A t t h e same t i m e , l a b o u r p r o d u c t i v i t y i s g e n e r a l l y low and t h e r e has not been a s i g n i f i c a n t improvement p a r t i c u l a r l y among r u r a l l a b o u r e r s i n r e c e n t y e a r s . The low p r o d u c t i v i t y i n p easant a g r i c u l t u r e was r e f e r r e d t o e a r l i e r ( C h a p t e r 4 ) . The p r o d u c t i v i t y l e v e l i n r u r a l m a n u f a c t u r i n g and t r a d i t i o n a l s e r v i c e s e c t o r s t o o i s r e l a t i v e l y low ( e . g . , i n handloom, Sethuraman and B a n g a s s e r , 1984: t r a d i t i o n a l r u r a l m a n u f a c t u r i n g s e c t o r , ILO, 1983; ILO-ARTEP, 1986a, and house m a i d s ) . These two s e c t o r s ( m a n u f a c t u r i n g , t r a d i t i o n a l s e r v i c e ) employ a s i g n i f i c a n t number of poor l a b o u r e r s i n t h e r u r a l a r e a s . T h e i r s k i l l l e v e l s a r e poor compared t o t h o s e o f o t h e r s . The r a p i d i n c r e a s e of numbers i n t h e l a b o u r c a t e g o r y ( T a b l e 5.3) a g g r a v a t e s t h e l a b o u r market s i t u a t i o n i n t h e r u r a l a r e a s . S c h o l a r s have e x p r e s s e d d i v e r s e o p i n i o n s about t h e c h a n g i n g n a t u r e o f t h e q u a l i t y o f l i f e i n S r i Lanka(3) (Lee, 1977; K a r u n a t i l a k e , 1978; Laksman, 1976, 1980). There i s g e n e r a l agreement t h a t t h e q u a l i t y o f l i f e s i t u a t i o n d i d n o t improve s i g n i f i c a n t l y d u r i n g 1963-73 and t h a t i t has d e t e r i o r a t e d ' s i n c e 1973. The consumption s i t u a t i o n r e a c h e d t h e w o r s t l e v e l d u r i n g 1970-77 p e r i o d due t o t h e 181 u n a v a i l a b i l i t y of food items. Devaluation of the value of the currency a f t e r the introduction of the open market p o l i c y affected the poor adversely because they were already l i v i n g below the poverty l i n e . Their levels of consumption f e l l to even lower l e v e l s . A number of studies indicated a worsening q u a l i t y of l i f e s i t u a t i o n among c e r t a i n occupational groups (e.g., landless labourers) i n r u r a l S r i Lanka (Wickramasekara, 1985; ILO/ARTEP, 1986b). With regard to the r u r a l standard of l i v i n g Jayantha (1985) indicated ". . . the steady f a l l i n r e a l incomes of the bottom q u a r t i l e over the period 1973-1981/82 may be representative of a more general decline i n l i v i n g standards"(1985: 27). Though the income and wage s i t u a t i o n was not favorable for the majority of the r u r a l labour force, there were improvements for some sub-sectors and selected occupational groups i n the r u r a l areas. Improvement was confined to teaching-related occupations and a few other production-related occupations (e.g., construction). We have noted that white-collar and other government-related occupations have shown a s i g n i f i c a n t increase during the l a s t two to three decades. The majority of those employed received some education. Most of those employed i n government sector i n s t i t u t i o n s i n the r u r a l sector enjoyed wage rates and other employment benefits (e.g., pension) somewhat better than those of other workers. The rapid increase i n these occupations was related to the p r o l i f e r a t i o n of welfare services and i n s t i t u t i o n s i n the r u r a l areas. The rapid 182 increase i n these employment groups i n fact has had a s i g n i f i c a n t impact i n terms of the improvements i n s o c i a l indicators i n r u r a l society. Other economic i n i t i a t i v e s of the state have also made a p o s i t i v e impact on some selected occupational categories i n the r u r a l areas. The construction boom during 1977 and 1980, for example, provided employment for a s i g n i f i c a n t number of s k i l l e d and un s k i l l e d r u r a l labourers. The ILO/ARTEP study (1986a) noted a s i g n i f i c a n t improvement i n wage and income leve l s for workers i n t h i s sector. However, the author found from Central Bank's 1983 Price and Wage S t a t i s t i c s (1984c) the d i s p a r i t y between the s k i l l e d and un s k i l l e d labour was considerable and that i n fact, s k i l l e d wage (masons and carpenters) was twice as high as that of the u n s k i l l e d worker. Secondly, the government's post-1977 open-market p o l i c y created new employment opportunities for educated r u r a l young people i n managerial and c l e r i c a l -r e l a t e d occupations p a r t i c u l a r l y i n manufacturing (wearing apparel), trading and finance (rural banks) sectors i n the r u r a l areas. Thirdly, the employment opportunities i n the Middle-Eastern countries also helped to reduce the det e r i o r a t i n g r u r a l employment s i t u a t i o n . To summarize, the RNA growth was concentrated i n two sub-sectors of the r u r a l economy. They were low productive and government-related occupations. Employment growth rates i n these two categories of occupations were not only rapid 183 but also several times higher than any other single occupational category p a r t i c u l a r l y between 1963 and 1981. Though these two occupational categories have shown an increase, the q u a l i t a t i v e changes between these two occupations varied. The q u a l i t y of employment i n the labour type and other low productive occupations was poor and the s i t u a t i o n has been deteriorating further. Growth of t h i s type of occupation was associated with the surplus labour s i t u a t i o n i n the r u r a l areas which was confined to the lower s t r a t a of the r u r a l households. Government-related occupations have not shown a s i g n i f i c a n t increase i n q u a l i t y of employment i n recent years. But government employment has security, reasonably high wages and other benefits and at t r a c t s educated youth i n the r u r a l areas. 5.2 The Factors Which Contributed to the Growth of Rural Non-Farm A c t i v i t i e s This section looks at the mechanisms used to stimulate R N A growth i n S r i Lanka since independence. The " r u r a l development" which was given "top" p r i o r i t y i n the development p o l i c i e s contributed to a number of associated changes i n the r u r a l society. The expansion i n a g r i c u l t u r e and the R N A as well as the over a l l growth of i n f r a s t r u t u r a l f a c i l i t i e s are some of them. 184 5.2.1 A g r i c u l t u r a l Development and RNA F i r s t , we may look at the development of the a g r i c u l t u r e sector and the growth of r u r a l non-farm a c t i v i t i e s . With regard to the contribution of the a g r i c u l t u r a l sector i n the growth of RNA, Chada ( 1985) indicated that ". . . the fastest growing agriculture i s capable of generating i ) high and r i s i n g l e v e l s of on-farm employment and income, i i ) new and expanding avenues of non-farm employment and income, e s p e c i a l l y for the weaker sections of the r u r a l society, i i i ) r i s i n g demand for purchased inputs to meet the requirements of technological changes, and the consumption of non-agricultural products a r i s i n g out of higher income le v e l s and s t r u c t u r a l change i n r u r a l consumption patterns, and iv) a f a i r degree of i n d u s t r i a l growth, heavily biased towards a g r o - i n d u s t r i a l i z a t i o n and economic t e r t i a r i z a t i o n , the e f f e c t s of which are very widely dispersed i n space." (1985:4) In s p i t e of a s i g n i f i c a n t production increase i n r i c e a g r i c u l t u r e (People's Bank, 1984a), the o v e r a l l performance of t h i s sector i n the contribution of RNA was not impressive. There were a number of factors which prevented the forward and backward linkages of rice-crop sector with the r u r a l non-farm sector, p a r t i c u l a r l y the r i c e - r e l a t e d r u r a l i n d u s t r i a l sector. Because r i c e i s a small holder crop produced mainly for subsistence, mere increases i n y i e l d did not necessarily generate additional RNA. As r i c e 185 f a r m i n g was g e n e r a l l y c o n s i d e r e d t o be a f u l l t i m e o c c u p a t i o n / t h e farmers d i d not t e n d t o engage i n RNA. T h e r e f o r e , i n c r e a s e s i n r i c e - p r o d u c t i o n d i d not encourage a s t r o n g r i c e raw m a t e r i a l - r e l a t e d r u r a l i n d u s t r i a l s e c t o r i n t h e wet o r i n t h e d r y zone. Coconut, u n l i k e r i c e , i s a produce t h a t has i n d u s t r i a l uses and has l e d t o g r e a t e r RNA g e n e r a t i o n t h r o u g h t h e growth o f r e l a t e d i n d u s t r i e s . The major p r o c e s s i n g a c t i v i t i e s w h i c h were based on coconut raw m a t e r i a l s a r e t h e f o l l o w i n g : c o p r a , o i l , d e s i c c a t e d c o c o n u t , c h a r c o a l , brown f i b r e and w h i t e f i b r e . A p p r o x i m a t e l y t w o - f i f t h o f n u t s a r e p r o c e s s e d f o r c o p r a , o i l and d e s i c c a t e d c o c o n u t . I n 1981, a t o t a l o f 2623 men and women were d i r e c t l y employed i n t h e p r o d u c t i o n o f c o p r a ( o t h e r t h a n on e s t a t e s ) and t h e p r o c e s s i n g o f d e s i c c a t e d coconut w h i c h i s about 90 p e r c e n t i n c r e a s e i n employment from 1971. The coconut i n d u s t r i a l p r o d u c t i o n i s e x p o r t - o r i e n t e d . S r i Lanka and I n d i a a r e t h e dominant e x p o r t e r s o f c o i r f i b r e i n t h e w o r l d market and n e a r l y 80 p e r c e n t o f t h e w o r l d s u p p l i e s o f t h e h i g h e r q u a l i t y b r i s t l e f i b r e i s s u p p l i e d by S r i Lanka (Marga, 1986a:2). C o c o n u t - r e l a t e d i n d u s t r i a l a c t i v i t i e s a r e l o c a t e d b o t h i n r u r a l and semi-urban a r e a s w h i c h p r o v i d e a s i g n i f i c a n t number o f workers on a f u l l - t i m e as w e l l as p a r t - t i m e b a s i s . Coconut c u l t i v a t e d l a n d s and i n d u s t r i e s a r e m o s t l y l o c a t e d i n t h e "coconut t r i a n g l e " o f t h e d i s t r i c t s o f Gampaha, K u r u n e g a l a and P u t t a l a m w h i c h i s one o f t h e most 186 densely populated regions i n S r i Lanka. The higher population density not only provided cheap labour i n coconut-related i n d u s t r i a l a c t i v i t i e s but also provided markets for finished products. The export o r i e n t a t i o n of t h i s sector activated the growth of export-oriented products and s p e c i a l attention was given by the state to promote such production. The development of the t o u r i s t industry created a new demand for white f i b r e - r e l a t e d products. Plantation agriculture i n S r i Lanka focused mainly on export marketing. The surplus tea and rubber a g r i c u l t u r a l productions were shipped to the external market. Tea processing i n estates and the manufacture of primary rubber provided employment for estate and urban workers. However, these production processes remained i n enclaves which had l i t t l e i n t e r a c t i o n with the domestic i n d u s t r i a l sector. In recent years, however, the processing of tea and rubber has increased l o c a l l y which provided a s i g n i f i c a n t amount of employment as the recent population censuses indicate. Besides the above, there were several other agro-processing industries (sugar, f r u i t s , vegetables, d a i r i e s , wood) which provided RNA-related employment. Most of