Centre for Policy Dialogue distinguished fellow Debapriya Bhattacharya speaks at a briefing at the CIRDAP auditorium in Dhaka on Wednesday. CPD executive director Mustafizur Rahman was also present, among others.
The Centre for Policy Dialogue on Wednesday said that the higher economic growth in recent years had not translated into employment generation which was a major concern for the economy.
Employment to gross domestic product elasticity or the rate of employment generation from a 1-per cent rise in the GDP plunged to 14-year low to 0.08 per cent in 2015, the local research organisation said in a report analysing a number of labour force surveys conducted by the Bangladesh Bureau of Statistics in different periods of time.
The rate of employment to GDP elasticity was 0.58 per cent in 2010, it said.
The private independent think-tank also said that implementation of the national budget was one of the weakest areas in the current fiscal year of 2015-2016.
The observations came at a press briefing organised by the CPD to release the report on the State of the Bangladesh Economy in FY16 (third reading) at the CIRDAP auditorium in Dhaka.
The CPD suggested that the government prepare a staggered implementation plan for the new Value-Added Tax and Supplementary Duty Act-2012 which is scheduled to come into effect from July 1 to reconcile the ongoing strong opposition from the business community.
It also suggested a lower VAT rate for some sectors including small and medium enterprises instead of the 15 per cent for all set in the new VAT law.
But, the country should gradually go to that level (15 per cent), it said.
‘It is a matter of concern that the attained higher level of GDP growth rates did not create adequate employment opportunities in the country. Indeed, the pace of job creation has slowed down considerably during 2013-2015 periods,’ the report said.
Jobs rose at the rate of 1.36 million per year from 2002-2013 but fell to 0.3 million from 2013-2015, it said.
‘It is also surprising that despite attaining double-digit value addition growth in the manufacturing sector in last two years, more than 12 lakh jobs were lost in the sector,’ it said.
The report also found that half of the employments in the country remained informal over the last 5 years while the unemployment rate for educated labour force (up to tertiary education) increased significantly.
Youth unemployment rate also rose sharply to 9.5 per cent in 2015 from 8.1 per cent in 2013, according to the report.
‘A GDP growth with very weak employment generating capacity will not be able to serve the development ambitions of Bangladesh,’ it said.
The CPD recommended prioritising labour-centric drivers of economic growth through human capabilities development, private sector job creation, improved skills and increased productivity.
The organisation also said that in recent years income tax collection rose at the slowest pace, ADP implementation remained at the lowest rate, progress in implementation of fast track projects and utilisation of foreign loans and grants remained slow.
CPD distinguished fellow Debapriya Bhattacharya said that the GDP growth at higher rates in recent years and the decline in employment generation created an incompatible situation in the country where economy grew at higher rates while job creation, private investment and productivity declined.
So, the quality and the source of economic growth are important, he said.
‘In this context, increasing private investment and employment generation should be the most important issues for the upcoming budget,’ he said.
The government is now enjoying a fiscal relief due to lower prices of commodities on the international market and reduced subsidy pressure in the country, which should be utilised properly in increasing investment in agriculture, health, education and social protection, he said.
Regarding the new VAT law, Debapriya said the CPD is in favour of implementation of the law as it is a modern system.
But the government will face problems in implementation if it does not address the concerns of business community, he said.
A specific work plan is needed to increase capacity of small and medium enterprises to improve their book keeping methods, he said.
He also emphasised necessary reforms in development administration, banking system and capital market, and policy measures which are major problems in the country’s development process.
CPD executive director Mustafizur Rahman said that considering the existing strength of the industry and the country’s socioeconomic condition the government might lower the VAT rate for some sectors including SMEs and take two to three years time for introducing fully the new VAT law which is a completely automated system.
He, however, said that the government would have to move towards to the level of 15 per cent VAT.
But the importance should be given to increasing revenue collection from income tax as the burden of VAT always falls on common people, he added.
CPD research fellow Towfiqul Islam Khan made a presentation on the report at the briefing.
Source: New Age
