University of Dhaka

Assignment on:

Unemployment in Bangladesh: A Bane to Economic and Social Stability

Course: DS-107 Macroeconomics

Submitted to:
Fahmida Sultana
Associate Professor
Department of Developement Studies
University of Dhaka

Submitted by:
Khondaker Nowshin Nawar
SN-025, Batch-15
Department of Development Studies
University of Dhaka

Date of Submission: 02/05/2023

Unemployment in Bangladesh: A Bane to
Economic and Social Stability
Unemployment, one of the most pressing issues of the world, has far-reaching consequences that
transverse through the layers of society. Bangladesh, a developing country in South Asia, has
been struggling with high unemployment rates for decades, which has been a hindrance in its
economic and social development. The issue of unemployment in Bangladesh is multi and inter
dimensional, with a myriad of underlying factors, ranging from a lack of education and skills to
inadequate job market, and an incremental population problem.

Introduction:
The term unemployment is applicable for those who are not working but are actively looking for
a job. In every economy, the rate of unemployment fluctuates around the natural rate of
unemployment. This is a rate created by default as there are not enough jobs for everyone and
not everyone is skilled enough for that particular work in this competitive labor market. This
competition for job opportunities in addition to a large population creates the natural rate of
unemployment for Bangladesh.

Unemployment Throughout the Years in Bangladesh:

Bangladesh is a developing country with a mixed economy thus it has always maintained an
unemployment rate below the global average. As an economy mostly reliant on its primary
sector of production (RMG, jute, shrimps, leather, tea, etc.) it is expected to have low
unemployment rates.
The unemployment data since 1991-2019 shows:

From 1991-2003 we can see a steady increase in unemployment. This is par for the course as
with every developing economy a certain amount of unemployment is expected due to
urbanization, in search of higher paying jobs and other socio-economic factors. Agriculture was
the most employed sector in Bangladesh and due to technological advancements and logistical
improvements our agricultural sector has experienced a decrease in employment, the same goes
for most other primary sectors of production.
From 2004-2006 we can see a steady unemployment rate which took a dip during 2005-2006 this
can be attributed to a boom in the RMG sector as well as our leather industry. 2008-2009 was the
period where the global financial crisis in 2008 affected the economy of Bangladesh as a whole.
This resulted in a loss of jobs mostly as the primary industry as global demand for our exports
decreased mainly our jute exports as that was one our main exports at the time. This caused a lot
of factories to be shut down and thus lead to a lot of jobs lost.
Our RMG sector also took a hit as a lot of garment factories shut down as well due to lack of
orders. There was a discernible decrease in unemployment during 2010, this can be attributed to
a large sum of foreign aid along with multiple policies which were implemented by the
government. There was also a significant increase in the service sector during that year as the
highest growth rate was observed for sales workers (42.57%) followed by administrative and
managerial occupation (36.83%). The years following shows a steady increase in the
unemployment rate which can be also attributed to urbanization also after the 2010’s Bangladesh
faced a trend of decreasing employment elasticity. Between fiscal 2005-06 and 2009-10, the
country’s employment elasticity was 0.55. It plunged to 0.25 between fiscal 2010-11 and 2017-
18, when the economy averaged 6.6% GDP growth.

Unemployment due to unsustainable growth

Dhaka is the central hub for most of the job opportunities. Every year thousands of workers leave
for Dhaka with the prospect of finding work. Dhaka generates 70% of the country’s money
supply and holds 60% of FDI generated. This makes Dhaka a lucrative city in order to find a job.
However, with an influx of labor supply already existing in the labor market, this creates a
problem as many find themselves without work and so a large population return.

Increase in the labor force:

A reason why the unemployment rate increases is the unprecedented supply of labor. In late 2017
due to the Rohingya crisis, about 700000 refugees took shelter in Bangladesh. By 2019. This has
increased to 1.1 million by 2019. The big issue is that they have completely captured the labor
market of Bangladesh even though they are barred from participating. The areas around Cox’s
bazar saw a rise in the employment of Rohingyas, which may have possibly spread to the
neighboring areas. This resulted in an inconsistent change in the minimum wage to cover for this
increased supply of labor.

Unemployment due to sectoral shifts:

As Bangladesh progresses towards a modern era, it is shifting towards automation. The country
is already doing well in the IT, industry, RMG and service sectors. It plans to increase its focus
on these sectors with the FDI they receive from countries such as Japan and America. However,
the underlying problem is that Bangladesh is losing focus on the agricultural sector. In 2010, we
saw that 47.31% employment was in the agricultural sector, which was a source of income for
the rural areas. However, by 2020 this will decrease to 37.75% and may decrease further due to
the pandemic. Compared to the agricultural sector, the industry and service will see an increase
in employment by 2020. The figures for the industry sector see a transition from 35.07% to
40.61% by 2020. For the service sector, there is a transition from 17.63% to 21.65% by 2020.
This private promotion is proving to be a curse to Bangladesh in the sense that rural people who
were already at a disadvantage are going to have to suffer further.
Youth unemployment:

Unemployment among the youth increased from 2018 to 2021. It was 12.55% in 2018 which
increased to 12.69% in 2019. There was an overall increase in the unemployment rate in the
youth population, which means that even though the country prides on a youth population with a
very bright future, there is very little done in order to make sure the youth generation have access
to jobs.
Female Unemployment
Greater labor force participation of women can be a source of inclusive growth, and wellbeing.
Despite the advances in female education attainment and the expansion of the market economy.
However female labor participation rates are still low in comparison to the rates of their male
counterparts in the country.

Figure: Female labor force participation rate

Female integration in the economy is very crucial for economic growth and development
especially in developing countries. In Bangladesh where women constitute half of the
population, This half faces various challenges especially at the employment level. The rate of
female labor force increased from 36.11% in 2017-18 to 36.31% in 2019-20 even though they
only represent 32%of the labor force. Bangladesh women labor force participation rate is still
very low in 2018-19 compared to a global average of 52%. However, in recent years we see a
change in the trend as the rate has decreased for the year 2020 and 2021.
Steps Taken by Bangladesh to Improve the Employment
Situation
To ensure the transition of Bangladesh to a middle-income economy establishing the rights of
workers specially living wage, improving safe working conditions, ensuring occupational safety
and health and establishing peace and stability for enhancing productivity and economic
development. Besides, implementation of labor law and updating the changed scenario, national
labor policy formulation and implementation, skilled manpower and employment generation,
minimum wage fixing, eliminating child labor, creating a safe workplace. Moreover, the
Ministry of Labor and Employment is leading in various indicators of sustainable development
goals such as eliminating child labor, decent work environment, equal pay for same work etc.

The measurements taken by Bangladesh:

• Preparation/Revision of Acts and Rules
• Maintaining Industrial Peace and Compliance in Labor Sector for Uninterrupted Production
• Skill Development and Training
• Eradication of Child Labor
• Women Development and Training
• Innovation and digital activities
• Expansion of Labor Market
• Control of Immigration Cost
• Training and Skill Development
• Modernization of Emigration Process
• Encouraging Sending Remittance Through Proper Channel.
Conclusion
The journey of Bangladesh’s economy is now riding an uptrend, aided by political and
macroeconomic stability, compared to what it had started out in the 1970s.Yet, the problem of
unemployment is always lurking. To address this issue, it is important to invest in education and
skill development, ensure gender equality, promote entrepreneurship, strengthen labor laws and
create more job opportunities through sustainable economic growth. By taking these steps,
Bangladesh can unlock its potential, create a more prosperous future, and provide a brighter
outlook for its citizens.

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