WB's assertive plan for job creation | The Daily Star
12:00 AM, December 24, 2018 / LAST MODIFIED: 12:00 AM, December 24, 2018

WB's assertive plan for job creation

The lender tags several conditions for reforms with $750m budget support

The World Bank has attached several conditions to its budget support programme that it extended to Bangladesh for three years with a view to creating faster job growth, which has slowed down in recent times.

The Washington-based multilateral lender is set to provide $750 million in three equal instalments and the first instalment of $250 million was approved recently.

Before the first instalment was approved, the government had to fulfil nine conditions.

The conditions include: enactment of the One-Stop Shop Act 2018; placement of the Customs Act 2018 in the parliament; approval of the National Environment Act by the cabinet; passage of the Bangladesh Labour Act (Amendment) 2018; and enactment of the National Skills Development Authority Act 2018.

The women and children affairs ministry has submitted the draft Child Daycare Act to the scrutiny committee of the cabinet.

For release of the second instalment, specific conditions will have to be met. The conditions mostly deal with proper implementation of the conditions that were tagged with the first instalment.

The budget support, which comes after a gap of ten years, was extended because of a slump in job creation since 2010: the growth rate for jobs fell to 1.8 percent in 2010-16 from 2.7 percent in 2003-10.

“Despite Bangladesh's robust economic growth, the pace of job creation has slowed in recent years, and almost stalled in the readymade garments sector,” the WB said.

Women and workers in lagging regions, and youth in particular face challenges in accessing quality jobs.

Both foreign and domestic investors face high barriers to establishing and growing their businesses, which ultimately hamper job creation.

Bangladesh attracted just $13 of foreign direct investment per capita in 2017, which is way lower than the average of $43 clocked in by the lower middle income countries and $148 by Vietnam, the country's major competitor in foreign trade.

Firms looking to establish new business in Bangladesh must navigate a non-transparent and cumbersome regulatory space that includes 150 services delivered by 34 different line agencies.

Referring to the WB Doing Business Report, the lender said registering a business in Bangladesh costs the equivalent of 22.3 percent of annual per capita income, which is 15 percent in case of neighbouring India and 6.5 percent for Vietnam.

“Such bureaucratic process and complex documentary requirements impose a high cost on investors and impedes entry.”

In February the one-stop shop act was passed. If it is fully implemented in the next two years, the time and cost for registering new businesses will come down significantly and it will also create more jobs, the WB said.

At present, it takes 19.5 days to set up a new business. It will decrease 25 percent in 2022 once the one-stop shop is implemented.

In the last five years the average annual growth in new business registration was 0.4 percent. It will rise to 5 percent.

The government has already passed the new customs act, but for fully implementing it regulations will have to be prepared. So far, the National Board of Revenue has established a risk management directorate.

Besides, the cabinet will have to approve the National Single Window Policy or law.

If the steps are taken, 3.19 lakh exporters and importers will be benefitted, according to the WB.

“These will contribute to job creation by enhancing competitiveness of exporters as well as firms using imported inputs to sell in the domestic market.”

Several conditions are related with the protection of the interests of workers. The conditions include full implementation of the new labour law and introduction of pension system in the private sector.

The government has already approved the comprehensive pension strategy. At least one government-regulated pension scheme will be launched outside of the civil service within the next three years.

Under the budget support scheme various steps would have to be taken for improving policies and programmes to enhance access to jobs for the vulnerable.

The average migration cost through formal channel is Tk 418,455 for male and Tk 253,078 for female. If the WB's reform conditions are fulfilled 20 percent of the cost will be reduced.

The WB has tagged the condition that the Wage Earners Welfare Board Act 2018 be fully implemented.

The Wage Earners Welfare Board Act 2018 includes raising the allocations for legal assistance for expatriate workers and emergency repatriation for female workers by at least 30 percent from the present allocations of Tk 30 lakh and Tk 57.3 lakh respectively. In the last fiscal year, 13,213 expatriate workers were provided with training, of which 31 percent are females. The WB said the number has to be increased to 19,345 per year, 41 percent of which must be females.

Besides, at present there are 294 training centres for workers; this would have to be raised to 500. At least 200 day care centres will have to be set up. At present there are none.

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