Assessing prospects of demographic dividend

Social scientists, mainly economists and demographers, continue to debate whether population growth encourages, discourages or is independent of economic growth. The focus however is on population size and growth, with little or no attention to the age structure of population. Economists have recently recast their focus on the impact of changing age structure of the population moving beyond the Malthusian emphasis on population growth. Interest on relation between population change and economic growth resurfaced because of the demographic transition taking place in the developing countries. This demographic shift initiates the demographic dividend which may be described as the accelerated economic growth resulting from a decline in mortality and fertility rates and the subsequent changes in the age structure of the population of a particular country. With fewer births each year, a country's young dependent population grows smaller in relation to the working-age population. With fewer people to support, a country has a window of opportunity for rapid economic growth if the right social and economic policies developed and investments made.
Therefore, one of the major tasks that the overpopulated countries have taken on themselves is to derive benefits out of their demographics along side undertaking short and long term population planning measures. These countries adapt family planning activities not only to keep the birth rate down, but also to make sure that the working age population (15 to 64 years) is higher than the non-working-age segment. Despite being overpopulated, Bangladesh has made remarkable strides in economic growth, thanks to the diligence of an industrious work force and tenacity of the nation as a whole. While battling population pressure, it has made significant progress in many areas of human development approaching nearer to deserve demographic dividend. Its GDP (gross domestic product) for last three years recorded an upturn of more than 6.0 per cent a year, which is equal to that of some of the best performing Asian economies. Life expectancy and literacy levels have also increased, child immunization rates are sustained above 90 percent, and maternal mortality ratio declined sharply.
However, considering the working age population, the employment structure of Bangladesh is characterized by the predominance of the low-productivity, low-wage, informal sector (absorbing around 80 per cent of the total labour force), which cannot contribute much to poverty reduction and stands as a predicament for achieving demographic dividend. Like many other developing countries, the official statistics on the unemployment rate is quite low (4.5 per cent) and it conceals the considerable rate of under-employment (17-34 per cent), which is of greater concern. The situation is even worse when it comes to the case of graduates coming out of colleges and universities every year. The economy is not being able to significantly enhance its employment generating capacity.
Recent empirical growth studies suggest that, capital deepening and improvements in production efficiency were the two main sources of growth for the fast-growing Asian countries. Indonesia and Korea relied much more on capital deepening. Bangladesh did not have as much growth in capital per worker. Agriculture continues to operate at low productivity, though employing around one-half of the country's labour force and contributing only around one-fifth of the GDP. In contrast, high productivity financial, information and communication, and engineering services employ only a tiny share of the labour force. Share of employment in industry in Bangladesh is lower than that of most other developing economies of Asia. As a result, per capita income has not benefited much from inter-sectoral migration of workers out of agriculture. Bangladesh's challenge now is to create the conditions for faster growth of productive employment in manufacturing and the formal sectors.  
As per the latest population census, 33 per cent of our population now belongs to age group of 0-14 years, while 18.8 per cent population belongs to 15-24 years and 37.6 per cent belong to age group of 25-54 years. It means that, after 15 years, most of our population will be in the workforce. Surely, we can take advantage from this transition. However, there are some challenges related to those seemingly favourable demographics. The first is finding jobs for all these people. Second, and more importantly, the young people will need to develop the right skills for modern job market.
If we analyze our economy of the last ten years, we shall see that we have been maintaining a healthy growth rate of 6 per cent plus, mainly because of our strong export, remittance earning and hard work of poor farmers. Goldman Sachs puts us in its list of 'Next 11' countries (those most likely to become the world's largest economies after Brazil, Russia, India and China), JP Morgan includes us among 'Frontier Five' economies and Citigroup has identified us as one of the 11 countries it terms of Global Growth Generators (or 3G countries). We have also made significant progress in achieving the Millennium Development Goals (MDGs), particularly relating to eradicating extreme poverty and hunger, promoting gender equality and empowering women, ensuring universal primary education and reducing child mortality. Life expectancy has also increased by 10 years, infant mortality has declined by nearly two-thirds, and female literacy has doubled.
It all sounds good, but if scrutinized closely, certain issues invoke serious concern. We still remain one of the poorest, overpopulated and inefficiently governed countries in the world, with about 45 per cent of the population employed in the agriculture sector. More than 26 per cent of the population earns less than $2 a day, and two in every five children are undernourished. More than 25 million people lack access to safe water sources. Over 67 million people do not have access to improved sanitation and over 7,000 children under 5 years of age die because of poor water and sanitation every year. According to a USAID report, at least 15 per cent of primary school age children never entered the educational system. Together with the 25 per cent primary school dropout rate, it means 40 per cent of Bangladeshi children never received a full primary education.
As per the latest literacy survey report of Bangladesh Bureau of Statistics (BBS), the country's literacy rate of the population aged above 15 reached 59.82 per cent while the literacy of women is 55.71 per cent. We have made remarkable progress in expanding primary education, especially in raising enrollment of the students and bringing gender parity. But our education system is not yet pro-poor and the curriculum does not serve the goals of human development and poverty eradication. Due to lack of communication and collaboration between the government, academia and industry, we are not being able to produce quality or skilled manpower for modern industries. Industry insiders say that beside poor infrastructure, lack of land, acute shortage of power and gas for new industries, finding the right people and getting them to work productively are the biggest hurdles for Bangladesh.
The demographic dividend period generally lasts for a long time - typically five decades or more. Eventually, however, the reduced birth rate reduces the growth of labour force. On the other hand, improvements in medicine and better health practices leads to an ever-expanding elderly population, sapping additional income and putting a pressure on the demographic dividend.   
Bangladesh is also going through the demographic transition, and is experiencing once-in-a-lifetime demographic dividend as the working-age population bulges and the dependency ratio declines. All indicators support the view that the first demographic dividend starts in 1980 and continues for a period of 60 years up to 2040. The possibility of a second dividend arises because some of the gains in per capita income can be diverted to raising productivity and thereby raising standard of living for future generations. This outcome can be generated in a variety of ways. One important possibility is by increasing investment in human capital and investment in physical capital should also be prioritized. For economic benefits to come true, appropriate policies dealing with education, public health, labour market flexibility and incentives for investment and savings need to be adapted. If appropriate policies are not formulated, the demographic dividend may turn into a demographic burden, leading to unemployment and an unbearable strain on education, health, and old age security.
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