Employment strategies for Bangladesh

Mustafa K. Mujeri | Published: March 15, 2019 21:19:14 | Updated: March 22, 2019 21:53:49

Job creation is an immense challenge for Bangladesh. The Labour Force Survey 2016-17 shows an unemployment rate of 4.2 per cent (3.1 per cent for males and 6.7 per cent for females), and many of these unemployed are young people. Youth (aged 15-24) unemployment rate is staggeringly high at 12.3 per cent; 10.1 per cent for males and 16.8 per cent for females. Further, the long-term unemployment rate (for one year or more) is also high. This is 15.2 per cent in 2016-17; for the males, it is 13.7 per cent and 16.7 for the females.

The inactivity rate (that is, the proportion of working age population that is not in the labour force) is also high in Bangladesh: 41.8 per cent in total, which is 19.5 per cent for males and 63.7 per cent for females.  In most countries, the male inactivity rate remains close to the low average of 7.0 per cent while, for the females, a high of above 50 per cent is reported only in North Africa and the Middle East.

The above shows that Bangladesh needs to create millions of new jobs over the next few years; and job creation will be the key factor to reduce poverty, improve people's lives, and reach the Sustainable Development Goals (SDGs) by 2030. The government's target is to create employment for more than 15 million people by 2023 as against 11 million new additions to the labour force during the period.

Creating more and better jobs requires two major economic transformations: moving workers from lower to higher productivity activities; and spatial transformation with urbanisation pulling villagers into secondary towns and cities. These shifts will have to be led by the private sector, the main engine of job growth in Bangladesh. For this to happen on a large enough scale, we need to look at what has worked best to create jobs, focusing on sectors that have the highest potential.

AGRICULTURE SECTOR: Agriculture still accounts for almost 41 per cent of total employment in Bangladesh. A central challenge for agriculture and the food system is to generate high value-added jobs across the value chain, especially for women and youth. Agriculture will probably remain one of the largest single occupations in the coming decade. Agriculture in Bangladesh is treated primarily as the source of essential food production. For successful transition of Bangladesh, agriculture will also have to play a major role as an engine for economic growth and employment. This will be through rising agricultural productivity and a shift to commercial crops which will be the dynamic engines for economic growth, job creation, higher incomes and rural purchasing power, wider markets for produce, and the growth of downstream industries. This can happen through adopting a conscious strategy to utilise agriculture to stimulate job creation and domestic demand.

The vast technology gap between the levels of agricultural productivity achieved by Bangladesh and the highest yields achieved globally represents an enormous untapped potential for stimulating economic growth and job creation. Bangladesh needs to focus strongly on an agriculture-led job creation strategy to generate productive jobs to eradicate poverty.

MICRO, SMALL AND MEDIUM ENTERPRISES: Excluding agriculture, there are more than 34 million own-account and unpaid family workers in Bangladesh, representing 56 per cent of the workforce. Self-employed persons and the micro, small and medium enterprises (MSMEs) that they establish have enormous potential for rapidly generating large numbers of new jobs and raising productivity to increase incomes, provided the right policy measures are in place to support them.

For example, China created 101 million jobs between 1985 and 1991, 70 per cent in 'township and village enterprises', of which nearly half were privately owned. A large proportion of MSMEs is established by women and employs predominately women in Bangladesh. An appropriate mix of policies focusing on access to technology, training, credit, marketing and distribution channels can substantially accelerate self-employment, particularly in the informal sector and rural areas, and among women.

MANUFACTURING & STARTUPS: Manufacturing, which has driven economic growth in the country, is changing with new technologies and shifting patterns of globalisation. While some industries remain feasible entry points for low-skill employment, technological innovations could cause substantial job losses in major sectors, such as the readymade garments (RMGs). We need to consider competitiveness, capabilities, and connectedness against shifting international trade patterns, market demands, and financial strengths of the Bangladesh economy for proper planning.

Beyond the traditional key sectors, we also need to harness the technological innovation and entrepreneurship that the digital age has unleashed. As startups and digital platforms mushroom across the world - from the Silicon Valley to Beijing's Zhongguancun - amazing examples can be found on how innovations are creating new and different jobs.

SERVICE SECTOR: The service sector represents only 39 per cent of the employed labour force in Bangladesh compared with more than 67 per cent in many industrial nations. Contrary to common perception, services can be a major contributor to job growth even in countries at earlier stages of development such as Bangladesh. This sector is as amenable to stimulation by government policies as agriculture or manufacturing, and it also provides impetus for the growth of other sectors.

Supportive policies can enable trade, transport and other services to generate a sizeable share of all jobs. For example, services have produced more than half of all job growth in many Asian countries, including private day-care centres, nursery schools and computer training institutes, which are multiplying rapidly in many countries, but can be expanded much further. India, for example, has adopted an innovative, low-cost, self-employment strategy to expand availability of long-distance telecommunications services by setting up small private telephone and fax centres throughout the country. Informal private service enterprises in construction, commerce, food catering, repair and transport have vast growth potential. Rapid expansion of education, training and public health, especially rural health and education, can also serve as a conscious strategy for employment generation.

