A Job Revolution: Unlocking Bangladesh's Potential
Jobs are the key to unlocking human dignity and prosperity, yet Bangladesh faces a critical challenge. With a rapidly growing youth population, the country must create not just more jobs, but quality jobs that offer stability and a path to a better future.
Between 2016 and 2022, an astonishing 14 million young adults entered the job market, but only 8.7 million new jobs were created. Nearly half of these eager youth were left without a job, and for those who found employment, the majority were stuck in low-productivity agriculture. The manufacturing sector, a potential engine of growth, actually shed jobs during this period.
But here's where it gets controversial... Bangladesh's economic growth hasn't translated into sufficient job creation. The country's young workforce, expected to peak in the late 2030s, presents a unique opportunity, but one with a limited shelf life.
The manufacturing sector, a traditional source of employment, has grown annually by about 9%, but employment within it has declined by nearly 10%. Possible reasons include automation, capital-intensive investments, and the country's over-reliance on the readymade garment (RMG) sector, which accounts for a whopping 82% of exports but only 6% of national employment. As Bangladesh graduates from Least Developed Country status in 2026, its manufacturing exports will face a tougher global trade environment.
Quality jobs are the answer. Well-paid, productive, and stable jobs drive long-term prosperity. When workers move from low-productivity activities like subsistence farming to higher-value jobs in manufacturing and services, incomes rise, lives change, and the economy becomes more resilient. Quality jobs also foster social cohesion and provide a sense of purpose and security.
The labour market challenges are particularly acute for young people and women. Youth labour force participation has declined, with 8% unemployment in 2023, and a staggering 14% among university graduates. Additionally, 16% of young people are neither employed, in education, nor training (NEET), with young women making up 73% of this group and urban youth accounting for 63%.
Women face even greater barriers. One in five young women is not in employment, and this rises to one in four for educated young women. Urban female labour force participation plummeted from 31% in 2016 to 25% in 2023. Many women have turned to agricultural work, predominantly in low-paid, informal jobs, now accounting for 58% of workers in this sector.
In contrast, women's share of manufacturing employment has declined, reversing earlier gains driven by RMG-led manufacturing growth. We must understand why women are leaving jobs. A country cannot thrive while leaving half its population behind.
The Path Forward:
Bangladesh must accelerate economic growth and convert it into stable, upwardly mobile jobs. This requires addressing three key constraints: the infrastructure gap, the skills gap, and the regulatory gap.
The infrastructure gap stems from rapid urbanisation outpacing the expansion of utilities and public services. Reducing this gap requires increased investment in physical and digital infrastructure for firm expansion and economic diversification. It's not just about access, but quality.
Reliable energy, modern transport, and digital connectivity are essential to lower business costs and attract private investment for job creation, particularly beyond the Dhaka-Chattogram industrial corridor. Given the substantial investment needs, mobilising private financing will be crucial to complement limited public funds.
The skills gap is a result of a mismatch between firm needs and job seeker skills. Education and training often fail to meet market demands. They must become more market-driven and job-relevant. Strengthening industry-training collaboration, expanding vocational and technical training, and scaling apprenticeships can ensure education leads to opportunities. Targeted programmes for women and youth can integrate them into fast-growing sectors.
The regulatory gap discourages expansion and hiring in micro, small, and medium enterprises (MSMEs) due to high business costs. Addressing this gap is crucial for private sector competitiveness and economic diversification beyond the RMG sector, towards new growth drivers like IT services, logistics, and agro-processing. This will lead to export dynamism and higher-quality jobs.
Ensuring a level playing field by reducing trade and investment barriers, simplifying regulations, addressing corruption, improving logistics, and expanding credit access for MSMEs can unlock investment and drive innovation.
Additionally, Bangladesh must focus on increasing female labour participation. A multi-pronged strategy is needed to address barriers like gender bias, inadequate childcare, unsafe commutes, limited financing for female entrepreneurs, and social norms limiting female mobility and resulting in early marriages.
Bangladesh needs bold and urgent reforms to create more productive, better-paying jobs. The path is clear: enable the private sector to create jobs by implementing policies and regulatory reforms, establishing a business-friendly environment, and ensuring a level playing field with transparent tax systems, good governance, and transparent institutions.
This article, part of the #BangladeshRising Blog Series, is published under special arrangement with The World Bank. Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, highlights the challenges and opportunities for Bangladesh's future.
