A Bangladeshi child entering primary school in 2026 will probably join the workforce around 2040. By then, the country will have only five years left before its share of the working-age population reaches its projected peak in 2045, as the World Bank’s 2026 report, Demographic Change in South Asia: From Tailwinds to Headwinds for Development, revealed.
Bangladesh will enter the formal statistical category of an ageing society in 2027, when people aged 65 and above constitute 7% of the population. It will become an aged society in 2051, when that share reaches 14%.
The transition will take only 24 years, compared with an average of 32 years in other emerging and developing economies and 46 years in advanced economies.
Bangladesh therefore faces two transitions at once. It must create productive employment for the large working-age population it has today while constructing the pensions, healthcare and social care systems that the population will need tomorrow.
The crisis ahead
Countries that industrialised earlier could tackle these problems sequentially. They created formal jobs, accumulated wealth and later built welfare systems for ageing populations. Bangladesh does not have that luxury.
Even if the country maintains its 2013–23 per capita growth rate, the report projects that it will reach aged status in 2051 with a real per capita income of only around $10,500–$11,000 in 2024 prices. That is barely above the income level at which comparable developing economies generally began — not completed — their ageing transitions.
Bangladesh risks growing old before it becomes rich.
The dividend exists, but jobs do not
The country still possesses a substantial demographic advantage. People aged 15–64 account for around two-thirds of the population, and their share is projected to approach 69–70% by 2045.
Between 2000 and 2023, the rising working-age share added an estimated 0.35 percentage points annually to Bangladesh’s labour-productivity growth. But demography only creates potential workers. It does not create jobs for them. And nothing is worse than a jobless youth bulge growing old.
World Bank enterprise data show that Bangladesh’s formal firms expanded employment by around 8% annually in the period captured by the 2013 survey. By the 2022 survey, formal employment growth had fallen into the bottom quarter of 82 emerging and developing economies.
Small formal firms were shedding workers at approximately 5% annually. Medium-sized firms contracted by around 2%, while large firms expanded employment by only about 0.5%. Young firms added jobs at roughly 5% per year — less than half the 10–11% median recorded among comparable economies.
This means the private sector is failing to absorb the very population upon which the demographic dividend depends.
Shams Mahmud, president of the Bangladesh Thai Chamber of Commerce and Industry and former president of the Dhaka Chamber of Commerce and Industry, warned that the advantage could reverse if Bangladesh failed to connect skills with productive investment.
“Bangladesh must align education with labour-market demands, strengthen technical and vocational training, promote female employment and create more decent jobs,” he said. “Unless we invest in skills and expand employment opportunities, our demographic advantage could become an economic liability.”
He said, “The immediate policy priority must therefore be labour demand, not training programmes in isolation. Customs delays, unreliable power, restricted access to finance and burdensome regulation suppress firms’ ability to invest and hire. Training young people for jobs that firms are not creating merely produces better-qualified unemployment.”
Bangladesh needs time-bound reforms to improve power reliability, accelerate customs clearance, expand credit for productive small firms and reward businesses that provide formal contracts and workplace training. The World Bank estimates that moving individual constraints — such as training, innovation, electricity reliability or customs efficiency — towards the top quartile of developing economies could increase annual formal employment growth by 0.2 to 0.7 percentage points per reform area.
Informal employment remains pervasive even among educated workers. Approximately 80% of workers with secondary education are informally employed. The rate remains around 44% even among those with graduate or higher qualifications. Inside medium and large registered firms, informal workers still account for 35–40% of employment.
Informal wage workers consequently earn far less. The wage penalty is approximately 45% before adjustments and remains between 31% and 44% after accounting for education, age, industry and location.
Much of what Bangladesh celebrates as entrepreneurship is, in reality, economic survival. Around 65% of informal business owners reported starting their enterprises because they had no alternative source of income, said Shams Mahmud.
He added, “The answer is not to eliminate informality through punitive registration campaigns. It is to create a pathway out of it.”
Women are the largest immediately available growth reserve
Bangladesh cannot maximise its remaining demographic window while excluding much of its female population from sustained employment.
