labor markets and employment challenges in bangladesh in ... · labor markets and employment...
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Labor Markets and Employment Challenges in Bangladesh in the
Context of SDGsSelim Raihan
Professor, Department of Economics, University of Dhaka, Bangladesh, and Executive Director, SANEM
Presented at the 60th Annual Indian Society of Labour Economics Conference 19‐21 December 2018, IGIDR, Mumbai, India
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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Slow job creation in recent years
•Between 2013 and 2016‐17: • Average annual GDP growth was 6.6%, but average annual jobs growth was 0.9%•Manufacturing jobs declined by 0.77 million • Female manufacturing jobs declined by 0.92 million
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Industry’s employment share declined in recent years!
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2000 2005 2010 2013 2016‐17Agriculture 51.3 48.1 47.5 45.1 40.6Industry 13.1 14.6 17.2 20.8 20.4
Manufacturing 9.5 11 12.4 16.4 14.4
Service 35.6 37.3 35.3 34.1 39Total 100 100 100 100 100
Data source: BBS
Share of broad economic sectors in total employment (%)
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Declining employment elasticity
Sectors 1995‐2000 2000‐2005 2005‐2010 2010‐2018
Agriculture 0.73 0.82 0.71 ‐0.09
Manufacturing 0.26 0.78 0.87 0.65
Construction 0.27 0.63 2.22 0.55
Services 0.21 0.69 0.27 0.40
Total 0.54 0.59 0.55 0.25
Data source: BBS and SANEM
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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2010 2018
Share of Informal
employment
Data source: LFS and SANEM
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2010 2018
Wage employment
Self employment
Share of decent job
Source: Raihan and Uddin (2018) and SANEM
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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Real GDP growth rate in Bangladesh
Source: World Bank, World Development Indicator10
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GDP growth rate and volatility
Source: Raihan (2018)11
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GDP growth rate and volatility
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Bangladesh’s real GDP growth rate over the past 10 years (2007‐2016) was also one of the least volatile
growth rates among the 30 countries in the world to have registered an annual average GDP growth rate of 6 percent or more during that period.
Source: Raihan (2018)
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How did Bangladesh grow?
PC GDP in 1985 (US$)
PC GDP in 2017 (US$)
2017 over 1985
Bangladesh $239 = 1.00 $1517 = 1.00 6.35
China $294 = 1.23 $8827 = 5.82 30
India $293 = 1.23 $1940 = 1.28 6.62
Vietnam $231 = 0.97 $2343 = 1.55 10.14Source: Raihan (2018)Data Source: World Bank, WDI
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Investment‐GDP ratio in Bangladesh
Source: World Bank, World Development Indicator14
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Source: World Bank, World Development Indicator
Investment‐GDP ratio in Bangladesh
Even under the very optimistic scenario (ICOR = 4.2), between
2017‐18 and 2029‐30, to achieve 9% GDP growth rate, investment‐GDP ratio has to be
increased annually by 0.7 percentage points which is 1.75 times higher than the current (2013‐2017) annual percentage
points rise (0.4).
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Poor FDI orientation!
1983‐1987 2012‐2016Bangladesh 0.01China 0.55 2.42India 0.04 1.71Lao PDR 0.33 5.90Vietnam 0.01
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FDI as % of GDP
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Poor FDI orientation!
1983‐1987 2012‐2016Bangladesh 0.01 1.37China 0.55 2.42India 0.04 1.71Lao PDR 0.33 5.90Vietnam 0.01 5.55
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FDI as % of GDP
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How was Bangladesh’s export growth?
Source: Raihan (2018)Data Source: World Bank, WDI
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How was Bangladesh’s export growth?
Source: Raihan (2018)Data Source: World Bank, WDI
1986 2017BGD 1.1VTM 1.7
Exports in billion US$
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How was Bangladesh’s export growth?
Source: Raihan (2018)Data Source: World Bank, WDI
1986 2017BGD 1.1 37.5VTM 1.7 227.3
Exports in billion US$
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How was Bangladesh’s export growth?
Source: Raihan (2018)Data Source: World Bank, WDI
1986 2016BGD 1.1 36.8VTM 1.7 192.1
Exports in billion US$
IMF’ Overall index of export diversification. Measured by Theil lndex
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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Trend in female LFP
• Labour force participation rate of female increased.
• However, despite some progress, labour force participation rate of female is stagnant around 33%‐36% during 2010 and 2016‐17.
