Foreword
The year at a glance
Sri Lanka enters 2027 with its lowest unemployment of the 2018–2025 series, a sharply higher minimum wage and record remittances. For employers, that adds up to a tighter, costlier and more mobile workforce.
- Unemployment, 2025
- 3.9%4.4% in 2024
- Monthly minimum wage
- Rs. 30,000From 1 January 2026
- Employer EPF + ETF
- 15%On top of total earnings
- Workers’ remittances, 2025
- US$ 8.08bn+22.8% on 2024
Real GDP grew by an estimated 5% in 2025 (Central Bank of Sri Lanka (opens in a new tab)). Inside that recovery, the labour market tightened for experienced workers while young people, and especially young women, still struggle to find a first job. Pay floors rose by more than 70% in two years, and statutory contributions add at least 15% on top of every rupee of earnings.
Each chapter starts with the finding, shows the official numbers behind it, and ends with what it means for employers. Every figure links to the government publication it comes from.
Chapter 01: The workforce at a glance
Sri Lanka’s unemployment rate fell to 3.9% in 2025, the lowest in the 2018–2025 series, while just under half of working-age people take part in the labour force.
- Labour force
- 8.41mAged 15 and over
- Employed
- 8.08m
- Participation rate
- 49.4%Men 69.1% · women 32.4%
- Youth unemployment
- 19.5%Aged 15–24
Unemployment fell to 3.9% in 2025, the lowest since 2018
Unemployment rate, % of the labour force aged 15 and over
Source: Department of Census and Statistics, Labour Force Survey Annual Bulletin 2025 (opens in a new tab)
Show the data
| Year | Women | Total | Men |
|---|---|---|---|
| 2018 | 7.1% | 4.4% | 3.0% |
| 2019 | 7.4% | 4.8% | 3.3% |
| 2020 | 8.5% | 5.5% | 4.0% |
| 2021 | 7.9% | 5.1% | 3.7% |
| 2022 | 6.5% | 4.7% | 3.7% |
| 2023 | 7.0% | 4.7% | 3.6% |
| 2024 | 7.1% | 4.4% | 3.0% |
| 2025 | 6.1% | 3.9% | 2.8% |
Women’s unemployment has stayed at roughly twice the men’s rate throughout the period. Of the 8,625,859 people aged 15 and over outside the labour force, about 6.2 million are women (Department of Census and Statistics (opens in a new tab)).
Where people work
Half of all jobs are in services, and agriculture still employs almost one worker in four. By status, 58.8% of workers are employees, 33.1% work on their own account, 5.2% are contributing family workers and 2.9% are employers.
| Sector | Share of employed |
|---|---|
| Services | 49.8% |
| Industry | 26.2% |
| Agriculture | 23.9% |
Chapter 02: Wages and earnings
The legal wage floor rose from Rs. 17,500 to Rs. 30,000 a month in under two years, and with prices nearly flat in 2025, wage rises became real gains.
The national minimum wage
The National Minimum Wage of Workers (Amendment) Act, No. 11 of 2025 (opens in a new tab) set the current floor. It also folded the old budgetary relief allowances into the wage, ending them as separate payments from 31 March 2025 (Department of Labour (opens in a new tab)).
| In force from | Monthly | Daily | Legal basis |
|---|---|---|---|
| 1 January 2026 | Rs. 30,000 | Rs. 1,200 | Act, No. 11 of 2025 (opens in a new tab) |
| 1 April 2025 | Rs. 27,000 | Rs. 1,080 | Act, No. 11 of 2025 (opens in a new tab) |
| August 2024 | Rs. 17,500 | Rs. 700 | Bill, 2024 (opens in a new tab) |
| 2021 | Rs. 12,500 | Rs. 500 | Act, No. 16 of 2021 (opens in a new tab) |
The national minimum is a floor. Wages boards set higher minimums for many trades, so check the rate for your sector.
How wages moved in 2025
The Central Bank reports that real wages improved in 2025 in the public sector, the formal private sector and the informal private sector (Annual Economic Review 2025 (opens in a new tab)).
| Measure | 2025 | 2024 |
|---|---|---|
| Public sector wages, nominal | +14.9% | +18.5% |
| Public sector wages, real | +14.7% | +16.8% |
| Informal private sector wages, nominal (IPSWRI, 2018=100) | +5.3% | +6.0% |
| Headline inflation, CCPI | −0.5% | +1.2% |
Prices fell in the first half of 2025 and inflation turned positive in August. By December, CCPI headline inflation was 2.1% (Central Bank of Sri Lanka (opens in a new tab)). The Central Bank is also building a formal private sector wage index from EPF contribution records, the first broad, regular measure of private sector salaries.
Chapter 03: The true cost of employment
For every Rs. 100 of earnings, an employer pays at least Rs. 115 in cash each month, and should set aside about Rs. 4 more for gratuity.
