Introduction to Job Creation in Bangladesh
Jobs are much more than a means to earn income and escape poverty; they provide dignity. Between 2016 and 2022, 14 million youth became working-age adults, but only 8.7 million jobs were added to the labor market in that period. That means nearly half of these youth could not find a job. For those who did secure a job, nearly 70% were employed in low-productivity agriculture. The manufacturing sector shed jobs.
The Challenge of Job Creation
Job creation has not kept pace with the country’s economic growth. The country’s young, growing workforce — expected to expand until the late 2030s — offers a demographic advantage, but with a limited time horizon. The manufacturing sector offers paying jobs, but while it grew by about 9% annually between 2016 and 2022, its employment declined by nearly 10%. Possible reasons include rising automation, capital investments, and the country’s heavy reliance on the readymade garment (RMG) sector.
The Impact on Women and Youth
Labour market challenges are particularly acute for young people and women. Youth labour force participation has declined, and youth unemployment stood at 8% in 2023, and at 14% among those who went to university. Additionally, 16% of young people were neither in employment, education, nor training (NEET), with young women comprising 73% of this group and urban youth accounting for 63%. Women face even steeper barriers to employment. One in five young women is not in employment, while that is the case for one in four educated young women.
Path to Creating More and Better-Paying Jobs
Bangladesh needs to accelerate its economic growth and convert it into creating jobs that are stable and drive upward socioeconomic mobility. For this, the country needs to address three major constraints to job creation: the infrastructure gap, the skills gap, and the regulatory gap. The infrastructure gap stems from rapid urbanization that is outpacing the expansion of utilities and public services. Reducing the infrastructure gap requires increased investments in physical and digital infrastructure needed for firm expansion and economic diversification.
Addressing the Skills Gap
The skills gap is widened by a mismatch between the skills firms need and the skills job seekers have. Education and training too often fail to match labour market needs. They must be made more market-driven and job-relevant. Strengthening collaboration between industry and training institutions, expanding vocational and technical training, and scaling apprenticeships can ensure that education leads to opportunities. Targeted programmes for women and youth can help integrate them into fast-growing sectors.
Addressing the Regulatory Gap
The regulatory gap is reflected in the high costs of doing business faced by micro, small, and medium enterprises (MSMEs), which discourage expansion and hiring. The gap needs to be addressed for private sector competitiveness and economic diversification beyond the RMG sector, to new drivers of growth such as IT services, logistics, and agro-processing. This will lead to export dynamism and higher-quality jobs. Ensuring a level-playing field by reducing barriers to trade and investment, simplifying regulations, addressing corruption and hassle, improving logistics, and expanding access to credit for MSMEs can unlock investment and drive innovation.
Increasing Female Labour Participation
The country needs to focus on increasing female labour participation. A multipronged strategy is needed to address the barriers prohibiting women from joining the workforce, including gender bias in education and pay, inadequate childcare and unsafe commutes, limited financing for female entrepreneurs, and social norms that limit female mobility and result in early marriages.
Conclusion
Bangladesh needs bold and urgent reforms to create more productive, better-paying jobs. The path forward is clear: enable the private sector to create jobs by putting in place the policies and regulatory reforms, and their enforcement, establish a business-friendly environment and level playing field, including transparent and clean tax systems, good governance, and transparent institutions. By addressing the infrastructure gap, skills gap, and regulatory gap, and increasing female labour participation, Bangladesh can create more and better-paying jobs, driving long-term prosperity and economic growth.