these i n d u s t r i a l a c t i v i t i e s have been promoted i n recent years (People's Bank, 1986c: 2-19). The i n d u s t r i a l sector i n general was poorly linked to the a g r i c u l t u r a l sector except for tea and rubber. Sethuraman's (1983: Table 1) regrouped i n d u s t r i a l u n i t s , excluding Colombo d i s t r i c t , i n terms of t h e i r linkages with 187 a g r i c u l t u r e indicated that the majority of i n d u s t r i a l units were not linked either forward or backward to a g r i c u l t u r e i n 1971 but linked to r u r a l household consumption i n d u s t r i e s . Unlinked r u r a l industries together comprised more than 50 per cent of the t o t a l i n d u s t r i a l units outside the Colombo d i s t r i c t . Furthermore, one of the important findings of 1986 ILO-ARTEP Rural Industries and Employment Survey was the poor i n t e r - l i n k between the r u r a l industries and between r u r a l small-scale industries and large-scale heavy indu s t r i e s . The majority of the r u r a l industries which employed a s i g n i f i c a n t number of r u r a l labourers adopted t r a d i t i o n a l techniques and did not attempt to modernize those industries due to marketing and f i n a n c i a l constraints (Marga, 1986b and ILO-ARTEP, 1987). In addition, i t has been indicated (ILO, 1983b; ILO-ARTEP, 1987) that the r u r a l industries were faced with l i m i t e d raw materials, non-a v a i l a b i l i t y of c r e d i t and marketing problems i n addition to t h e i r s t r u c t u r a l weakness and l o c a t i o n a l disadvantages. The poor performance of the r u r a l i n d u s t r i a l sector resulted i n a r e l a t i v e l y low l e v e l of non-farm labour absorption i n the r u r a l areas (see Chapter 4). This trend i s r e f l e c t e d i n the occupational d i s t r i b u t i o n and absorption of labour. As Table 5.3 shows, among the sixteen occupational categories (2 d i g i t a l level) which absorbed nearly 90 per cent of the t o t a l r u r a l employment between 1971 and 1981, only two occupational categories (No.95, contraction workers and No.97, food & beverage producers as 188 i n Table 5.3) showed an increase. These two occupational categories together absorbed only about 10 per cent of the t o t a l r u r a l employment increase during t h i s period (Table 5.3). Another important aspect of the r u r a l employment change i s the disappearance of r u r a l i n d u s t r i a l employment (see chapter 4). As Table 5.5 indicates, handloom-related occupations, blacksmiths and tool makers and other t r a d i t i o n a l occupations l o s t a t o t a l of nearly 45 thousand employees between 1971 and 1981. With regard to the disappearance of r u r a l t r a d i t i o n a l occupations such as that of blacksmith, t o o l makers, c r a f t makers and service occupations, the major factors are the increased competition from imports and the changing consumer preference i n the r u r a l areas. Senanayake (1987) c i t i n g from Hesselberge (1981) indicated that " . . . i n a v i l l a g e i n southern province, several of the c r a f t s are disappearing i n the face of import of mass-produced goods" (1987:15). In recent years, however, while many t r a d i t i o n a l c r a f t s have been decl i n i n g , some have achieved considerable production increases due to increased t o u r i s t a r r i v a l s since 1977 and the rapid development of the t o u r i s t industry. 189 5.2.2 S t a t e , I n f r a s t r u c t u r a l Development and t h e Growth o f R u r a l Non-Farm A c t i v i t i e s A c c o r d i n g t o t h e a v a i l a b l e s t a t i s t i c a l i n f o r m a t i o n , w h i t e - c o l l a r - r e l a t e d o c c u p a t i o n s absorbed t h e l a r g e s t number o f employed p o p u l a t i o n (more t h a n 35 p e r c e n t o f t h e t o t a l i n c r e a s e ) i n t h e r u r a l a r e a s ( T a b l e 5.2). Among t h e w h i t e c o l l a r o c c u p a t i o n s , c l e r i c a l and r e l a t e d , p r o f e s s i o n a l and t e c h n i c a l o c c u p a t i o n a l c a t e g o r i e s absorbed more t h a n 90 p e r c e n t o f t h e t o t a l i n c r e a s e i n employment ( T a b l e 5.2). The p r o f e s s i o n a l and t e c h n i c a l o c c u p a t i o n a l c a t e g o r y was h e a v i l y c o n c e n t r a t e d (more t h a n 90%) i n community, s o c i a l and p e r s o n n e l s e r v i c e s e c t o r w h i l e c l e r i c a l and r e l a t e d o c c u p a t i o n a l c a t e g o r i e s were s p r e a d i n t h r e e s e c t o r s community, s o c i a l and p e r s o n n e l s e r v i c e ( 3 3 % ) , t r a n s p o r t , s t o r a g e and communication ( 2 7 % ) , and f i n a n c e , i n s u r a n c e , r e a l e s t a t e and b u s i n e s s s e r v i c e (8%) - i n t h e r u r a l a r e a s a c c o r d i n g t o t h e 1981 p o p u l a t i o n c ensus. That i s t o s a y , s c h o o l t e a c h e r s , government a d m i n i s t r a t i v e w o r k e r s , bank o f f i c i a l s and w e l f a r e - o r i e n t e d o f f i c i a l s were found t o be t h e w h i t e - c o l l a r employees i n t h e r u r a l a r e a s . These c a t e g o r i e s of o c c u p a t i o n s were c r e a t e d by t h e s t a t e and employed i n t h e s t a t e s e c t o r . How were such l a r g e numbers o f w h i t e - c o l l a r (non-farm) o c c u p a t i o n s c r e a t e d i n t h e r u r a l a r e a s ? What f a c t o r s l e d t h e s t a t e t o c r e a t e such t y p e s o f o c c u p a t i o n ? To answer 190 these questions, we should remember f i r s t that independent S r i Lanka inherited a well-developed administrative system from the B r i t i s h c o l o n i a l r u l e r s which linked the administrative c a p i t a l c i t y with the rest of the country. After independence, the objective of developing the domestic a g r i c u l t u r a l sector led the state to es t a b l i s h an inf r a s t r u c t u r e which would coordinate the development of a domestic agricu l t u r e sector. Roads, houses, dams were b u i l t ; tanks and anicuts were renovated; transportation and communications were linked with the a g r i c u l t u r a l areas and a number of administrative units which were related to the a g r i c u l t u r a l development, e.g., a g r i c u l t u r a l extension services were established i n the r u r a l areas. As a r e s u l t of these attempts, more government employment was created i n those areas. While t r y i n g to promote the l i v i n g standard of the r u r a l people, the post-independence governments also attempted to upgrade the s o c i a l aspects of r u r a l l i f e . Education and health were given greater attention. Schools were established even i n remote r u r a l areas; teachers and teaching-related administrative o f f i c i a l s were appointed. Free education was made available for children regardless of sex, and caste. Education was made compulsory for young chi l d r e n . Health f a c i l i t i e s were promoted i n a s i m i l a r manner. The health sector too provided a s i g n i f i c a n t number of jobs for the r u r a l population. 191 The r a p i d l y e xpanding government s e c t o r i n t h e r u r a l a r e a s n e c e s s i t a t e d an a d m i n i s t r a t i v e u n i t t o c o o r d i n a t e and s u p e r v i s e t h e development o f a g r i c u l t u r e and o t h e r s t a t e a c t i v i t i e s a t t h e r u r a l l e v e l . The c o l o n i a l headmen system was a b o l i s h e d and t h e new Grama Sevaka a d m i n i s t r a t i v e d i v i s i o n was c r e a t e d i n wh i c h a Grama Sevaka and a number o f o t h e r a g r i c u l t u r e , r u r a l development and h e a l t h o f f i c i a l s were a p p o i n t e d ( P e r e r a and Fernando, 1980). A t t h e same t i m e , a number o f semi and non-governmental r u r a l i n s t i t u t i o n s such as c o - o p e r a t i v e s , r u r a l development s o c i e t i e s and t h e l i k e were e s t a b l i s h e d . These government, semi and non-governmental r u r a l i n s t i t u t i o n s p r o v i d e d r u r a l non-farm employment. The t o t a l employment i n t h e s t a t e s e c t o r has been i n c r e a s i n g r a p i d l y s i n c e independence. As T a b l e 5.8 i n d i c a t e d t h e t o t a l employed i n p u b l i c s e c t o r has r i s e n more t h a n 100 p e r c e n t w i t h i n 10 y e a r s between 1948 and 1958. The t o t a l number o f s t a t e employees has i n c r e a s e d a t an even f a s t e r r a t e . The r a p i d growth of t e a c h e r s , m e d i c a l o f f i c e r s and o t h e r r e l a t e d o c c u p a t i o n a l c a t e g o r i e s was shown i n t h e e a r l i e r p a r t o f t h i s c h a p t e r . Most o f t h i s employment was found i n t h e r u r a l a r e a s (see T a b l e 5.3). A c c o r d i n g t o t h e 1981 census o f p o p u l a t i o n , a t o t a l o f 519,967 p e o p l e were d i r e c t l y employed i n t h e s t a t e s e c t o r and a n o t h e r 834,217 employed were c a t e g o r i z e d as semi-government employees. Combining b o t h t h e s e two c a t e g o r i e s o f government employees, more t h a n t h r e e - q u a r t e r s o f t h e t o t a l 192 Table 5.8: The Expansion of State Sector A c t i v i t i e s and Growth i n Employment, Selected Years. 1948 1958/59 1970 1975 1981 No. of Public NA 28 62 107 NA Corporations No. of Employed 109854 222664 NA NA 519967 Public Sector 'NA' Not avail a b l e Note. Employment Figures for 1981 include Government Employee Only and Semi-Government Employee Category which includes 834217 persons i n 1981 i s not included i n t h i s table. Source: Figures for 1948, 1958/59, 1970 and 1975 are from Leitan, 1979:27-30. The Figures for 1981 are from the Department of Census and S t a t i s t i c s , 1986c. employees are found i n the r u r a l areas and are mainly d i s t r i b u t e d i n agricul t u r e sector (about 45%), production-re l a t e d occupation (20%) professional and technical and c l e r i c a l (25%) occupational categories. Apart from the above types of non-farm employment creation, there were three other areas where the state was able to create a considerable amount of non-farm employment and income for r u r a l people. F i r s t , the government established a number of r u r a l industries, e.g., handlooms, handicraft and provided d i r e c t employment for the r u r a l workers. Secondly, the government's drought r e l i e f programmes gave farmers and landless labourers part-time work i n the renovation and repair of v i l l a g e tanks and 193 anicuts during the drought and off-seasons. F i n a l l y , the state's anti-poverty programs (see Chapter 4) provided a s i g n i f i c a n t proportion of non-farm income to the r u r a l poor who were considered to be below poverty l e v e l according to the government's d e f i n i t i o n of poverty. There are two questions about the exceptional r o l e of the state i n employment creation and r u r a l development which need to be analysed further. F i r s t , why did the post-independence governments concentrate on such types of development a c t i v i t i e s and how did the state manage to engage i n such massive r u r a l development programmes? A general answer to the f i r s t question i s the e l e c t o r a l i n t e r e s t of the post-independence governments. The e l e c t o r a l aspects of post-independence p o l i t i c s have been discussed from a number of viewpoints, e.g., i n t e r e s t of the core region, e l i t e group and urban bourgeoisie, Moore, (1985a); ethnic p o l i t i c s , Ponnambalam, (1983). More than two-thirds of the t o t a l e l i g i b l e voters i n S r i Lanka l i v e i n the r u r a l areas and t h e i r p o l i t i c a l p a r t i c i p a t i o n i s higher and active compared to several other developing countries. As a r e s u l t of t h i s , the post-independence development plans i n e v i t a b l y gave greater attention to t h i s area and the people who could make the p o l i t i c a l choices. There were a number of sources i n which the states were able to a t t r a c t the needed investment and create employment. Most of the major industries, over 80 per cent of the banking a c t i v i t i e s , power generation and d i s t r i b u t i o n and 194 construction works are financed by the state. According to the a v a i l a b l e information, a t o t a l of 1.1 m i l l i o n employees were employed i n government departments and semi-governmental i n s t i t u t i o n s by December 31, 1978 (People's Bank, 1979: Table 1). According to the 1981 census of population, the s a l a r i e d government employees consisted of more than 90 per cent of white and semi-white-collar occupations and 25 per cent of the r u r a l employed population at that time. It i s important at t h i s point to evaluate whether the state-oriented r u r a l development p o l i c i e s helped to activate a dynamic growth i n r u r a l non-farm a c t i v i t i e s . The a g r i c u l t u r a l - r e l a t e d non-farm growth was discussed e a r l i e r . With regards to the development of in f r a s t r u c t u r e and welfare, three major areas - education, transportation and e l e c t r i f i c a t i o n - are taken here for analysis of the c h a r a c t e r i s t i c s of RNA growth. F i r s t , the achievements i n education (increasing l i t e r a c y and education level) i n the r u r a l areas have undoubtedly contributed to t h i s development. The success of the green revolution and the increasing s k i l l e d and managerial employment i n the r u r a l areas indicate the impact of increasing education. However, t h e i r contribution to the r u r a l development was not s u f f i c i e n t for a rapid RNA growth for the following reasons. The educational system which was inh e r i t e d from the c o l o n i a l masters did not aim at providing s k i l l s and t r a i n i n g i n c l e r i c a l - r e l a t e d occupations. 195 Isenman (1980) i n d i c a t e d t h a t t h e c u r r i c u l u m o f e d u c a t i o n has been f o c u s e d on t h e academic needs o f t h e s m a l l m i n o r i t y g o i n g beyond t h e s e c o n d a r y l e v e l , r a t h e r t h a n on t h e d e v e l o p m e n t - o r i e n t e d l e a r n i n g needs of t h e m a j o r i t y who d r o p out b e f o r e t h e n . The p o s t - i n d e p e n d e n c e e d u c a t i o n system f a i l e d t o t e a c h t e c h n i c a l s k i l l s needed f o r t h e r a p i d development o f an u n d e r d e v e l o p e d economy l i k e S r i Lanka. The s t a t e , on t h e o t h e r hand, made such w h i t e - c o l l a r ( c l e r i c a l and t e a c h i n g -r e l a t e d ) o c c u p a t i o n s p r e s t i g i o u s and s e c u r e by a b s o r b i n g a l a r g e number o f t h o s e t y p e s o f o c c u p a t i o n s i n t h e s t a t e s e c t o r . Those and o t h e r f a c t o r s worked towards t h e s e p a r a t i o n o f r u r a l young l a b o u r f o r c e from t h e a g r i c u l t u r e and t h e p r o d u c t i o n - r e l a t e d o c c u p a t i o n s i n t h e r u r a l a r e a s . Such d i f f e r e n t e x p e c t a t i o n s o f e d u c a t e d y o u t h o n l y h e l p e d t o c r e a t e more unemployment. The e d u c a t e d y o u t h who were from t h e r i c h e r r u r a l households made t h e i r way t o t h e towns as t h e d e s t i n a t i o n o f o u t - m i g r a t i o n from t h e r u r a l a r e a s . The r u r a l t r a n s p o r t a t i o n and e l e c t r i f i c a t i o n , on t h e o t h e r hand, had a s i g n i f i c a n t impact on t h e r u r a l non-farm employment growth. The government t r a n s p o r t s e r v i c e s e c t o r ( C e y l o n T r a n s p o r t Board "CTB") and t h e government r a i l w a y p r o v i d e d r e g u l a r s e r v i c e and c o n n e c t e d most of t h e r u r a l a r e a s w i t h t h e r e s t o f t h e c o u n t r y . W i t h i n t h r e e y e a r s from 1978, more t h a n 35,000 motor c a r s were i m p o r t e d w h i c h s i g n i f i e s t h e i n c r e a s i n g use o f a u t o m o b i l e i n r e c e n t y e a r s . A l l t h e s e , i n f a c t , h e l p e d t h e m o b i l i t y of l a b o u r and t h e 196 t r a n s p o r t a t i o n o f goods and s e r v i c e s w i t h i n t h e r u r a l and between t h e r u r a l and urban a r e a s . Such an impact o f t r a n s p o r t a t i o n i s n o t e d i n t h e employment o p p o r t u n i t i e s i n th e t r a n s p o r t a t i o n - r e l a t e d a c t i v i t i e s . The i n d i r e c t i m p a c t i s e v i d e n t i n t h e i n c r e a s i n g s e c t o r a l i n t e g r a t i o n o f t h e r u r a l economy. The i m p o r t a n c e o f r u r a l e l e c t r i f i c a t i o n w h i c h i n c r e a s e d s i g n i f i c a n t l y i n r e c e n t y e a r s a l s o c o u l d be seen i n t h e same manner. However, t h e development o f r u r a l e l e c t r i f i c a t i o n was b i a s e d towards some a r e a s , c o n s t i t u e n c i e s w h i c h r e t u r n e d members of t h e r u l i n g p a r t y , and most of t h e i n c r e a s e d r u r a l e l e c t r i f i c a t i o n was f o r h o u s e h o l d consumption i n t h e r u r a l a r e a s ( G u n a t i l a k e , 1980: 3 ) . On t h e whole, t h e b e n e f i c i a r i e s o f t h e r u r a l i n f r a s t r u c t u r a l development were, i n f a c t , r i c h p e a s a n t s , t r a d e r s and t h e government p o l i t i c a l s u p p o r t e r s (Swan, 1983; G u n a t i l a k e 1980: 2-3). The development i n t h e e d u c a t i o n a l l e v e l d i d not make any s i g n i f i c a n t impact on t h e poor r u r a l h o u s e h o l d s ; n e i t h e r d i d e l e c t r i f i c a t i o n n o r t r a n s p o r t a t i o n . I n f a c t , t h e l a t t e r two c a t e g o r i e s o f i n f r a s t r u c t u r a l development d i s p l a c e d t h e poor r u r a l l a b o u r e r s and d e s t r o y e d t h e i r t r a d i t i o n a l non-farm e s t a b l i s h m e n t s ( e . g . , b l a c k s m i t h s and t o o l makers, T a b l e 5.5) t h r o u g h t h e improvement o f t r a n s p o r t a t i o n on t h e one hand and e l e c t r i f i e d m e c h a n i z a t i o n on t h e o t h e r hand. However, some p o s i t i v e a s p e c t s o f t h e r u r a l development p r e v e n t e d any r u r a l t o urban m i g r a t i o n of an a d v e r s e k i n d w h i c h o c c u r r e d 197 i n many developing countries as the r e s u l t of the r u r a l population increase and modernization and mechanization which accompanied the green revolution. 5.2.3 Urban Factors i n the Growth of Non-Farm A c t i v i t i e s The influence of the urban market on the growth of RNA i s a well documented aspect i n the employment l i t e r a t u r e . The enterprises located i n the urban centres eith e r provided non-farm employment for the migrant r u r a l workers or promoted the RNA-related a c t i v i t i e s through sub-contracting which d i r e c t l y contributed to employment and income growth i n the r u r a l areas or through creating markets. At the same time, a strong urban impact on the r u r a l economy could eithe r promote or discourage the growth of RNA i n d i r e c t l y . The t o t a l urban population ( o f f i c i a l l y defined) i n 1981 was 3.19 m i l l i o n which was 21.5 per cent of the t o t a l population. Urban growth was not very s i g n i f i c a n t during the l a s t four decades and i n recent years the proportion of t o t a l urban population has shown a decline. Urban functions i n S r i Lanka are mostly administrative and have very l i t t l e i n d u s t r i a l components. As the ESCAP (1980) study on Migration. Urbanization and Development i n S r i Lanka indicates, the in-migration has contributed less than 10 per cent to the t o t a l urban population increase during the period 1948 to 1971. 198 The p r i m a t e c i t y o f Colombo c o m p r i s e s about 60 p e r c e n t of t h e t o t a l urban p o p u l a t i o n i n S r i Lanka i n 1981 w h i c h shows t h e uneven urban d i s t r i b u t i o n i n S r i Lanka. As t h e Marga s t u d y (1981b) i n d i c a t e s , t h e urban economy of Colombo c i t y has been e x p e r i e n c i n g a s u r p l u s l a b o u r s i t u a t i o n . I n a d d i t i o n , Colombo c i t y ' s economic performance and employment a b s o r b i n g c a p a c i t y was l a r g e l y d e t e r m i n e d by e x p o r t market and s t a t e p o l i c i e s . The u rban markets i n S r i Lanka t o some e x t e n t c o n t r i b u t e d t o t h e growth o f r u r a l development by t r a n s f e r r i n g goods and s e r v i c e s . Such t r a n s f e r , as n o t e d e a r l i e r , s t i m u l a t e d t h e growth o f t h e d o m e s t i c s e c t o r and urban e n t e r p r i s e s p r o v i d e d employment f o r a s i g n i f i c a n t number o f r u r a l r e s i d e n t s . F o r example, i t i s i n d i c a t e d t h a t about 45 p e r c e n t o f t h o s e who work i n Colombo commute r e g u l a r l y from n e i g h b o r i n g r u r a l a r e a s (ESCAP, 1980: 8 7 ) . S i m i l a r p a t t e r n s o f employment c o u l d be seen i n s m a l l e r towns as w e l l . However, due t o t h e weakness and s l o w growth o f t h e urban economy, t h e urban e n t e r p r i s e s c o u l d not s t i m u l a t e t h e growth o f RNA f o r t h e f o l l o w i n g r e a s o n s . The s t r u c t u r e o f t h e u rban economy w h i c h c o n t a i n s few i n d u s t r i a l components d i d n ot p r o v i d e s u b - c o n t r a c t i n g a c t i v i t i e s t o r u r a l a r e a s e i t h e r . A t t h e same t i m e , t h e urban market d i d not p r o v i d e an e f f e c t i v e demand f o r consumer and o t h e r p r o d u c t s from r u r a l a r e a s ; i n s t e a d , t h e urban e n t e r p r i s e s b e n e f i t e d by 199 sending goods, urban produced and imported, and services, white-collar occupations, to the r u r a l area. 5.2.4 Population Factors and the Growth of RNA It was indicated e a r l i e r (Chapter 4) that the t o t a l population i n S r i Lanka was growing rapid l y i n 1950s and 1960s due to the decline of mortality rates. The gradual decline of the b i r t h rate began i n early 1970s which resulted i n s i g n i f i c a n t changes i n age d i s t r i b u t i o n . The baby boom children of the 1950s and 1960s entered the labour market i n 1970s. For example, the age group 15-29 was 25 per cent of the t o t a l population i n 1963 but i n 1971 and 1981, the percentage contribution of t h i s age group has increased to 28.4 and 29.6 respectively (ESCAP, 1976). As a r e s u l t , the labour force population (15-59) grew at the rate of 4.2 per annum i n 1971 as opposed to around two per cent per annum i n 1950 and 1960. The o v e r a l l labour market s i t u a t i o n i n 1970s was increasing unemployment, under-employment and u n a v a i l a b i l i t y of productive employment. However, the labour market situ a t i o n s c h a r a c t e r i s t i c a l l y varied between the d i f f e r e n t income groups of r u r a l households. As Morrison and Pinnaduwage (1982) indicated, employment i s l a r g e l y the r e s u l