Published on Daily Sun
With a growing population and relatively small size of the economy employment generation is a challenging task for Bangladesh. 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. This is reflected also in the pattern of employment in broad economic sector as Table 1 shows. Along with the structural change the economy has also achieved impressive growth in terms of Gross Domestic Product (GDP). However, the growth of the economy has not been accompanied by adequate employment creation and the number of unemployed people has increased over the years. A recent report of the World Bank (2012) reveals that Bangladesh is the only country in South Asia where growth in labour force outpaced growth in employment during the last decade. However, unemployment rate remained remarkably low in Bangladesh, only at 4.5 percent in 2010 (Labour force Survey 2010, BBS). Unemployment rate for 2010 becomes as high as 24.0 percent if underemployment is added to unemployment rate.
One of the encouraging developments in the employment scenario of the economy has been the increase of female participation in the labour force. Between 2000 and 2010, female labour force doubled, against a 39.3 percent growth in the overall labour force. At the same time, against a 38.7 percent growth in total number of employment during this time period, female employment grew by 105.1 percent. The share of women in labour force in 2010 stood at 30.3 percent which was 21.1 percent in 2000 (BBS 2010).
It is to be noted that while growth is important for employment generation, it may not be a sufficient condition. Studies have indicated that the sectoral composition of growth influences the extent and nature of employment creation. For example, manufacturing, construction and services sectors usually demonstrate higher employment elasticity compared to sectors like agriculture, mining, utilities, etc. Though the composition of growth trend in Bangladesh suggests a positive shift towards a modern economy, the pace of the shift is yet to get adequate momentum. It is observed from table 4.2 that annual employment growth in recent years has been higher in agricultural sector than the service sector in Bangladesh. This is probably due to high underemployment in the agriculture sector which absorbs more of the incremental labour force even though the sector is burdened with surplus labour.
Low level structural shift in the domestic economy has resulted in a deteriorated labour force scenario. Between the labour force surveys of 2006 and 2010, although rate of employment creation has been higher than the increase in working age population, the pace of employment generation has been slower than the growth of labour force. As a result, in absolute numbers, both unemployment and the number of unemployed working age population have increased.
It is thus important to pursue a strategy towards further enhancement of the share of the manufacturing sector for employment generation. The current government in its election manifesto set the target to increase the share of modern sectors in the GDP. This is also reflected in the medium term targets laid down in the Sixth Five Year Plan (SFYP FY11-FY15).
Unemployment numbers mentioned in the election manifesto of the current government is not based on any labour force surveys. However, the target of the government has been set to reduce unemployment by more than 50 percent by 2021. This is to be achieved by a compositional change in the GDP, with modern sectors such as industry and services having to contribute more. Thus the share of agriculture sector is aimed to be brought down to 15 percent by 2021 from the current rate of 18.6 percent.
According to SFYP targets, unemployment rate is not going to decline compared to FY10 until the very last year of the plan period, that is, FY 2015, that too only marginally by 0.3 percent. In fact, total number of unemployed people is projected to increase till 2014 and is expected to return to the FY10 level in FY15. However, as a share of labour force, unemployment will be lower, as the labour force is expected to grow by 1.8 percent a year. It appears that SFYP aims at improvement in employment intensity of growth in the medium term, but not in any significant way. Table 2 shows the targets for employment.
* Actual growth
With less than three years left for the implementation of the SFYP, any significant change in the GDP composition may be an over optimistic target to be fulfilled within the plan period. However, the government can try to achieve the aggregate growth projection. This is a difficult, but not impossible task given the performance that Bangladesh economy has demonstrated over the years.
Apart from the efforts to accelerate growth, the government can emphasise two areas of intervention to leave a direct impact on the employment situation. First, the government can directly engage in employment generation through its safety net programmes (SNPs) for the poorest section. Major employment generating SNPs of the government includes the Employment Generation Programme for the Poorest (EGPP), the Food for Work (FFW) programme and the National Service (NS) programme. In FY12 the EGPP created over 3.3 million, FFW about 3.8 million and NS programme another 1.5 million man months of employment. These programmes are, therefore, contributing significantly to the improvement of the employment scenario. The challenge however is to achieve incremental job creation through SNPs in order to have any significant improvement of the unemployment situation. This is all the more important given the resource constraint. It is to be noted that the three above mentioned programmes targeted only 0.5 million man months of incremental employment in FY12. Targeted employment generation for the EGPP and the FFW programme remained the same in FY12 compared to FY11 (MoF 2012).
The wage implications of the employment generating programmes have increasingly become an important factor in job creation. Due to the absence of a competitive wage rate a modest increase in allocations did not yield any significant incremental employment contribution from these programmes. As the current government is committed to enhanced social protection and employment generation through the safety nets, resource allocation for these programmes will need to be enhanced.
The second important area of intervention is the outflow of overseas migrant workers. Surprisingly, migrant workers are neither included in the labour force, nor counted in total employment. However, the outflow of workers does reduce the pressure on the growth of labour force and the overall employment generation effort. During FY06 to FY10 (between the last two LFSs), 2.9 million people from Bangladesh went abroad for jobs. This number is about 40.2 percent of the incremental labour force during this period, a fact that signifies the impact of overseas workers on the labour force and employment scenario of the country. Thus as part of the employment generation strategy of the government and in order to supplement domestic employment generation efforts due emphasis should be given on the exploration of opportunities for overseas employment. Apart from strengthening diplomatic relations, this also calls for reducing cost of migration and skill enhancing training programmes, catering for the needs of the overseas markets.
Indeed, enhancement of economic growth should be at the centre of an employment strategy, which will be intertwined with the ultimate aim of poverty reduction through employment generation. However, for Bangladesh the major impetus for increased employment has to come from the private sector. Enhancing growth and employment creation in Bangladesh will of course require removal of obstacles such as infrastructural bottlenecks, institutional weakness and political instability.