Statutory contributions
| Obligation | Rate | Base | Due |
|---|---|---|---|
| EPF, employer (opens in a new tab) | 12% minimum | Total monthly earnings | Last working day of the following month |
| EPF, employee (deducted) (opens in a new tab) | 8% minimum | Total monthly earnings | With the employer share |
| ETF, employer (opens in a new tab) | 3% | Total monthly earnings | Last day of the following month |
| Gratuity (opens in a new tab) | Half a month’s pay per completed year | Last-drawn wage or salary | Within 30 days of termination |
“Total monthly earnings” for EPF include salary or wages plus cost-of-living and similar allowances and holiday pay, not basic salary alone (EPF (opens in a new tab)). Gratuity applies to employers who employed 15 or more workmen on any day in the 12 months before a termination, for workmen with at least five completed years of service. Workmen who are not monthly-rated receive 14 days’ wage per completed year (Payment of Gratuity Act (opens in a new tab)).
A worked example
| Monthly item | Minimum-wage worker | Mid-level employee |
|---|---|---|
| Gross monthly earnings | Rs. 30,000 | Rs. 150,000 |
| Employer EPF (12%) | Rs. 3,600 | Rs. 18,000 |
| Employer ETF (3%) | Rs. 900 | Rs. 4,500 |
| Cash cost to employer | Rs. 34,500 | Rs. 172,500 |
| Gratuity provision (≈4.17%) | Rs. 1,250 | Rs. 6,250 |
| Full cost with provision | Rs. 35,750 | Rs. 178,750 |
| Employee EPF deducted (8%) | Rs. 2,400 | Rs. 12,000 |
Gratuity is shown as a monthly provision (half a month’s pay ÷ 12). The actual payment uses last-drawn pay and is due only after five completed years. Try your own figures in the Sri Lanka salary calculator.
Late payment
Late EPF contributions attract a surcharge that grows with the delay, from 5% when 1 to 10 days late to 50% when more than 12 months late (EPF (opens in a new tab)). From contributions for July 2026, due by 31 August 2026, ETF payments and returns must be made electronically; cheques, money orders, cash and paper returns are no longer accepted (ETF Board (opens in a new tab)).
Chapter 04: Tax on employment income
The first Rs. 1,800,000 a year (Rs. 150,000 a month) of an employee’s income is tax-free, and tax then rises in bands from 6% to 36%, withheld by the employer as APIT.
Rates and relief are set by the Inland Revenue (Amendment) Act, No. 02 of 2025 (opens in a new tab), in force from 1 April 2025. The Inland Revenue Department confirms the 2026 amendments do not change employment income rates, bands or relief (notice SEC/PN/IT/2026/02 (opens in a new tab)).
| Monthly pay | Rate | Monthly APIT |
|---|---|---|
| Up to Rs. 150,000 | 0% | Nil |
| Rs. 150,001 – 233,333 | 6% | 6% of pay − Rs. 9,000 |
| Rs. 233,334 – 275,000 | 18% | 18% of pay − Rs. 37,000 |
| Rs. 275,001 – 316,667 | 24% | 24% of pay − Rs. 53,500 |
| Rs. 316,668 – 358,333 | 30% | 30% of pay − Rs. 72,500 |
| Above Rs. 358,333 | 36% | 36% of pay − Rs. 94,000 |
For one primary employment. Matches the formula in IRD APIT Tax Table No. 01 (opens in a new tab), which employers must use for deductions.
What employees take home
| Gross monthly pay | Monthly APIT | Effective rate |
|---|---|---|
| Rs. 150,000 | Rs. 0 | 0.0% |
| Rs. 200,000 | Rs. 3,000 | 1.5% |
| Rs. 250,000 | Rs. 8,000 | 3.2% |
| Rs. 300,000 | Rs. 18,500 | 6.2% |
| Rs. 400,000 | Rs. 50,000 | 12.5% |
| Rs. 500,000 | Rs. 86,000 | 17.2% |
| Rs. 1,000,000 | Rs. 266,000 | 26.6% |
Chapter 05: Talent, skills and migration
Over 311,000 Sri Lankans left for jobs abroad in 2025, and the money they sent home passed US$ 8 billion for the first time.
- Departures for foreign employment
- 311,223−1.1% on 2024
- Classed as skilled
- 76%237,010 people
- Workers’ remittances
- US$ 8,076mUS$ 6,575m in 2024
Four Gulf states took 70% of departures for foreign employment in 2025
Top ten destinations, registered departures, 2025
Source: Sri Lanka Bureau of Foreign Employment, Annual Statistical Report 2025 (opens in a new tab)
Show the data
| Country | Departures |
|---|---|
| Kuwait | 77,657 |
| UAE | 59,611 |
| Qatar | 44,914 |
| Saudi Arabia | 36,441 |
| Israel | 13,252 |
| Romania | 12,597 |
| Japan | 11,090 |
| Maldives | 11,068 |
| Oman | 7,028 |
| South Korea | 6,494 |
190,881 men and 120,342 women registered for foreign employment in 2025 (SLBFE (opens in a new tab)). Outside the Gulf, Israel, Romania and Japan each took more than 11,000 workers. Remittances rose +22.8% to US$ 8,076 million (Central Bank of Sri Lanka (opens in a new tab)).
