Sri Lanka’s main construction firms have requested to import 7,500 workers, especially pertaining to large-scale projects. Following Cyclone Ditwah, the sector is expected to have a spike in construction activity, while also projecting a shortfall of 20,000 staff in 2026.
Thus, industry stakeholders have urged importation of foreign labour as an immediate solution, while highlighting the long-term need for developing a constant, skilled labour force within the country.
In 2024, the construction sector expanded by 19.4%. According to the Sri Lanka Purchasing Managers’ Index for Construction, the industry reached 67.6% in September 2025, recording the strongest increase in activity observed since late 2021, and activity is expected to experience further expansion post-Ditwah.
Importing foreign labour as a last resort
Speaking to The Sunday Morning Business, Construction Industry Development Authority (CIDA) Chairman Prof. Chandana Jayalath stated that importing foreign labour would be a last resort.
He explained that discussions on labour shortages in the construction industry had been ongoing at ministerial and institutional levels for several months, with the foremost challenge being the lack of reliable national-level data on the construction labour force.
Prof. Jayalath explained that a national-scale construction database was only now being developed under a special IT project, with funding of Rs. 100 billion allocated over five years and the initial timeframe curtailed to four years.
Once completed, the database will include labour input and output data, allowing authorities to track down workforce deployment across projects undertaken by Government, semi-Government, and private sectors, as well as by location and project type. According to him, only with such data can demand and supply gaps in construction labour be properly assessed, since labour availability is ultimately a domestic economic issue.
Furthermore, Prof. Jayalath noted that the construction industry traditionally depended on seasonal labour, especially from rural communities engaged in agriculture, with workers entering construction only during non-harvest periods. Thus, ad hoc and informal labour remains scattered throughout the country, with an estimated 450,000–500,000 workers engaged informally across approximately 40 identified trades, including masonry, carpentry, plumbing, etc.
He agreed with contractors’ claims regarding the existence of a labour shortage. According to him, CIDA is working to establish a national pool of construction craftsmen through a registration process open to skilled, semi-skilled, and unskilled workers. An application form has been made available through newspapers and through the website, enabling data to be collected on workers’ trades, locations, and experience, which could then be used to support contractor deployment.
“Information is being distributed through the grama niladhari system, cascading from district and divisional secretaries down to local communities. Workshops are being organised islandwide by District Coordinating Officers (DCOs) of CIDA, ensuring that communities understand the benefits of registration, including eligibility for public projects, access to Recognition of Prior Learning (RPL), National Vocational Qualification (NVQ) certification, up-skilling, and grievance redress mechanisms. Establishing a fully functional pool will therefore take several months,” Prof. Jayalath added.
He further stated that following instructions from the Minister of Housing and Construction, CIDA was engaging with Community-Based Organisations (CBOs), which were legally mandated to undertake public works at the rural and village level with values of up to Rs. 4 million. While CBOs are not conventional contractors, he said that they were capable of contributing labour to small-scale public projects.
“The other aspect is whether the Mahaweli Authority – one of the country’s largest organisations with a registered pool of around 14,000 agrarian societies – could be used to carry out public works under the scrutiny of technically qualified persons. CIDA intends to formalise cooperation through a Memorandum of Understanding, especially because attracting such workers into construction remains challenging due to negative perceptions of the trade,” he said.
Prof. Jayalath added that training institutions such as the Vocational Training Authority (VTA) already produced trained trades personnel, and that CIDA had formally requested real-time data from the VTA under provisions of the CIDA Act. Once the data is received, it will be easier to project demand and supply levels.
In addition, Prof. Jayalath said that CIDA was working closely with the National Construction Association of Sri Lanka (NCASL), the apex body representing contractors registered across multiple grading categories – C1–C9. He highlighted the importance of large-scale contractors, especially the CS2 category, who are capable of undertaking projects valued up to Rs. 6,000 million. He further noted that contractors had been asked to provide project-specific labour requirements, including workforce size, skill categories, localities, and project duration, in order to better align labour supply with demand.
“There are limitations. We cannot post advertisements on behalf of private companies and they are responsible for promoting themselves, lobbying tradesmen, retaining, and compensating in compliance with statutory requirements,” he added.
