The end of the three decade war and the liberation of the Northern and Eastern Provinces has heralded a new era of economic, political and social development in Sri Lanka. Nevertheless, the country faces challenges in the economic and social spheres and in promoting decent and productive employment for all. The challenge of building a sustainable and progressive post- conflict era is made more difficult by the global economic crisis. Yet the economy has attracted inflows of foreign funds and the process of rehabilitation and reconstruction in the newly liberated North has the potential to provide a much needed fiscal stimulus, helping to mitigate the worse effects of the crisis. The aim of this report is to identify key economic and labor trends along with the main challenges facing workers, employers and the Government. This is because the country strives to promote economic growth and competiveness and an adequate number of decent employment opportunities which are built upon a foundation of rights at work, social protection and tripartite dialogue.