An anatomy of 'jobless growth' in Bangladesh
According to the official statistics, between 2013 and 2016-17, on average, gross domestic product (GDP) in Bangladesh grew annually by 6.6 percent, and there has been a net increase of 2.8 million new jobs on top of the 60.7 million jobs that existed in the economy in 2013. This suggests that the number of jobs grew by only 0.9 percent per annum or less than one-eighth of the rate at which the economy grew during those five years.
"Jobless growth" is a phenomenon when an economy experiences growth without an expansion of jobs. Understanding the "jobless growth" experience entails a closer look at the job statistics. According to the Labour Force Surveys, over the past five years, in the face of a decline in jobs by 1.5 million in agriculture, out of the new jobs created in the economy, the services sector accounted for the bulk—3.9 million—of these, and industry contributed only 0.3 million jobs. Between 2013 and 2016-17, annually, jobs in agriculture declined by 1.1 percent against output growth of 3.2 percent; jobs in the industry grew by only 0.5 percent even as output grew by a robust 9.8 percent, while services sector jobs grew by around four percent against output growth of around six percent.
One of the most alarming features is that the manufacturing jobs declined by 0.77 million—from 9.53 million in 2013 to 8.76 million in 2016-17—an annual average decline by 1.6 percent, despite a strong output growth of 10.4 percent. While male manufacturing jobs increased by only 0.17 million (from 5.73 million to 5.9 million), female manufacturing jobs saw a big drop by 0.92 million (from 3.78 million to 2.86 million). This suggests that much of the pride of generating female employment in the manufacturing sector over the past few decades in Bangladesh is at stake now.
Keeping aside the debate on the validity of such a claim of a robust manufacturing output growth of over 10 percent throughout those years regardless of the sluggish private sector investment and depressed export growth, one can interpret the aforementioned trends as both good news and bad news. On the positive side, one might justify these patterns by emphasising that labour productivity seems to have gone up through technological advancement. According to this argument, over the past five years, it didn't take as much increase in the number of workers to generate eight times more growth in GDP in the economy. However, such arguments do not provide any comfort to those who see these numbers as bad news. Keeping aside the questionable claim of such a large increase in labour productivity within a short time span, it is obvious that the economy's rapid growth, which is one of the fastest in the world in recent years, has failed to generate jobs at a large scale, and thus has not been able to translate into the desired reduction in poverty. Consequently, the economy's growth is far from becoming "inclusive growth" as aspired by the government in its national development plans. This has contributed to widening income inequality too in recent years as is evident from the growing Gini index.
There is even more reason for concern. The quality of the new jobs generated is also problematic. A worrying picture is that more than 85 percent of the jobs in 2016-17 were informal which can't be considered as good quality jobs. Also, while male jobs increased by only one million (from 41.2 million in 2013 to 42.2 million in 2016-17), female jobs increased by 1.8 million (from 16.8 million to 18.6 million), and the rise in female jobs has been heavily concentrated in the informal sector. Female jobs in the informal sector increased by 1.9 million, which suggests a drop in female jobs in the formal sector by 0.1 million.
Another big concern is the rise in the share of youth (aged between 15 and 29) "not in employment and not in education or training (NEET)" in the total youth population, which increased from 25.4 percent in 2013 to 29.8 percent in 2016-17. It is important to note here that around one-third of the labour force in Bangladesh comprises of youth, and the unemployment rate among the youth is much higher than the national unemployment rate of around 4.2 percent. In 2013, youth unemployment rate was 8.1 percent, which increased to 10.6 percent in 2016-17. All this indicates that the country is far from taking advantage of the phase of demographic dividend that it is passing through.
The aforementioned analysis points to the fact that achieving a high rate of economic growth alone, in terms of a mere increase in the GDP growth rate, should not be treated as a panacea. The quality of growth is important, and in particular, growth must be able to produce jobs and livelihoods for as many people as possible. In order to avoid "jobless growth", the pattern, structure, and strategies of growth have to be revisited. The economic growth momentum needs to be tuned for "meaningful" diversification and structural transformation of the economy where promotion of labour-intensive and high-productivity sectors, both in the farm and non-farm sectors, would be fundamental. This should be coupled with interventions to enhance productivity, jobs, and incomes in traditional and informal activities where there are large pools of surplus labour.
Dr Selim Raihan is a professor in the Department of Economics at University of Dhaka, and the executive director of South Asian Network on Economic Modeling (SANEM). Email: selim.raihan@econdu.ac.bd