As government jobs remain a dream for many, the stagnation of the private sector has overshadowed youth employment in Bangladesh. What can be done to fill the gap?

“Quota or Merit? Merit, Merit!” This was the first slogan of the July uprising, when it was still a quota reform movement. At the heart of the movement that overthrew a 15-year-long dictatorial regime, he was a fair shot at landing a prestigious government job.

Why Govt Jobs? Because it is the safest and most dignified way to a better life and a better chance of upward social mobility. In a country where being a highly educated person means a high probability of student unemployment, this is hardly desirable. However, this is due to non-employment generation by the private sector.

The latest labor force survey by the Bangladesh Bureau of Statistics (BBS) shows that unemployment in the country is on the rise. Ensuring jobs for the country’s educated youth cannot depend on the government alone. With the private sector stagnating for years, the question looms large: What must be done to create meaningful opportunities for this generation?

Unemployment crisis in Bangladesh

The number of unemployed in Bangladesh rose by 1.7 million in a year, as the number of people employed or participating in the labor force fell.

The survey found 2.7 million unemployed people in the country at the end of September, compared to 2.5 million during the same period in 2023. The number of unemployed has increased by 20,000 over the past three months.

A World Bank report revealed a decline in labor force participation, from 61.2 percent in 2022 to 59.9 percent in the first half of 2024. Employment also fell by 1.2 percent in 2024, while the unemployment rate remained stagnant at about 3.5 percent.

According to the Bangladesh Bureau of Statistics (BBS) Labor Force Survey 2023, 7.2 percent of the 2.67 million youth labor force is unemployed. 78.9% of the total unemployed population is youth, aged 15-29 years.

31.5% of unemployed youth completed university education, 21.3% completed secondary education and 14.9% completed upper secondary education.

Is political instability fueling unemployment in the short run?

Bangladesh has not yet stabilized after the July uprising. Such unrest affects economic activity and undermines investor confidence. Businesses can’t get back on track, people are still uncertain about the economic outlook.

According to the International Labor Organization (ILO), declining investment and reduced private sector credit flows have slowed job creation in key sectors including agriculture, services and industry. Additionally, austerity measures and delays in public sector recruitment have put many qualified candidates at a disadvantage.

Dr. Syed Akhtar Mehmood, economist and former lead private sector specialist at the World Bank Group, explained how the current political uncertainty is hampering job creation.

“Political uncertainty can affect employment in at least three ways. First, it can reduce economic activity. For example, there can be a contraction in manufacturing activity. As a result, distribution and There will be spillover effects on other areas such as marketing,” he said.

Political uncertainty also discourages investment, which may affect employment in the future.

Finally, in political uncertainty, the government sometimes loses its focus and economic policy-making suffers.

He remarked, “All this can lead to job losses, especially those with weak job security. Some people may not be completely unemployed, but their working hours may be reduced. may, or their wages may be reduced.”

“The investment climate needs to improve to increase private investment. To convert that investment into jobs, we need to increase the supply of skills. People acquire skills through education and employment. “

Dr. Syed Akhtar Mahmood

Why is the private sector lagging behind?

Although the private sector is vital to Bangladesh’s economy, it is struggling to create enough employment opportunities for its growing youth population. There are several factors contributing to this decline. The economy is heavily dependent on the ready-made garments (RMG) sector, while other industries lag behind in growth.

Automation and technological advances in manufacturing have further reduced the demand for low-skilled workers.

Dr. Akhtar Mehmood pointed out, “In many sectors, such as garments, investors are opting for more capital-intensive or automated technologies. They may be doing so to be more competitive, but this means It’s also that while investment and output are growing, we don’t necessarily see a proportional increase in jobs, the trend of unemployment growth is now very real.”

Small and medium-sized enterprises (SMEs) face barriers to access to affordable credit, limiting their ability to expand and absorb more workers. In addition, lack of foreign investment has been a persistent problem.

Dr. Akhtar Mehmood said that our private investment/GDP ratio has been between 20-25 percent in the last few decades. The reasons for this have been much debated. The downsides to the investment climate are wide-ranging—they include regulatory hassles and uncertainty, tax issues, and more. administration, lack of infrastructure, energy shortages and poor access to credit.”

“The lack of foreign exchange in recent years has added another dimension. All these factors are discouraging investment,” he added.

The overall labor force participation rate declined from 61.2 percent in 2022 to 59.9 percent in 2024. This segregation reflects both the structural weaknesses of the economy and the disillusionment among the youth regarding meaningful employment opportunities.

How to increase employment in the private sector.

With increased time, better facilities, and stronger government support—through effective policies and an enabling ecosystem—the private sector has the potential to significantly boost innovation. This, in turn, can drive the country’s export ambitions while meeting growing domestic demand. Moreover, as the private sector grows, it will create a ripple effect, creating more employment opportunities in its value chain.

Dr. Akhtar Mehmood said, “Investment climate needs to be improved to increase private investment. I have mentioned the factors above. To convert this investment into jobs, we need to provide skills. There is a need to increase people’s skills through education and employment.”

Better collaboration will help ensure that colleges and universities produce graduates that industry and other businesses need.

“Of course, business can teach people on-the-job skills, but they must first have the minimum skills (including soft skills) to do the job,” said Dr. Mehmood. skill) should be.”

He recommended, “I think it is important for the government to carefully monitor whether there are job losses due to political uncertainty or other reasons, and if so to what extent. It should then address this issue.” We have to think of ways to deal with it.”

According to Fahim Mushar, it is important to regularly publish accurate data on literacy unemployment, disaggregated by subject and institution, and labor market demand in specific sectors for the next five years. Providing a sector-specific forecast with forecasts will guide higher education institutions accordingly.

“Make vocational training compulsory in all 2,200 colleges under the National University, allow colleges that lack resources to partner with private technical institutes. Provide financial incentives such as training subsidies and new Covering 50% of first-year salary, or offering tax credits for companies hiring graduates,” he added.

The UGC should publish data on annual employment and higher education rates for each university, verified by third parties, to encourage universities to focus on ensuring graduate employability.

Fahim Mashroor also advocates the establishment of foreign language centers in universities that offer training in languages ​​other than English, with free programs for enrolled students and fee-based options for outsiders. .

Another complicating factor is the informal economy, which absorbs many people excluded from formal statistics. Although the informal sector provides temporary relief for unemployed youth, it lacks stability, benefits and career development.

“MSMEs should recognize freelancing and gig economy initiatives as businesses, ensuring they get the same government benefits, including cheaper bank loans,” he suggested. .