As a result of low fertility rates andhigh life expectancy, the current demographic trends in SriLanka include a declining share of children and increasingshare of elderly, and (for now) an increasing working agepopulation. Sri Lanka has a unique window of opportunity totake advantage of the high share of working age populationto stimulate economic growth, but the other two emergingpopulation issues spur questions on their own. In thiscontext, the report discusses some of the economicimplications of demographic transition in Sri Lanka,focusing on employment and productivity related issues onone side; and performance of cash transfer programs aimingto assist the poor and vulnerable groups on the other. Thisreport quantifies Sri Lanka's demographic change byproviding updated population projections and by applyingNational Transfers Accounts methodology documenting how thedemographic change and aging contribute to life-cycledeficit and to Sri Lanka's employment and labor market.The challenges and opportunities associated with theupcoming demographic transition are highlighted, focusing onthe functioning of the labor markets and the social safetynet system. The report discusses different avenues that thecountry can take to make its labor market more efficient andinclusive, and offset some of the disadvantages faced by thepoor and vulnerable households. The analysis in this reportsuggests that timely policy actions can enable Sri Lanka toeffectively cope with its changing demographic structure.
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