Over the last few decades, the decline in fertility and mortality rates in Bangladesh and subsequent increase in number of working-age population (15-59) relative to the dependents (0-14 and 60+) offer the country an opportunity of accelerated economic growth. Economists optimistically call this potential for accelerated economic growth the “demographic dividend”. Until the early 2040s, Bangladesh is expected to gain an average 1 percent additional yearly GDP just because of this growing working age share—yet realising that potential has been one of its major challenges.
However, demographic dividend is not a given. Shifts in age structure of a country’s population do not automatically guarantee growth. Rather, it requires investment in a number of areas and a set of policy commitments to systematically manage its working-age population for productive economic output. Based on data from the “Labour Force Survey 2016-17” published by Bangladesh Bureau of Statistics (BBS) in 2018, a number of gaps have been chalked up where the country should focus on to gain a boost in economic productivity making the most of the “window of opportunity”.
Firstly, the supply of labour is quite inadequate in the absence of sufficient demand. Labour force participation in Bangladesh declined gradually from 59.3 percent in 2010 to 58.2 percent in 2016-17. Of the total 63.5 million labour force, 2.7 million are unemployed—which increased considerably from 2.6 million in 2010. The unemployment rate is still 4.2, which is slightly low compared to the 4.6 percent in 2010. The proportion of jobs, both in the formal and informal sectors, did not grow keeping pace with the growth of population. In order to reap the benefits of the demographic dividend, the government should prioritise on expanding the labour market and creating mass employment though economic policies.
Secondly, the youth should be the focus of development targets if we want to make the most of our demographic dividend. While the labour force participation of Bangladesh is 58.2 percent, the rate is only 48.7 for people aged 15-29, which is a 31.6 percent share in the total labour force. That means more than half of our younger-aged population (aged 15-29) are doing nothing—they are not employed, nor are they looking for a job. Even if an opportunity of work arises, they would not, reportedly, take the opportunity either. This applies to those who are studying at the tertiary level. All possible efforts need to be made to get our youth into the labour force from the time they enter the working age bracket (work opportunities for them also need to be increased).
It is not just the labour force participation rate that is alarming; the higher unemployment rate is also largely a consequence of unemployment among youth aged 15-29. Whereas total unemployment is 4.2 percent, the rate is 10.6 percent among the youth. Universities should take the lead role to address this. More involvement of universities with “subject related organisations” through internships and partnerships will not only benefit the organisations and contribute to the country’s economic output, it will also help the youth equip themselves with skills needed for the fast-changing job market.
Thirdly, there is an apparent gender gap in labour force participation, employment rate, wages and economic opportunities for women in Bangladesh. Only 36.3 percent women participate in the labour force compared to the 80.5 participation rate of men. Like the total participation rate, the rate for women has also remained constant over the last decade. Nearly 81 percent of women who do not participate in the labour force are not being able to work outside the home because of their role as homemakers. The high unemployment rate among women also contributes to the overall rate. Unemployment among women is 6.7 percent compared to 3.1 percent for men. Interestingly, among the young working-age group, the rate is 15 percent for women in contrast to 8.2 percent for men. There is also a gender gap in terms of the nature of employment: 8.2 percent of employed women are in the formal sector compared to the 17.9 percent men. Therefore, addressing the gender gaps in terms of these economic indicators is a must, if we want to harness maximum benefits of the demographic dividend in Bangladesh.
Fourthly, high unemployment rate is also associated with fewer employment options in rural areas. What is surprising is that 1.8 million unemployed persons live in rural areas compared to 866,000 living in urban areas. In order to seize the opportunity of demographic dividend, the government should focus more on job creation in rural areas.
Finally, encashing the demographic dividend is irrevocably linked with human resource development. Good health, quality education and skilled manpower are important prerequisites for such desired growth. Surprisingly, 25.3 percent of men are out of the labour force because of illness or injury. Promotion of health, especially maternal and child health, is also linked with greater productivity. The proportion of allocation for the health sector as part of the total budget needs to be increased. Moreover, among those who are in employment, only 5 percent and 6 percent have completed tertiary and higher secondary levels of education respectively, while 26 percent are primary graduates. This indicates a serious gap in education and skills even among the employed section, automatically leading to lower wages and income. The report also shows that around 30 percent of the youth are not in education, employment or training. The government should invest more in education and skill development to build human capital. It can adopt models of skill development for enhancing skills of those out of education.
To sum up, Bangladesh can realise the full potential of its demographic window of opportunity with decisive policies to expand labour markets though ensuring participation of the young working-age cohort in the labour force, investing in youth and skill development, enhancing health services, and generating mass employment, particularly rural and formal sector employment. Moreover, if we cannot reduce the gender gaps in education, employment, skills and in the labour markets, we stand to miss out on the opportunity of reaping the benefits of our demography.
Shekh Farid is a Statistical Officer at Bangladesh Bureau of Statistics (BBS).