Abstract: This paper examines the impact of trade on employment and wages in the manufacturing industry in Sri Lanka. The study models the effects of trade on employment and wages in the manufacturing industry in a labour demand and a wages framework on an integrated panel dataset of trade, labour and manufacturing industries. The impact of trade on manufacturing employment and wages is empirically examined following the predictions of the Heckscher-Ohlin trade theorem. Empirical findings on the labour demand model suggest a positive and statistically significant impact of exports on manufacturing employment, confirming the Heckscher-Ohlin predictions.