FE Today Logo

Are we heading towards demographic nightmare?

Shamim Sahani | November 12, 2018 00:00:00

During late 70's, East Asia started to experience bulge in youth segment to enter the labour force and reached its peak during the first decade of this millennium. In the span of 40 years or so, East Asia emerged as power houses of the world economy, notably comprising China, Japan, South Korea and Singapore. During this time, East Asian contribution to world GDP climbed from merely 4.0 per cent to 24 per cent with fairly higher and stable growth rate compared to the rest of the world. One of the key reasons for this remarkable progress is believed to be the participation of youth workforce and adequate investment in channelling them into right path. With the declining fertility trend and higher life expectancy, a country's working-age population grows faster in relation to the young dependents. This time of window (roughly 30 to 35 years) is termed Demographic or Youth dividend.

Before stepping into Bangladesh perspective, where the mean age of the nation is 26 years and roughly 65 per cent population are under 35, let's have a quick look at a few other countries, which came across the window of youth dividend. Japan has now the average age of 46 while China and the United States is well over 40. Europe's average age has touched to 45. Compared to these developing and developed economies, India has average age of 28 years, Sri Lanka 32 years, Indonesia 28.4 years, Cambodia 24 years -- all these countries are promising. Now the fundamental question is whether these countries with promising economies can reap the dividend of the youth in the same way as Japan, China, the USA or Europe did. While answering the question, the central consideration could be 'investment' in human resource development. For obvious reason, education comes first. Historically, Bangladesh government's expenditure for education never crossed 2.2 per cent of GDP. On the contrary, India has spent consistently above 3.5 per cent of its GDP since 2011, Indonesia above 3.3 per cent, Malaysia ranges from 4.0 per cent to as high as 7.6 per cent. With further analysis, a simple trend could be spotted: during the time of youth bulge, developed countries invested heavily in education (and thereby in human resources development). Lately, research has also revealed that the countries that are potentially to face workforce deficit are managing it through planned immigration policy and efficient labour productivity. By 2020, the USA is expected to have 17 million shortage of workforce and to address this, it has systematically encouraged skilled migration. The influx of energetic young minds has eventually gave birth to companies like eBay, PayPal or Intel. While Europe implemented planned migration policy much before, Australia and Canada are still acquiring innovative young minds from around the world. For obvious reason, China could not afford to encourage migration, it emphasised efficiency in human productivity. Compared to Bangladesh's 145 persons to produce one million dollar equivalent RMG product China needs only 45! Due to the lag in automation and other technological advancement, the window of Youth dividend, 30-35 years, is likely to be shortened for the underdeveloped countries while capitalising the same would allow the developed countries to elongate the dividend period.

Given all these facts and forecasts, whether 'Youth' would turn to be a dividend or a nightmare, depends on how the government. acknowledge and responds to the reality. Without much debate, job creation is the ultimate solution to reaping the youth dividend. Considering the overall working-age population, Bangladesh is still somewhat in a balanced position -- 0.95 million job creation against 1.1 million job demand. But the scenario is horrifying when it comes to unemployment rate of fresh graduates. Nearly half of the fresh graduates are either unemployed or not with the desired level of job commensurate to their degree. Let not be fooled with the definition of the ILO in defining unemployment. The ILO defines that a person who worked at least one hour in the last one month will not be regarded as 'unemployment'! Without any mass insurance policy in place, the definition appears to be a laughing stock! Considering the definition, Bangladesh has an unemployment rate of little over 4.5 per cent that is misleading!

It is the high time for the policy makers, particularly in the education sector, to acknowledge that with a mere degree is not sufficient; other peripheral skills are equally important. Have we ever given thought: Why higher positions (even mid and senior mid-levels lately) of the garments are occupied by the employees from neighbouring countries, having been in the apparel sector for nearly 40 years? We simply ignored the human development aspect and heavily relied on the complacency of cheap labour. Labour dynamics is rapidly changing; advantage of cheap labour will diminish very shortly. We tend to forget that the current global economy does not bear any vacuum; with the lack of competent workforce in Bangladesh, some other nations are filling it and we let it happen. This is not only the case for apparels, it holds equally for other sectors.

By the nature of our economy, we are not in a position to sustain a "jobless growth". Ever increasing unemployment will not only exert pressure on the economy, but also bring in instability in the social arena. So sustainable employment can contribute to addressing youths’ frustration. Aiming for only higher GDP growth might turn the 'Youth Dividend' into a 'Youth Nightmare'.

Shamim Sahani is a researcher. shamim_sahani@yahoo.com

Share if you like