Bangladesh economy had been growing at an impressive rate until the arrival of the novel coronavirus in early March this year.
As the deadly pathogen started taking a heavy toll on the life and living of millions, the pace of economic growth, naturally, slowed down. Grim projections about the country's economy---forecasts about most other economies, particularly the developed ones have been even grimmer---also started to pour in.
A couple of multilateral donors predicted the economy to grow below 2.0 per cent in the immediate past FY. The government, however, estimated the growth at 5.24 per cent for the FY 2019-20.
The World Bank (WB) reportedly has predicted the country's economy to grow at 1.0 per cent in FY '21. Another Bretton Woods Institution the International Monetary Fund (IMF) has projected a better outlook. It sees the economy to grow at 5.7 per cent.
The Manila-based Asian Development Bank (ADB) has made a far rosier projection in its latest Asian Development Outlook 2020 Update. It feels that the economy would grow at 6.8 per cent, only if the pandemic did not continue for long. The ADB projections though lower than the one made by the government has created a sense of elation among the policymakers.
One particular issue--- high unemployment rate--- however, must be bothering the policymakers. None is sure about the employment outlook in the coming days, even under an impressive rate of recovery of the economy.
The generation of new employment opportunities had not been satisfactory even when the economy was growing at an attractive rate for more than a decade or so. There had been a negative employment growth in recent years.
Evidently, hundreds of thousands across the country lost jobs or their sources of income dried up since the outbreak of the Covid-19 disease. The hardest hit have been the self-employed people engaged in the informal sector. According to the latest Labour Force Survey (LFS), 85 per cent of the employed people work in the informal sector.
The units, big and small, in the formal sector have also shed hundreds of jobs during the past few months to overcome the negative effect of the pandemic.
So, in the event of any notable recovery of the economy in the current FY and beyond, it is most likely that a portion of the jobs lost in both formal and informal sectors would be filled up first. Any additional/fresh recruitment is unlikely. Even if it happens, it would be at a very marginal rate.
Similarly, not all the self-employed people would be able to pick up the small-scale trade again for various reasons, including the shortage of capital. Most of them have exhausted their capital for the sake of physical survival.
Under the circumstances, the new entrants and those who have lost jobs due to the pandemic in all likelihood would crowd the labour market where opportunities are expected to be very limited.
The private sector is considered the engine of growth, but only a small fraction of the labour force is absorbed by its operating units.
One of the main reasons for the slow growth of employment opportunities in recent years has been the stagnancy in private investment. This is evident from the flow of bank credit towards the private sector. Even during the pre-Covid period, the flow of credit had been lower than the targeted one.
The permanent jobs created by the government are very limited. It, however, can generate temporary employment opportunities at the grassroots level to help the needy.
The target should be to buoy up investment in employment generating activities in the private sector. The government might think of providing incentives to private units engaged in such activities.