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Empowered Sri Lanka, Sri Lanka’s development policy document, envisions reorienting the country toward a modern and high-value-adding economy that is able to compete in the global market. Expanding the middle class and improving the living standards by creating one million jobs are at the core of the policy. This report seeks to support the realization of that vision by analyzing Sri Lanka’s employment situation and drawing recommendations from the analysis. The report starts with an overview of the labor market in relation to both supply and demand. It then looks at the issues of aging and skills generation. The concluding chapter examines links between labor market trends, informality, and poverty. This study is a co-publication of the Asian Development Bank and the International Labour Organization.