t of a household decision making. They say (1982) ". parents i n the households who plan the strategies and make the choices. Yet i n each community there i s a context 200 within which these choices are made. Everything depends on the l e v e l of resources and opportunities i n the lo c a l i t i e s " ( 1 9 8 2 : 21). Such employment choices and decision making s i g n i f i c a n t l y vary among d i f f e r e n t income groups of the r u r a l households. For purpose of our study, the r u r a l income groups are categorized into two: lower and upper. In fact, as the number of population and f e r t i l i t y studies (Abhayaratne and Jayawardene, 1967 and World F e r t i l i t y Survey, 1978) indicates the population growth i n the 1950s and 1960s was r e l a t i v e l y higher among the lower income groups of r u r a l household compared to others. The higher f e r t i l i t y among the lower income group was associated with low education and l i t e r a c y , etc. (World F e r t i l i t y Survey, 1978). Therefore, the labour force growth could be expected to be also higher among t h i s group. In fact, however, the labour force growth mechanism among the lower income r u r a l households was quite d i f f e r e n t from that of other groups. The members of lower income households entered into the labour market at an ea r l y age and t h e i r o v e r a l l working time was also high. As Tilakeratne (1977) indicated, c h i l d labour i s common among these poor households. Likewise, female work p a r t i c i p a t i o n was also high. The rapid increase i n labour force population i n the lower income category undoubtedly would have increased the r u r a l labour i n selected occupational categories (e.g., manual and labour type occupation). In fact, as Wickramasekara (1977) indicated, the development of 201 the domestic agriculture sector i n 1950s created a demand for 'hired labour' i n r u r a l areas i n which the lower income group was able to get employment. However, such a s i t u a t i o n changed i n 1970s due to the r e l a t i v e decline of ag r i c u l t u r e employment and to surplus labour i n the r u r a l areas. The labour s i t u a t i o n i n the middle and upper income group was d i f f e r e n t from the previous s i t u a t i o n . The large segment of young people i n the population was associated with the r a p i d l y increased educational f a c i l i t i e s i n the r u r a l areas. For example, as the enrollment rates and progression rates are linked with income l e v e l s , the drop-out rate i s generally much higher among low-income families i n the r u r a l sector (Wickramasekara, 1986). As a r e s u l t , education for these income groups means s a l a r i e d employment and s o c i a l mobility. In t h i s regard, Isenman (1980) indicated that ". . . Public- or formal private-sector jobs tend to be more secure and to o f f e r much better career prospects; such jobs are worth waiting for. In other words, r e l a t i v e l y educated young people i n S r i Lanka have a high 'reservation wage'. They tend to choose to remain ('voluntarily') unemployed i n large part because, from t h e i r point of view, i t i s f i n a n c i a l l y p r o f i t a b l e i n the long run to do so". Moore and Wickramasinghe (1980) too found i n a v i l l a g e l e v e l study that the parents were prepared to support the educated unemployed youth u n t i l they found a "good" job either i n the government sector or equivalent white-collar 2 0 2 occupation. Therefore, the increasing open unemployment among the middle and upper rural groups was largely due to the lack of white-collar employment and partly due to attitudes about other 'less prestigious' rural employment. Therefore, as the above discussion indicates, the mechanism in which labour type and government-related occupations emerged were different in the rural areas. 5 . 4 Discuss ion In the previous sections of this chapter, three major research questions with regards to the growth of rural non-farm acti v i t i e s in Sri Lanka were considered: a) has R N A significantly increased? b) has the overall quality of labour increased among the R N A workers? c) what factors led to such growth of R N A ? Our findings are the following: The R N A growth was significant in absolute numbers only during the recent decades especially after 1 9 7 0 . Secondly, the R N A growth during the study period was confined to two areas of occupational categories: the low productive occupations and salaried government employment. The R N A growth mechanism and quantitative and qualitative aspects of these two "polarized" categories' employment growth dif f e r . The low productive occupations increased in numbers (volume) but the extent of i t s numerical significance is not known at the 203 national l e v e l due to the u n a v a i l a b i l i t y of data. However, as a number of micro-level case studies (Wickramasekara, 1977 and Crooks and Ranbanda, 1981) indicate, the growth of RNA was much higher than reported i n the macro-level s t a t i s t i c s . Further, the labour type RNA growth was confined to the lower income group of the r u r a l households among whom labour surplus and under-employment were common. The surplus s i t u a t i o n i n t h i s income group was associated with the rapid population and labour force growth and also higher labour p a r t i c i p a t i o n i n the form of c h i l d labour and female work p a r t i c i p a t i o n compared to other income groups. But at the same time, the weak r u r a l economy which was not able to absorb the cheap labour was also l a r g e l y responsible for t h i s s i t u a t i o n . Therefore, as the conceptual scheme of RNA growth model (Chapter 2) predicted, the population factors (supply determined RNA growth factors) were stronger i n the emergence of labour type RNA growth. The mechanism that explains the s i g n i f i c a n t growth of government-related occupations was d i f f e r e n t from the supply determined RNA growth s i t u a t i o n . The emergence of such type of occupation was neither the r e s u l t of r u r a l economic development nor the o v e r a l l improvement i n the economy. In fact, the growth of government-related occupations was associated with "welfarism" as state p o l i c y and the impact of e l e c t o r a l p o l i c i e s i n post-independence S r i Lanka. At the i n i t i a l stage, i t was the population factor which led to the rapid labour force growth. The s i t u a t i o n created by t h i s 2 0 4 mechanism was open unemployment among the educated youth. The employment problems of the youth of the middle and upper st r a t a of r u r a l households were given greater attention by the state since t h e i r p o l i t i c a l activism was important i n e l e c t o r a l revolutionary p o l i t i c s . Therefore, the state used i t s a v a i l a b l e resources and expanded the state sector i n order to create more employment and absorb many of the unemployed youth. Such a mechanism of RNA growth was not demand determined. Instead, i t was a kind of manipulative employment growth which i s found i n post-independence S r i Lanka and i n many other LDCs. However, such conclusions need to be c l a r i f i e d further. The atmosphere for rapid numerical as well as q u a l i t a t i v e growth of RNA i n S r i Lanka e x i s t s . F i r s t , unlike i n several other developing countries, the growing labour force i n S r i Lanka was r e l a t i v e l y well educated. Secondly, a r e l a t i v e l y well developed infr a s t r u c t u r e positioned r u r a l S r i Lanka for an integrated r u r a l development along with RNA growth. Th i r d l y , the S r i Lankan model of r u r a l development was unique i n developing countries and such r u r a l bias development p o l i c i e s did transfer a s i g n i f i c a n t proportion of the national wealth to the r u r a l areas during the l a s t four decades. F i n a l l y , there has been a s i g n i f i c a n t demand for RNA-related goods and services from the domestic agr i c u l t u r e sector and from r u r a l consumers. However, i n spite of t h i s atmosphere there was no further s i g n i f i c a n t growth i n RNA i n S r i Lanka. As 205 discussed e a r l i e r , t h i s was due to the following factors. The f i r s t factor i s the poor performance of the o v e r a l l economy and the lack of any sectoral change. The second weakness was the lack of foresight of the post-independence development p o l i c i e s with regard to future development. The t h i r d factor i s the concentration of post-independence p o l i t i c s on e l e c t o r a l factors. The government p o l i c i e s during t h i s period were mainly for short-term goals aimed at s a t i s f y i n g the electorate. The benefits of development and welfare were d i s t r i b u t e d to everybody (Isenman, 1980; Wickramasekara, 1986) instead of providing such benefits to the "targeted" (under privileged) groups which would have made the s i t u a t i o n far more desirable for development. Wickramasekara (1985) indicated that ". the analysis of anti-poverty programmes i n S r i Lanka shows that most programmes had no s p e c i f i c focus on the r u r a l poor and generally applied to the whole population" (1985: 249). In t h i s s i t u a t i o n , RNA grew i n two d i r e c t i o n s : one was as a strategy of s u r v i v a l which was adopted by the poor segment of the r u r a l households. A phenomenal growth of low productive occupations was one example of t h i s . On the other hand, the state was forced to expand i t s various sectors i n order to absorb the educated unemployed who were considered to be a s i g n i f i c a n t threat i n the form of p o l i t i c a l opposition or r a d i c a l movements. In t h i s respect, the white-c o l l a r and other government-related employment grew s i g n i f i c a n t l y . 206 In conclusion, the major d r i v i n g factor i n the post-independence growth of RNA was the supply determined factor, that i s the expansion of population examined e a r l i e r . However, the government undertakings on the other hand created employment opportunities by introducing state venture. We may consider these RNA to be demand factor induced. But the extent of employment created by state intervention was not very large and i n the long term i t had very l i t t l e s i g n i f i c a n c e as a factor generating momentum of growth of RNA. Notes 1 Population census reports (1971 and 1981) provide occupational information at d i f f e r e n t levels of occupational categories. These are c a l l e d d i g i t a l l e v e l s . The two-d i g i t a l l e v e l of occupational category i s more de t a i l e d information than the major or f i r s t d i g i t a l category. The two-digital occupational category provide more f l e x i b i l i t y for researches i n the occupational analysis. 2 "Labourers not elsewhere c l a s s i f i e d " i s an occupational category i d e n t i f i e d i n the census reports and i s defined as low paying and low status. 3 Lee (1977) argued that the l e v e l of poverty and income d i s t r i b u t i o n i n S r i Lanka deteriorated during 1960s and 1970s. The opposite view was expressed by Rasaputram (1972), Karunatileke (1978) and Laxman (1975). 