The Financial Express
Swasti Lankabangla Swasti Lankabangla

Bad omens for economy, society  

| Updated: September 13, 2019 22:27:54

Bad omens for economy, society   

Closure of one or two industries for one reason or other is not any notable event. The loss of jobs due to such closures thus does not have much impact.

But if a substantial number of industrial units or factories is shut within a short span of time and thousands of workers are rendered jobless, there should be genuine reasons for the relevant parties to be worried. The government policymakers need to be more concerned.

Unfortunately, the country's industrial sector is now witnessing a development that would surely give rise to an uncomfortable feeling among most people. A good number of industrial units/factories have been closed down by their owners in recent months, mainly for not being able to attract sufficient work orders. 

According to a report published in a vernacular financial daily, at least 209 factories/industrial units were closed down across the country during the last 10 months.

The largest number of units --129 were shut in Gazipur, 45 in another major industrial hub---Ashulia, 25 in Narayanganj and one in Mymensingh between the months of November, 2018 and August, 2019.

The news report quoting a home ministry source said during the period under review more than 19,000 workers became jobless. The number includes a few thousand retrenched workers of some units that are very much in operation.

The units that have gone out of operation do mainly belong to textiles and apparel sector. The apparel factories that have failed to comply with remediation requirements are closing down for not being able to procure buying orders. Besides, some large apparel groups are now reducing the number of their production units as part of cost-cutting measure, the industry leaders have claimed.

The news concerning loss of such a huge number of jobs would surely evoke concern among the policymakers. The government is already ill at ease because of the slow growth of employment in an otherwise 'fast-growing' economy.

The economy's failure to create enough jobs has emerged as an enigma to many. This particular weakness has thus put to question the quality of the economic growth. It does also create an embarrassing situation for the government that is very enthusiastically trying to sell the economic growth story both at home and abroad.

Much to the frustration of the policymakers, employment elasticity, the factor that shows the ability of an economy to generate employment in relation to its growth, declined between 2005-06 and 2017-18. The employment elasticity which was 0.55 between 2005-06 and 2009-10 plunged to 0.25 between fiscal 2010-2017-18.

The economy during the period under review, according to the data maintained by the state statistical organisation, the Bangladesh Bureau of Statistics (BBS), achieved an enviable growth rate.

The drop in employment elasticity in most major sectors of the economy in recent years is attributed to stagnancy in investment in the private sector and concentration of most part of the government's increased expenditure to infrastructure-building. The highly capital-intensive mega projects have not been contributing much to job creation.

Barring the services sector, the employment elasticity in most other sectors, including agriculture and manufacturing, declined during the period under review. The textile and garments saw substantial growth, but it did fail to create enough jobs because of a slow but steady automation. Besides, most of the sectors are increasingly becoming capital-intensive, not labour-intensive.

The closure of mills and factories and the consequent loss of thousands of job are ominous developments for both economy and society. Workers do very often take to streets in support of their demands for higher wages or payment of their unpaid dues. They have rarely staged demonstrations seeking jobs or reopening of their closed mills and factories. But there is no guarantee that they would not do so in the future.



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