Youth unemployment: Emphasising skill development

Bangladesh has been experiencing steady growth rate of around 6.0 per cent for a decade. The country has also been experiencing demographic dividend for a few years. With a projection of increase of 2.2 million population per year for the next ten years such dividend will continue until 2040. Historically, demographic dividend has played very important role in a country's economic development. But this does not automatically translate into economic benefits; policies and programmes play critical role in this. East Asian countries during the 1960s and 1970s are examples of success stories; demographic dividend was successfully used to bring 'miracle' in those countries. Bangladesh's unemployment rate is relatively low (10.3 per cent in 2013 according to the latest Labour Force Survey) compared to the global level but employment growth, particularly that of decent and productive jobs, has also been low. Finding jobs for its youth population will be one of the major challenges the country will be facing in near future.
Currently the agriculture sector provides the highest youth employment (51.52 per cent) in the country followed by the manufacturing (14.57 per cent) and the services sector (5.73 per cent). About 77 per cent of the youth population lives in rural areas. Male and female employed youth constitutes 69.50 per cent and 38.22 per cent respectively of the total employed youth. Among the employed female, 39.5 per cent are in manufacturing and 25.2 per cent in agriculture. The RMG (ready-made garments) sector has successfully attracted a large number of young female workers. Currently this sector employs 3.2 million female workers among the total 4.0 million employed, according to BGMEA (Bangladesh Garment Manufacturers and Exporters Association). Underutilisation of labour is prevalent in the country - low quality jobs being the main contributing factor. Underutilisation of labour includes people who are neither in employment nor in education and training (NEET) which is 41 per cent of youth, according to a recent World Bank report.  
The Solutions for Youth Employment  (S4YE) report 2015, published by the World Bank, identified inadequate skills and mismatch between demand and supply as main reasons for high youth unemployment in Bangladesh. The primary reason for mismatch is that the existing education system is to a large extent not demand-driven. Technical and vocational trainings have demand but they are not incorporated in the mainstream education system. Students and their parents prefer engineering or medical degrees rather than technical and vocational qualification. Most of the training programmes are not demand-driven rather predominantly theoretical.  Supply side constraints include lack of infrastructural, legal, and financial facilities. This limits large-scale investment and hence employment generation.
The advent of the microfinance programmes in the rural areas has encouraged many female entrepreneurs. These programmes target small-scale projects, while the youth who aspire for something bigger, still opt for finance from their families and friends. Lack of experience act as another supply side constraint; often recent graduates, although skilled, are denied jobs stating lack of experience as the main reason for the denial. This in turn forces them to go for unpaid internships, to gain some experience, thus being trapped in temporary contracts, involuntary part-time or casual work in informal sector, causing underemployment. Over-qualification is another problem. Absence of unemployment benefits during job search period often forces youths to accept low quality/informal jobs. ILO's school-to-work-transition surveys (SWTS) have found  95.1 per cent of all surveyed workers engaged in informal sectors in 2013; 37.9 per cent of the surveyed youth were part of the vulnerable employment cluster, being either self-employed (31.7 per cent) or unpaid family workers (11.1 per cent).
There has been remarkable progress with regard to educational attainments in the past decades. A recent ILO report reveals that higher level of education is associated with better chances of obtaining stable employment with better wages. Tertiary graduates are 1.5 times more likely to find a stable job compared to those with primary or secondary education, and earn three times more than those with no education. However, the scenario is different for university graduates. Youth unemployment rate for university graduates are more than four times higher than those with just primary-level education. For secondary education, the rate is more than double. The coexistence of over- and under-education qualification is common in youth labour market; 61.6 per cent of young Bangladeshi workers, mostly in agricultural, craft and trade-related work, are undereducated for the work they have been hired to do.  The overeducated proportion is only 2.5 per cent. The percentage of undereducated youth is highest in the agricultural sector (67 per cent) followed by industry (61.7 per cent) and service sector (58.2 per cent).
Gender issues greatly affect the youth labour market scenario. Female youths constitute the majority of school dropouts. The most common reason for their dropout is early marriage whereas in the case of male dropouts, the reason is early employment. Constrained by the societal norms about 80 per cent women would prefer to stay at home. Accommodation facility near workplace is another contributing factor. In many cases industries grow without infrastructure facilities, and housing or transportation services. This affects mobility of the workers, particularly the female workers, which in turn has a negative impact on their social life and on productivity.
Most experts consider that the jobs for future Bangladesh are in the services sector. For example, there will be demand in health care, education, hospitality, tourism, hotel management, housekeeping, IT outsourcing, mobile technology, fashion designing, legal services, readymade garments, leather, and financial sectors. Services sector needs skilled individuals; knowledge on technological knowhow is fundamental for gaining comparative advantage in the sector. The manufacturing sector, particularly garment, has great potential but multi-skilling is required in this sector. Agriculture could provide further employment opportunity with appropriate incentives for social enterprises. Migration abroad has great prospects too. It is therefore crucial to prioritise the sectors for potential growth for the next 10 years or so. The S4YE 2015 emphasised the introduction and expansion of related skill development programmes to prepare the youth for such jobs. In general terms, we have to be aligned with the global forces, i.e. technological improvement in any sector for creating better and decent jobs.

Dr Farzana Munshi is Associate Professor of Economics at Brac University, Dhaka.

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