Job creation key to equality and faster poverty reduction in Bangladesh: World Bank

Bangladesh reduced poverty significantly between 2010-2022, lifting 25 million people out of poverty and another 9 million people out of extreme poverty while improving living standards and access to essential services like electricity, education, and sanitation, but since 2016, the pace of poverty reduction slowed and economic growth became less inclusive, says a new report launched today. 

 

The report, Bangladesh Poverty and Equity Assessment 2025, finds that extreme poverty fell from 12.2 percent to 5.6 percent and moderate poverty dropped from 37.1 percent to 18.7 percent from 2010 to 2022.

 

Yet nearly 62 million people—about one-third of the population—remain vulnerable to falling back into poverty if faced with an illness, natural disaster, or other unexpected shock.

 

After 2016, Bangladesh's economic growth pattern shifted, becoming less inclusive, and income inequality rose as income growth benefited wealthier families more.

 

Rural areas led poverty reduction with agriculture as a key driver. But the rate of poverty reduction was much slower in urban areas. By 2022, one in four poor Bangladeshis lived in a city.

 

“For years, Bangladesh has been known for its success in poverty reduction. But with a changing global context, severe climate vulnerabilities, and a slower rate of job creation, labor income has weakened,” said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan. 

 

“A business-as-usual approach will not accelerate poverty reduction. The fastest path to reducing poverty and ensuring the dignity of people is through job creation, particularly for youth, women, and vulnerable populations. A pro-poor, climate-resilient, and job-centric strategy will be essential to ensure inclusive and sustainable growth,” Pesme said.

 

Job creation stagnated in the manufacturing sector and shifted to less productive sectors, hitting women and youth the hardest. One in five young women remains unemployed, while one in four educated young women is without a job. In urban areas, job creation stagnated outside Dhaka, and labor participation fell, particularly among women. Half of all youth aged between 15 to 29 work in low-paying jobs, suggesting a skill-mismatch.

 

For millions of Bangladeshis, both international and domestic migration proves to be a pathway out of poverty. Remittances helped reduce poverty and benefited poorer households most. But domestic migrant workers suffer from poor living conditions in congested urban settlements, while the pathway of international migration is limited to those who are better off, due to the high costs involved.

 

Although Bangladesh has expanded social assistance programs, they remain inefficient and poorly targeted. In 2022, 35 percent of the richest families received social protection benefits, while half of the poorest families did not. Moreover, subsidies are often misdirected, with wealthier households receiving the bulk of the benefits from electricity, fuel, and fertilizer subsidies.

 

The latest poverty assessment identifies four key policy areas to help Bangladesh reduce poverty and narrow inequality: strengthen the foundations for productive jobs; create more and better jobs for the poor and vulnerable; enable markets that work for the poor by investing in modern processing and supportive business regulations; and enhance resilience through stronger fiscal policy and effective and better targeted social protection programs.

 

“Bangladesh has reduced regional disparities, particularly the East–West divide. But climate risks are exacerbating spatial disparities, particularly between rural and urban areas,” said Sergio Olivieri, World Bank Senior Economist and report co-author.

 

“Our poverty assessment shows that by adopting innovative policies, Bangladesh can restore and accelerate the pace of reducing poverty and boosting shared prosperity by improving connectivity, creating quality urban jobs, facilitating pro-poor value chains in agriculture, and making social protection effective, ” Olivieri added.