With the existing social security system, Sri Lanka faces challenges in meeting the social security needs of a large and growing informal sector.

A social insurance scheme could be introduced to extend coverage to those currently ineligible for any existing scheme, economists suggested.

It is necessary to ensure adequate social protection coverage for all informal workers, temporary workers, daily waged workers, and self-employed workers. Such a social insurance scheme will safeguard those who have lost livelihoods in a crisis, a research study revealed.

According to the study, more than 1.7 million temporary workers in Sri Lanka face uncertainty due to the economic impacts of COVID-19. In a blog post published by Sri Lanka's Institute of Policy Studies (IPS) on Wednesday, economist Priyanka Jayawardena pointed out that "more than 1.7 million temporary employees in the private sector are at the risk of facing drastic wage cuts and layoffs."

Jayawardena said that significant dips in economic activities and demand for goods and services amid the COVID-19 pandemic will lead to redundancies, especially for temporary workers who lack legal protections. Citing data from the Department of Census and Statistics, Jayawardena said that more than 100,000 people were unemployed in the first quarter of 2020, with more job losses likely due to pandemic induced uncertainties.

According to Jayawardena, around 90 percent of temporary and casual workers do not have a written contract, while 88 percent are not covered by the country's Employee's Provident Fund (EPF).

Sri Lanka has 2.8 million private-sector employees, out of whom 60 percent are temporary workers lacking formal job and social security benefits.

The research called for greater labour market security, an unemployment insurance scheme, and policies to re-skill unemployed workers in order to transition them to new sectors.