Chapter 06: What it means for employers
Planning for 2027 comes down to three facts: a higher legal pay floor, a statutory cost of at least 15% on top of pay, and a skilled workforce with real options abroad.
- Re-baseline pay against the Rs. 30,000 floor. Check every monthly-rated and daily-rated role, including wages-board trades with higher sector minimums.
- Budget the full cost of each hire. Use gross pay plus 12% EPF and 3% ETF as the cash cost, plus about 4% for gratuity where you employ 15 or more workmen.
- File EPF and ETF correctly and on time. Include allowances in total earnings, pay by the end of the following month, and pay ETF electronically.
- Show net pay in offers above Rs. 233,333. In the 18% to 30% APIT bands, a raise is worth much less in take-home pay than its gross figure suggests.
- Compete on more than salary. Low unemployment among experienced workers, steady migration and higher real-wage expectations make career paths, flexibility and reliable pay part of the offer.
VixHR keeps employee records, attendance, leave and payroll in one system, so EPF, ETF and APIT are calculated from the same data that drives each payslip. See how VixHR runs payroll.
Sources
Methodology, sources and citation
- Every figure comes from a Sri Lankan government body or statute and links to its original publication. VixHR Research compiled and interpreted the data; no new surveys were run.
- Labour market figures are annual 2025 results of the Labour Force Survey, for the population aged 15 and over.
- Wage and inflation changes are annual averages unless stated, as published by the Central Bank of Sri Lanka.
- Legal rates (minimum wage, EPF, ETF, gratuity and APIT) are those in force on the publication date.
- Worked examples are illustrative and rounded to the nearest rupee. They do not replace the official IRD tables or legal advice.
Sources
- 01Sri Lanka Labour Force Survey, Annual Bulletin 2025 (opens in a new tab)
Department of Census and Statistics · Used in chapter 01
- 02National Minimum Wage of Workers (Amendment) Act, No. 11 of 2025 (opens in a new tab)
Parliament of Sri Lanka · Used in chapter 02
- 03National Minimum Wage of Workers (Amendment) Bill, 2024 (opens in a new tab)
Parliament of Sri Lanka · Used in chapter 02
- 04National Minimum Wage of Workers (Amendment) Act, No. 16 of 2021 (opens in a new tab)
Parliament of Sri Lanka · Used in chapter 02
- 05Budgetary relief allowance and national minimum wage notice, 2025 (opens in a new tab)
Department of Labour · Used in chapter 02
- 06Annual Economic Review 2025, Chapter 1: Macroeconomic Developments (opens in a new tab)
Central Bank of Sri Lanka · Used in chapter 02, chapter 05
- 07Press release: Annual Economic Review 2025 (opens in a new tab)
Central Bank of Sri Lanka · Used in foreword
- 08CCPI based headline inflation, December 2025 (opens in a new tab)
Central Bank of Sri Lanka · Used in chapter 02
- 09FAQs for employers (opens in a new tab)
Employees’ Provident Fund · Used in chapter 03
- 10Employees’ Provident Fund (opens in a new tab)
Central Bank of Sri Lanka · Used in chapter 03
- 11Notice: mandatory electronic payment of ETF contributions (opens in a new tab)
Employees’ Trust Fund Board · Used in chapter 03
- 12Payment of Gratuity Act, No. 12 of 1983 (opens in a new tab)
Department of Labour · Used in chapter 03
- 13Inland Revenue (Amendment) Act, No. 02 of 2025 (opens in a new tab)
Parliament of Sri Lanka · Used in chapter 04
- 14APIT Tax Table No. 01, 2025/26 (opens in a new tab)
Inland Revenue Department · Used in chapter 04
- 15Public notice SEC/PN/IT/2026/02 on the Inland Revenue (Amendment) Act, No. 11 of 2026 (opens in a new tab)
Inland Revenue Department · Used in chapter 04
- 16Annual Statistical Report of Foreign Employment 2025 (opens in a new tab)
Sri Lanka Bureau of Foreign Employment · Used in chapter 05
- 17External Sector Performance, December 2025 (opens in a new tab)
Central Bank of Sri Lanka · Used in chapter 05
How to cite this report
VixHR Research (2026). Sri Lanka Workforce & Payroll Report 2027: Pay, talent and the true cost of employment — what the data means for employers. VixHR. https://www.vixhr.com/reports/sri-lanka-workforce-payroll-report-2027
Last updated . This report gives general information, not legal or tax advice. Spotted something that looks wrong? Let us know.
