Decent employment for youth: areas of concern

Bangladesh’s demographic landscape is characterised by a large young population, which offers both significant opportunities and confronts the country with formidable challenges. As is widely recognised, the country’s performance in terms of many socio-economic indicators has been quite impressive. However, cross-country experience shows that economic growth does not necessarily translate into more and better jobs, particularly for the poor, the disadvantaged, and those in danger of falling behind. This is what has been observed in the case of Bangladesh as well. Despite the country’s strong economic performance, concerns such as lack of enough job opportunities, particularly among the youth, access to limited number of decent jobs, and lack of skilled human resources have continued to remain persistent.

The above underpins the crucial need for focused initiatives to address the country’s emergent labour market challenges. The tasks are twofold: the economy must produce jobs for the increasing number of young people, and it has to ensure that labour market participants have the required skill sets that meet the demands of the workplace. In view of this, the Policy Brief draws attention to some of the critical attendant challenges and offers a number of concrete suggestions to address those. The areas cover high youth unemployment and underemployment, the nature of overseas employment, the presence of the dominant informal sector with a lack of decent jobs, low female labour force participation, widespread vulnerable employment, skills mismatch, and the challenges originating from the evolving landscape of the future of work. The Brief comes up with a number of concrete recommendations, keeping in perspective the needs of the young people belonging to the marginalised and disadvantaged communities. In dealing with the challenges, the Brief has drawn lessons from successful strategies and policies pursued by other countries. The recommendations encompass a holistic and actionable approach to reshaping Bangladesh’s labour market landscape, covering a wide range of areas: aligning education with labour market demands, embedding formal sector attributes to the informal sector, addressing overseas migration challenges, ensuring decent working conditions for labour market participants and attracting foreign direct investments (FDIs) and promoting entrepreneurship. The Brief recognises that needs of disadvantaged youth call for special attention, particularly if SDG-8, Decent Jobs, is to be attained by leaving no one behind. This Policy Brief can serve as a call to action, urging stakeholders to collaborate and align their efforts towards fostering a dynamic labour market capable of harnessing the demographic dividend that Bangladesh’s young population promises.

In order to deal with Bangladesh’s labour market challenges and address the requirements of providing decent work, with inclusivity and in a comprehensive manner, actions will need to be taken to deal with a number of areas of concern:

• High Youth Unemployment and Underemployment

• High Proportion of Youth ‘Not in Employment, Education, or Training (NEET)’

• Challenges facing Overseas Employment

• Dominant Informal Sector and Lack of Decent Jobs

• Low Female Labour Force Participation

• Prevalence of Vulnerable Employment

• Skills Mismatch and Behavioural Bias

• The Future of Work and Attendant Challenges

High Youth Unemployment and Underemployment : Bangladesh has one of the world’s highest numbers of people in the age cohort of 18-29 years. This demographic composition presents formidable challenges as also many opportunities. Indeed, the labour market is where the battle for the country’s development will be won or lost. Approximately 105 million people, or about 62 per cent of the total population of Bangladesh, are aged between 15 and 59 years, the working-age population. About 47.4 million young adults belong to the age group between 15 and 29 years. This age group accounts for approximately 46 per cent of the total labour force. It is important to note that seven million young people have entered the country’s labour force in the past as many years alone. Creating employment opportunities for these young women and men poses enormous challenges for the country; it is also indicative of the prospective demographic dividend that the country could reap and the significant contribution to the country’s economic development that the young people could make.

In 2022, the unemployment rate among youth in Bangladesh was 10.2 per cent, significantly higher than the national average rate of 3.6 per cent. This speaks of the nature of the Bangladesh labour market, where young people’s difficulties in finding jobs are disproportionately higher. There is also the problem of underemployment. This is identified as a condition in which individuals either work fewer hours than they would like to or are employed in jobs and positions that do not fully use their skills and qualifications.

High Share of Youth who are ‘Not in Employment, Education, or Training (NEET)’: Approximately 37.1 million people in the country belong to the NEET category. About 27.0 per cent of the country’s total youth population belongs to the NEET group. There is also a stark gender disparity in this backdrop- nearly ninety per cent of these young people are female. This significant gender gap is another reason for concern.

