Two reports, one datelined Dhaka, September 02, and the other from New Delhi, dated September 04 have conveyed more or less the same message pertaining to growth, employment and demographics. Regardless of the sizes of the economies dealt with, perhaps lending themselves to differing interpretations and considerations of variants, the core point of the reports is strikingly similar. In that sense, the analyses make you sit up and take note for what they are worth.
Although economies of India and Bangladesh are among the fastest growing in the world they find themselves in an unequal race with the incremental rise in the sizes of their labour forces.
In this context, the release of a joint Asian Development Bank (ADB) and International Labour Organisation (ILO) study report on the need for Bangladesh to maintain 8.0 per cent growth to be able to absorb its existing labour force, has added an interesting dimension to the prevailing debate over the aggregative growth. A question arises from the 8.0 per cent growth rate being prescribed to work off the cumulative surplus labour for the last 15 years which is: Do we, thereafter, begin on a clean slate? Far from it; we will have to service the annual incrementals so that unemployment in severe forms does not recur.
The New Delhi datelined Reuters report based on Indian government data revealed that despite annual growth of 6.5 per cent between 1991 and 2013, India added less than half the jobs needed to absorb new entrants to the job market.
Modi has opened up to foreign investment hoping to generate manufacturing jobs; a loan scheme for small business has been set up; and there are plans for a $1.5b startup fund. A programme to train up 4.0 million people in different skills in six years is being undertaken.
The level of desperation for work in India seems staggering; 'last year in Uttar Pradesh, 2.3 million people sought 368 low-level government jobs that required primary education and ability to ride a bicycle.'
The ADB-ILO diagnostic report for Bangladesh advocates for looking beyond garments. While we go for a more employment-intensive pattern of growth strategy focused on employability, we must develop mid-level management manpower coupled with having a reservoir of technicians. This will help plug drain on foreign exchange as well as laying building blocks or cornerstones for sustainable development.
There is no second opinion about the imperative need to forge a link or strong synergy between post-primary tiers of education and the manpower demands of sectors such as industry, agriculture, services and all the modern avocations.
Let's not forget that seeds of South Korea's quick-fire development had been sown early in the day by a massive investment in human resource development by its leaders.
Clearly what merits both horizontal and vertical priorities with respect to accelerated industrialisation and creation of new jobs is the SME (small and medium-sized enterprises) sector. There are altogether around 80,000 SMEs of which 93.6 per cent are small units and the remainder is medium-sized. All the same, they serve more than 2.4 million clients, 94 per cent of whom are women.
The SMEs account for 45 per cent of manufacturing value, feed about 80 per cent of industrial employment, about 90 per cent of total industrial units and 25 per cent of labour force, according to newspaper reports.
Two million join the work force in the country every year; half of them find jobs at home and abroad. In absorbing the other half, SMEs can be the silver bullet of an answer.
The SMEs have already entered the global value chains. They are our big hope for the future. The Bangladesh Bank has been consistently striving to boost lending to the SME sector. Whilst raising three state-owned banks' credit growth ceilings, a former governor of the central bank reportedly suggested that 'the SoCBs should invest their funds in SME and agriculture sectors for minimising risk.'
Startup fund is a crippling problem for an otherwise enterprising person having a brilliant idea but with little or no collateral. Could something like carpet bomb cash be handed to him or her on condition that the loan default would not exceed 25 per cent.
Bangladesh is never short of acolytes for being a country with inherent, resilient and creative strength to be forging ahead as an economy. What's inspiring is the lively, engaging focus in the realm of expert international reckonings that it often comes under.
For instance, the prestigious London-based Business Monitor International (BMI) in its research has picked Bangladesh to be a 'growth outperformer' in 2016-25. The select group of six countries, besides Bangladesh, includes Ethiopia, India, Mexico, Pakistan and the Philippines. The BMI analysis identifies three factors as being key to growth: Net commodity import, positive demographic trends and economic reform momentum. Net commodity importers stand to benefit from generally decreasing commodity prices, including, importantly, oil with collateral lowering of prices of some other commodities. Such will be the gains for the net commodity importers over 2016-2025 as compared with 2006-2011.
For a country prioritising export-led growth, it is not good to hear the BMI research predicting that exports will be underperforming; yet the saving grace is that our exports enjoy more or less captive markets. Moreover, they are to a large extent, reliant on imports which are likely to cost less.
In any case, we need more than ever to diversify our export destinations including those for garments and manpower.
Bangladesh is shaping to be a prime investment destination. All because of a growing youth population, competitive labour price structure (with a margin for correction on the fairer side), gradually increasing man-hour productivity, a growing consumer society, expanding local demands and a vibrant retail sector.
Countries ready to enact "economic and political reforms, specially measures to improve business environment and unlock economic productivity, will grow faster than those without such reform momentum," concludes the BMI research.