Job growth in manufacturing plunges: BBS survey
Despite double-digit growth in manufacturing output, job growth has slowed down in Bangladesh alarmingly, which may raise unemployment and prevent the economy from benefitting from the abundance of working age population, official figures showed.
According to the latest Survey of Manufacturing Industry (SMI)-2019 released recently by the Bangladesh Bureau of Statistics (BBS), the annual growth of jobs declined to 1.23 per cent between 2011 and 2018, way lower than the 6.24 per cent recorded between 2006 and 2011.
Medium industries culled more than half of their jobs as the number of medium factories dipped 48 per cent to 3,178 in 2018 from 6,103 in 2011. Micro factories cut the number of units by 4 per cent, bringing the number of jobs down.
Only small and large industries added jobs, offsetting the sharp slide in micro and medium factories, which together made up 14 per cent of total industrial jobs of 54.65 lakh in 2018, albeit down from 26 per cent in 2011.
Large factories, which registered a slump in terms of numbers of units during the seven-year period, took in 24 per cent more jobs to raise it to 36.69 lakh in 2018 compared to 2011.
Rising capital intensity and adoption of advanced technologies were major reasons behind the sluggish employment growth, and this takes place at a time when the economy recorded more than 6 per cent annual growth.
"Slowdown of employment growth will result in higher unemployment and can affect wages and labour income adversely," said Rushidan Islam Rahman, executive chairperson of the Centre for Development and Employment Research.
Bangladesh's unemployment rate is 4.3 per cent, according to the latest Labour Force Survey 2016-17.
She identified two forces: the lack of rapid growth of the numbers of establishments with lower per-unit employment growth and the rising capital intensity in the large establishments.
The total employment in micro, small and medium (MSM) industries declined to 18 lakh in 2018 from 20.5 lakh seven years ago.
The BBS survey found the number of large establishments declined 22 per cent to 2,856 in the seven years to 2018. Remarkable changes took place in the garment industry, which accounts for about 85 per cent of national exports, as the number of units plummeted by 30 per cent to 1,924 in 2018.
Apparel shipment, however, surged 49 per cent $28.14 billion to the fiscal year of 2016-17, from $18.91 billion in 2010-11, data from the Export Promotion Bureau showed.
Yet the share of large factories in the total employment has increased. "This implies a rise in average employment per unit," said Rushidan, also a former research director of the Bangladesh Institute of Development Studies.
"The declining trend in manufacturing sector employment is alarming for the economy," said Sayema Haque Bidisha, a professor at the economics department at the University of Dhaka.
Because of a lack of proper capital accumulation, the number of medium industries has decreased over the years, she said.
"If we want to increase manufacturing sector jobs, the government should come forward to ensure the flow of capital for investment in the medium-sized firms."
The survey was conducted before the coronavirus pandemic struck. If a survey is carried out now, it will show a more depressing scenario, since most factories were kept shut for at least two months after the virus arrived on the shores of the country in March 2020.
"The unemployment rate might have increased now," said Prof Bidisha, also the research director of the South Asian Network on Economic Modeling.
"Unskilled and women workers are losing jobs as they can't adjust to the changing atmosphere."
Rushidan said large establishments have a much higher share of female employment compared to MSMs.
"Lack of women's employment in MSMs in local areas may work against the scope of women's employment growth and discourage their labour force participation."