Overseas Employment Challenges: In the context of Bangladesh, overseas employment is an important area of youth employment, particularly for young people with low skills and from disadvantaged groups. At present, about 7.5 million Bangladeshi migrants are working in many countries of the world. The majority of these are young people, predominantly male, but also an increasing number of females in recent times. Over the last three years alone more than two and a half million people went overseas for jobs. These mostly low-skilled workers face many difficulties, and their earnings are also way lower than those of their peers from some of the other developing countries.

Cost of Migration. The substantial cost associated with migration is a significant barrier for migrant workers. However, they have no other way than to bear the burden. The expenses include recruitment fees, visa fees, medical examination fees, travel expenses, and very high commissions charged by the recruiting agencies.

Fraudulent Practices. Fraudulent activities associated with migration are common and widespread in Bangladesh. This is a major source of worry for prospective migrants. Unscrupulous recruiting agencies often employ deceptive methods, deceiving job-seekers with false promises about employment opportunities, working conditions and salaries. The victims are often financially ruined; they are harassed and jailed, and they remain helpless in foreign countries. Sometimes, they are compelled to engage in illegal and hazardous work.

Contract Substitution. Contract substitution is quite prevalent, whereby the terms, conditions and circumstances of work are changed once the worker arrives in the destination country. Both recruiting agents and prospective employers are involved in this. Workers often find that there is a significant difference between what was promised and what they end up with in terms of the nature of jobs, the wages they are given, and the hours they have to work.

Living and Working Conditions. For many Bangladeshi migrant workers, living and working conditions in destination countries are very harsh. These workers often have to endure shabby living conditions with poor sanitation, and their access to healthcare tends to be highly limited. These young people are having to spend the best years of their lives in depressing and deplorable conditions.

Very Large Informal Sector and Lack of Decent Jobs: The 7th Fifth Year Plan projected that about 12.9 million additional jobs would be created over the FY 2016-20 period, including about 2 million job opportunities abroad. However, the actual number turned out to be far less. Many of the employment opportunities that were created were not decent jobs. The COVID-19 pandemic of the recent past made the situation even worse. There is a significant gap between the demographic dynamics and the availability of suitable employment opportunities. Also, research findings suggest that employment elasticity of GDP growth has slowed down in recent years.

As of 2022, according to the BBS figures, the informal economy employed about 85 per cent of the labour force. Non-agriculture sectors employed nearly three-fifths of the informal workers. More than 90 per cent of young people work in the informal sector, many of whom are self-employed or are involved in unpaid family works. While the informal economy does provide some livelihood opportunities, these tend to be mostly in low-paid jobs and without any old-age benefits. These workers lack social safety net support, employment stability and legal recognition. Some have to work in hazardous and dangerous conditions; many of whom are children and women.

Low Female Labour Force Participation: When it comes to employment, a large number of women face additional difficulties and challenges. These include, but are not limited to, the followings: a lack of infrastructure to facilitate and support women’s employment, e.g., daycare facilities near women’s workplaces for working mothers; absence of safe and women-friendly transportation; workplace violence against women; discrimination in terms of wages for the same jobs; lack of upward mobility. Despite the recent rise in female labour force participation rate in Bangladesh, it continues to remain at low levels and significantly below the global average.

More than 90 per cent of female youth in the labour market worked in the informal sector; this was about 10 per cent higher than their male cohort. The female unemployment rate is more than double than that of men. Support to raise female labour force participation is therefore critically important for reducing gender disparity in the labour market and for inclusive labour force participation aligned with the LNOB spirit.

Prevalence of Labour Market Vulnerabilities : Many Bangladeshi youths are forced into vulnerable and precarious employment. Workers in informal sector often lack job security, labour rights, social safety, and decent salaries and wages (ILO, 2020). The widespread prevalence of vulnerable employment impedes social and economic mobility of the youth, often resulting in lack of inter-generational mobility. Inadequate labour rights protection, lack of job security measures and an absence of job satisfaction exacerbate the difficulties faced by many in the workforce. Workers in the informal sector, in particular, are vulnerable to exploitative practices due to lack of enforcement, absence of legal safeguards and lack of formal job contracts in the labour market.

