Bangladesh News

Employment growth rate has shrunk by half while underemployment swelled by about 50 percent in three years since 2003, reveals the Labour Force Survey (LFS) Report 2005-06 of the Bangladesh Bureau of Statistics (BBS) still in its draft form.

Paid employment has grown little, and whatever increase it has seen was for the female population.

The survey findings include some puzzling indications like a decline in female employment in manufacturing sector (-8.7 percent) and a negative male employment growth in construction sector (-0.1 percent).

Besides, economic dependency ratio, which is measured by inactive people depending on those economically active, being higher in urban areas than rural presents another teaser.

According to LFS, annual employment growth was 2.2 percent during 2003 to 2006, compared to 4.4 percent in 2000-2003.

But underemployment rate has increased from 16.6 percent in 2000 to 24.5 percent in 2006.

“These show that not enough employment was generated during the period,” says Dr Rushidan Islam Rahman, research director of the Bangladesh Institute of Development Studies (BIDS). “This phenomenon has to be seen in the light of demographic factor and to some extent employment factors.”

In the demographic context, the 1980s saw baby-boomers with high population growth rate. These newborns entered the labour market in early 2000 and so the employment rate also spiked, she explained.

But more complex is the employment factor. While the absolute population increased since 2000 despite a drop in population growth rate, employment rate dropped. Rushidan tries to find the answer in the sectoral employment statistics of the LFS.

Most of the employment has taken place in ‘trade’ and ‘transport and communication’ sectors and not so much in manufacturing. While the service sector that lacks large investment thrived, the manufacturing especially the small and medium enterprises performed badly, leading to less employment.

“We can explain that female employment in manufacturing dropped because of stagnating readymade garment sector,” said Rushidan. “But why that would be the case for male employment in construction sector which actually boomed during the period is a riddle.”

“With the advancement of the economy, it is expected that paid employment will grow faster than self-employment,” she continues. “But data on type of employment shows there has been little growth of paid employment.”

The total paid employment (regular salaried jobs plus daily/ casual wage employment) also declined from 16 million in 1999-2000 to 15 million in 2002-2003 to 15.2 million in 2005-2006. This has resulted in slow growth of real wage — 3.5 percent in 2003-2004, 2 percent in 2004-2005 and 0.0 percent in 2005-2006, according to the Bangladesh Economic Review, 2007.

“Labour force from poorer households is usually engaged in casual wage employment. Therefore, the above figures do not reveal an impressive experience of pro-poor labour market process,” observes the BIDS research director.

There are other explanations for decline in casual and regular paid employment. Investment did not take place as much in wage labour-based enterprises and family enterprises grew more than the SMEs as evident in the large self-employed female population mostly in household agriculture like poultry, livestock and crop processing, she continued.

With a countrywide average economic dependency ratio of 71, urban areas witnessed a ratio of 79.7 and the rural areas 68.4 in 2005-2006. Six years ago, this was the reverse with 83.2 for rural population and 78.3 for urban areas. One explanation for this may be that more people in the urban areas are pushing for higher education and so more are dependent on the income-earning family members. The reverse may be true for the rural population.

Under the current economic situation, Rushidan feels that with high food prices, real crops production will be higher in the coming crop seasons if the government can ensure adequate and timely input supplies. This will increase the demand for paid casual labour.

She also pins hope on investment supportive growth in power sector, communications and an environment which will convince entrepreneurs to accept lower profit rates in the short term.