In 2022, more than a quarter of a million workers, including doctors, left Sri Lanka to work in other countries. This was largely due to economic problems, including an inflation rate of 50% and a concern that unemployment might rise. The Sri Lankan Government increased direct taxation. It also encouraged some public sector workers to work abroad temporarily. People who work abroad often send money home to relatives.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] Frictional (1) structural (1) cyclical / demand deficient (1).
2. [1] If more than two types given, consider the first three.
3. [1] Also accept voluntary unemployment, involuntary unemployment, seasonal, classical, casual, regional, technological. Accept demand-deficient as an alternative to cyclical.
4. [1] Could spend more on food / buy more products / buy more basic necessities have higher purchasing power / more income / could increase overall spending (1) reduce poverty (1).
5. [1] Could spend more on better quality food (1) improve nutrition / improve health (1).
6. [1] Could spend money on education / training (1) increase earning potential / wages (1).
7. [1] Could spend on healthcare (1) raise life expectancy (1).
8. [1] Could spend on housing (1) reduce illness (1).
9. [1] May be able to afford luxuries (1) e.g. may be able to afford a holiday / car (1).
10. [1] Could set up a small business (1) which could earn them an income (1).
11. [1] Could pay off debts / reduce need to borrow / reduce cost of borrowing (1) reduce stress (1).
12. [1] Could save more (1) earn interest / pay for e.g. healthcare/education of children in the future (1).
13. [1] Could work fewer hours / fewer jobs (1) less stress (1).
14. [1] One mark each for each of two ways identified and one mark each for each of two explanations.
15. [1] If more than two ways given, consider the first three.
16. [1] No marks for why the money received may be large due to e.g. lower tax rates abroad, high exchange rate.
17. [1] (Increase in) (personal) income tax (1) (increase in) tax on wealth (1) would reduce disposable income / purchasing power / money available / the amount of their wages they can keep (1) reduce consumer spending (1) lower total demand (1) lower demand for workers (1) as demand for workers depends on demand for goods and services / derived demand (1) increase cyclical unemployment (1).
18. [1] Reduce incentive to work / encourage workers to leave their jobs (1) may now rely on unemployment benefit / as may receive more from unemployment benefit than from a now lower paid job (1) increase frictional/voluntary unemployment (1).
19. [1] (Increase in) corporation (corporate income) tax (1) will reduce the amount of profit that can be kept / reduce profit (1) firms may reduce output / reduce economic growth / may cause a recession / reduce supply / less incentive to expand (1) reduce investment (1) result in cyclical unemployment (1) may reduce employment to cut costs (to maintain profit) (1).
20. [1] may be higher paid, higher living standards.
21. [1] may benefit from lower inflation.
22. [1] may benefit from lower taxes.
23. [1] may be more chances of gaining a job or gaining a promoted post.
24. [1] may have better working conditions.
25. [1] may have more fringe benefits.
26. [1] may gain new skills and experience.
27. [1] may be safer environment.
28. [1] may be able to send money home to family.
29. [1] may provide better opportunities for their children.
30. [1] may have longer working hours.
31. [1] may have less holidays.
32. [1] may have less job security.
33. [1] may miss friends / relatives.
34. [1] may face discrimination.
35. [1] may face language problems/ cultural differences.