Abstract—The status mismatch in the labour market occurs when an individual is unable to find a suitable job for his or her level of education attained. Generally, this is known as Job- Education Mismatch and it’s mainly occurs due to demand side deficiencies of the economy. That is lack of job creation in the economy to absorb the educated youth to the job market. If the economy is unable to produce enough job opportunities to absorb newly passed out graduates, they find difficulty to secure suitable jobs. Senarath and Patabendige 2014, have found that there exists a considerable extent of education mismatch among the graduates who are employed in the Sri Lankan graduate labour market. Although this problem continuously exists, no proper attention has been still given. Accordingly, the main objectives of the research are to analyze the status of employment of Sri Lanka to identify the job generation of the economy and identify whether the graduates are doing jobs suited for their level of education using the secondary data analysis. The study used a deductive methodology and developed a declarative hypothesis to identify whether there exist a status mismatch in the graduate labour market. The study used the content analysis to analyze the secondary data available in the Central Bank Annual Reports, the Consumer Finances and Socio Economic Survey Reports, and the other relevant research already published. Finally, all the evidences support the hypothesis confirming that education mismatch is a more visible in the graduate labour market in Sri Lanka. Index Terms—Graduate labour market, job-education mismatch, status of employment, content analysis. I. INTRODUCTION The status mismatch in the labour market occurs when an individual is unable to find a suitable job for his or her level of education attained. Generally, this is known as Job- Education Mismatch or Educational mismatch, and it is a major problem currently faced by many newly passed out graduates. This sort of underemployment of human capital will create a severe skill mismatch issue. As such, when a graduate is educationally mismatched he or she is not be able to properly utilize the skills acquired from the university [1], [2]. When job aspirants of the country are unable to find suitable jobs to be matched with their educational qualifications their employment problem becomes a very serious issue from different angles. [2], [3]. Economists and sociologists have recognized the education mismatch phenomenon as a serious efficiency concerned problem with Manuscript received August 20, 2016. Sri Lankan Graduate Labour Market: A Status Mismatch. S. A. C. L. Senarath and S. Amarathunga are with the Department of Commerce and Financial Management, University of Kelaniya, Sri Lanka (e-mail: chathu.senarath@gmail.com, asunethrani@yahoo.com). S. S. J. Patabendige is with the Department of Marketing Management, University of Kelaniya, Sri Lanka (e-mail: sugeeth@kln.ac.lk). its pertinent socio-economic costs at individual, firm and national level. At individual level, it would let down the individual‘s marginal product, though the estimated wage differential differs across the countries’ status [4], [5], [6]. At the firm level, education mismatch is leading to lower productivity and lower level of job involvement; and high turnover rates. Accordingly, firms may have to bear extra costs on screening, recruiting and training of new employees repeatedly [7]. Education mismatch mainly occurs due to demand side deficiencies of the economy. That is lack of job creation in the economy to absorb the educated youth to the job market. If the economy is unable to produce enough job opportunities to absorb newly passed out graduates, they find difficulty to secure suitable jobs. As a result, the educated youths have to either wait until they could find a suitable job for their qualifications or accept any available job without considering the qualifications or field of study [8]. When a person is educationally mismatched, he or she will be unable to utilize the skills that acquired through learning and also unable to gain real output from the investment made for the education [9]. With respect to the education mismatch in the Sri Lankan graduate labour market, Senarath and Patabendige [10] found that there exists a considerable extent of education mismatch among the graduates who are employed, and further noticed that the education mismatch, education characteristics, employment characteristics and gender characteristics have a significant association with education mismatch. Although this problem continuously exists, no proper attention has been still given. Accordingly, the main objectives of the research are to analyze the status of employment of Sri Lanka to identify the job generation of the economy and identify whether the graduates are doing jobs suited for their level of education using the secondary data analysis. II. LITERATURE REVIEW A. Education Mismatch Education mismatch is defined as the lack of coherence between the required and offered educational level for a given job [11]. The issue of education mismatch has a long history, and accordingly, it had been, first, identified in 1870’s by Gladwell [12]. In a report written under the title of “Relation of Education to Insanity” by US commissioner of education, Jarvis invented this concept. Through this report he claims that out of the 1,741 cases of insanity he studied, “over-study” was responsible for 205 of them [13]. Since then, the issue of education mismatch has become popular although attention paid to this issue over time was inadequate. However, from the 1970s onwards, a renewed attention was given to this issue Sri Lankan Graduate Labour Market: A Status Mismatch S. A. C. L. Senarath, S. S. J. Patabendige, and S. Amarathunga Journal of Economics, Business and Management, Vol. 5, No. 1, January 2017 63 doi: 10.18178/joebm.2017.5.1.487