Growth eludes job creation

Dhaka,  Sat,  22 July 2017
Published : 13 Mar 2017, 23:48:56
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Growth eludes job creation

Prof Mahmud for providing enough incentives to productive sectors
FE Report


Bangladesh ought to develop its own 'Ease of Doing Business' index accommodating needs of informal sectors and small and medium entrepreneurs, a prominent economist said at a pre-budget meet that recommended job-generating economic growth.

"We need to develop our own Index to measure the business-friendliness issues in line with the needs and context of our country," said Prof Wahududdin Mahmud at the function in the capital Monday.

Centre for Development and Employment Research (CDER) organised the seminar on 'Development and Employment: Selected Issues for Budget 2017-18' at Bangladesh Institute of Development Studies (BIDS).

"The present 'Ease of Doing Business Index' of the World Bank is only taking into account the issues of formal sector," Prof Mahmud said. "However, there is a huge informal sector as well as numerous Small and Medium Entrepreneurs in the country whose needs and concerns are not covered by this index."

Professor Mahmud also noted that the imposition of VAT on necessary utilities like gas as well as the import of goods creates extra burden on general people and SMEs.

"VAT should be imposed on finished goods only at the final stage of business chain," he said in disapproval of the current practice, adding: "Imposing it at every stage of the chain or imposing it on basic utilities like gas acts as a burden for small businesses and consumers."

The economist also noted that currently most of the budget discussions in the country are usually centered on the proposed budget and tax policy while there is a lack of analysis on the final or implemented budget or tax policy.

"For example, we need to analyse whether there are enough incentives for productive sectors or sectors that create employment."

"At the same time," Prof Mahmud said, "there should be incentives for the sectors that generate investment, like infrastructure."

Earlier in the seminar, experts noted that despite the constant economic growth, the employment-generating ability of the economy has been declining over time.

"During the years between 2005 and 2010, GDP growth at a rate of 1.8 per cent could generate one per cent growth in employment," said Rizwanul Islam, Senior Visiting Fellow of CDER.

"But between the year 2010 and 2013, 2.6 per cent GDP growth was needed to produce the same outcome," he added.

Islam also noted that despite positive output growth, employment in the construction sector has declined while growth in employment and services was also very low.

He proposed that each ministry and agency should have cell working on the employment implication of the policies and programmes in their respective fields.

"Appropriate methodologies have to be developed and needed capacity have to be built while the results of their work should be used in formulating budget proposals," he added.

Executive Director of the Center for Policy Dialogue Fahmida Khatun in her speech noted that in recent times there has been a negative trend in export growth, which, in the long run, can have a detrimental impact on employment.

She also blamed the economic downturn in the Middle East and an increased use of informal channels for decline in remittance in recent times.

Noting the lack of updated labour and employment statistics with the government, Executive Director of the Policy Research Institute Dr Ahsan H Mansur said currently, the labour-related statistics are updated only once in three years.

"The government should move to publish the labour statistics on an annual basis, and in the long run, it should be available on a quarterly and monthly basis," he told the meet.

Director-General of BIDS KAS Murshid in his speech called for tax exemption for the SME sector to encourage small-scale investment in the country.

He also called for mainstreaming technical and vocational education to encourage students in such training schemes.

Noting the recent slowdown in labour demand in the country, Executive Chairman of CDER Rushidan Islam Rahman said incentives for readymade garment sector should be linked to labour intensity.

President of the Consumers Association of Bangladesh Ghulam Rahman, and Senior Fellows of CDER Quazi Shahabuddin and ATM Nurual Amin, among others, also spoke at the pre-budget discussion meet.

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