Understanding Bangladesh’s Labour Market: Trends, Challenges, and Policy Implications based on the quarterly Labour Force Survey (LFS) 2022

The release of the quarterly Labour Force Survey (LFS) 2022 has sparked significant interest among policymakers and researchers, especially in the aftermath of the Covid-19 pandemic. Timely and regular data on key labour market variables are crucial for evidence-based research and policy formulation in any country. This article delves into the findings of the LFS 2022, focusing on the participation rate and unemployment rate, with a particular emphasis on gender disparities and youth unemployment. Additionally, it highlights the need for alternative definitions of unemployment, the importance of addressing informality, and the role of skills development and education in shaping the labour market landscape.

Gender Disparities in Labour Force Participation

The LFS 2022 reveals an encouraging increase in the female labour force participation rate (FLFPR) from 36.3 percent in 2016-17 to 42 percent in 2022. However, a closer analysis shows a contrasting trend between rural and urban areas. While the FLFPR has risen significantly in rural areas (from 38.6 percent in 2016-17 to 50.9 percent in 2022), it has declined in urban areas from 31 percent to 23.6 percent during the same period. The negative impact of the Covid-19 pandemic on the urban labour market, combined with the shift towards automation in the ready-made garment (RMG) sector, has likely contributed to this decline. It is important to investigate whether increased female enrolment in education has also played a role in this trend.

The rise in FLFPR in rural areas can be attributed to the increasing number of women engaging as unpaid family workers due to rising male labour migration and the growth of rural-based small and medium enterprises. Furthermore, the expansion of microcredit, which primarily targets rural women, has facilitated their involvement in small-scale self-employment activities. Reverse migration from urban to rural areas during the pandemic has likely contributed to the contrasting participation rates between rural and urban women.

Youth Unemployment and the Demographic Dividend

Bangladesh’s demographic transition brings with it a significant portion of youth in the labour force, comprising 36.53 percent of the total workforce. This demographic dividend presents both opportunities and challenges for the country. To fully capitalize on this favorable demographic profile, it is crucial to address the issue of youth unemployment and the presence of youths who are not in employment, education, or training (NEET). This section explores the importance of tackling youth unemployment and maximizing the benefits of the demographic dividend.

  1. The Demographic Dividend: Bangladesh’s demographic dividend refers to the potential economic benefits that can arise from having a large and productive working-age population. With a substantial proportion of youth in the labour force, there is an opportunity to leverage their energy, creativity, and skills to drive economic growth and development. By investing in education, skills development, and employment opportunities, the demographic dividend can be harnessed to propel the country’s progress.
  2. Youth Unemployment: Despite the potential advantages of the demographic dividend, the LFS 2016-17 data revealed a higher rate of youth unemployment (10.6 percent) compared to the national average (4.2 percent). This disparity underscores the need to address the challenges faced by young job seekers in finding suitable employment. High levels of youth unemployment can lead to wasted potential, social unrest, and economic stagnation. It is essential to create an enabling environment that promotes youth employment and empowers young individuals to contribute meaningfully to the economy.
  3. Youth NEET: Another concern is the presence of youths who are not in employment, education, or training (NEET). These individuals are at risk of exclusion from economic opportunities and may face long-term challenges in their career development. Addressing the issue of youth NEET is crucial for maximizing the benefits of the demographic dividend. By providing access to quality education, vocational training, apprenticeships, and entrepreneurship opportunities, young people can be empowered to engage in productive activities and contribute to the country’s growth.
  4. Policy Interventions: To effectively tackle youth unemployment and NEET, comprehensive policy interventions are required. These may include:
  • Enhancing the quality of education: Ensuring that education equips young individuals with relevant skills, knowledge, and critical thinking abilities necessary for the job market.
  • Promoting entrepreneurship: Creating an enabling environment for youth-led enterprises, providing access to financial resources, mentorship, and business development support.
  • Expanding vocational training: Strengthening technical and vocational education and training (TVET) programs to provide practical skills aligned with industry needs.
  • Strengthening labor market information systems: Improving the availability and accessibility of information on job vacancies, skills requirements, and career pathways to facilitate informed decision-making by young job seekers.
  • Encouraging public-private partnerships: Collaborating with the private sector to create more employment opportunities, internships, and apprenticeships for young people.
  • Addressing gender disparities: Promoting gender equality and ensuring equal access to education, training, and employment opportunities for young women.

