Wednesday, February 29, 2012
Bangladesh needs up to 1.5 million new jobs each year for the next 20 years to accelerate economic growth, says the World Bank.
Bangladesh along with other South Asian nations has seen steady job growth and a substantial decrease in poverty over the past three decades, according to a WB report.
The WB yesterday launched the report styled “More and Better Jobs in South Asia” at Brac Centre in Dhaka.
“Accelerating growth in per capita income has added nearly 1.2 million new jobs every year and improved job quality between 2000 and 2010 in the country,” the report says.
But the country could have generated more jobs for the working age population if the top five issues had been addressed properly, the report suggests.
The top five constraints, being faced by the urban firms, are lack of electricity, political instability, corruption, lack of access to land and complicated tax administration, it adds.
It says power outage is estimated to cost Bangladesh about $1 billion a year, reducing GDP growth by about 0.5 percent.
Unreliability of power supply and frequency of power outage cause firms to lose production and incur high costs of self-generation, it observes.
According to the report, political instability is higher in Afghanistan, Bangladesh, and Nepal than in other countries with similar level of per capita GDP.
Firms in Bangladesh report a very high prevalence of bribe payment in absolute and relative terms, it adds.
More than half of firms in Bangladesh, India, and Pakistan are to pay bribe during tax inspections as the tax system in these countries is complicated, the report says, adding, this leads to high costs of compliance and opportunities for corruption.
It further says South Asia will be the largest contributor to the global workforce over the next two decades. Economic growth, which has been second only to East Asia, needs to be sustained to create more and better jobs and reduce poverty.
The demographic transition will result in more than 350 million people entering the working age population over the next two decades.
The South Asian region will need to add between 1-1.2 million additional jobs every month for the next 20 years, equivalent to about 40 percent of the increase in the global labour force.
Ellen Goldstein, country director, World Bank Bangladesh, said “The challenge for Bangladesh is to create jobs of higher quality.
“Investing in education, health and nutrition, and infrastructure, along with a renewed thrust to economic reforms would help in creating more and better jobs for Bangladesh,” said Goldstein.
“It’s not only the quantity of jobs but the quality of the jobs being created in the region that is relevant,” said Kalpana Kochhar, chief economist for the WB South Asia Region.
“There has not been much change in the composition of employment, that is between casual labourers, the self-employed and regular and salaried wage earners, but there has been an increase in real wages and poverty reduction within these categories. However, the share of wage employment and high-end self-employment are stagnant,” said Kochhar.
Wage workers in Bangladesh have seen their wages adjusted for price increases rise by nearly 2 percent a year. Poverty rates among the self-employed have fallen.
While quality of jobs has improved, little upward mobility has seen across the three broad employment types — the self-employed, casual labourers, and regular wage or salaried earners.
The report suggests that among other things, sustained attention to electricity, and education, and encashing the demographic dividend can make an important difference.
Education is the key to labour mobility, it adds.