The coming unemployment crisis

The Daily Star  October 23, 2019

The coming unemployment crisis

Is it inevitable? No, it is avoidable through proper actions.

The problem of high unemployment that has been sweeping across the world ever since the 2008 financial crisis is yet to be adequately resolved. And with the passage of every year, creating enough quality jobs is looking increasingly difficult globally.

Its ramifications, which are surely being felt by ordinary people every day, can also be seen from a broader perspective. The shift in the political climate in the US and other countries, where people are opting to vote in those they view as anti-establishment—against an establishment they believe has failed them—as well as increased protests and social unrest that we see across continents, share one common root: the problem of joblessness.

That problem extends to Bangladesh and could possibly be even bigger here. In 2014, a report by the Economist Intelligence Unit said the rate of joblessness among Bangladeshi graduates was about 47 percent. Although the report raised some eyebrows at the time, a more recent World Bank report seems to support it to some degree.

The report, titled “Tertiary Education and Job Skills”, said that more than a third of graduates in Bangladesh remain unemployed for a year or two after graduation. Another survey report by the Bangladesh Institute of Development Studies (BIDS) estimated that the unemployment rate among university graduates is 38.6 percent. Similarly, the Labour Force Survey 2016-2017 by the Bangladesh Bureau of Statistics found 46 percent of unemployed people to be graduates. And besides unemployment, a new study conducted by the General Economics Division under the planning ministry found there are currently 1.38 crore underemployed people in the country.

A person is considered to be underemployed when their employment is inadequate in terms of working hours, earnings, productivity and use of skills, and the person is looking for better or additional work in conformity with their education and skills. Put simply, large numbers of people are not getting employment in accordance with their educational “qualification”.

One reason for this could be that educational institutions, while providing people with certificates, are not equipping them with what the market (or employers and businesses) considers as valuable. Which is why, after graduating, people are settling for jobs they consider themselves to be overqualified for.

But the same government study also found the country had made little progress in creating jobs in the industry sector and that 85 percent of all jobs recently created were in the informal sector. Between 2005-2006 and 2017-2018, employment elasticity, which indicates the ability of an economy to generate employment opportunities for its population as a percentage of its growth, plunged from 0.55 to 0.25. According to data, the services sector is the only sector that saw an increase in employment elasticity from 0.27 in FY2009-10 to 0.40 in FY2017-18; in agriculture, it sank from 0.71 between FY2005-06 and 2009-10 to -0.09 between FY2010-11 and 2017-18; in construction, it came down from 2.22 in FY2009-10 to 0.55 in FY2017-18; and in manufacturing, employment elasticity decreased from 0.87 in FY2009-10 to 0.65 in FY2017-2018.

Therefore, while our educational institutions are guilty of failing to provide students with the skills being demanded by the market, part of the problem is that our economy is simply not creating enough jobs when compared to the rate at which it is growing. And the foreign minister, while recently saying that the government is taking initiatives to create 1.5 crore jobs in the next five years, admitted how the current reality poses “a huge challenge”.

To compound the problem, overseas jobs for Bangladeshis have been going down for the last two years. In 2017, more than 10 lakh Bangladeshis secured jobs overseas which came down to 7,34,181 in 2018, according to the Bureau of Manpower Employment and Training. In the first eight months of this year, the number of jobs Bangladeshis got were 4,17,084, which puts the projected number of jobs by year-end at 6,25,620—a further decline from last year.

Lastly, a study conducted last year by Access to Information programme under the ICT Division, along with some local and international experts, found some 53.8 lakh jobs spread across five specialised industries—garment, food, agriculture, furniture, tourism and hospitality, and leather and footwear—to be at risk of disappearing within the next two decades because of technologies that will be adopted during the impending fourth industrial revolution. Thus, all things considered, the future of jobs in Bangladesh does seem to be quite bleak.

But is it inevitable for us to go through a period of even higher unemployment? Perhaps not.

The high unemployment we are experiencing currently did not come about by happenstance. It is the result of failed policies, inefficient institutions and outdated thinking—all of which are reversible.

For example, the foreign minister also admitted that despite the government’s best efforts, creating enough jobs in the country will require a much bigger contribution from the private sector. And we have seen private-sector investment remain stagnant for a number of years now. However, in that regard, the government is also somewhat to be blamed. As according to the IMF, “The percentage of defaulted loans in Bangladesh is around 11 percent. This means a good amount of fund was not paid back to the banking sector. For this reason, the country’s private sector is not getting required loans” to invest.

This is but one policy issue that is holding private investment back, albeit perhaps the most significant one. There are a host of others that continue to make Bangladesh a difficult place to do business in—as evident by its poor ranking in the WB’s Ease of Doing Business Index, where it last came in at 176 out of 190 countries.

Along with the lack of private sector investment, the Metropolitan Chamber of Commerce of Industry identified infrastructure deficiency and energy crisis as the three major barriers to boosting Bangladesh’s industrial output. Cutting out the high level of corruption and inefficiencies that have continually plagued our infrastructure and energy projects would surely help, at least by quickening the completion of infrastructure from its current slow pace, giving businesses more structural support.

In terms of jobs abroad, Bangladesh has one of the highest migration costs among developing countries which again results from corruption. The government needs to address this and more effectively negotiate with recruiting countries to get greater and better opportunities for its migrant workers—if other countries such as Nepal and Philippines can do it, as they have recently done, there is no reason why Bangladesh should not be able to.

However, in the long run, one of the safest bets to reduce unemployment is to provide people with better training and education. In developed countries, education policies are often based on solid research findings. Bangladesh must do the same for its policies to pay sufficient dividend. University and private-sector collaboration should be increased so that curriculums developed by higher educational institutions meet industry demands—which they are not doing right now.

According to a research titled “Tracer Study of Graduates of Universities in Bangladesh” done by BIDS, the rate of employment among private university graduates is higher at 44 percent compared to public university graduates at 32 percent. One explanation given for this is that private universities generally update their curricula quicker than public universities, having taken market demands into account. The research further said that though both employers and universities are aware of the importance of university-industry collaboration, “we found serious lack of this sort of collaboration taking place in reality”—and here, private universities once again performed better than public universities.

Rewinding back to the important question of whether a coming unemployment crisis is inevitable, it is obvious that the answer depends on our collective action from here onwards. What is also obvious is that our actions in the past have been very inadequate in that regard.

To avoid the unemployment crisis that all the data show is inevitably approaching, we have no other option but to do better.

Eresh Omar Jamal is a member of the editorial team at The Daily Star.

His Twitter handle is: @EreshOmarJamal.

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