Growth tastes good, but where is my job?

Despite a strong economic growth – an object of envy to world economies – over the last five years, Bangladesh still remains far behind in creating job opportunities.     

Bangladesh economy – propelled mainly by a robust manufacturing sector – has grown at a rate of over 7% on an average in the seventh Five Year Plan (FYP).

But, the average Gross Domestic Product (GDP) growth fell a bit short of the target set in FYP (2016-2020) because of the pandemic onslaught. Bangladesh achieved a 7.13% GDP growth against the target of 7.4% during the time.

However, when it comes to attainment in employment, job creation fails to meet expectation, 34 lakh less than the target in the seventh plan.

Experts and economists say other data on production besides that of employment is inconsistent with economic growth.

They cast doubt on the accuracy of the calculated growth.

They believe that the long-running drought in private investment is to blame for the less than expected numbers of jobs being generated. The private sector investment now hover around 22-23%.

They think that employment target cannot be attained if private investment does not get a significant boost.

In addition to lower employment generation, there was also a rise in job erosion during the time when the seventh plan was executed.  

Economists and government officials opined that rise in automation in industries, especially in the manufacturing sector, is boosting productivity but also causing the disappearance of many jobs.

Some 95 lakh domestic and foreign jobs were created against the target of 1.29 crore in the seventh Five Year Plan that ended last June, according to the evaluation report of the General Economic Division (GED) of the Planning Commission.

When the domestic job creation was far behind the target – only 55% of jobs were realised, foreign employment registered a robust growth, 75% more than the target.

Dr Shamsul Alam, member of the General Economics Division said there was momentum in employment in the first three fiscal years of the seventh plan. But job creation in the last two years fell to some extent.

Employment generation fell short of the target owing to automation in the manufacturing sector, including the export-oriented garment industry.

Debapriya Bhattacharya, distinguished fellow at the CPD, said, "Incorrect data might be an explanation for employment opportunities not being created. There are doubts about the growth calculation too. If the growth data is correct, we must say this kind of growth is not employment-oriented."

Despite high growth, the government failed to meet the target of private investment while foreign investment was even lower. If the private investment does not increase, employment opportunities will not be created, he added.

He also pointed at the shift from labour-intensive to capital-intensive approach for the decline in employment.

Ahsan H Mansur, executive director of Policy Research Institute (PRI), also cast doubt on the high GDP growth rate.

The PRI executive director pointed out that small and medium enterprises (SMEs) play a crucial role in employment generation.

"But new SME entrepreneurs are not being created. A lack of skills is another reason for not getting jobs," said Ahsan H Mansur.

A lack of skilled workers in the domestic job market forced the private sector to import their workforce from abroad, he added.

Prof Mustafizur Rahman, distinguished fellow to the CPD, told The Business Standard the number of workers will fall with rise in productivity. The increased productivity may raise the GDP but employment growth will not be proportionate.

He recommended enhancing private investment to address the employment issue.     

Prof Mustafizur said, "The sluggish private sector investment is the main reason we could not achieve the employment target. In five years, private investments of the GDP was supposed to reach 26% from 22%, but it has increased by only 1%."

"The FYP targeted foreign direct investment at $30 billion. But the net foreign investment that came in clocked at about $10 billion," added the CPD distinguished fellow.

Employment in industries will drop further in 8th FYP

The draft of the 8th Five Year Plan (2021-2025) sets a lower target for internal employment. The new plan targets 84 lakh internal jobs – which is 25 lakh less than the previous FYP.

However, the 8th plan estimates 35 lakh jobs abroad, which is 15 lakh more than the previous plan.

Shamsul Alam of the GED also thinks that employment in the manufacturing sector will decline in the next five years owing to increased automation.

The draft of the 8th FYP says the rise in labour-saving technologies in apparel factories is likely to shave 10 lakh positions in the country by 2025 – the closing year of the 8th Five Year Plan.

Therefore, the government must take measures for job creation in other potential sectors such as jute, footwear and leather goods, agro-processing, plastics and light engineering, according to the draft 8th Five Year Plan.

The plan also stresses on initiating necessary policy reforms to speed up export diversification.

According to the draft, women will lose more due to automation. Therefore, the draft plan advocated for a more forceful skill-development policy directed towards women with adequate investment in technical, vocational and other training options to counteract the fallout.

PRI Executive Director Ahsan H Mansur said automation would eat up jobs and the global scenario will be almost the same.

M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said burgeoning foreign employment is undoubtedly a significant advantage for us. But the majority of the incoming workforce to the job market will never find work abroad.

Reaz said employment opportunities in labour-intensive industries such as the export-oriented apparel sector have been declining. Garments are leaning towards machines instead of humans.

"We talk a lot about diversifying the export basket. But we also need to diversify the domestic economy for employment generation. Internal employment will not be created if new sectors do not get adequate investments and fail to flourish," he warned.