Sluggish investment dampens job market

Over the last two financial years, investment declined to 21.4 per cent from 22.5 per cent of the Gross Domestic Product (GDP). Even significant reduction in interest rates has failed to induce private investment. The country is now witnessing almost a negative investment scenario in the private sector.  
Although overall investment has not declined because of rise in public spending, this is a bad omen.
    Public investment, being generally inefficient and wasteful, does not make proportionate contribution to productivity. However, one good thing about public investment is that most of it is spent on physical and social infrastructures. Investment in superstructures produces high social gains, because it helps increase productivity in other sectors. If public investment is made with efficiency, major expansions in superstructure and productivity are sure to take place.  
As investment in our country is in a near static mode, rate of employment is unlikely to increase. Apart from agriculture, two other major providers of employment are industry and manpower export. Industry in Bangladesh is dominated by the readymade garment (RMG) sector while overseas jobs refer to non-resident Bangladeshis working abroad.
Over the last few years, job opportunities in the Middle Eastern countries have declined although new opening is now on cards. On the other hand, since private investment is decreasing, employment will not increase in private industries.
Correct figures of unemployment in the country are not available. If some one is jobless, he or she does something for bare survival and therefore, can not be treated as fully unemployed. For example, if a man moves around and sells tea and cigarettes, he is not unemployed, but this is far from being a productive employment.
On the other hand, recruitment of workers from Bangladesh by Gulf countries declined over the last few years. Our remittance earnings fell by 2.5 per cent in 2013, which of course, rose by 8.0 per cent in 2014.    
Most of our industries are export-oriented. But exports during the first five months of the current fiscal registered a very nominal increase indicating that employment is not increasing in the industrial sector. Imports from July to December increased by 17.0 per cent although many apprehend, the real increase in imports was much less. There was a substantial deficit in current income due to export-import gap. There was a large surplus in the current account last year, but we now have a greater deficit. Last year, increase in government revenues was not encouraging. As a result, budgetary targets had to be reviewed. A big deficit still exists. The rate of revenue earnings from July to November 2014 is less than that of the corresponding period of the previous year, which is also a sign of a weakened economy.
Credit flow is another indicator of the state of the economy. The commercial sector is dependent on it in many ways. When business expands, credit flow is sure to rise, but in our case, it did not. During the first five months of the current fiscal year, personal credit increased by 4.6 per cent while overall credit increase is only 3.87 per cent. One inevitable outcome of this is that banks can not utilise their deposits as loans, because demand for credit is sluggish. To make matters worse, the government recently approved foreign private loans. As a result, local banks are rolling on liquidity.
Another major problem that has hit the overall financial sector badly is the huge amount of classified loans. Several banks, particularly the state-run ones, are in a precarious condition. Classified loans in these banks have exceeded normal proportions. Recently, the huge amount of loan disbursed by these banks has been rescheduled. It is not possible to find out from the published statistics on classified loans whether the situation has improved or deteriorated as a result of rescheduling. It actually calls for detailed research on the matter. In view of excessive classified loans, the banks are now compelled to increase the interest rate for loans given to businesses and reduce interest on deposits. Difference between the two rates is over 5.0 per cent. As a result, on one hand, investment is being discouraged and depositors are earning lesser profit on the other. According to statistics, released by the Bangladesh Bank, even short-term credit declined during 2014-2015 confirming that investment has gone down. Mills and factories incur huge losses due to continuous strikes and blockade. Exports face shipping problem. The whole economy is likely to be affected.   
High rate of GDP growth cannot be expected if the present situation lingers because investment and growth are interlinked. Based on available information and statistics, it is most likely that growth this year will be comparatively lower. But without high growth, we can not expect high employment.   
Investment is critical to generate employment opportunities. Every year, around 2.0 million people are added to our workforce. Massive investment is required to provide jobs for them. A large segment of this workforce, that is almost 700,000 of them, secured employment outside the country in fiscal 2011-12. During next two years, only 400,000 left to join employment abroad and the remaining 1.6 million were self-employed at home.
Over the last few years, agriculture sector has been expanding satisfactorily. Food deficit is no longer a threat for us. But the way the agriculture sector is developing today, it will require lesser number of people to be employed in the sector in future. Demand for agricultural workers will decline progressively. Therefore, additional employment will have to be created in other sectors, particularly in industry and service sectors. Otherwise, the rate of unemployment will increase giving rise to social unrest. Higher growth is not just required for material gains. It is essential to remove social problems.
People aiming to improve their living standards want to be employed. They are unhappy if they are not provided ample opportunities to fulfil their objectives. A developing country with sluggish economic growth is likely to have social and political unrest.
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