208 CHAPTER SIX: THE SPATIAL DISTRIBUTION OF RURAL NON-FARM ) ACTIVITIES AND THE VARIATIONS IN THEIR REGIONAL GROWTH IN SRI LANKA The underlying factors that cause changes i n RNA vary r e g i o n a l l y . The growth and type of RNA i s a r e f l e c t i o n of agro-ecological factors, the uneven impact of economic growth and government decision making. This chapter looks at the s p a t i a l d i s t r i b u t i o n and variations i n regional growth i n RNA. S t a t i s t i c a l information at the administrative d i s t r i c t l e v e l i s used i n t h i s analysis. Population census reports and other macro-level surveys are used as the basis for the s t a t i s t i c a l analysis. The purpose of t h i s chapter i s f i r s t to i d e n t i f y the s p a t i a l d i s t r i b u t i o n and variations i n the regional growth i n RNA; secondly to group the administrative d i s t r i c t s which experienced s i m i l a r types of RNA growth into regions; and, f i n a l l y , to i d e n t i f y the factors which have contributed to s p a t i a l d i s t r i b u t i o n and variations i n regional growth i n RNA i n S r i Lanka during the study period. 6.1 Regional Analysis of RNA An inspection of RNA reveals that there are two d i s t i n c t aspects of RNA that require detailed study. The f i r s t of these i s the s p a t i a l d i s t r i b u t i o n pattern of RNA i n S r i Lanka at any one time that may be obtained by using data 209 of that census year (the s p a t i a l d i s t r i b u t i o n of RNA when expressed as a proportion of the t o t a l employed population w i l l be referred to as the 'structure of RNA' for the purpose of t h i s study). The second aspect that needs inve s t i g a t i o n i s the variations i n the regional growth of  RNA over time that emerges from data for the period 1963 to 1981. 6.2.1 The Spatial D i s t r i b u t i o n of RNA This section analyses the s p a t i a l d i s t r i b u t i o n and i t s c h a r a c t e r i s t i c s of RNA at the d i s t r i c t l e v e l . The  proportion of r u r a l employed population i n RNA to the t o t a l  r u r a l employed population (structure of RNA) i s used as an indi c a t o r of RNA i n t h i s analysis. However, the s i g n i f i c a n c e of the absolute number employed i n RNA i s emphasized whenever necessary. The analysis was ca r r i e d out for each of the 22 d i s t r i c t s of S r i Lanka. Diagram 6.1 gives the l o c a t i o n of these 22 d i s t r i c t s . ( 1 ) The structure of RNA varied s i g n i f i c a n t l y across the d i s t r i c t s i n 1981 as shown i n Table 6.1. The more urbanized Colombo d i s t r i c t shows the highest proportion (81 percent) engaged i n RNA while the plantation a g r i c u l t u r e economy of Nuwara E l i y a d i s t r i c t shows the lowest (17 percent). Similar d i s t r i c t - w i s e variations i n the structure of RNA were observed i n 1963 as well. 210 Diagram 6.1: S r i Lanka: A d m i n i s t r a t i v e D i s t r i c t s at the Time of 1971 Census. ' B a t t i c a l o a 1 / P u t t a l a m / Ma t a l e '\ Kandy ^'Kegalle / ' B a d u i l a i [ Ampara Colombo , 'Nuwara; \ \ E l i y a ' ' M o n eragala K a l u t a r a R a tnapura V G a l l e Hambantota 2< i — 74 mitts Source : F i e l d Survey , 1987. 211 Table 6.1: The Percentage of Employed Population Engaged i n Non-Farm A c t i v i t i e s by D i s t r i c t , Selected Years. D i s t r i c t s * % of Non-Farm Employment** 1963 1981 Colombo 71.8 81.4 Kalutara 46 .4 58.1 Kandy 27.4 50.5 Matale 24.8 33.9 Nuwara E l i y a 11.6 17 .2 Galle 51.2 51.8 Matara 40.5 44.9 Hambantota 26.9 33.5 Jaffna 49.9 48.8 Mannar 35.0 30.2 Vavuniya 23.5 31.9 Batticaloa 30.2 34.7 Tricomalee 39.4 38.2 Ampara 40.1 34 .4 Kurunegala 33.6 40.8 Puttalam 50.4 49.4 Anuradhapura 23.9 24.9 Polonnaruwa 27.1 32.6 Badulla 17 .5 22.1 Moneragala 9.3 22.5 Ratnapura 24.8 36.1 Kegalle 36.9 46.8 '*' D i s t r i c t Reported as i n 1971 Population Census. '**' Employed Population i n Rural Areas Only. For 1981, Gampaha d i s t r i c t included i n Colombo d i s t r i c t and M u l l a i t i v u d i s t r i c t i s not included i n t h i s table. Source: Calculated from Census of Population, 1963 and 1981. Department of Census and S t a t i s t i c s , 1967a and 1984a. 212 The main agro-ecological zones(2) exhibit a d i s t i n c t pattern i n the volume of RNA. While wet-zone h i l l country, intermediate and dry zones each have ranged from 34 to 37 per cent of the t o t a l r u r a l employed population i n RNA-related a c t i v i t i e s , the wet-zone low country has almost twice that percentage (65 per cent) i n the same a c t i v i t i e s (see Table 6.3a). A s i g n i f i c a n t l y higher proportion of RNA i n wet-zone low country d i s t r i c t s i s c l o s e l y associated with higher population density, greater urbanization, more d i v e r s i f i e d economic a c t i v i t y and the p o l i t i c a l dominance of t h i s zone compared to others. The variations i n RNA are also calculated by sex and by i n d i v i d u a l occupational categories within RNA (Table 6.2). The proportion of males employed i n RNA i s c o n s i s t e n t l y higher, often more than 80 percent, i n a l l d i s t r i c t s . . However, the proportion of female p a r t i c i p a t i o n i n RNA i s r e l a t i v e l y high i n the urbanized wet-zone low country d i s t r i c t s of Colombo, Kalutara, Galle and Matara compared to other a g r i c u l t u r e dominant d i s t r i c t s . 6.2.2 The Growth of RNA Sp a t i a l variations i n the growth of RNA are a r e f l e c t i o n of sectoral changes i n employment across the regions of S r i Lanka. The regional changes i n RNA are 213 Table 6.2: Rural Non-Farm Employed by White-Collar, Blue-C o l l a r and Service Occupations, 1981. Proportional Contribution D i s t r i c t White C o l l a r Blue C o l l a r Service Occupation(%) Occupation(%) Occupation(%) Total Female Total Female Total Female Colombo 32 .2 27 .0 56 .8 15 .0 9 .0 19 .0 Kalutara 34 .5 27 .0 55 .2 13 .0 9 .4 17 .0 Kandy 39 .2 22 .0 52 .0 13 .0 8 .8 18 .0 Matale 37 .2 22 .0 53 .6 17 .0 9 .2 16 .0 Nuwara E l i y a 40 .5 19 .0 47 .8 14 .0 17 .7 13 .0 Galle 34 .5 26 .0 56 .5 17 .0 9 .0 17 .0 Matara 39 .4 27 .0 50 .5 16 .0 10 .0 20 .0 Hambantota 32 .2 26 .0 57 .8 16 .0 9 .9 15 .0 Jaffna 42 .7 19 .0 49 .3 6 .0 8 .0 8 .0 Mannar 39 .9 13 .0 51 .0 12 .0 9 . 1 15 .0 Vavniya 35 .8 19 .0 54 .3 12 .0 9 .9 19 .0 Baticaloa 34 .9 16 .0 53 .0 11 .0 12 .0 10 .0 Trincomalee 26 .6 15 .0 63 .7 6 .0 9 . 7 4 .0 Ampara 34 .4 16 .0 55 .7 8 .0 9 .9 6 .0 Kurunagala 35 .0 25 .0 56 .0 17 .0 9 .0 16 .0 Puttalam 28 .2 24 .0 62 .2 18 .0 9 .6 16 .0 Anuradhpura 39 .6 11 .0 51 .9 11 .0 8 .5 9 .0 Polonnaruwa 28 . 1 19 .0 64 .7 7 .0 7 .2 9 .0 Badulla 42 .0 24 .0 47 .5 10 .0 10 .4 16 .0 Monaragala 40 .0 18 .0 50 .2 15 .0 9 .8 13 .0 Ratnapura 28 .4 25 .0 63 .5 7 .0 8 .1 18 .0 Kegalle 33 .6 26 .0 57 .5 11 .0 8 .9 15 .0 Note: 1) Percentages indicate the proportional Contribution of each major occupational categories. 2) White c o l l a r , blue c o l l a r and service occupations as defined i n census. 3) Total employed indicates the percentage of persons (both male and female) employed i n each occupational category. Female employed indicates the percentage of females i n each occupational category. Source: Calculated from Census of Population, 1971 and 1981. Department of Census and S t a t i s t i c s , 1984a. 214 Table 6.3a: RNA and Related Variables by Agro-Ecological Zones, 1981. Major Climatic Zone % of Total Popu-l a t i o n % of Urban Popu-l a t i o n * Popula. Density (per sq.km.) % of Total Area % RNA Wet Zone Low country Wet Zone H i l l country 29.6 42.0 23.3 09.0 Intermediate Zone 16.4 06.0 Dry Zone 30.7 17.0 1031 391 8.2 13.4 220 15.1 115 63.3 65.0 37.0 34.0 35.0 Total 100.0 21.0 213 100.0 '*' % urban population to t o t a l population. Table 6.3b: RNA Growth and Related Variables by Agro-Ecological Zones, 1953-81. Major Climatic Zone Population Growth (%) 1953-81 Net Lifetime RNA Growth Migration 1963-81# Wet Zone Low Country Wet Zone H i l l Country Intermediate Zone Dry Zone 32.0 16.0 14.0 38.0 -84827 -286372 -80552 451759 25.0 32.9 68.2 60.2 '*' Percentage of absolute number of RNA growth '#' Data at the regional levels are not available for estimating RNA growth for 1953. Source: Calculated using census, 1953-1981. Department of Census and S t a t i s t i c s , Various Years. 215 analysed i n t h i s section for the three decades since independence (1948 to 1981). The variations i n the regional growth of RNA d i f f e r sharply between d i s t r i c t s . For example, according to the available s t a t i s t i c s for the period between 1963-81 (see Table 6.4), the highest growth i n RNA occurred i n Monaragala d i s t r i c t located i n a dry-zone a g r i c u l t u r a l development area. The growth here was more than 300 per cent. A wet-zone d i s t r i c t , Matara, has shown almost zero per cent growth i n RNA during the same period. The growth i n absolute number also confirms the wide v a r i a t i o n i n RNA between d i s t r i c t s . 6.3 Hypotheses Given the above o v e r a l l patterns of s p a t i a l d i s t r i b u t i o n and the regional growth of RNA, t h i s thesis proposes to examine the following hypotheses i n r e l a t i o n to RNA changes i n S r i Lanka. The changes r e f e r to the period 1960-1980. 1) The d i s t r i c t s characterized by rapid increase i n the r u r a l labour force, in-migration and intensive c a p i t a l investment i n domestic agriculture have exhibited the largest growth of RNA. In d i s t r i c t s where these changes d i d not occur, the growth of RNA was not so rapid. 216 Table 6.4: The Percentage Changes i n Employment by D i s t r i c t , 1963-71 and 1971-81. D i s t r i c t Employment Change (%) 1971-81 1963-71 Total Rural RNA Total Rural RNA Emplo- Emplo- Emplo- Emplo-yment yment yment yment Colombo 26 34 48 8 -12 -10 Kalutara 6 5 14 8 5 22 Kandy -24 -23 29 7 -1 28 Matale 3 4 38 23 23 26 Nuwara E l i y a 40 40 193 1 0 30 Galle -2 -2 -6 9 8 13 Matara -5 -5 -5 11 10 23 Hambantota 26 24 35 21 20 38 Jaffna 11 11 67 7 -5 -6 Mannar 39 40 31 21 20 13 Vavuniya -3 0 7 32 27 11 Bat t i c a l o a 23 29 27 25 29 50 Trincomalee 29 37 210 -5 2 -24 Ampara 39 36 15 9 19 13 Kurunegala 14 14 39 26 26 26 Puttalam 27 31 27 20 18 20 Anuradhapura 38 40 99 63 71 24 Polannaruwa 66 72 20 20 13 -5 Badulla 18 12 134 -1 3 -37 Moneragala 16 44 67 41 41 195 Ratnapura 31 31 160 -2 0 27 Kagalle 2 0 17 1 -3 6 Note Employment indicates the t o t a l employed population and defined as the workers employed i n f u l l - t i m e economic a c t i v i t i e s . Employment change indicates the percentage of change i n the t o t a l employment during the reference period. Source: Calculated from Population Censuses, 1971 and 1981. Department of Census and S t a t i s t i c s , 1967a and 1984a. 217 2) The d i s t r i c t s with a higher l e v e l of urbanization were characterized by RNA growth. In d i s t r i c t s where urban growth was slow, the RNA growth was also slow. 3) The d i s t r i c t s that experienced d i v e r s i f i c a t i o n i n r u r a l economic a c t i v i t i e s , the growth of RNA was rapid. In d i s t r i c t s where such d i v e r s i f i c a t i o n i n r u r a l economic a c t i v i t i e s was poor, the growth i n RNA was slow. 4) In d i s t r i c t s where the i n f r a s t r u c t u r a l development was high the growth of RNA was faster. In d i s t r i c t s where the i n f r a s t r u c t u r a l development was poor, the growth of RNA was slow. These hypotheses were tested i n two stages. In the f i r s t stage, the c r u c i a l variables which contributed to the variatio n s i n RNA i n S r i Lanka were i d e n t i f i e d i n a s t a t i s t i c a l analysis. In the second stage, using the o v e r a l l s t a t i s t i c a l findings and the background RNA-related variables, the RNA growth regions were i d e n t i f i e d . 