• Females’ participation rate is much lower than that of males.
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Data: LFS, BBS
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Supply side factors affecting female labour force participation
• We estimate standard supply function using probit model while categorizing the potential determinants of female labour force participation (FLFP) into certain broad categories:• Individual factors• Household factors• Gender norm variables
• Geographical variables
• The data source is the QLFS of 2016‐17.
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Demand side factors affecting firms’ demand for female labour: Role of innovation and technology
• We use firm‐level data from the World Bank’s Enterprise Survey of 2007 and 2013.
• The survey questionnaire focuses on questions reflecting the business and investment environment of a country.
• The number of firms surveyed was 1230 in 2007 and 1442 in 2013.
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Sector‐wise average percentage share of female workers in 2007 and 2013
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Female employment intensity declined in major manufacturing and services sectors.
Data: World Bank
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Female employment intensity of firms surveyed in 2007 and 2013
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The percent shares of female employment intensive firms declined.
The overall female employment intensity also declined from an average of 20.35% in 2007 to 17.67% in 2013.
Data: World Bank
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2SLS econometric estimates
• In the questionnaire of 2013 World Bank’s Enterprise Survey, there was a specific section on the ‘innovation’ of firms. There were nine questions related to innovation.
• 2SLS estimates show that out of the nine innovation variables, six turn out to be statistically significant with negative sign, suggesting the negative impact of innovation on firms’ female employment intensity.
• Innovation appears to have differential impacts on female and male labour.
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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Youth employment challenges
Between 2013 and 2016‐17: • Share of youth NEET increased from 25.4% to 29.8%• 87% of the NEET youth are female• Youth unemployment rate increased from 8.1% to 10.6%
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Youth NEET
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What are the challenges?
1. Job creation (Quantity) 2. Decent job (Quality)3. Economic growth, FDI and diversification4. Female labor force participation5. Youth employment6. Productivity
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Where do we stand in terms of good health and well‐being?
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Data Source: World Bank, WDI
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Where do we stand in terms of quality education?
Bangladesh India Pakistan Sri Lanka Malaysia Thailand Vietnam
Public Expenditure on Education (as % of GDP)
2.1 3.7 2.4 1.8 5.4 4.3 5.3
Average Years of Schooling 5.1 5.8 4.9 10.9 10.1 7.7 7.8Trained teachers in primary education (% of total teachers)
52.7 77.2 83.7 79.1 97.2 100 10034
Data Source: World Bank, WDI
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How do education and skill development affect the transition from ‘good‐enough’ job to ‘decent’ job?• LFS 2010 data is used. To see the impacts of education and training on the quality of job we use multinomial logistic regression involving three categories of job with good‐enough job as the base category.
• Primary education is found to be insignificant in changing the quality of job.
• Persons with secondary and higher secondary education have almost 20 percentage points higher probability to be in a decent job compared to persons with no‐education
• Being educated in a university increases the probability to be in a good job by 18 percentage points.
• Being educated in a university increases the probability to be in a decent job by 26 percentage points compared to the persons with no‐education.
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Turning challenges into opportunities
1. Policy‐induced challenges• Economic diversification: ‘Meaningful’ structural transformations of the economy
• Promotion of labor‐intensive sectors
2. Supply‐side constraints in the form of weak infrastructure and the high cost of doing business. • Quick and effective implementation of SEZs
3. Emphasis on human capital4. Institutional development
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Turning challenges into opportunities
1. Policy‐induced challenges• Economic diversification: ‘Meaningful’ structural transformations of the economy
• Promotion of labor‐intensive sectors
2. Supply‐side constraints in the form of weak infrastructure and the high cost of doing business. • Quick and effective implementation of SEZs
3. Emphasis on human capital4. Institutional development
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Turning challenges into opportunities
1. Policy‐induced challenges• Economic diversification: ‘Meaningful’ structural transformations of the economy
• Promotion of labor‐intensive sectors
2. Supply‐side constraints in the form of weak infrastructure and the high cost of doing business. • Quick and effective implementation of SEZs
3. Emphasis on human capital4. Institutional development
38
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Turning challenges into opportunities
1. Policy‐induced challenges• Economic diversification: ‘Meaningful’ structural transformations of the economy
• Promotion of labor‐intensive sectors
2. Supply‐side constraints in the form of weak infrastructure and the high cost of doing business. • Quick and effective implementation of SEZs
3. Emphasis on human capital4. Institutional development
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