Joblessness rises amid dull investment

Jobs in Bangladesh are not being created in line with the demand from its youth population, leading to a rise in unemployment despite the urgent need for more job opportunities.

Bangladesh's unemployment rate increased to 4.63 percent in the October-December period of fiscal year 2024-25 as a growing number of job seekers failed to secure employment, according to the latest Quarterly Labour Force Survey (QLFS) data.

The number of unemployed people rose to 2.7 million in 2024, up from 2.55 million the previous year.

The jobless rate stood at 3.95 percent in the fourth quarter of 2023, the Bangladesh Bureau of Statistics (BBS) said yesterday.

However, this increased to 4.49 percent in the July-September quarter of FY25 after economic activities ground to a halt following a mass uprising that led to the ouster of the Sheikh Hasina-led government and subsequent labour unrest in major industrial areas of Dhaka.

The overall unemployment rate stood at 4.48 percent last year compared to 4.15 percent in 2023.

In the October-December quarter of 2024, the labour force participation rate dropped to 48.41 percent from 50.27 percent a year earlier. During the full year, the labour force participation rate was 49.49 percent, compared to 50.92 percent in 2023.

Noted economist Rizwanul Islam said the total number of people in the labour force has declined, indicating that potential members of the labour force are feeling discouraged by job prospects and are staying away.

The latest QLFS data showed that the labour force participation rate declined in the fourth quarter of 2024 and throughout 2025, mainly due to reduced participation of women in the workforce.

"The number declined more sharply for women, which means that the country is unable to utilise a major part of its human resources. The gender difference and its causes require serious research," added Islam, a former special adviser on employment at the International Labour Office in Geneva.

"Rising unemployment is a matter of worry, but it is more worrisome if it is associated with a rise in youth unemployment, which is already much higher than general unemployment."

The country is not only losing out on the possibility of reaping demographic dividends but also seeing a potential source of social discontent and unrest continue, he said.

The number employed in industry has continued its downward trend despite healthy growth in exports and output, indicating a continuation of jobless growth.

Furthermore, the continued decline in the share of industry shows that the reverse movement of the structure of employment is continuing. From a long-term point of view of development, this is disappointing and worrisome, the economist added.

Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said job creation depends mainly on private investment, which has stagnated.

Amid high inflationary pressure, the central bank is controlling the supply of money to cool off prices, leading to a rise in lending rates. Another major factor hindering investment is political uncertainty.

Inflation has remained above 9 percent since March of 2023, standing at 9.17 percent in April this year.

Amid the central bank's measures to control the money supply, credit flow to private firms grew by only 7.15 percent in January this year, the lowest since at least 2015, according to data from the Bangladesh Bank.

Furthermore, the equity market, which could contribute to creating capital for the private sector, is not vibrant.

Another major factor for investment is not only energy prices, but the availability of energy, which the country has been struggling to ensure. Many industrial units have complained in recent years of being able to operate at only a fraction of their capacity due to inadequate gas supply.

"Foreign direct investment is also not rising, so new jobs are not being created. Manpower exports are also not growing at a higher pace," Rahman said.

"Until inflation is controlled and political uncertainty subsides, investment may not get a boost."

He added that the recent rise in exports could be explained by higher productivity, which indicates that job creation in the manufacturing sector did not rise.

During July to January of the current fiscal year, LC openings for capital machinery fell 33.68 percent to $1 billion, while LC settlements for capital machinery declined 27.33 percent to $1.24 billion, according to central bank data.

"Job creation is not rising as the business environment is not conducive. Additionally, there is a shortage of confidence and banks are also not financing adequately," said Humayun Rashid, a former president of the International Business Forum of Bangladesh.

The whole business sector is strained after facing challenges such as the Covid-19 pandemic, global supply chain jitters, and geopolitical problems within a couple of years.

Moreover, the previous government regime failed to create a proper investment environment. So, job creation is not rising adequately, he said.

"Now, the government is taking some steps towards reform, which should have been taken at least 30 years ago," he said, recommending that the government focus on addressing policy issues to ensure a smooth business environment.

For instance, registration of land and licensing should be easier for entrepreneurs, he said.

"If one government enacts reforms, what is the guarantee that another government will not change it," he questioned, drawing on his previous experiences of frequent policy changes.

Moreover, the country's education system should be contemporary and forward looking so that educated people can match industry demands, Rashid added.

A vocational education system exists, but qualified manpower is not coming out of the system as teachers are not up to date with modern need-based demands. The education system should be need-based and targeted, he said.