7 years ago

Hectic exercise on dynamics of labour force

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Labour is the second most important factor of production, as basic economic theory says. Land is the first while capital and entrepreneur are the third and fourth factors. All the four factors are must for economic activities originated from production. Hard Marxists, however, recognise only land and labour as two fundamental factors of production and term capital and entrepreneur as 'tools of extraction'.  Capitalists, on the other hand, argue that without risk taking venture, production is not possible and entrepreneurs are the risk takers by investing capital.
Nevertheless, labour is unavoidable in both the views though capitalism sees it as not only factor, but also beneficiary of production as the process generates employment.

In fact, sufficient generation of employment is the foremost challenge for the growing economies like Bangladesh. The country experienced a consistent economic growth over the last two decades and has emerged as Lower Middle-Income Country (LMIC). But unemployment is still a big problem although official statistics keep the rate at 4.3 per cent in 2013. At the same time, the structural shift in the country's labour force as well as employment took place broadly in line with growth pattern. For instance, in 1999-2000, broader agriculture sector provided around 51 per cent of total employment which slightly came down to 45 per cent 2013. At the same time, contribution of agriculture in the national economy declined to 24.60 per cent to 19.75 per cent.

The book titled 'Structural Change and Dynamics of Labor Markets in Bangladesh: Studies on Labor and Employment' tries to illustrate the changing scenario of the country's labour structure and future prospects from different perspectives. Edited by Dr Selim Raihan, a professor of economics at the University of Dhaka, the book contains 13 analytical chapters.  Based on series of studies, these chapters cover diversified areas of labour force and labour market in Bangladesh including: farm and non-farm employment, unpaid labour, female labour, affect of social protection and demographic dividend.

Few of the chapters are interesting in the sense that these analysed topics least discussed so far. For instance, chapter seven titled 'Some Estimates of First Demographic Dividend in Bangladesh: An Application of the Bangladesh National Transfer Account.'

In this chapter Dr Bazlul Haque Khondker and Muhammad Moshiur Rahman made an exercise on estimating the 'first demographic dividend' in the country. In a process of development, a country 'switches from a large agrarian society with high fertility and mortality rates to a predominantly urban industrial society with low fertility and mortality rates.'

At the early stage of this transition, fertility rates decline and so ratio of young mouths to feed also decline.   At the same time, labour force grows faster than the population dependent on it. So, more resources become available for more investment in economic activities and welfare.

Beside all these, other things being equal, per capita income also grows more rapidly. This is termed as 'first demographic dividend.' The authors show that Bangladesh is now very close to this phase and the first dividend to predominant from 2020 to minimum 2030 and maximum 2045. They, however, caution by saying: "The connection between the demographic dividend and income growth is policy dependent. The first demographic dividend is in part of the result of the growing working-age population and can be admitted if employment opportunities grow to keep pace. In order to reap the economic gains of the potential first demographic dividend, nonetheless, adequate job opportunities need to be created." (P-71).

This book is not a pleasant read as its materials are mostly presented with lot of tables and charts to substantiate the analyses. But a major drawback of the whole exercise is the use of data. Almost all the data are secondary data which are obviously official. In many cases backdated data have also been used.

When result of 'Labour Force Survey 2013' is available and in some chapters, it is used as a major data source, other chapters depend on the survey of 2010.  Using the backdated data fail to capture the dynamic changes in many cases.

For example, in the fourth chapter titled 'Female Labour Force Participation in Bangladesh: Structural Changes and Determinants of Labour Supply,' the authors-Simeen Mahmud and Sayema Haque Bidisha- depict the pattern of women workforce in brief.

The authors used LFS 2010 as the latest. That's why they made their analyses based on female participation rate in labour force 35 per cent in 2010. But LFS 2013, released at the middle of 2015, shows that the rate of female participation in labour force declined to 33.5 per cent in 2013 from 36 per cent in 2010.

The authors' conclude: "The trend comparisons in the composition of the female workforce indicate that there has been an increase in women's labor force participation in a more mainstream manner to contribute to family incomes and reduce labor cost, compared to earlier when women's work/economic activity was often undertaken by women without male support or very inadequate male incomes and seen to be more poverty driven."(P-40) But updated data reflecting decline in female LFP makes the conclusion slightly misleading.

Moreover, no field-work with sample-survey was done for any of the studies although scopes were there to do so to validate some of the secondary data strongly. Again, one has to struggle a lot to find out the overall employment and unemployment situation of the country in the book.  Finally, there should be an annexure presenting definitions and notes on important concepts of labour and employment.

Despite all these limitations, the book will be helpful for researchers. At the same time, policymakers may consider some of the recommendations for future policy designing.

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