'Demographic dividend' could turn into 'demographic burden' | The Daily Star
12:00 AM, June 17, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

'Demographic dividend' could turn into 'demographic burden'

'Demographic dividend' could turn into 'demographic burden'

ACCORDING to international donor agencies and economists, 2014 is when Bangladesh can start utilising demographic dividend which will last till around 2040. Demographic dividend is accelerated economic growth resulting from country's declining mortality and fertility rate and subsequent changes in the age structure of the population.  It occurs when the majority of the population is of working age and can contribute to the country's economy, so the economy grows.
As per the latest population census, 33% of our population  now belong to age group 0-14 years, while 18.8% population belong to age group 15-24 years and 37.6% belong to age group 25-54 years. It means that, after 15 years, most of our population will be in the workforce. Surely, we can take advantage from this transition. However, there are some challenges related to those seemingly favourable demographics. The first is finding jobs for all these people. Second, and more importantly, our young people will need to develop the right skills for the modern job market. The critical question is, are we ready, and how well are we prepared for the “demographic dividend”?
If we analyse our economy of the last ten years, we will see that we are maintaining a healthy 6% plus growth rate, mainly because of our strong export, remittance earning and hard work of poor farmers. Goldman Sachs puts us in its list of 'Next 11' countries (those most likely to become the world's largest economies after Brazil, Russia, India and China), and it is one of JP Morgan's 'Frontier Five' economies. Citigroup has identified us as one of the 11 countries it terms Global Growth Generators (or 3G countries). We have also made significant progress in achieving the Millennium Development Goals (MDGs), particularly relating to eradicating extreme poverty and hunger, promoting gender equality and empowering women, ensuring universal primary education and reducing child mortality. Life expectancy has also increased by 10 years, infant mortality has declined by nearly two-thirds, and female literacy has doubled.
Apparently it all sounds good, but on closer examination, rather than a reason to rejoice, certain issues and the situation invoke serious concern; we still remain one of the poorest, overpopulated and inefficiently governed countries in the world, with about 45% of the population employed in the agriculture sector. More than a quarter of the population (26%) earns less than $2 a day, and two in every five children are malnourished. More than 25 million people lack access to safe water source. Over 67 million people don't have access to improved sanitation and over 7,000 under-5 children die because of poor water and sanitation every year. According to a Usaid report, at least 15% of primary school age children never entered the educational system. Together with the 25% primary school dropout rate, it means 40% of Bangladeshi children never received a full primary education.
As per the latest literacy survey report of Bangladesh Bureau of Statistics (BBS), the country's literacy rate of the population aged above 15 reached 59.82% while the illiteracy rate is 40.18% and the literacy of women is 55.71%. We have made remarkable progress in expanding primary education, especially in raising enrollment of the students and bringing gender parity. But our education system is not yet pro-poor and the and curriculum does not serve the goals of human development and poverty eradication. There is a lack of communication and collaboration between the government, academia and industry, so we are not producing quality or skilled persons for modern industry. Industry insiders says that beside poor infrastructure, lack of land, acute shortage of power and gas for new industries, finding the right people and getting them to work productively are the biggest problems of Bangladesh today.
In 2004, United Nations Population Division (UN PD) revealed that our population would reach 218 million by 2050, but later upgraded the figure to 243 million by taking into account the decade-long fertility plateau (1993–2002).  Therefore, let's assume that our population in 2050 will be 230 million.
Where will productive jobs for this extra population come from? What will be the sources for higher economic growth? What is the capacity of agriculture to feed the growing population? Also, will Bangladesh be able to make adequate investments in education and health to ensure a healthy, skilled and productive future workforce? Unfortunately, for the last several years, we have been suffering from economic growth stagnation with GDP growing between 5% and 6.8%, and the investment-GDP ratio has stood at 24%-26% for a decade. Though public investment has increased nearly 1 percentage point in 5 years, private investment has declined this year. Investors' confidence has been destroyed due to the recent political instability and businesses are suffering from insecurity too. Private-sector investment in the country remains at a low ebb, which resulted in a surplus liquidity of Tk. 96,000 crore in the banking sector. If we want to achieve higher economic growth then government should give top priority to restoring investors' confidence because overall investment which is now at 22% should be 36 % for higher growth.
According to The Asian Development Bank (ADB), , Bangladesh is expected to have 78 million workers by 2025, up from 56.7 million in 2010, of whom two thirds have only minimal education and 4% have received any kind of training. Different studies also show that around 2.2 million people enter the job market annually, while nearly 1 million get jobs and rest remain unemployed or under-employed. Currently, 47% of graduates are unemployed. Moreover, our employment structure is characterised by the predominance of low-productivity and low-wage, and around 80% of the total labour force were employed in the informal sector, which is insecure, poorly paid and has no social security which in turn cannot contribute much to poverty reduction.
In a pre-budget meeting, the finance minister said that this year government will not allocate any new fund for agriculture and has no plan to increase the agriculture research allocation either (The Daily Star May 20). Every year, we are adding 1.8 to 2 million people to the national population, because of which we are losing 1% of agricultural land every year. Currently, there are 8.774 million hectares of cultivable land available, of which 88% is cultivated, so there is limited scope to expand the cultivated area and on top of that if we lose 1% land per annum, we will not have much land to cultivate. The question is, what is our plan to accommodate and feed the extra population who will join soon?
From above analysis and seeing the present economic scenario, it seems Bangladesh will not be able to take advantage of this demographic transition, unless it continues to invest in education, health and nutrition, infrastructure and economic polices, and creating favourable environment for local and foreign investment. Demographic dividends are not automatic. To realise the dividends, we will need educated, healthy and productive labour force. Only new and enhanced infrastructure will provide jobs, increase attractiveness for foreign direct investment, improve productivity and urbanization, and ultimately, connect us to the global economic markets which we desperately needs to access. We need to adopt an expansionary economic policy so that we can increase production, productivity and consequent employment generation for future workforce through higher investment in above mentioned sectors. This massive number of young working people, if provided jobs, will definitely generate economic activity. On the other hand, they can become a threat to stability and turn into 'demographic burden,' if we were unable to provide them work or business.

The writer is a businessman.
E-mail: afsarulhaider@gmail.com

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