Female labour-force participation is around 40%. The World Bank’s modelling shows that raising it gradually towards the median of upper-middle-income countries could lift real GDP per capita by around 3% above the baseline by 2050. A more ambitious combination of human-capital reform and gender parity could produce gains of up to 13%.
But women do not leave work simply because they lack skills. They leave because the care economy, unsafe transport, workplace harassment and social expectations make continued employment impractical.
Sayema Haque Bidisha, professor of economics at the University of Dhaka, argues that policy must address three immediate barriers: safe accommodation, safe workplaces and care support.
“Women often leave the labour market when they have children. Better childcare support could help prevent this,” she said.
Existing labour rules often link daycare obligations to the number of women employed at an establishment, creating an incentive to avoid hiring enough women to trigger the requirement. Bangladesh should replace this model with employer contributions to accredited community childcare networks serving industrial and commercial zones.
Bidisha stresses that the entire demographic strategy needs deadlines.
“We need time-bound policies, backed by proper implementation and monitoring,” she said. “Good policies are not enough; they must be implemented.”
The country needs to fix its education now, because the results arrive in 2040
Human-capital reforms are indispensable, but their demographic payoff is slow. Children receiving better nutrition and education today will not enter the workforce for roughly 15 years.
Mohammad Kaykobad, computer scientist, educator and author, describes people as Bangladesh’s only surplus resource.
“By educating them and equipping them with the necessary skills, we can transform them into human capital,” he said. “Education is the only way for Bangladesh to become a prosperous country.”
“Bangladesh’s strategy should begin with foundational learning, teacher quality and textbooks rather than adding more institutions of uncertain quality. It should then connect secondary education, technical training and universities with sectors that are actually hiring.”
For workers already approaching adulthood, Bangladesh cannot wait for the school system to improve. Active labour-market programmes in South Asia have raised employment by an average of 8% and earnings or profits by 9%. Vocational and business training performed better, increasing employment by 12% — particularly when classroom instruction was combined with workplace experience.
The old-age system needs to be built before the elderly arrive
Bangladesh’s final mistake would be to spend the next two decades discussing jobs and postpone ageing policy until 2051.
Only around 4% of adults save specifically for old age. Bangladesh also lacks a mandatory contributory pension system covering private-sector workers. Civil-service pensions consume around 0.5% of GDP while reaching only approximately 0.4% of the population.
Healthcare offers even less protection. Around 74% of health expenditure is paid directly by households. As cardiovascular disease, diabetes, cancer and disability become more common, families will increasingly bear the costs of longer lives without necessarily enjoying healthier ones.
Bidisha said, “The Universal Pension Scheme needs stronger digital enrolment, credible fund governance and matching contributions for low-income workers. The Old Age Allowance should be indexed to poverty and inflation rather than left to lose value. Primary clinics must begin routine screening and treatment for non-communicable diseases, while Bangladesh develops a trained care workforce for home and community-based eldercare.”
This care economy can also create jobs now. Training nurses, health assistants and professional carers would meet future domestic demand while opening regulated migration opportunities in ageing countries such as Japan, she suggested.
Syed Abdul Hamid, a professor at the Institute of Health Economics, Dhaka University, said, “What we need is a way to provide care for patients with multiple healthcare needs. Ideally, this would involve geriatric hospitals, but Bangladesh’s administrative system does not yet have such a concept.
“As I have repeatedly argued, we need a National Health Fund. Health insurance may not be feasible in the short term; it will take more time to establish. An alternative would be to provide every family with a health card carrying a spending ceiling. For instance, if the ceiling were Tk1 lakh, a family could use that allocation when seeking medical treatment,” he added.
Because the window to capture the ‘first demographic dividend’ overlaps directly with the rapid onset of aging, Bangladesh cannot sequence its reforms such as fixing labor markets first and building old-age support systems decades later. It must pursue a parallel policy agenda: accelerating formal private-sector job creation, closing severe human capital and gender participation gaps, and urgently building primary health care, long-term care, and retirement savings institutions before demographic pressures peak.
Source: https://www.tbsnews.net/features/panorama/can-bangladesh-beat-ageing-clock-1593196
