Unemployment has historically been a very sensitive issue in Sri Lanka as high levels of unemployment have predominantly been concentrated among educated youth. The primary objective of this study is to further explore the reasons for the high level of youth unemployment in Sri Lanka using individual records from the 1995 Labour Force Survey (LFS) conducted by the Department of Census and Statistics. The study providea background information on Sri Lanka’s economic reforms and performance over the last decade and summarises the conclusion of existing literature on unemployment in Sri Lanka. It also presents the new data and methodology used in this study and explains the results obtained from the data analysis from a broader public policy perspective. Finally, the study concludes by recommending some policy reform for a positive impact on the labour market in Sri Lanka.