Eden Building to Stock Exchange

Published:  01:41 AM, 16 July 2017

Growth of joblessness and way out

Growth of joblessness and way out

Bangladesh's economy has been doing well for the last several years but job growth is the lowest in two decades though the growth of GDP by average is more than 6%. The country could add only 1.4 million job opportunities between 2013 and 2015-16 fiscal years, down from 4 million jobs it had added between 2010 and 2013, according to the latest data of Bangladesh Bureau of Statistics' Labour Force Survey. The World Bank observed that the annual growth rate of jobs fell to 1.8 percent in 2010-15 after growing 2.7 percent annually in the period 2003-10, and has almost stalled in the Ready Made Garment sector. But every year about 2.2 million young people enter in the job market.

The sluggish job creation has raised questions whether it is a 'jobless growth'. Thomas Farole, the lead author of the World Bank Jobs Diagnostic, said the relationship between GDP growth and jobs growth is not 'straightforward. But more recently jobs growth has slowed down, even though GDP growth has actually increased a bit in Bangladesh but the reason not yet identified.

More than 65 percent of the population is of working age, between 15 and 64 in Bangladesh. This population has immense potentials for economic development. By 2030, the population of this age group would rise to 70 percent, but then it will start declining, according to the UNDP's Asia Pacific Human Development Report launched in Dhaka on April 26, 2015.  The demographic dividend usually continues for 30 to 35 years. The dividend usually comes once for a country. Bangladesh needs to invest right now in the human capital of its young people and create employment opportunity, if it wants to reap the benefits of a large demographic dividend. It is possible on through transforming the demographic dividend to economic dividend.

The present population statistics and available job are not matching for optimum use of manpower. This has created a situation of missing the benefit of demographic dividend. Demographic dividend is defined as the economic growth potential that can result from shifts in a population's age structure, mainly when the share of the working-age population is larger than the non-working age share of the population as revealed by United Nations Population Fund (UNFPA).

The economy of the country has undergone a structural change since its independence. It has gradually moved from an agrarian to a more industry and services sector based economy. In October 2015, Bangladesh was newly classified by the World Bank as a lower middle income country, and neighboring Pakistan, India, Sri Lanka and Bhutan had all also graduated to 'lower middle-income' status. Moreover, the economy has grown alongside a degree of macroeconomic stability, as judged by inflation and budget balances.

Another UNFPA study read "In 1972, about 75% of the workforce was in primary industry (mostly agriculture) and 25% in non-agricultural sectors while in 2010 these ratios had changed greatly in which 47% were in agriculture and 53% in non-agriculture,. But the magnitude of this decline and agriculture now still employ 47% of the total workforce.
In the 2000s, population in Bangladesh grew about 1.5% per year, a rate confirmed by Bangladesh Bureau of Statistics Labor Force Surveys from 2000 to 2013.

A notable demographic feature is the significantly higher growth of the female population in the successive surveys. Since only 1 in 5 workers are employed as wage- worker which means they earn a regular wage which is 'a set amount paid at a set time' - weekly, monthly. Further, 1 in 3 working women, as opposed to 5 percent of working men, are engaged in unpaid work. Bangladesh needs to generate quality jobs and address gender disparities.

Only one in a thousand had technical or vocational qualification in 2010. This is not surprising given enrollment in technical and vocational education of only 2.43% of secondary enrollment, compared with 6.31% in Malaysia and 18.41% in the People's Republic of China. "A section of the educated unemployed are going abroad for some manual laborious job risking their lives for employment. In fact, their migration indicates the real scenario of the employment in the country." According to Bangladesh Economic Study 2017, in the country only 1,91,909 people have been employed in the projects registered with the private sector in the first eight months from July 2016 to February 2017 and rest of employed in informal sector.

Our expatriate working abroad are in non-technical low earning hard working job except less than one percent having employment in technical or managerial position. The situation is also worsening in the country as well. The number of foreign nationals employed in the country is on the rise in the absence of adequate manpower with the technical know-how among a labor force of nearly 4.4 million and expanding economic activities.