Thus, the CIDA Chairman highlighted that importing labour would only be considered as a last resort under certain specific circumstances on a case-by-case basis, and only after contractors justified this decision by demonstrating that all local recruitment efforts had failed. He added that for delays in project completions, there were liquidated damages unless the matter of labour shortage was simultaneously addressed at the project level with clients at the outset.
Hence, Prof. Jayalath stated that while CIDA had taken steps to establish and promote a national construction labour pool, labour shortages were an economic reality that could not be resolved overnight. He noted that workforce development was a long-term process, adding that temporary shortages in specific sectors were not unusual.
Considering int’l scenarios
Prof. Jayalath highlighted several international examples where countries confronting shortages of construction labour had responded through comprehensive, state-led policy frameworks that integrated aspects like skills development, workforce formalisation, technological modernisation, and social protection mechanisms.
He provided Germany as a leading example, where a nationally regulated dual apprenticeship system channelled young people into construction careers from an early age. In Australia, a strong partnership between government and industry has resulted in the establishment of a national construction skills registry and a robust RPL framework.
Singapore has adopted a highly structured, data-driven workforce management strategy led by the Building and Construction Authority (BCA). In the US, the construction workforce pipeline is sustained through institutional collaboration between major contractors, labour unions, community colleges, and vocational institutions.
Across these global experiences, Prof. Jayalath noted certain prevalent common policy pillars. These include early skills intervention, formal certification systems, social protection, public-private partnerships, and strategic technological adoption.
“For Sri Lanka, these lessons strongly validate the establishment of a national pool of construction craftsmen, strengthened NVQ and RPL pathways, decentralised provincial outreach, and contractor-driven training hubs. By institutionalising skills, introducing targeted financial and social incentives, and integrating education with workplace learning, Sri Lanka can retain youth within the sector, minimise reliance on foreign labour, and secure a resilient, future-ready construction workforce aligned with national development priorities,” he said.
Long-term skill development
Meanwhile, speaking to The Sunday Morning Business, former President of the Chamber of Construction Industry of Sri Lanka (CCI) and Green Building Council Chairman Architect Jayantha Perera said that the construction sector was currently facing a shortage of skilled labour, largely due to migration. He noted that both foreign contractors operating in Sri Lanka and local contractors handling large-scale projects were struggling to find the required number of skilled local workers.
The sector experienced a prolonged downturn over the past few years, during which many workers were left without employment and thus found opportunities overseas, especially in the Gulf region and parts of Africa. Perera noted that there was a need to fill this gap in the skilled construction workforce with foreign labour.
He also addressed both the pros and cons of this. On the positive side, he said that foreign workers, if properly screened and recruited, tended to be more efficient and generally took minimal leave. However, he noted that the drawback was the need to pay foreign workers in foreign currency.
“Any recruitment of foreign workers has so far been carried out under a structured process overseen by the CCI. Workers are properly checked, based on their credentials, work history, references, etc. There have been no complaints regarding this process,” he noted.
With Sri Lanka now at a point where construction activity is expected to increase, especially in the post-Ditwah context, he said that the need for more labour was a serious concern. While importing foreign labour is an immediate solution, he noted that in the long run it was essential to properly develop and train skilled labour within the country.
Perera also pointed to the need to improve societal attitudes towards these skilled trades in Sri Lanka. “In many developed and developing countries, construction-related trades such as carpentry, masonry, plumbing, and welding are regarded with respect. This respect is needed to attract more skilled labour into these trades,” he said.
He also observed that a large number of young people of working age were engaged in informal or low-income activities, such as driving three-wheelers, which had an impact on skilled labour and trades.
Need for a constant workforce
Speaking to The Sunday Morning Business, National Construction Association of Sri Lanka (NCASL) Chairman M. Darinton Paul noted that the industry expected a large amount of construction work to take place following the disaster, especially in the next 2–3 months.
He also highlighted the migration of skilled labour that had been initiated as a result of the economic crisis, where not only construction workers but also professionals such as quantity surveyors, engineers, etc. had left the country, as a key challenge in the current context.
According to him, despite a considerable number of projects being available in the country, both the private and public sectors are lacking skilled labour, especially when it comes to large-scale projects.
“There was approval to import foreign labour in the past few years, which was cancelled by the Government in November last year. Hence, we are requesting that it be resumed. We have discussed with the Government and explained the situation and the need. The Government has adopted a stance of training the labour within Sri Lanka in construction firms. While this is a great initiative, currently, given the spike in construction activities, foreign labour is an immediate need, especially for large-scale projects. This will be vital to improve the progress of projects,” Paul said.
