Employment takes a hit from economic downturn

The relationship between Bangladesh's manufacturing sector growth and decline in employment on that front presents an incongruous picture. This converse equation is highlighted in the recently released World Bank report titled Bangladesh Development Update. The report, while presenting an overall economic outlook ranging across rising inflation, external-sector pressures, financial vulnerabilities and political uncertainty, points out that between 2016 and 2022, the manufacturing sector grew at 9.1 per cent on average while employment in the sector declined by 9.6 per cent. This paradox illustrates how the country's economic growth has not been inclusive or translated into job creation, particularly for the increasing number of young people entering the job market each year.
What is worrying in the report is that despite the overall unemployment rate declining during 2016-2022, young people faced persistently higher unemployment rates. This is because urban jobs, particularly in the industrial sector, have not kept pace with the country's economic growth. Instead, economic progress has largely been fuelled by informal employment, which now constitutes nearly 85 per cent of all jobs. This over-reliance on informal employment reflects a systemic issue, where quality jobs, particularly for educated individuals, are becoming increasingly scarce. The report underscores the fact that job creation in large industries, including the ready-made garment (RMG) sector, has stagnated. While Dhaka, the capital, has witnessed some job growth since 2016, other major divisions such as Chattogram, Rajshahi, and Sylhet have suffered net employment losses. The decline in employment has been compounded by the fallouts of the COVID-19 pandemic, which disrupted economic activities and slowed down the post-pandemic recovery. High inflation and vulnerabilities in the financial sector have further exacerbated the employment crisis, particularly for youth, women, and those with higher educational qualifications.
The WB report also highlights a shift in employment trend in the agricultural sector. Between 2016 and 2022, agriculture accounted for 45.4 per cent of new jobs, although many of these are low-paying and informal. However, it is undeniable that informal employment in the agriculture and farming sectors, despite being underpaid, remains a crucial part of the rural economy. As for the decline in manufacturing sector in urban locations, the attributing factors could be a lack of investment, and less than required facilitation for start-ups. While recovery from the post-Covid situation has been long to allow business as usual, the inflationary pressure coupled with deteriorating geopolitics has caused stagnation for new business ventures. This stagnation has had a ripple effect on job creation, with fewer opportunities in urban manufacturing sectors and growing reliance on the informal economy to absorb the country's burgeoning labour force.
The World Bank report thus serves as a warning that while the country has made commendable strides in economic growth, the benefits have not been distributed evenly, particularly among the younger and educated segments of the population. Without targeted interventions for stimulating job creation, the country risks undermining the potential of its most valuable resource -- the youth force.