6.4 Regional Variations i n RNA: Empirical Analysis The pattern of RNA changes across the d i s t r i c t s i n S r i Lanka requires separate analyses. The analyses that follows are two f o l d , ( i) The f i r s t part of the analysis looks at the s p a t i a l d i s t r i b u t i o n i n the structure of RNA using 1981 s t a t i s t i c a l materials. ( i i ) The other examines the variatio n s i n the regional growth of RNA between 1963 and 1981. 218 With regard to (i) the s p a t i a l d i s t r i b u t i o n i n the structure of RNA, a t o t a l of 25 measurable demand and supply RNA-related variables are selected from a number of r e l i a b l e s t a t i s t i c a l sources. The majority of the 25 variables are calculated from 1981 population and housing census information. Other variables are obtained from government publications and related sources for the period around 1981. The names and the d e f i n i t i o n s of the variables used i n t h i s analysis are given i n Appendix 2, Table 1. (i) The structure of RNA employment i s measured by the  percentage of employed population engaged i n r u r a l non-farm  a c t i v i t i e s to the t o t a l r u r a l employed population. The independent variables (Appendix 2, Table 1) are used as measures of economic development (demand-related indicators) and population-related aspects (supply-related indicators) of RNA. The variables i n d i c a t i n g the l e v e l s of i n d u s t r i a l i z a t i o n , r u r a l e l e c t r i f i c a t i o n , d i v e r s i f i c a t i o n of r u r a l economic a c t i v i t i e s , the female l i t e r a c y rate, the r a t i o of farm/non-farm wage are among others used as the indicators of demand factors of RNA. The supply factors of RNA are represented by a percentage of the unemployed population, a percentage of part-time farmers, a percentage of food stamp receivers, a percentage of income receivers i n the l a s t income category and a percentage of the dependent population. ( i i ) The analysis of variations i n the regional growth of RNA, on the other hand, i s intended to understand changes 219 i n RNA since independence. The r e l i a b l e and comparable s t a t i s t i c s at the r u r a l l e v e l are available only since 1963 (see Appendix 1, Table 2). Therefore, s t a t i s t i c a l information from censuses of 1963, 1971 and 1981 are used as the basis for the selection of most of the variables i n RNA growth analysis. The percentage of change i n the absolute  number of employed population i n r u r a l non-farm a c t i v i t i e s was used as the main dependent variable. The purpose of using t h i s variable i s to measure the absolute change of RNA between 1963 and 1981. A t o t a l of 14 background variables which i n most cases cover the period between 1963 and 1981 were selected as independent variables. The names and the d e f i n i t i o n s of these variables are given i n Appendix 2, Table 2. The independent variables i n t h i s analysis represent socio-economic and demographic factors that may have changed concurrently with RNA during the study period. S t a t i s t i c a l l y two techniques, c o r r e l a t i o n and multiple regression, were used to analyse s p a t i a l d i s t r i b u t i o n and the v a r i a t i o n s i n the regional growth of RNA. The purpose of employing these two s t a t i s t i c a l techniques was to i d e n t i f y the strength and d i r e c t i o n of relationships between each background variable and RNA ( c o r r e l a t i o n analysis) and to determine the degree of l i n e a r dependence of RNA on the background variables (multiple regression). The Pearson c o r r e l a t i o n c o e f f i c i e n t and stepwise multiple regression methods were employed using S t a t i s t i c a l Package for S o c i a l  Science (SPSS:X, University of B r i t i s h Columbia Version) 220 s t a t i s t i c a l programme. The findings of these analyses are as follows. 6.4.1 The Analysis of Spatial ( D i s t r i c t ) D i s t r i b u t i o n i n the Structure of RNA Rank-order c o r r e l a t i o n analysis was used i n the f i r s t stage of analysis to i d e n t i f y and then to eliminate from further analyses the variables that had no s i g n i f i c a n t association with RNA. Using a smaller set of independent variables, c o r r e l a t i o n analyses followed. Using the univariate Pearson c o r r e l a t i o n analysis, i t was found that there was no s i g n i f i c a n t association between the structure of RNA i n 1981 with labour p a r t i c i p a t i o n ( a c t i v i t y ) rates, wage rates, s o c i a l indicators such as the student/teacher r a t i o , housing and ethno-cultural variables i . e . , percentage of Sinhalese population. Seven other independent variables (socio-economic and demographic variables) were found to be correlated (r=.5 or greater) with RNA at a s i g n i f i c a n t l e v e l (p=.0001 or bet t e r ) . The highly correlated variables and the co r r e l a t i o n values are given i n Table 6.5. As Table 6.5 indicates, the structure of RNA i n 1981 was associated with a combination of supply and demand-related factors. For instance, among the strongly correlated v a r i a b l e s , % of urban population (r=.71), the l e v e l of d i v e r s i f i c a t i o n i n r u r a l economic a c t i v i t i e s (r=.77), the l e v e l of r u r a l 221 Table 6.5: Relationship Between Selected Demand and Supply Factors (1981) and the Structure of RNA i n 1981 (Pearson r; N = 22 D i s t r i c t s ) Variables Percentage of Part-time A g r i c u l t u r a l operators to the Total Small Holders Structure Structure Structure of RNA(%) of RNA(%) of RNA(%) Female Total 84 Male .83 01 Number of Types of Economic A c t i v i t i e s 77 73 NS Population Density .77 Number of Indu s t r i a l .73 Establishment (below 5 workers) Percentage of Urban Population .71 Percentage of Unemployed .65 to Total Labour Force 74 68 73 62 26 19 32 06 Percentage of Rural Houses Having E l e c t r i c i t y 64 65 05 A l l r's reported are p.0001 or better. Table 6.6: Multiple Regression Analysis of Selected Demand and Supply Factors i n 1981 and Structure of RNA i n 1981 (N = 22) (R = .957 and R2 = .92) Percentage of Urban Population Number of Types of Economic A c t i v i t i e s Standardized Beta .630 .295 Part-time A g r i c u l t u r a l Operators to the Total Small Holder Population Density Number of Indu s t r i a l Establishments (below 5 workers) Percentage of Unemployed to Total Labour force .239 -.221 . 171 . 131 Source: Calculated Using SPSS:X. 222 i n d u s t r i a l i z a t i o n (r=.73) and % of household having e l e c t r i c i t y indicate the demand-related factors of RNA. At the same time, the % of unemployed population (r=.64) and % of part-time farmers (r=.84) indicate that RNA i s associated with population pressure on the available r u r a l resources. The patterns of association of these background factors for males and females are d i f f e r e n t . The structure of RNA for males mirrors the o v e r a l l patterns of association with background variables. The structure of RNA for females was not only not s i g n i f i c a n t l y related to background variables but the pattern of relationships was inconsistent with the pattern for o v e r a l l structure of RNA. This was probably due to the low v a r i a t i o n i n female RNA across the d i s t r i c t s . The above univariate analyses i d e n t i f i e d the s p e c i f i c factors which were associated with the s p a t i a l d i s t r i b u t i o n i n the structure of RNA i n S r i Lanka i n 1981. However, i t may be noted that since i d e n t i f i e d variables are probably i n t e r - r e l a t e d , the contribution of each variable to the structure of RNA cannot be adequately estimated from the univariate analyses. Therefore, multiple regression analysis(3) was employed to provide evidence of the independent contribution of each variable to v a r i a t i o n i n the dependent variable (RNA). The seven background variables that are correlated with RNA i n Table 6.5 were entered into the step-wise multiple regression analysis. Table 6.6 shows seven background variables which explain .927 of the t o t a l variance i n the 2 2 3 s t r u c t u r e o f RNA. These seven v a r i a b l e s t h u s make a s i g n i f i c a n t i m p a ct on t h e s t r u c t u r e o f RNA i n 1981. The s t a n d a r d i z e d b e t a v a l u e s i n T a b l e 6.6 i n d i c a t e t h e s t r e n g t h and t h e o r d e r o f e f f e c t s o f s u p p l y and demand v a r i a b l e s on t h e s t r u c t u r e o f RNA. I n o r d e r o f t h e i r s i g n i f i c a n c e f o r t h e s t r u c t u r e o f RNA, t h e y a r e : u r b a n i z a t i o n , d i v e r s i f i c a t i o n i n r u r a l economic a c t i v i t i e s , % o f p a r t - t i m e f a r m e r s , p o p u l a t i o n d e n s i t y , number o f s m a l l -s c a l e i n d u s t r i a l e s t a b l i s h m e n t s , t o t a l unemployment and r u r a l e l e c t r i f i c a t i o n . As t h e o r d e r o f background v a r i a b l e s i n d i c a t e s , t h e % o f u r b a n p o p u l a t i o n emerged as t h e most i m p o r t a n t e x p l a n a t o r y v a r i a b l e i n t h e v a r i a t i o n s o f RNA i n 1981. I n o t h e r words, t h e d i s t r i c t s w h i c h have had h i g h e r p r o p o r t i o n o f u r b a n p o p u l a t i o n have a l s o had h i g h e r p r o p o r t i o n o f RNA o r v i c e -v e r s a . The demand d e t e r m i n e d f a c t o r s (economic development-r e l a t e d ) and s u p p l y d e t e r m i n e d f a c t o r s (employment problems and p o p u l a t i o n d e n s i t y ) a r e i n t e r m i x e d i n t h e i r o r d e r o f e x p l a n a t i o n o f t h e s p a t i a l d i s t r i b u t i o n o f RNA. T h i s s u g g e s t s t h a t r e g i o n a l v a r i a t i o n s i n t h e l e v e l o f u r b a n i z a t i o n i n c o m b i n a t i o n w i t h t h e v a r i a t i o n s i n economic development and p o p u l a t i o n p r e s s u r e a r e a s s o c i a t e d w i t h t h e s p a t i a l d i s t r i b u t i o n i n t h e s t r u c t u r e o f RNA i n 1981. I n a d d i t i o n , when o t h e r v a r i a b l e s were c o n t r o l l e d i n t h e r e g r e s s i o n a n a l y s i s , t h e d i r e c t i o n o f t h e r e l a t i o n s h i p between t h e s t r u c t u r e o f RNA and t h e p o p u l a t i o n d e n s i t y was r e v e r s e d . Thus, t h e d i s t r i c t s w h i c h have had a h i g h e r 224 p r o p o r t i o n o f RNA have a low p o p u l a t i o n d e n s i t y ( i . e . , T r i n c o m a l e e and P u t t a l a m ) and v i c e - v e r s a ( i . e . , Nuwara E l i y a ) . 6.4.2 The A n a l y s i s o f t h e V a r i a t i o n s i n t h e R e g i o n a l Growth o f RNA The a n a l y s i s i n t h i s s e c t i o n i s f o c u s e d on t h e p e r c e n t a g e changes i n t h e a b s o l u t e number o f RNA between 1963 and 1981. The purpose o f t h i s a n a l y s i s i s t o i d e n t i f y t h e f a c t o r s a s s o c i a t e d w i t h t h e changes i n RNA d u r i n g t h e above r e f e r e n c e p e r i o d . The same a n a l y t i c a l s t e p s as b e f o r e ( P e a r s o n and r e g r e s s i o n a n a l y s e s ) were t a k e n i n t h i s a n a l y s i s as w e l l . A c c o r d i n g t o t h e f i n d i n g s from t h e P e a r s o n c o r r e l a t i o n a n a l y s i s ( T a b l e 6.7), t h e changes i n a g r i c u l t u r a l l a n d , n e t -m i g r a t i o n , town p o p u l a t i o n i n t h e a d m i n i s t r a t i v e u n i t o f town c o u n c i l ( s m a l l towns) a r e p o s i t i v e l y c o r r e l a t e d w i t h t h e changes i n RNA between t h e p e r i o d 1963 and 1981. The a s s o c i a t i o n s w i t h p r o p o r t i o n o f males i n RNA i s s t r o n g e r t h a n t h a t o f f e m a l e s . The above f i n d i n g s c l e a r l y i n d i c a t e t h a t t h e RNA growth was a s s o c i a t e d w i t h t h e d o m e s t i c a g r i c u l t u r a l development d u r i n g t h e s t u d y p e r i o d . 