Skill Mismatch and Behavioural Differences: Skill mismatch in Bangladesh’s labour market is widespread and growing. There is a large a gap between knowledge and skills attained through education and those that are actively sought after in the labour market. University graduates are more likely to pursue professional careers, but only in certain jobs. Many graduates from top institutions prefer not to work in the manufacturing sector. The difficulty of finding workers with the necessary skills locally often forces firms to recruit workers from abroad. This is particularly seen in export-oriented sectors where many businesses hire foreign workers because of acute shortages of professionals with required skills. This not only raises their production costs but also costs the economy valuable foreign exchange, not speak of lost job opportunities for local youth. The mismatch between skills of young job seekers and the needs of the labour market is emerging as a major reason for rising youth unemployment, particularly among the educated youth. Young people do not have access to appropriate and marketable skills by the prevailing education system, which causes a mismatch between supply and demand for jobs.A large number of educated youth are busy preparing and applying for government jobs, but the number of such jobs is somewhat limited. Many educated youths are found to be unwilling to work in the sales and services sector, where entry-level jobs are relatively more available. There is an urgent need to address this gap, with initiatives to be taken by both the government and the private sector.

The Future of Work: The workplace and the nature of future employment are changing dramatically around the world. Various forces are reshaping it, ranging from the impact of the COVID-19 pandemic on the labour market, technological advancement and the rise of artificial intelligence to the impact of climate change on economies and jobs. These have given rise to an increasing demand for new hard and soft skills. Proficiencies in such areas as computer literacy, IOT, troubleshooting in IT-related areas, critical thinking, and language skills are becoming increasingly sought-after in the job market. While these have implications for all, young job seekers are particularly affected. Many young people were adversely affected by the pandemic. Their employment, education, and training were interrupted by the pandemic.

Since the youth will make up the majority of Bangladesh’s future workforce, it is important that they have the competencies to be able to meet the demands of the future of work. The emerging needs will have to be catered to through skills development, encouraging lifelong learning, upskilling, and reskilling. Young people will need support to be able to prepare for the longer-term transformative trends such as the digital revolution and green transition. Bangladesh’s economy will be resilient and its development sustainable only if the youth capacities are properly harnessed and developed.

[To be continued]

The paper is the first part of the policy brief which was prepared by a team of experts. This Policy Brief on “Providing Decent Employment for Youth in view of Domestic and Overseas Markets” was prepared by a team with Mr Syed Nasim Manzur, Core Group Member, Citizen’s Platform and Managing Director, Apex Footwear Limited as Chair and Mr Tanvir Sobhan, Senior Lecturer, Department of Economics and Social Sciences, BRAC University serving as the Penholder Expert. Other team members are :Mr A K M Fahim Mashroor, Chief Executive Officer, Bdjobs.com Limited; Mr Amzad Hussain, Chairman, SAARC Chamber Young Entrepreneurs Forum and Former Director, Federation of Bangladesh Chambers of Commerce & Industries (FBCCI); Mr Mohammad Sahab Uddin, Vice President, e-Commerce Association of Bangladesh (e-CAB); Mr Nazmul Ahsan, Manager – Young People, ActionAid Bangladesh; Dr Sayema Haque Bidisha, Professor, Department of Economics, University of Dhaka and Honorary Research Director, South Asian Network on Economic Modeling (SANEM); Dr Selim Raihan, Professor, Department of Economics, University of Dhaka and Executive Director, SANEM; Mr Shale Ahmed, Executive Director, Bandhu Social Welfare Society; Mr Shams Mahmud, Managing Director, Shasha Denims Ltd; Dr Suborna Barua, Professor, Department of International Business, University of Dhaka and Dr Zahid Hussain, Former Lead Economist, The World Bank.

The Policy Brief exercise is the outcome of an initiative of the Citizen’s Platform for SDGs, Bangladesh hosted by the Centre for Policy Dialogue (CPD). The issues were identified and prioritised through nation-wide consultations with local level people and organisations. The initiative was led by Dr Debapriya Bhattacharya and Professor Mustafizur Rahman, Distinguished Fellows at the CPD. [email protected]