In the context of Bangladesh, despite impressive progresses in terms of different socioeconomic indicators, there remain challenges in some areas and the labor market is argued to be one of those. Besides, especially in the context of high inflationary pressure and contractionary policies of the Central Bank, understanding the labor market scenario is extremely important.
In this connection, one of the most important indicators of the labor market is certainly that of participation rate. According to the Labour Force Survey (LFS) 2022, though there has not been notable change in the overall participation rate with the rates of males having similar trend over the years (around 80%), the female participation rate (FLFPR) shows an increase from 36.3% in 2016/17 to 42.8% in 2022. This rise in participation rate of females though impressive, needs to be analyzed in detail as the area-wise LFPR shows that, the rate has increased in rural areas (from 38.6% in 2016/17 to as high as 51% in 2022) with a fall from 31% (2016/17) to 23.7% (2022) in urban areas. This fall in FLFPR in urban areas can partly be attributable to the negative impact of COVID-19 on the urban labor market- with the majority of Bangladeshi women work force being in the informal sector (according to the LFS 2022 female informal employment is 96.6%), it is likely that these women have been hardly hit during the pandemic. In addition, evidence have shown that, there has been a gradual fall in the proportionate involvement of women in the ready-made garments (RMG) sector, primarily due to increased automation. This trend has expected to have continued in recent years too, affecting women’s participation in non-agricultural urban based activities in recent years. The other side of the FLFPR is the rise in the participation rate in rural areas, especially in recent years (a 12.4 percentage point rise between 2016/17 and 2022). With as high as 74% women engaged in agriculture, one most convincing explanation of rise in FLFP in rural areas can be related to a rise in women’s role as an unpaid family worker in rural areas due to a gradual rise in labor migration (both internal as well as international) of males. While analyzing the trend and pattern of FLFPR, we however must keep in mind that this participation includes both paid (wage employment and self-employment) and unpaid work (unpaid family work). According to the LFS of 2022, as high as 12.5% of women are found to be engaged in unremunerated works (commonly known as family labors) conducted under the ownership of other household members. Therefore, despite an increase in the participation rate in recent years, women’s involvement in the labor market is still being significantly determined by their traditional role involving home-based production process, rather than for marketed paid activities or of profit based entrepreneurial work.
One note-worthy point in the context of labor market is the sector-wise distribution of employment. For the last decade or so, though the participation in the agriculture sector has shown a declining trend, the LFS 2022 data revealed that as high as 45.4% labor force are engaged in agriculture, a rise from 40.6% in 2016/17. This rise has been contrasted by a moderate fall in both industry as well as service sector employment where the former has experienced a fall from 20.4% to 17% and the latter has shown a decline from 39% to 37.4% within the same time period. One important aspect of this distribution of sectoral employment is the sharp rise of women’s participation in the agriculture sector (74.1% in 2022 from 59.7% in 2016/17) accompanied with a fall in industry (8.7% from 16.9%) as well as in service sector employment (17.2% from 23.5%). In the context of male employment, in both agriculture as well as industrial employment there has been a moderate decline from 32.2% to 29.7% for the former and from 22% to 21.5% for the latter, with a slight increase in service sector employment (from 45.8% to 48.8%). Therefore, the sectoral participation of labor force reflects greater concentration of women in informal and relatively low-skilled and low-paid (even unpaid) rural-based agriculture sector work, with only a moderate rise in participation for men in non-agriculture sector. Such a pattern indicates that the fruits of structural transformation have not been effectively contributed to the labor market as a whole, with the women lagging behind men.
One of the most important indicators of labor market is that of unemployment rate and according to the labour force survey 2022, there has been a fall in unemployment rate to 3.53% – where the rate was 4.2% in 2016/17. This fall has been observed in both rural and urban areas with the overall unemployment rate of the former for 2022 was found to be 3.32% and the rate for the latter being 4.19%. This trend in unemployment should however be analyzed in light of the conventional way employment/unemployment is defined- according to the conventional definition, a person is employed if he/she has worked atleast one hour in a seven-day period prior to the survey. Therefore, it is crucial to have alternative definitions of unemployment (often termed as under employment) -based on hours of employment, desire for additional work etc. for future policy formulation.
While analyzing labor market data, one crucial information which we need to examine is that of labor market profile of youths. Given that the country is going through a demographic transition, with the youths (15-29 years old) constituting 36.7% of total labor force (LFS 2022), it is important that our policy focus is given towards utilizing this youth bulge of the labor force. However, according to the 2022 labor force survey data, the rate of unemployment of the youths (8%) is much higher than the national average (3.53%). Besides, as high as 22% youths are found to be NEET (youths not in employment, education and training) with the male NEET being 16.2% and female NEET is 27.1%. With this large proportion of youth not being in the main-stream labor market activities and another significant proportion being unemployed, one of the most crucial challenges of the labor market is to effectively utilize our favorable demographic profile.
In the context of labor market statistics, it is extremely crucial to have timely availability of data of the labor market, preferably on an annual basis. Besides, in order to deal with the challenges of the labor market, it is essential to invest in skill and education while focusing more on the quality of education. With increased automation of industries and importance of 4IR related technologies, greater concentration is needed in updating the existing curriculum of training programs, providing skill training for the trainers, introducing 4IR related sophisticated skills in education and training, and more importantly to deal with the challenges of skill mismatch. It is however needless to mention that, the TVET programs must be in the core of the strategies while dealing with the challenges of the labor market. To remove the bottlenecks in boosting female employment, the prime focus must be given towards dealing with certain inherent constraints like child marriage, safety and security in the public sphere, along with policy interventions towards dealing with the challenges related to gender centric norms.
This article was first published in the Thinking Aloud on 1 July 2024
RECENT COMMENTS