Bangladesh’s demographic dividend presents immense potential for economic growth and development. However, addressing the challenges of youth unemployment and NEET is crucial to maximize the benefits of this demographic profile. By implementing targeted policies and interventions that focus on quality education, skills development, entrepreneurship, and inclusive employment opportunities, Bangladesh can empower its youth to become productive contributors to the country’s progress.

Reevaluating Unemployment Measurement and Informality

The unemployment rate in Bangladesh, as defined by the LFS, has fallen to 3.6 percent in 2022 from 4.2 percent in 2016-17. However, this conventional definition fails to capture the reality of the country’s labour market, which is characterized by temporary and ad hoc employment arrangements, often without sufficient remuneration. Therefore, alternative definitions of unemployment, based on hours of work, desire for additional work, and other factors, should be considered for accurate policy formulation. Additionally, assessing the quality of work, including wages and informality trends, is crucial for a comprehensive understanding of the labour market landscape.

Investing in Skills and Education

Investing in skills development and education is crucial in response to the automation of industries and the emergence of Fourth Industrial Revolution-related technologies. As these advancements reshape the job market, it is essential to equip the workforce with the necessary skills to adapt and thrive in this evolving landscape. This section explores the importance of investing in skills and education, focusing on updating training curricula, providing relevant skills training, and addressing the challenge of skills mismatch. It also emphasizes the role of technical and vocational education and training (TVET) programs in effectively addressing labour market challenges.

  1. Updating Training Curricula: To ensure that individuals are prepared for the changing demands of the job market, training curricula need to be regularly updated. Traditional educational institutions, such as schools and universities, should revise their programs to incorporate emerging technologies, digital literacy, critical thinking, problem-solving, and creativity. By aligning curricula with industry needs, educational institutions can produce graduates who possess the skills and knowledge required in the modern workforce.
  2. Providing Relevant Skills Training: In addition to formal education, providing relevant skills training is essential. Short-term training programs, workshops, and certifications can equip individuals with specific skills that are in high demand. These programs can focus on areas such as coding, data analysis, artificial intelligence, robotics, and other emerging technologies. By offering such training opportunities, individuals can acquire the skills necessary to excel in industries at the forefront of technological advancements.
  3. Addressing Skills Mismatch: One of the challenges in the labour market is the skills mismatch, where there is a gap between the skills possessed by job seekers and the skills required by employers. To address this issue, stakeholders, including educational institutions, employers, and policymakers, need to collaborate. Regular dialogue and information-sharing can help identify the skills that are in demand and design training programs to bridge the skills gap. Internship and apprenticeship programs can also play a vital role in providing practical training and facilitating the transition from education to employment.
  4. Emphasizing TVET Programs: Technical and vocational education and training (TVET) programs have a significant role to play in preparing individuals for the labour market. These programs focus on equipping students with specific skills and competencies that are directly applicable to industries and trades. By offering hands-on training, internships, and apprenticeships, TVET programs provide a practical and industry-relevant learning experience. They can produce a skilled workforce ready to contribute to sectors such as manufacturing, construction, healthcare, and information technology.

Investing in skills development and education is vital to meet the challenges posed by automation and Fourth Industrial Revolution-related technologies. Upgrading training curricula, providing relevant skills training, and addressing skills mismatch are essential components of this investment. By prioritizing technical and vocational education and training (TVET) programs, policymakers and stakeholders can ensure that the workforce is adequately prepared to thrive in the evolving labour market.

Policy Implications and Way Forward

To foster private sector investment and support small-scale entrepreneurs, monetary and non-monetary incentives are necessary. Tackling gender-related constraints such as child marriage, ensuring women’s safety and security in public spaces, and implementing gender-sensitive policies are essential to boost female employment. The government should prioritize the publication of data on alternative unemployment definitions and include detailed information on migrants in future iterations of the LFS. Moreover, a more granular breakdown of data, particularly for wages, hours of work, and education, is crucial for informed policy formulation.

Conclusion

The LFS 2022 sheds light on important trends and challenges in Bangladesh’s labour market. While the increased FLFPR and decreased unemployment rate are positive developments, gender disparities, youth unemployment, and the prevalence of informal employment necessitate focused attention. Policy interventions should prioritize skills development, education quality enhancement, and addressing gender-centric norms and constraints. By adopting alternative definitions of unemployment and providing a more nuanced understanding of informality, policymakers can make informed decisions to ensure inclusive and sustainable growth in the labour market.

 

Author:

Khan Mohammad Mahmud Hasan

A TVET, Career Development and Project Management Expert

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