225 T a b l e 6.7; R e l a t i o n s h i p Between S e l e c t e d demand and S u p p l y F a c t o r s and t h e Growth o f RNA*, 1963-1981. ( P e a r s o n r ; N = 22 D i s t r i c t s ) V a r i a b l e s P e r c e n t a g e Change i n A g r i c u l t u r a l Land, 1963-82 Net I n t e r - D i s t r i c t M i g r a t i o n , 1963-81 P e r c e n t a g e i n P o p u l a t i o n I n c r e a s e i n S m a l l Towns, 1971-1981 P e r c e n t a g e I n c r e a s e i n P o p u l a t i o n D e n s i t y , 1963-81 % Change i n RNA ( T o t a l ) 78 78 67 41 % Change % Change i n RNA i n RNA (Male) .82 .78 .68 .39 (Female) 66 ,47 47 42 '*' Growth o f RNA measured by p e r c e n t a g e change i n a b s o l u t e number o f p e r s o n s employed i n RNA from 1963-1981. T a b l e 6.8; M u l t i p l e R e g r e s s i o n A n a l y s i s o f S e l e c t e d demand and S u p p l y F a c t o r s and t h e Growth o f RNA, 1963-1981. (N = 22) (R = .86 and R2 = .75) V a r i a b l e s P e r c e n t a g e Change i n A g r i c u l t u r a l L a n d, 1962-82 Net I n t e r - D i s t r i c t M i g r a t i o n , 1963-1981 P e r c e n t a g e o f P o p u l a t i o n I n c r e a s e i n S m a l l Towns, 1971-81 P e r c e n t a g e Change i n P o p u l a t i o n D e n s i t y S t a n d a r d i z e d B e t a .437 .432 .290 -.300 S o u r c e ; C a l c u l a t e d u s i n g SPSS:X. 226 I t m ight be e x p e c t e d t h a t t h e s t r o n g e r a s s o c i a t i o n s o f n e t - i n m i g r a t i o n and p o p u l a t i o n i n c r e a s e i n s m a l l towns w i t h t h e a b s o l u t e change i n t h e number o f p e o p l e employed i n RNA r e s u l t from t h e o v e r a l l i n c r e a s e i n p o p u l a t i o n , b ecause a number o f v a r i a b l e s used i n t h i s a n a l y s i s i n c l u d i n g o u r measure o f change i n RNA a r e d e r i v e d from p o p u l a t i o n d a t a . One might ask whether t h e above s i g n i f i c a n t c o r r e l a t i o n r e s u l t s s i m p l y from t h e f a c t t h a t a l l p o p u l a t i o n b a s e d v a r i a b l e s a r e h i g h l y c o r r e l a t e d w i t h o v e r a l l p o p u l a t i o n change. T h i s q u e s t i o n has been i n v e s t i g a t e d i n a P e a r s o n c o r r e l a t i o n a n a l y s i s by i n c l u d i n g two new v a r i a b l e s : t h e p e r c e n t a g e g r o w t h of t o t a l p o p u l a t i o n i n t h e d i s t r i c t and t h e p e r c e n t a g e g r o w t h o f t o t a l r u r a l p o p u l a t i o n i n t h e d i s t r i c t . I t was found i n t h i s a n a l y s i s t h a t t h e p e r c e n t a g e growth of p o p u l a t i o n ( b o t h d i s t r i c t t o t a l and r u r a l ) was n o t s i g n i f i c a n t l y a s s o c i a t e d w i t h t h e growth o f RNA (% i n c r e a s e o f t o t a l p o p u l a t i o n r=.16 and % growth o f r u r a l p o p u l a t i o n r = . - 0 8 ) . Thus, o u r measurement o f RNA i s n o t s i m p l y a p r o x y f o r o v e r a l l p o p u l a t i o n change. RNA grew r a p i d l y d u r i n g t h e s t u d y p e r i o d i n t h e d i s t r i c t s where a g r i c u l t u r a l development o c c u r r e d a l o n g w i t h t h e i n c r e a s i n g n e t - i n m i g r a t i o n and u r b a n i z a t i o n . M u l t i p l e r e g r e s s i o n a n a l y s i s ( T a b l e 6.8) c o n f i r m s t h i s f i n d i n g when t h e above h i g h l y c o r r e l a t e d b ackground v a r i a b l e s were r e g r e s s e d on t h e changes i n RNA; 75 p e r c e n t o f t h e v a r i a n c e i n RNA growth a r e e x p l a i n e d by f o u r v a r i a b l e s i n c o m b i n a t i o n 227 (R - . 7 5 ) . T h i s t o o i n d i c a t e s a h i g h e r p r o p o r t i o n o f v a r i a n c e e x p l a i n e d by t h e f o u r v a r i a b l e s . As t h e s t a n d a r d i z e d b e t a v a l u e s i n d i c a t e , changes i n t h e a g r i c u l t u r a l l a n d and t h e n e t - i n m i g r a t i o n a r e s t r o n g e s t ; town c o u n c i l p o p u l a t i o n f o l l o w s . T h e r e f o r e , i t i s t h e a g r i c u l t u r a l development and t h e i n c r e a s e s i n t h e a g r i c u l t u r a l l a n d and r e l a t e d i n m i g r a t i o n w h i c h a r e more s i g n i f i c a n t l y a s s o c i a t e d w i t h changes i n RNA between 1963 and 1981. T h e r e f o r e , t h e s t r u c t u r e o f RNA i n 1981 and t h e g r o w t h o f RNA between 1963 and 1981 a r e a s s o c i a t e d w i t h two d i f f e r e n t t y p e s o f f a c t o r s . The s t r u c t u r a l measure, s p a t i a l d i s t r i b u t i o n o f RNA i n 1981, i s a s s o c i a t e d w i t h p o p u l a t i o n f a c t o r s s u c h as p o p u l a t i o n d e n s i t y and unemployment l e v e l on t h e one hand and t h e economic f a c t o r s s u c h as t h e l e v e l o f u r b a n i z a t i o n , i n f r a s t r u c t u r a l development and r e s o u r c e a v a i l a b i l i t y and t h e l e v e l o f d i v e r s i f i c a t i o n i n economic a c t i v i t i e s on t h e o t h e r . The v a r i a t i o n s i n t h e a b s o l u t e ( r e g i o n a l ) g r o w t h o f RNA a r e m a i n l y e x p l a i n e d by t h e f a c t o r s a s s o c i a t e d w i t h t h e d o m e s t i c a g r i c u l t u r a l development s u c h as i n - m i g r a t i o n , r u r a l p o p u l a t i o n i n c r e a s e and t h e i n f r a s t r u c t u t a l i n v e s t m e n t s a s s o c i a t e d w i t h t h e a g r i c u l t u r a l development. 228 6.5 RNA Growth Regions The emergence of RNA growth regions and the factors which were associated with regional growth are discussed i n th i s section. For t h i s purpose, the 22 d i s t r i c t s i n S r i Lanka are re-grouped into f i v e RNA growth regions using two c r i t e r i a . The f i r s t c r i t e r i o n i s the v a r i a t i o n i n the percentage (regional) growth of RNA between 1963 and 1981. The growth by d i s t r i c t varied from zero to more than 300 per cent during t h i s period. Using the national average growth of RNA between 1963-81 of 70 per cent as the middle l e v e l , the RNA growth i s categorized into three types; rapid, moderate and slow. The second c r i t e r i o n i s the structure ( s p a t i a l d i s t r i b u t i o n ) of RNA i n 1981. As indicated, the proportion of employed persons engaged i n RNA varied from 17 per cent to 81 per cent across the 22 d i s t r i c t s i n S r i Lanka. The national average of the proportion of RNA of 40 per cent i s assumed to be the mid point and those above i t are considered as high and those below are considered as low. By combining the above two c r i t e r i a , f i v e RNA growth  regions are i d e n t i f i e d . 1. Region No. 1: Moderate growth and higher proportion of RNA. 2. Region No. 2: Slow growth and higher proportion of RNA. 3. Region No. 3: Rapid growth and low proportion of RNA. 229 4. Region No. 4: Moderate growth and low proportion of RNA. 5. Region No. 5: Slow growth and low proportion of RNA. Table 6.9 shows the two main c r i t e r i a and the RNA growth regions to which the 22 d i s t r i c t s belong. Diagram 6.2 shows the s p a t i a l d i s t r i b u t i o n of the f i v e RNA growth regions. As t h i s diagram shows, region No. 1 i s located around Colombo D i s t r i c t . Part of region No. 2 i s located i n the southern t i p and the other part i s located i n the northern t i p of S r i Lanka. Region No. 3 i s mainly confined to the a g r i c u l t u r a l development d i s t r i c t s i n the dry-zone. Region No. 4 consists of predominantly plantation d i s t r i c t s and Region No. 5 i s underdeveloped and made up of d i s t r i c t s with small holding types of agriculture. The geographical background i n which RNA emerged i n d i f f e r e n t regions i s considered i n t h i s section. The analysis i n t h i s section i s l a r g e l y based on the regional s t a t i s t i c a l information provided i n t h i s chapter p a r t i c u l a r l y i n Tables 6.10 and 6.11. The other relevant empirical studies are also referred to. Table 6.9: RNA Growth Region Growth of UNA High Low-Rapid Moderate Slow Region No. 1 Districts: Region No. 2 Districts: Coloibo Kalutara Kandy Kurunegala Puttalaa Kegalle Salle Matara Jaffna Region No. 3 Districts: Region No. 4 Districts: Region No. 5 Districts: Anuradhapura Moneragala Polonnaruwa Vavuniya Haibantota Nuwara Eliya Badulla Ratnapura Hatale Mannar Batticaloa Trincoaalee Aapara Source: Field Survey, 1987. Table 6.10: The Changes in RNA and the Background Variables by Re-grouped Districts. 231 Z Change in Net-Migration Z Increase No. of Types I Increase 100 Usually Z Population Z Increase of in Stall of Act i v i t i e: Z of Z Change of Rural Resident Density Agricultural Town (Industrial RNA* in RNA** Population Population Increase Land Population Categories) 1981 1963-1981 1963-1981 1981 1963-81 1962-82 1971-81 1971-81 Group 1 Coloibo 81.4 33.4 21.4 4.98 146 -16.3 18.2 37 Kalutara S8.1 38.3 29.0 -4.34 64 -1.1 14.4 64 Kandy 50.5 41.1 -3.6 -17.14 8 -31.8 5.4 82 Kurunegala 40.8 75.1 41.7 -2.04 43 4.9 14.1 93 Puttalaa 49.4 51.8 63.2 8.31 66 1.2 16.4 49 Kegalle 46.3 T 5 c l w . 0 12.7 -14.74 18 -10.9 17.8 74 Group 2 Salle 51.8 6.1 26.6 -14.79 29 1.7 b.9 81 flat ar a 44.9 0.2 26.0 -20.81 26 -6.5 9.5 75 Jaf fna 48.3 5.2 21.0 -6.37 69 -28.2 23.1 36 Group 3 Anuradhapura 24.6 147.4 122.0 20.38 110 39.9 32.3 82 /loner aga la 22.5 392.8 107.9 25.78 117 90.2 45.2 62 Polonnaruwa 32.6 133.1 122.8 44.60 133 37.6 28.6 60 Vavuniya 31.9 102.2 156.3 30.51 100 78.5 25.0 0 Haibantota 33.5 85.8 51.7 -0.22 58 15.3 31.6 50 Group 4 Nuwara Eliya 17.2 107.0 49.1 -3.99 31 39.5 6.4 98 Badulla 22.1 47.0 21.7 -6.65 23 10.3 5.2 85 Ratnapura 36.1 90.9 4.8 1.51 46 1.5 15.2 79 Natale 33.9 74.1 41.0 -4.30 40 12.8 9.5 58 Group 5 Nannar 30.2 48.6 80.2 16.58 121 5.9 29.7 0 Batticaloa 34.7 51.5 71.0 -0.49 79 4.4 7.4 5 Trinco»alee 38.2 35.4 67.4 17.52 92 38.1 16.3 14 Aapara 34.4 29.5 83.3 13.19 86 28.1 15.6 30 * Z of eaployed in RNA to the total rural eaployed. ** I of absolute nuaber of increase in RNA. Note 1: Region 1 indicates aoderate growth in higher proportion of RNA; Region 2 - slow growth and higher proportion of RNA; Region 3 - rapid growth and low proportion of RNA; Region 4 - aoderate growth low proportion of RNA; Region 5 - slow growth and low proportion of RNA. Source: The variable Z increase of agricultural land is calculated froa Agricultural Censuses, 1962 and 1962 and all other variables are calculated froa Population Censuses, various years. 