Home ›› 22 Jun 2022 ›› Editorial
The creation of employment opportunities is essential for poverty alleviation and sustainable development. Employment creates earning capacity and ensures workers' entitlement to goods and services. Employment greatly depends on investment, and investment is the most vital factor for economic growth and development. Employment helps the unemployed and his/her family members meet the basic necessities of life. Their expenditures create multiplier effects on the economy.
The labour survey found that 14 lakh new faces joined the labour force between 2015-16 and 2016-17, taking the total number to 6.35 crore. According to the Labour Force Surveys over the past five years, although the jobs declined by 1.5 million in agriculture, there was output growth of 3.2 percent. On the other hand, the service sector created the highest number of jobs. Between 2013 and 2016-17, jobs in the industrial sector grew by only 0.5 per cent even as output grew by a robust 9.8 percent. On the other hand, services sector jobs increased by around four percent against output growth of about six per cent.
Bangladesh's unemployment rate was low at about 4 per cent as per Bangladesh Bureau of Statistics, which is partly because people simply cannot afford to remain unemployed and try to earn a living from whatever work they can get. As a result, a large proportion of the employed is engaged in work that can be called "vulnerable," such as self-employed, own account, unpaid family helper, and day labor.
In a review of the Bangladesh economy, the local thank tank, the South Asian Network for Economic Modelling (SANEM), states that although the economy has performed well, the job market has not grown correspondingly. Hence, the conditions of the people have not improved markedly. Similarly, the Centre for Policy Dialogue (CPD) stated in its discussion on the latest budget that the nation is fast heading towards a great depression triggered by joblessness. Bangladesh has made remarkable progress in accelerating growth and reducing poverty. Still, the rate of job creation has not kept up with economic growth. Creating more and better jobs is a prerequisite for the country to achieve its vision of upper-middle-income status.
Unemployment and poverty are two significant problems in Bangladesh. The unemployment problem will create many complex social and political problems if sufficient jobs are not generated.
According to the BBS statistics, on average, between 2013 and 2016-17, Bangladesh's gross domestic product (GDP) grew annually by 6.6 percent. There has been a net increase of 2.8 million new jobs on top of the 60.7 million jobs that existed in the economy in 2013. This means the number of jobs grew by only 0.9 percent per annum or less than one-eighth of the rate at which the economy grew during those five years.
The service sector employed 2.37 crore people, adding 17 lakh jobs from 2015-16. As a result, the share of the service sector rose 2.1 percentage points to 39 per cent in 2016-17, as the sector secured the share lost by agriculture and industrial sectors during the period.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), about 4 million of total manpower is working in 4328 garments factories in Bangladesh, of which 85 per cent is women. Employment in RMG sector increased from 2 million to 4 million between FY05 and FY12. It remained unchanged until FY16, when the number of factories declined from 5876 to 4382 in FY16 compared to FY12. Experts and analysts said the sluggish private investment, rise of the capital-intensive sector, and adoption of advanced technologies are three key reasons behind this.
According to a survey titled "Ongoing Upgradation in RMG Enterprise: Preliminary Results from a Survey" conducted by the Centre for Policy Dialogue (CPD) and presented in 2018, there are 3,596 active RMG factories in Bangladesh with 3.5 million workers, of which 60.8 per cent are female and 39.2 per cent are male. In the previous survey in 2015, the workers were 36 per cent male and 64 per cent female. The employment growth in the RMG sector has decelerated. In 2012-2016, the employment growth was 3.3 per cent, which was 4.01 per cent in 2005-2012.
There are even more reasons for concern. The quality of the new jobs generated is also problematic. A worrying picture is that more than 85 percent of the jobs in 2016-17 were informal, which can't be considered good quality jobs. Also, while male jobs increased by only one million (from 41.2 million in 2013 to 42.2 million in 2016-17), female jobs increased by 1.8 million (from 16.8 million to 18.6 million). The rise in female jobs has been heavily concentrated in the informal sector. Female jobs in the informal sector increased by 1.9 million, suggesting a drop in females in the formal sector by 0.1 million. Low levels of technology, outdated management practices, and lagging workforce skills create low-quality jobs. The vulnerable groups are facing higher challenges in finding jobs.
The role of productive employment in reducing poverty is now widely recognized. But the experience of many developing countries seems to indicate that in recent years, the employment growth rate has been inadequate vis-à-vis the growth of the labour force. The number of employment generated due to given output growth has
been declining.
The situation naturally calls for special efforts and programmes to create employment.
One of the important features of the 7th FYP (2016-2020) is that it proposes a private sector-led growth strategy. The document estimates a private sector investment of Taka 24.6 trillion or 77 per cent of the total investment outlay of Taka 31.9 trillion. It is a well-known fact that the private sector can create jobs much faster than the public sector. And the private sector is always quick to adopt newer technologies to maintain its competitiveness and improve the quality of products.
According to experts and analysts, attracting new investments and creating employment opportunities are some major challenges Bangladesh will likely face in the forthcoming fiscal year. Finance Minister in budget proposal has set a target to increase the share of investments in GDP to 33.54 per cent from 31.47 percent in the outgoing fiscal year. Private sector investments are expected to contribute 25.15 per cent and the public sector will contribute 8.39 per cent to the GDP.
Recently, Bangladesh signed a $250 million deal with World Bank to generate jobs. The World Bank-funded programme aims to help leverage Bangladesh's comparative advantage in the manufacturing sector while stimulating investment, making doing business easier, and modernising customs and trade facilitation. Bangladesh is now a low-middle-income country and its share of industrial sector employment should increase until it becomes an upper-middle-income country. In recent years, countries such as China, Indonesia, and Vietnam have created more industrial jobs.
This programme will support reforms that will address key challenges in creating inclusive and quality jobs. This will help the government implement policies to modernise trade, stimulate investment, strengthen workers' social safety nets, and help vulnerable people access employment.
The writer is a legal economist and adviser, Bangladesh Competition Commission. He can be contacted at mssiddiqui2035@gmail.com