On the other hand, the mid-level local job market was gradually being occupied by foreign manpower in some sectors, which is a reason for worry. Most of these foreign nationals are employed in the garment sector in top posts like production managers, merchandisers, and senior sewing operators, cutting masters, designers and washing experts. They are mainly come from India and Sri Lanka, followed by Pakistan, China, South Korea, Taiwan and the Philippines and took home nearly $5 billion in salaries and allowances through official channel. The remittance though informal channel is many fold higher than formal Banking channel.

The manufacturing sector plays a key role in employment generation and in the provision of income to the poor. Nearly four million workers are directly and more than twelve million inhabitants are indirectly associated with the industry. Manufacturing needs to grow faster as that sector has the potential to be the engine of growth and a major source of productive employment. More labor-intensive sectors such as garments will have to continue to grow. The policy regime needs to be neutral for other industries with the same growth potential. But employment opportunities in the country haven't increased as investments in the private sector have been low for several years.

The 7Th FYP has projection of creating good jobs for the large pool of underemployed and new labor force entrants by increasing the share of employment in the manufacturing sector form 15 percent to 20 percent and increase the contribution of the manufacturing sector to 21% of GDP by FY20. Substantial improvement of export projected to $54.1 billion by FY20.

Under the plan, the average growth rate is projected at 7.4% over the seventh plan period. The FYP seeks to raise the GDP growth rate progressively from 6.5% in FY2015 to 8% by FY2020. It is estimated that some 12.9 million additional jobs will be available during the five years of the seventh FYP, including 2 million jobs abroad for migrant workers. Again, the FYP seeks to reduce poverty rate from 24.8% to 18.6% and extreme poverty to around 8.9% by FY2020.

The key challenge for implementing seventh FYP will be to increase the rate of investment from 28.9% of GDP in FY2015 to 34.4% of GDP by the end of the plan in FY2020 from the current 28.9 per cent . For this, it requires balanced efforts to further reduce inflation to 5.5% by FY2020.

The direct investment is expected to play a bigger role under the seventh plan. Inflow of FDI needs to be increased from about 1% of GDP to 3% to achieve the financing of the seventh FYP's investment target. Total investment over the five years will amount to Tk31.9 trillion. Private sector will continue to play its dominant role, accounting for 77.3% of total planned investment. But the investment is visible as projected in the 7th FYP.

Despite declining role, agriculture is a major source of rural jobs in Bangladesh. Over 87 percent rural people derive at least some income from agriculture. But two thirds of rural households rely on both farm and rural non-farm activities (RNF). It is estimated that a 10 percent rise in farm incomes generates a 6 percent rise in non-farm incomes. While rural non-farm employment is large -- almost double of total urban employment- and growing, non-farm businesses are not expanding or diversifying fast enough. Government needs to focus on fostering a more robust rural non-farm economy for further employment generation for rural people.

The RNF activities in the non-crop sector are driven by poultry farming, fish farming, livestock farming, and various services etc. Some of these RNF activities are: (1) Crop processing and marketing (2) Equipment repair workshop (3) Rural industry and construction (4) Rural transport services (5) Shop keeping (6) Cottage industries, like pottery, bamboo and cane made products, food processing, etc.

The government should have multi-sectorial focus, with special attention to education and health. Education should be skill and market oriented, not certificate oriented. One World Bank expert said "Addressing the job issues requires policies that establish the macro and microeconomic frameworks to stimulate private sector investment, promote education and skills development, and support innovation, urbanization and mobility,"

Government can plan for a balanced development strategy should be developed for both farm and non-farm growth in rural area. The SME sector both in rural and urban area has the highest opportunity to create employment. In a country like Bangladesh, the SME sector can play a major role, as it is a great force for the domestic market for employment.

Bangladesh have a "National Jobs Strategy" to increase the pace of formal job creation, raise the quality of jobs, and connect vulnerable workers to jobs and appropriate technical and general education.


The writer is a legal economist. He can be reached at: mssiddiqui2035@gmail.com

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