Meanwhile, in order to improve the skill levels of the low-skilled/unskilled workforce in the country, the NCASL Chairman pointed to the need for establishing a system to enable them to be recruited to construction companies after undergoing proper training, which could be carried out by the industry. While he noted that this was a long-term solution, he stressed that it was key since importing foreign labour meant an outflow of foreign currency.
“Currently, in Sri Lanka, there is a need for a skilled workforce of at least 20,000–30,000 to be working in this industry. However, we have not yet achieved this state. One reason behind this is the reliance on traditional methods where the workforce consists of those engaged in other fields of work as well, such as agriculture, where they return to construction in a rather seasonal manner. This heavily impacts the progress and timeframe of a project,” he said.
Hence, Paul emphasised the need to develop a consistent, permanent workforce within the construction industry.
Creating employment opportunities
Voicing similar concerns, Sri Lanka Construction Association Chairman Susantha Liyanaarachchi noted that given the need for rebuilding and the spike in construction as a result of significant disaster damage in at least 19 districts, there was need for more skilled labour.
“It is evident that the Government is taking measures to boost the construction sector. Hence, a few industry representative bodies, especially those engaged in large-scale construction projects, have made the request to bring a workforce of less than 10,000 to maintain progress of construction activity. It does not seem as if the Government is likely to oppose this request due to dire shortage,” he said.
Furthermore, with a large number of workers having migrated to work in countries with high construction activity, Liyanaarachchi said that the labour force requirement was at least 20,000. According to him, the countries from which Sri Lanka can potentially recruit are India, Bangladesh, and Nepal.
Liyanaarachchi too noted the need to attract more people of workable age to the construction industry. He acknowledged CIDA’s continuous efforts to build a professional labour force in the construction industry, especially with young people. He also stressed the need for Government intervention in ensuring job security and a stable mode of income within the industry in order to retain the labour force.
“In order to re-establish the construction industry in the country, if the Government, bearing proper accountability, can invite the migrated skilled workforce, especially the higher segment, to return to the country to contribute to the industry, it could significantly support development of the sector and the economy,” he added.
Impact on real estate sector
Speaking to The Sunday Morning Business, Research Intelligence Unit (RIUnit) Chief Executive Officer (CEO) Roshan Madawela highlighted the importance of listening to industry voices in this regard.
Madawela noted that labour shortages had not been identified as a key risk in contractor surveys conducted in previous years. Instead, contractors had listed issues such as third-party payment approvals, contractor and consultant performance, and procurement-related challenges. He pointed out that labour had only emerged as a significant concern very recently, despite the sector already facing multiple risks, including political interference, energy price shocks, interest rate and exchange rate volatility, tariffs, and construction material costs.
“In the real estate sector, according to the clients we have spoken to, developers have begun reporting labour shortages that are slowing the progress of ongoing projects, especially large-scale developments. Construction delays directly affect costs, which in turn influences project viability and profitability. As a result, some developers have already started bringing in workers from the region, including India and Bangladesh,” he said.
Furthermore, Madawela stated that given the importance of construction to the GDP, policymakers needed to listen to industry voices and facilitate the use of migrant workers where necessary, without which there could be serious consequences.
“The reason why we have a labour shortage is largely due to the outflow of semi-skilled workers overseas. While remittances contribute to the economy, receiving low-cost labour from other countries in turn is not a bad sign as the economy progresses.”
Should this become a long-term issue, he noted that it could affect future real estate supply, especially for projects that had been pre-sold based on current cost estimates. He explained that if labour costs increased significantly over time, developers who had already committed to sales based on earlier projections could face pressure on profitability.
However, while concerns persist, Madawela said that the situation was not severe and expressed confidence that policymakers would act in time to address the issue and facilitate the necessary providence to enable a smooth flow of labour into the industry.
Furthermore, given the close link between construction and real estate in terms of growth and contribution to GDP, he noted that several studies, as well as RIUnit’s own research, showed a strong relationship between real-estate demand and supply and construction sector performance.
However, he noted that the construction sector had previously contributed double-digit growth to GDP, but was currently operating below full capacity, although it remained in a recovery phase. He added that last year’s growth of around 7% could improve further, which would be important both for the broader economy and for the real estate sector.