The proposed FY 18 Budget will increase tax burden on the middle-income families. On the other hand, the debt service burden of the government would be growing. In order to deal with the growing debt burden, it's obvious that tax income needs to be increased. In favour of debt, the argument could be that it's contributing far greater benefit to economic growth. Despite claims of upward gross domestic product (GDP) growth, creation of job opportunities for graduates seriously matters for the middle-income families. In recent studies, it has been observed that the higher the education, the lower the prospect of jobs.
It is being reported that currently 3.2 million students are enrolled in tertiary-level education compared to only 31,000 in 1972. According to an estimate made by the University Grants Commission (UGC), total tertiary enrolment over the next decade (2016-2026) may reach 4.6 million.
The government is in the process of making an investment of $16 billion to revamp the secondary education system. This will increase both the debt and the number of graduates. But if those graduates do not get jobs, who will pay the growing taxes to repay additional debt burden?
On the other hand, the government has been reducing corporate taxes to keep them afloat. For example, the corporate tax on textile and ready-made garments sector was reduced from 35 per cent to 20 per cent in 2016-2017 budget. Further 5.0 per cent reduction has been proposed in the FY 18 Budget. But there has been no net employment growth even in this sector.
According to a survey conducted by Bangladesh Bureau of Statistics (BBS) between December 2013 and June 2015, unemployment rate was the highest among people having tertiary education. It rose to 9.0 per cent in June 2015 from 6.7 per cent in December 2013. According to some other observations, including The Economist Intelligence, unemployment rate among graduates having university degrees is as high as 50 per cent. Moreover, income level of those lucky ones succeeding in getting jobs has also been equally disappointing. Although no systematic studies are available to make conclusive comments, it has been observed that starting salary offered to graduates has slumped to even below BDT 15,000, equivalent to the salary of drivers having basically no education. Moreover, the salary growth with experience has also been slowing down at an alarming rate.
For a country like Bangladesh, education has been thought to be the most rewarding investment. Many families have succeeded in the past to exit the low-income trap by offering higher education to their children. To capitalise this possibility, there has been significant growth in investment in education. Along with the government, investment at the family level has gone up manifold over the last decade. It has become an accepted norm for most of the middle-income families to send their children to private universities shouldering the whole expenses for tertiary education. But, upon graduation, if they do not get jobs, how will those families get the return on the investment? How will they pay more taxes to enable the Government to repay growing debt?
There have been many observations about growing unemployment among graduates. The quality of education is one mentioned often. Does it mean that virtually unlimited number of jobs is waiting for quality graduates? By investing billions in improving quality, does it mean that we will be creating millions of decent paying jobs for those graduates? It's being argued that we should focus on employable skill development, but do we ask about the availability of those employments? Often we raise the issue of importance of technical, vocational, science and engineering education. But should we not also ask the question about what it takes to create jobs for those qualifications? Despite the growing investment in improving the quality in both public and private universities, why is not the job market responding should be a serious issue to investigate before we progress further to produce more unemployed graduates, increase debt burden and ask middle income families to pay more taxes.
Underlying changes and emerging opportunities should be carefully investigated to turn the education into wealth creating opportunities. Otherwise, this country runs the serious risk of facing both economic hardship and social chaos. The future implications of 40 million students should be seriously taken into consideration. We are in a race to increase tax burden for them to repay. But upon being virtually bankrupt after having tertiary-level education, with no jobs or very little pay, how will they pay growing taxes? Are we expecting them to migrate in large numbers to other countries to work and send money to repay the debt? Should we welcome such massive migration for survival? Is it a healthy model of development?
We should accept that there is no natural correlation between education and income level. With the growing number of graduates, we need to carefully incubate and nurture jobs. Instead of just pointing to quality of education and applying conventional tools, we should focus on analysing realities and take advantage from emerging opportunities to create jobs.
No longer, the government can be the source of employment for all these graduates. The past strategy of increasing the credit and adjusting the taxes to encourage import substitution-based expansion of industrial jobs is no longer a sustainable option. The strategy of giving incentives for importing capital machinery and adding labour to production is not the solution to create jobs for university graduates. Attracting foreign direct investment (FDI) for labour-intensive manufacturing does not address the issue of employment for university graduates either. How to convert the investment in offering tertiary-level education to millions of graduates to attractive economic output should be a serious issue for us to resolve.
Technological progression is lowering the market value of labour to operate machines. As a result, the number of manufacturing jobs across the world has been shrinking. High oil price can no longer drive economic growth in the middle-eastern countries-major destinations of migrating Bangladeshis. The countries like Malaysia being caught in middle-income trap can no longer grow like in the past to offer employment opportunities to us. With the given reality, the option for Bangladesh is very limited. If available options are not carefully exploited, 40 million students could become a serious liability, instead of being an asset.
So far, Bangladesh has overlooked the role of total factor productivity through local innovations to drive economic growth, whether in manufacturing, delivering services or farming. Bangladesh can longer afford to overlook this opportunity. Unfortunately, no positive step is being observed along this direction. The value addition in capital machinery has not been in the development radar of Bangladesh. We can no longer ignore this opportunity either. We can no longer keep our education system isolated from the rest of the world. The integration of our education system to global trend is of paramount importance. Acceptance of qualifications of our graduates in advanced nations has multi-dimensional benefits. The growing virtual job market will offer one of the major benefits. Globally accepted qualifications will open opportunities to those graduates to find emerging opportunities from home in digital service space across the world. Time is running out for Bangladesh to tap the opportunity of utilising the skills and merit of 40 million students to make Bangladesh a developed country over a single generation.
M. Rokonuzzaman Ph.D, academic, researcher on Technology, Innovation and Policy, is Professor, Department of Electrical and Computer Engineering, North South University, Bangladesh. [email protected]