The ongoing contraction in private sector job opportunities is creating a tough environment for even skilled individuals to secure employment that aligns with their qualifications. A recent FE report highlights that educated young professionals are often forced to compromise by accepting low-paid positions in the informal job market. Additionally, the report underscores that rising inflation, combined with diminishing job security and a tepid investment climate, is causing qualified professionals to feel uncertain about their employment prospect. Market analysts have pointed out that challenges facing both local and foreign investors are contributing to eroding job security in the private sector, which in turn fuels the growth of the informal economy and increases cash-based transactions.
This decline in employment opportunities cannot be attributed to cyclical unemployment-a type of temporary joblessness that arises during economic downturns due to lower demand. While the country's economic activity remains subdued, the nature of the current employment crisis suggests a deeper, long-term crisis rather than a short-term dip typical of recessionary periods. The problem reflects a structural weakness, particularly for young people qualified for quality jobs, which has become more pronounced over time.
The primary factor driving this trend appears to be stagnant company earnings. Since the global pandemic and the subsequent economic disruptions caused by the Russia-Ukraine conflict, private sector earnings have failed to recover, leading to significant reductions in job openings. Wage growth has also been insufficient in recent years. As per the Bangladesh Bureau of Statistics (BBS) data, from 2013-14 to 2022-23, nominal wage rates increased at an average of 6.26 per cent, while inflation exceeded 7.0 per cent during the same period. Wage growth in key sectors, including agriculture, industry, and services, ranged from 5.0 per cent to 7.01 per cent, failing to keep up with inflation rates of 7.0 per cent to 9.02 per cent. The share of the manufacturing sector in Bangladesh's total labour force fell to 11.26 per cent in 2022-23, down from 14.43 per cent in 2022. Other sectors also saw declines: agricultural sector employment dropped to 45.36 per cent in 2022 from 47.3 per cent, while jobs in forestry, fisheries, minerals, and mining saw significant decreases. Employment in the manufacturing sector declined from 12.34 per cent to 11.26 per cent, and jobs in commerce, hotels, and restaurants dropped from 16.45 per cent to 12.89 per cent. Employment in health, education, and public administration also fell from 4.74 per cent to 4.24 per cent.
A paradox emerges here, as even though the manufacturing sector has grown, employment in the sector has continued to decline. This inconsistency is underscored by the World Bank's recent Bangladesh Development Update report, which highlights that between 2016 and 2022, the manufacturing sector grew at an average rate of 9.1 per cent, yet employment in the sector decreased by 9.6 per cent. This paradox points to an economic growth model that has not generated sufficient employment opportunities, particularly for the growing number of young job seekers entering the labour market annually.
The World Bank report further highlights that while the overall unemployment rate declined during 2016-2022, youth unemployment rates remained high. This is attributed to a mismatch between economic growth and job creation in urban areas, especially in industrial sectors. Instead, economic progress has been driven largely by the informal sector, which now constitutes nearly 85 per cent of all jobs. This reliance on informal employment reveals a systemic issue: high-quality, formal jobs are becoming increasingly rare, especially for educated individuals. The report points out that job creation in large industries, including the ready-made garment (RMG) sector, has stagnated. Although Dhaka has seen some job growth since 2016, other major divisions, such as Chattogram, Rajshahi, and Sylhet have experienced net job losses. The post-pandemic economic recovery has been slow, further strained by high inflation and vulnerabilities in the financial sector, exacerbating the employment crisis for youth, women, and educated individuals.
If these trends persist, the outlook for skilled young professionals will become dimmer. The scarcity of jobs that match their qualifications, particularly in the private sector, suggests that more educated youth may be compelled to accept low-paying positions in the informal economy, unable to fully utilise their skills and knowledge. This situation could have long-lasting implications, potentially stifling the aspirations and economic contributions of an entire generation.
A lingering mismatch between the supply of and demand for qualified and skilled labour in the private sector could erode the country's competitive advantage in sectors like manufacturing and services, as a significant portion of the talent pool remains underutilised or forced into informal, low-wage jobs. This situation may also drive a brain drain, with many educated young professionals seeking opportunities abroad rather than contending with limited prospects at home. Additionally, the lack of upward mobility and job security can contribute to societal disillusionment, potentially deepening frustrations among the youth and increasing economic inequality. To address these issues, policymakers and industry leaders need to implement targeted reforms, such as enhancing vocational training, promoting inclusive economic growth, and incentivising private sector investment, aimed at generating sustainable employment opportunities and stabilising the job market.
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