CREATING ENABLING ENVIRONMENT: The government needs to take policy actions to create an enabling environment. It needs to invest in education - from early childhood to adulthood; and build the human capital needed for a rapidly evolving global economy. It needs to build quality infrastructure to connect both domestically and globally. And it needs to set up the right ecosystem for private investments, especially for micro and small businesses and entrepreneurs.

No doubt there is a widening gap in technology between Bangladesh and developed and many other developing countries; but the gap in the technology of organisation is probably even greater. Creation of new types of systems and organisations can create markets and jobs in many ways. For example, the Dutch system of flower auction cooperatives is so successful that 68 per cent of the entire world's exports of cut flowers pass through markets in the Netherlands. The franchise system has led to a rapid proliferation of new businesses and new jobs in the West in such widely diverse fields as food services, home remodelling, dry cleaning and real estate.

Industrial estates, export processing zones, export promotion councils, export insurance, warehouse receipts, quality standards, and thousands of other organisational innovations have either been created or can be borrowed by Bangladesh to accelerate social progress. A comprehensive study of successful systems and institutions that can be transferred and adapted to local conditions in Bangladesh will document the enormous untapped potential for stimulating faster economic and job growth by inventing, imitating and further improving social systems.

EMPLOYMENT GENERATION - A PRODUCT OF MULTIPLE FACTORS: For policy purposes, it is important to recognise that employment generation is the product of multiple factors that combine together. Stimulating job creation requires a comprehensive approach, rather than partial policies or piecemeal strategies. Good success in increasing employment can be achieved by using comprehensive strategies.

For agriculture, a shift is needed to high value-added, commercial crops, supported by policy measures to upgrade technology, improve skills, raise productivity, ensure the supply of essential inputs, establish marketing and distribution channels, create linkages between agriculture and industry, and cater to export markets.

For MSMEs, policies should make technology, training, credit, and marketing and distribution channels more easily accessible, and forge linkages between universities, research institutes, and MSMEs. The creation of financial institutions specifically designed to cater to the needs of the self-employed and small firms can be especially effective. There are a growing number of these institutions targeting clients that lack access to commercial lending institutions, particularly women, providing unsubsidised loans, and achieving very low levels of default.

Absorbing new technology, raising productivity, improving the quality and competitiveness of exports - all depend on the skills of the workforce. Training institutions and programmes in Bangladesh provide only a narrow range and low level of skill acquisition to a small portion of the labour force. The need is to raise skills to increase productivity by vastly expanding the lower tiers of the agricultural, craft, technical and vocational training systems at the local level to provide practical training in job-related skills. Imbalances between supply and demand for skills exist at all levels. There is a need to make a careful assessment of present supply and demand for key skills. Bangladesh should compare the density of different types and levels of skill in countries at the next higher stage of development and evolve programmes to raise the quantity and quality of skills to at least that level.

The organisation of marketing is one of the weakest links in the country. Bangladesh should improve distribution and marketing systems, especially for agricultural produce, by identifying missing links and establishing successful model programmes that bridge the gap between rural producers and urban or overseas markets.

Overall, significant improvements in the competitiveness and growth of businesses in Bangladesh can be achieved through raising organisational efficiency and dynamism through better internal management practices and better commercial systems. There can be a comprehensive study of successful management practices, systems, and institutions across selected countries that can be transferred and adapted to local conditions in Bangladesh in order to accelerate development in each field of activity. Then, there should be evolution of new organisational patterns for existing industries based on adaptation of new technologies in small, geographically decentralised, labour-intensive production units in order to make these industries more responsive, flexible, efficient, and competitive.

At the present early stage of industrialisation in Bangladesh, there should be emphasis on primary and secondary education, especially in rural areas. This strategy increases the productivity of the workforce; helps promote income equality; raise consumer spending power; and provide broad support for high growth and pro-business policies. There should be particular emphasis on primary and secondary education, rural education, and education of young girls. The education system should help alleviate the problem of the educated unemployment through changing the type of knowledge and attitudes imparted. There should be reorientation of the educational curriculum at all levels, especially higher education, to impart the knowledge and attitudes needed to promote self-employment and entrepreneurship rather than salaried employment.

Conscious employment planning is an essential requirement for ensuring employment for all. The employment objectives should be high on the national agenda and a comprehensive plan is needed to identify the untapped growth potentials in agriculture, industry, exports and services.

Bangladesh should adopt a combination of these strategies to generate 15 million new jobs within 2023, which will also have significant impact on the level of poverty. With a comprehensive approach, right mix of policies, good government, and a conducive international environment for trade, technology transfer and investment, Bangladesh should be able to meet the employment needs of its people within the next one decade.

EXAMPLE OF CHINA: In this respect, the experience of China is an example from which others can learn. In recent decades, China has succeeded in creating millions of employment opportunities and absorbing millions of new entrants into its labour market, while transforming its economy and society. China's path offers useful lessons. As it moves higher on the global value chain, China is also creating fresh opportunities for other developing countries. By looking closely at China's success stories, we can identify what the government can do to generate incomes and create jobs, by engaging the private sector and unleashing people's energy and creativity. What is important for Bangladesh is to unlock its own human and economic potential, through more and better jobs.

Mustafa K. Mujeri is Executive Director, Institute for Inclusive Finance and Development (InM)


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