The crisis of unemployment

Bangladesh is now one of the world’s fastest growing economies, with high rates of gross domestic product growth that continued even during the pandemic. Yet, youth unemployment has been one of the major obstacles to the sustainability of its economic development. Additionally, Covid-19 has considerably affected the global economy and job markets all over the world. According to the United Nations Development Program (UNDP), this has been the worst economic recession since the great depression, and we have seen its impacts in Bangladesh as well. Thus, it is going to be a challenge to provide employment opportunities for those who have lost their jobs during the pandemic, as well as for the 2.26 million new entrants into the job market every year, as targeted in the Eighth Five Year Plan.

The reason for high rates of youth unemployment in Bangladesh is two-fold. On one hand, the education system is failing to create a competent and skilled workforce. Instead of career-oriented skills development, the only focus is on good grades. A recent World Bank report identified the skills gap between the supply and demand of industries as the main reason for the high youth unemployment rate in Bangladesh. The existing skills development programmes and institutions have been ineffective in transforming the young population into an efficient workforce. There is a dearth of standard job opportunities relating to the background and subjects that are being taught in the universities. But let us not forget the farmers, garment workers and expatriate labourers whose sweat and poorly remunerated labour has made this possible. The growth would have been much bigger if rampant corruption had been controlled and good governance been in place.

Mega projects can contribute a bit more, but the biggest sustainable growth will come from utilising the combined intellectual potential of our huge youthful workforce. Their innate intellectual capability is undisputed, and intellectual capital can be our most potent weapon for achieving economic growth of well over 10 percent required for sustainable development necessary for promotion to a developing nation in 2024, and even more so for progressing towards a developed economy by 2041.But this will need to be complemented and supported by excellence in higher education underpinned by a very strong science and technology base. But how well prepared are we for this educational and technological transformation?

Quality higher education can only be built on a strong base of primary and secondary education. But for now, let us concentrate on youth about to enter the workforce. There is no doubt that our current and future generations of workers must be technologically proficient.

The government should carry out a study to determine the number of different professionals we need in different employment sectors and set need-based post-secondary goals accordingly. To cater to the expected increase in manufacturing and skills-based jobs, many more post-secondary technical and vocational institutions need to be set up to produce a trained workforce of various categories of technical and supervisory positions. The government will need to seriously make the necessary investments in education and research, build the required science and technology platform, and prepare and retain the highly trained workforce needed for elevation first to the status of a developing nation.

And then to a developed country. Intellectual capital and the technological abilities of our youthful workforce will be our major weapons. Since the pandemic began, more often than not informal workers have been the first to lose their jobs over those who have the protections offered by formal employment. A survey in Thailand by The Asia Foundation, for example, shows that around two-thirds of those who lost their jobs in small and medium enterprises between May and June 2020 were informally employed, with 81 percent of informal workers who lost their jobs coming from the tourism sector. By definition, informal workers are without automatic access to social security, and so have limited access to the services that might help them cope with the shock of job losses. They tend to come from lower income households, and so have little or no savings to tide them over. They have lower levels of education, which limits their access to other jobs. A survey of 97,000 low-income household micro-enterprises in the Philippines across poor and near-poor income levels found that of the group not already poor prior to Covid-19, three- quarters either fell into poverty or got even closer to poverty, and close to one-third of all respondents have experienced hunger since the pandemic began. In countries like Thailand, Indonesia, and Laos, the oldest workers also have the highest rates of informal employment and additional difficulties finding alternative living conditions or adapting to challenges. It is quite evident that the pandemic has exacerbated many existing negative trends. From rising income inequalities to what is now a gaping digital divide, Covid-19 has laid bare pre-existing weaknesses in governance and social protection provision in Southeast Asia, as much as globally.

However, one weakness that has received far less attention than it deserves is the disproportionate impact of the pandemic on the livelihoods of millions in informal employment who have become newly unemployed or underemployed. The pandemic has highlighted the weak foundations of Southeast Asian labor systems. Restrictions on the movement of people and the sudden stoppage or severe downscaling of economic activities to contain the propagation of Covid-19 are having a strong impact on informal workers. The sectors worst affected by the pandemic such as accommodation and food service activities wholesale and retail trade, transportation, and construction all have a particularly high proportion of informal labor. According to a 2019 Association of Southeast Asian Nations Report, the informal employment rate in the accommodation and food services sector ranged from 81 percent to 99 percent in Vietnam, Myanmar, Laos, and Cambodia. In the same four countries, informal employment rates range from 70 percent to 97 percent in wholesale and retail trade, and from 90 percent to 99 percent in construction. From the same Asian report, it can be estimated that in eight of the 10 Asian countries (excluding Singapore and the Philippines, which have no data), 57.5 million workers in these four sectors were in informal employment before the pandemic. Asian leaders adopted the Declaration on Transition from Informal Employment to Formal Employment towards Decent Work Promotion. The regional action plan that accompanied the declaration included an important study on statistical data gaps that paved the way for the establishment of an Asian informal employment database, including decent work indicators.

While it made more data available to policymakers, significant policy changes are yet to occur. In the wake of Covid-19 and its dramatically unequal impact on work in the informal labor market, it is time to consider a more holistic approach, one that combines social protection coverage with the promotion of employment opportunities and skills development. Asian member states recognize this. It is reflected in a study recently published by the Asian. In its impact on informal workers across the region, Covid-19 has drawn attention to a vulnerability of Southeast Asia’s labor markets that requires urgent action. Evidence of its impact should spur on governments to review, scale up, and adjust existing policies and systems to make them more responsive in a crisis such as this. While reform of social protection systems is one side of this coin, ultimately, redressing the balance between informal and formal labor such that more workers have access to decent jobs will allow for fairer and more shock-responsive labor markets. Now is the time for a stronger commitment to make transition from informal to formal employment the centerpiece of holistic and sustainable recovery efforts.

The writer is a researcher based in the UK