2 3 2 Table 6.11: Selected Independent Variable by Re-grouped Districts 1 2 3 4 5 6 7 8 I of Part-tiae Average Population Agricultural I of Z of Rural Feaale I of Food Non-Density Operators (Saall Uneapioyed Houses has I of Urban Literacy Staaps agricultural (Per Sq. Ka.) Holdings) Population Electricity Population Rate Receivers Wage (Rs) 1981 1982 1381 1981 1981 1981 1982 1981 Group 1 Coloibo 2,603 64.9 21.5 23.4 74.3 92.3 23 47 Kalutara 515 53.5 25.3 11.2 21.4 87.5 45 44 Kandy 476 55.4 18.9 15.8 13.1 81.0 45 40 Kurunegala 254 41.1 14.3 3.2 3.S 84.2 61 40 Puttalai 166 51.1 11.8 7.2 12.5 87.6 59 42 Kegalle 410 53.9 25.1 3.4 7.8 83.2 59 41 Group 2 Galle 487 48.2 25.0 6.0 20.6 87.1 60 38 Matara 517 42.7 27.3 6.4 11.1 81.7 56 38 Jaffna 401 50.7 14.1 17.8 32.6 92.3 53 47 Group3 Anuradhapura 82 • 18.4 3.6 4.0 7.1 81.3 49 43 Moneragala 39 18.1 10.7 1.8 2.2 70.9 42 47 Polonnaruwa 77 26.6 13.9 1.8 7.3 82.8 40 43 Vavuniya 36 15.1 6.0 0.2 19.3 80.9 29 43 Haabantota 164 28.6 18.6 2.3 9.8 75.8 48 42 Group 4 Nuwara Eliya 425 34.0 8.5 11.6 7.3 69.6 46 39 Baaulla 228 35.4 10.5 9.2 8.0 69.3 48 38 Ratnapura 246 50.1 14.0 3.S 7.4 76.4 50 42 rtataie 179 37.8 12.3 3.3 10.6 78.0 52 40 Group 5 Mannar 53 28.3 3.0 0.2 13.5 83.4 32 57 Batticaloa 134 43.3 8.3 4.6 24.0 61.9 40 43 Trincoaalee 98 29.4 12.3 3.1 32.4 73.7 43 44 Anpara 130 • 33.9 13.6 9.4 13.6 66.7 43 55 Note 1: Region 1 indicates aoderate growth in higher proportion of RNA; Region 2 - slow growth and higher proportion of RNA; Region 3 - rapid growth and low proportion of RNA; Region 4 - toderate growth and low proportion of RNA; Region 5 - slow growth and low proportion of RNA. Note 2: Uneapioyed population as a percentage of the econoaicaliy active population (ten years of age or older). Source: Coluans 1, 3, 4, 5, and 6 are calculated froa Censuses of Population and Housing, 1981. Coluans 2 is calculated froa Census of Agriculture, 1982, and Census of Industries, 1383. Coluan 7 is froa Wickraaasekra, 1986. Colunan 8 is calculated froa Central Bank of Ceylon, 1386. 233 Diagram 6.2: The D i s t r i b u t i o n of Re-Grouped D i s t r i c t s by RNA Growth Region 234 6.5.1 R e g i o n N o . 1: Moderate Growth and H i g h P r o p o r t i o n o f RNA The s i x d i s t r i c t s ( Colombo, K a l u t a r a , P u t t a l a m , K e g a l l e , K u r u n e g a l e and Kandy) o f S r i Lanka a r e grouped i n t o f i r s t t y p e o f RNA growth r e g i o n . Among t h e s e , Colombo, K a l u t a r a and P u t t a l a m a r e on t h e west c o a s t w h i l e o t h e r s a r e i n t h e i n t e r i o r . T h i s r e g i o n i s c h a r a c t e r i z e d by moderate growth o f RNA. I t i s a l s o o b s e r v e d t h a t t h i s r e g i o n has a h i g h e r p r o p o r t i o n o f RNA when compared w i t h o t h e r r e g i o n s . The o v e r a l l p o p u l a t i o n d e n s i t y i s s t r o n g l y c o r r e l a t e d w i t h a g r o - e c o l o g i c a l f a c t o r s and i t i s t h r e e t i m e s h i g h e r i n t h e wet-zone a r e a s compared t o o t h e r r e g i o n s . On t h e a v e r a g e , t w o - t h i r d s o f t h e t o t a l p o p u l a t i o n i n t h i s r e g i o n l i v e i n r u r a l a r e a s . The h i g h e r p o p u l a t i o n d e n s i t y p a r t i c u l a r l y i n t h e r u r a l a r e a s l e a d s t o p o p u l a t i o n p r e s s u r e on t h e a v a i l a b l e r e s o u r c e s . The a g r i c u l t u r a l h o l d i n g s a r e s m a l l i n s i z e and t h e p o p u l a t i o n i n c r e a s e moved many p e r s o n s i n t o non-farm a c t i v i t i e s e i t h e r i n p a r t - t i m e on a f u l l - t i m e b a s i s ( T a b l e 6.11). The l e v e l o f d i v e r s i f i c a t i o n o f economic a c t i v i t i e s (as a measure o f t h e number of t y p e s o f economic a c t i v i t i e s ) i n t h e r u r a l a r e a s i s h i g h e r i n t h i s r e g i o n compared t o t h a t o f o t h e r s . I n t h i s r e g i o n t h e r e i s a g r e a t e r u t i l i z a t i o n o f r e s o u r c e s , t e c h n o l o g y , l a b o u r and m a rkets ( T a b l e 6.11). The i m p o r t a n t a s p e c t i n t h e d i v e r s i f i c a t i o n o f r u r a l economic 235 a c t i v i t i e s i n the d i s t r i c t s i n Group No. 1 i s that there occurred an expansion i n manufacturing-related a c t i v i t i e s r ecently (Population Censuses, 1971 and 1981). Further re-grouping of these s i x d i s t r i c t s into two sub-groups (1. Colombo and surrounding d i s t r i c t s , 2. Kandy d i s t r i c t ) provides us with a better understanding of the nature and mechanism of RNA growth. The f i r s t sub-group includes Colombo and the d i s t r i c t s around Colombo. It i s i n these f i v e d i s t r i c t s that about 50 per cent of the island's population l i v e . The l e v e l of urbanization, however, i s very high and reaches 74 per cent i n Colombo. The d i s t r i c t s surrounding Colombo, though urbanized less than Colombo, were found to be very high i n density (Table 6.11). The primate c i t y and i t s suburbs are located i n Colombo d i s t r i c t . Colombo c i t y i s not only the administrative c a p i t a l but i s also a p o r t - c i t y and an i n d u s t r i a l and service centre. For example, the majority of the imports and exports are channelled through Colombo port and Colombo c i t y acts as the d i s t r i b u t i o n centre of goods and services to the r e s t of the country. A well-established transportation network r a d i a t i n g outwards connects Colombo with the r e s t of the country. Improved transportation i n and around Colombo d i s t r i c t stimulates the labour mobility and the movements of goods and services between urban and r u r a l areas. The recent open-market p o l i c i e s have undoubtedly encouraged i n d u s t r i a l and trading a c t i v i t i e s i n the Colombo d i s t r i c t . I n d u s t r i a l , 236 t r a d i n g and employment a c t i v i t i e s expanded i n t o t h e s u r r o u n d i n g d i s t r i c t s due t o t h e u n a v a i l a b i l i t y o f l a n d i n Colombo c i t y . S u r r o u n d i n g a r e a s have i n a d d i t i o n t h e advantage o f cheap l a b o u r (ILO/ARTEP/ 1986a). As Waanasinghe, (1973) i n d i c a t e s , l i n k a g e o f Colombo c i t y w i t h t h e s u r r o u n d i n g r u r a l a r e a s e x i s t e d f o r a l o n g t i m e . The w e l l - d e v e l o p e d t r a n s p o r t a t i o n network a l s o f a c i l i t a t e d d a i l y commuting between Colombo and t h e r u r a l h i n t e r l a n d . Colombo c i t y and i t s suburbs p r o v i d e d w h i t e -c o l l a r , b l u e - c o l l a r and s e r v i c e o c c u p a t i o n s f o r t h e r u r a l r e s i d e n t s who commuted d a i l y from t h e i r r u r a l homes f o r work ( C h a p t e r 4 ) . R e l i a b l e s t a t i s t i c s a r e n o t a v a i l a b l e t o e s t i m a t e how many r u r a l l a b o u r e r s were employed i n i n d u s t r i a l p r o m o t i o n z o n e s - r e l a t e d a c t i v i t i e s . A c c o r d i n g t o 1983 I n d u s t r i a l Census i n f o r m a t i o n , K u r u n e g a l a , K a l u t a r a , K e g a l l e and P u t t a l a m had more t h a n 30 p e r c e n t o f t h e t o t a l s u r v e y e d e s t a b l i s h m e n t s . The r u r a l -b a sed s m a l l - s c a l e i n d u s t r i a l a c t i v i t i e s a c c o u n t e d f o r more t h a n 90 p e r c e n t o f t h e t o t a l e s t a b l i s h m e n t s and employment i n t h e s e d i s t r i c t s . The m a j o r i t y o f t h e r u r a l i n d u s t r i e s i n t h e s e d i s t r i c t s a r e based on a g r o - r e s o u r c e s m a i n l y c o c o n u t . The c o c o n u t t r i a n g l e w h i c h c o v e r s most o f t h e a r e a ( p a r t i c u l a r l y K u r u n e g a l a ) under r e v i e w p r o v i d e d a s i g n i f i c a n t number o f R N A - r e l a t e d o c c u p a t i o n s i n m a n u f a c t u r i n g , t r a n s p o r t a t i o n and t r a d e . A s i g n i f i c a n t number o f fe m a l e l a b o u r e r s a r e employed i n a g r o - b a s e d m a n u f a c t u r i n g a c t i v i t i e s . Rubber p r o c e s s i n g i s s i g n i f i c a n t 237 i n K e g a l l e and K u r u n e g a l a d i s t r i c t s . A h i g h l y d e v e l o p e d i n f r a s t r u c t u r e , e s p e c i a l l y t h a t o f t r a n s p o r t a t i o n and e l e c t r i f i c a t i o n i s c l o s e l y a s s o c i a t e d w i t h r u r a l i n d u s t r i a l i z a t i o n i n t h e s e d i s t r i c t s ( T a b l e 6.11). The c o c o n u t and r u b b e r - r e l a t e d i n d u s t r i a l p r o d u c t i o n i s e x p o r t -o r i e n t e d . The dependency o f t h e s e a c t i v i t i e s on Colombo p o r t i s c l e a r . The s o c i a l i n d i c a t o r s i n c l u d i n g l i t e r a c y , s c h o o l i n g , h e a l t h s e r v i c e and l i f e e x p e c t a n c y a r e c o m p a r a t i v e l y h i g h i n t h e s e d i s t r i c t s ( T a b l e 6.11). The i n s t i t u t i o n s s u p p l y i n g t h e s e s e r v i c e s p r o v i d e employment t o a l a r g e segment o f t h e p o p u l a t i o n ( T a b l e 6.2). I n a d d i t i o n , as t h e 1981 P o p u l a t i o n Census S t a t i s t i c s i n d i c a t e , t h e r e c e n t open market p o l i c i e s p r o v i d e d p r o f e s s i o n a l and m a n a g e r i a l t y p e s o f employment i n t h e garment and w e a r i n g - a p p a r e l i n d u s t r i e s i n t h i s a r e a . But on t h e n e g a t i v e s i d e i s t h e l o s s o f employment t o a c o n s i d e r a b l e number o f p e r s o n s engaged i n m i nor t r a d i t i o n a l non-farm a c t i v i t i e s i n c l u d i n g c o t t a g e handloom i n d u s t r y and b e e d i ( l o c a l c i g a r ) making (Department of Census and S t a t i s t i c s , V a r i o u s Y e a r s ) . The s e cond sub-group i n c l u d e s Kandy l o c a t e d i n t h e c e n t r a l p a r t o f t h e c o u n t r y . T h i s r e g i o n i s d o m i n a t e d by p l a n t a t i o n a g r i c u l t u r e . The p l a n t a t i o n a g r i c u l t u r e i s e x p o r t - o r i e n t e d and has l i t t l e i n common w i t h r u r a l f a r m i n g . Kandy s e r v e s t h e p l a n t a t i o n d i s t r i c t s and r e m a i n s t h e a d m i n i s t r a t i v e and r e l i g i o u s c e n t r e o f t h e c e n t r a l p r o v i n c e . The l e v e l o f u r b a n i z a t i o n was low (13 p e r c e n t ) . However, 238 the l e v e l of RNA was about 50 per cent and i t has been growing s i g n i f i c a n t l y during the l a s t two decades. A s i g n i f i c a n t out-migration of farm workers (mainly Indian Tamil expatriate workers) was one factor i n the proportional increase i n the RNA. As the population census by d i s t r i c t i n d i c a t e s , the t o t a l and the r u r a l (which include estate as well) employed population has declined by 24 and 23 per cent between 1971 and 1981. During the same period, the RNA increased by 25 per cent. Therefore, the increase i n the proportion of RNA would have been p a r t l y due to out-migration. However, there has also been an absolute increase of RNA between the same period by 24,000, which i s a s i g n i f i c a n t l e v e l of growth. Food crops ( r i c e and vegetables) and non-food crops (coffee, b e t e l , pepper, etc.) are c u l t i v a t e d side by side i n the r u r a l areas of the Kandy d i s t r i c t . The d i v e r s i f i c a t i o n i n r u r a l economic a c t i v i t i e s i s r e l a t i v e l y high. Morrison (1979) and S i l v a (1979) found a s i g n i f i c a n t d i v e r s i f i c a t i o n i n a g r i c u l t u r e and non-agriculture a c t i v i t i e s i n Kandyan v i l l a g e s . The Kandyan area also has long been known fo r handicraft and r e l a t e d i n d u s t r i a l production. Several v i l l a g e s i n the Kandyan areas are wholly engaged i n c r a f t -r e l a t e d production. Such occupations contributed a s i g n i f i c a n t proportion of employment to the t o t a l RNA i n the Kandy d i s t r i c t . In recent years, RNA-related a c t i v i t i e s , mainly manufacturing, were encouraged by a number of f a c t o r s . The 239 manufacturing sector increased i n numbers and types of a c t i v i t i e s with the