By Prasanna Perera
During the first quarter of 2026, 62,145 Sri Lankans emigrated. In 2024, the number of Sri Lankans who left for foreign employment reached 314,673, the highest ever. Over 75% of people who left did so in skilled categories compared to 66% in 2022, indicating a deepening crisis. According to the Human Flight and Brain Drain Index (Fund for Peace, 2024), Sri Lanka ranks 16th out of 175 countries and is the most seriously affected by brain drain in South Asia. This has particular weight because Sri Lanka has made a huge investment in state education, and the whole country bears the loss of those who benefited from it.
Any citizen who pays taxes has, through that contribution, trained the doctors, engineers, academics, and technologists who leave every day. The departure of these people from a country still in crisis causes serious damage to the economy, health services, and education. Foreign migration, given the right context, is not bad. In 2025, worker remittances stood at USD 8.1 billion, a 22.7% increase from 2024. But when skilled professionals leave because of economic hardship, institutional failure, or political disillusionment, the problem cannot simply be managed. It must be addressed directly and urgently.
The scale of medical emigration shows how serious the situation has become. Between 2019 and 2022–2023, the Sri Lanka Medical Council issued roughly four times as many Good Standing Certificates (GSCs) for foreign registration. A total of 4284 GSCs were issued during a span of 13 months. Around 200 doctors were leaving the country each year before 2021. This figure was close to 1,800 in 2022 and 2023. Between June 2022 and May 2023, as many as 1,116 doctors had emigrated. Data from the Ministry of Health has disclosed that approximately 2,100 specialist doctors in service in 2025 will fall short (30%) of the required 3,000 nationwide by nearly 900. What is more alarming is that already over 25% of government health service doctors have passed qualifying exams for foreign employment.
The broad labour market bears the same pressure. The labour force participation rate (LFPR) of Sri Lanka fell from 52.3% in 2019 to a historic low of 47.4% by the end of 2024. According to the Department of Census and Statistics, those of working age who have left the labour force now exceed 1.4 million compared to 2019. Even as GDP recovers, the economy is failing to retain the skilled workforce needed to sustain that recovery.
Why are skilled workers leaving?
These causes are structural and long-standing. The 2022 economic crisis revealed an array of weaknesses built up over decades. This includes low public-sector salaries, poor working conditions, institutional dysfunction, and a political context that incentivises connections over competence. Many professionals are leaving the country due to rupee depreciation, fuel and medicine shortages, rising inflation, and a heavy PAYE tax burden. The growing wage disparity between Sri Lanka and the countries selected by its professionals heightens those incentives.
However, money is not the only reason. Politicization, bureaucracy, and a lack of meritocracy in public institutions also drive skilled professionals away. Doctors working in state-run hospitals are short of essential medicines and equipment. Academics function without sufficient research funding. All of these frustrating conditions have started to push talented people out of the country.
Sectors in crisis
Brain drain does not strike all sectors equally. In healthcare, doctors, nurses, and pharmacists are leaving primarily for the United Kingdom, Australia, the UAE, and Canada. The Ministry of Health has acknowledged critical shortages in anaesthesiology, radiology, and specialist surgery. When the sole specialist at a rural hospital emigrates, an entire district’s patients are left without care.
In higher education, university academics, scholars, and researchers are moving primarily to Australia, the UK, and the United States. Research quality and teaching standards decline as the most capable leave. Compounding this, restrictions imposed by the Department of Management Services (DMS) prevent universities from filling thousands of vacant posts, leaving the remaining staff overwhelmed. In my own Department of Economics and Statistics, sustaining our Tamil medium programs has become increasingly difficult.
In the technology sector, engineers and software developers are heading to Australia, Germany, and Canada. The inability to retain IT professionals is becoming the foremost obstacle to building Sri Lanka’s digital economy. A proposed VAT amendment, scheduled for 1 July 2026, would impose an 18% VAT on digital infrastructure, covering global platforms, Google services, cloud services, cybersecurity, YouTube, and similar services. This would raise costs for freelancers, BPO workers, and IT service providers, and it is entirely foreseeable that those affected may migrate to India, Pakistan, Vietnam, Thailand, or the Philippines, where no such burden applies.
What must be done?
Retaining skilled professionals requires a policy that genuinely values them. So far, the government’s response has been inadequate, and the proposed tax changes threaten to speed up departures in the sectors that are most vulnerable. The Central Bank of Sri Lanka states that public sector real wages have still not been restored to the pre-2022 levels.
In the short term, retention incentives such as duty-free vehicle permits, housing subsidies, and a reduction of the 36% PAYE tax rate, as already promised by the government, can be introduced without jeopardizing the IMF program. When I raised the question of PAYE tax rates directly with IMF representatives, they made clear that their institution does not advocate such rates. I would like to remind the government and trade unions that reducing PAYE tax is feasible within the IMF framework.
In the medium term, the priority has to be to eliminate political interference in appointments across universities, health services, and the civil service, and replace it with merit-based, transparent systems of recruitment and promotion. Additionally, it is worth noting that some of the current government’s own appointments and civil service decisions have already undermined confidence among state-sector employees.
On the digital services VAT, the government must be willing to reconsider. While residents are not subject to the 18% rate, imposing it on non-resident digital service providers risks tipping the entire sector into crisis. It is not too late to act. Sri Lanka should study the deliberate delays in implementing digital services tax reforms in Asian, European, and American countries and calibrate its own approach accordingly.
If the government fails to intervene swiftly and decisively in the skilled labour market, the outflow of talent to better-paying, better-governed destinations will be impossible to reverse. Allowing skilled workers to be drawn abroad is not a neutral outcome. It is a sacrifice of this country’s future economic growth, and I urge the government to treat it as such.
(The writer is a Senior Professor and Head of Departmentof the Department of Economics and Statistics, University of Peradeniya)
Disclaimer: Opinions expressed are solely those of the writer and do not necessarily represent the views of Pulseline.
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