WB offers job-focused credit

Dhaka,  Sun,  24 September 2017
Published : 26 Aug 2017, 01:23:44

WB offers job-focused credit

Suggests major policy recast to address employment challenges
Syful Islam

The World Bank has held out a development policy credit (DPC) to help create more, better and inclusive jobs in Bangladesh as employment generation slows, officials said.

After discussion with Finance Minister AMA Muhith the multilateral lending agency forwarded a policy note in this regard to the ministry of finance last week for further actions, they added.  

According to the officials, the WB recently conducted a Jobs Diagnostic assessing the labour market on job creation, as well as the quality and inclusiveness of jobs in Bangladesh. It found multiple challenges that require concerted efforts at both policy and institutional levels.

According to the policy note, employment generation grew at a rapid annual rate of 2.7 per cent in Bangladesh during 2003-10 period before slowing sharply down to 1.8 per cent in 2010-15.

In the former period the jobs growth was faster than the growth in the working-age population, allowing for lower unemployment and higher labour-force participation. But the trends reversed in 2010-15 with an average of 64,000 jobs per year from 320,000 during 2003-10.  

The note noted that slowing in the apparel sector underscores the need for developing a diversified export sector to create quality jobs.

While the other manufacturing sectors are growing rapidly to meet an increasing domestic demand, large-scale, export-oriented sectors beyond apparel have yet to emerge to create quality jobs.

Sluggish enterprise growth and a high share of micro-enterprise highlights the need for supporting small and medium enterprises (SMEs) for job creation, the policy note said.

In addition to employment generation Bangladesh also needs to address the quality of jobs.

Substantial shares of workforce are engaged in informal, unpaid, or agricultural work. Only 22 per cent of male and 20 per cent of female workers are wage employees, with large shares of female workers in unpaid work and male workers in day labour.

The report also said low levels of technology, outdated management practice, and lagging skills of the workforce, especially among micro-enterprises, perpetuate the creation of low-quality jobs in Bangladesh. Amid slowing job creation and low quality of jobs, inclusive employment is becoming weak here.

The WB suggested that a comprehensive and well-coordinated programme of policy reforms could help address the jobs challenges facing Bangladesh.

The programme needs to cover three inter-linked objectives: increasing the pace of formal job creation, raising the quality of jobs, and connecting vulnerable workers to job.  

Regulatory reform and revisiting distortionary business policies will be critical to acceleration of structural transformation and improving competitiveness, especially for non-RMG sectors and for SMEs, for faster and diversified job creation, it noted.

The WB also underscored better-planned and faster urbanisation which is critical to the development of second-tier cities and sustainability of Dhaka. In this regard strategic and coordinated investment in amenities, infrastructure, and administrative capacity is needed.

Increasing the level of formality of the labour market will contribute sustainability to enhancing the quality of jobs, the WB said, but argued that it will need to be supported by interventions that boost firm productivity.

Developing comprehensive and coherent measures for old-age support would also enhance job quality, especially since options for pensions tend to be provided through employment.  

It said the current pension system in the country is insufficient as most workers are excluded. The government needs to find means to expand pension coverage while remaining sustainable.

The policy note also suggested that considering the growing importance of overseas employment for development, the government can make several interventions to facilitate more and safer temporary migration of workers.

Reduction in migration costs and developing policies to facilitate return and reintegration can help reduce vulnerability of migrant workers overseas, it says.

Editor : A.H.M Moazzem Hossain
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