Employment, real wages not in match with rapid growth

The average GDP growth in Bangladesh reached 6.57% over FY10-FY17 from 5.36% in the last five years of the 1990's, but the annual growth of employment dropped to 1.88% from 3.3% in the same period.

On the last day of the virtual international conference of the CPD on Thursday, Economist Dr Rizwanul Islam explained how the economy is heading towards jobless growth over the years in Bangladesh and failed to create enough employment for about 2 million people in the job market every year.

The share of labour productivity to economic growth compared to employment stands at over 71%, up from 49% in the previous five years. Despite the increase in the share of productivity of labourers, their real income is on the reducing trend.

Dr Rizwanul, also former special adviser, Employment Sector, International Labour Office at Geneva, presented a paper titled "Fifty Years of Development Experience of Bangladesh: An Employment and Labour Perspective" at the event arranged by the CPD to celebrate the 50 years of Bangladesh and Mujib Borsho.

The reducing trend of real wages has been pushing back wage earners' purchasing power and leading to a decrease in their living standards, eventually forcing them to be engaged in non-compliant work, he also said.

The surplus labour is emerging as a rising concern for the economy. The agriculture sector is not capable of accommodating new labourers owing to reducing growth. The employment growth in the industry is reducing as well. Besides, getting an overseas job is becoming difficult too due to higher costs of migration but lower wages.

Presenting a paper titled "Bangladesh Environment since Independence: Internal Dynamics and External Changes", Dr Iftekhar Iqbal, associate professor of Arts and Social Sciences at Universiti Brunei Darussalam, said Bangladesh inherited major environmental legacies of floods and cyclones, upended by widespread arsenic contamination in the 1980s. 

Since the turn of the century, climate change challenges have kept informing the academic and popular discourses. If looked from the vantage point of the impact of macroeconomic growth since liberalisation, a complex set of evolving environmental trajectories could be identified, he noted.

As the nation celebrates 50 years of independence, at a time when economic development must embrace sustainability, environmental issues demand holistic and critical explorations. 

He explained how extreme use of fertilisers and irrigation for cultivation is reducing the quality of soil, water and air of the country.

High costs, low wages, poor working and living conditions, denial of basic workers' rights, discrimination and xenophobia remain a major concern for the overseas employment

Dr Md Golam Rabbani, head at Climate Bridge Fund Secretariat, Brac, said Bangladesh is committed to reducing emission by 6.7% without any condition and 8.4% on several conditions regarding support of the development partner. Some 15.1% reduction of emission would help the country to ensure the good health of the environment.

Chairing the session titled "costs and challenges of development", Dr Fahmida Khatun, executive director at the CPD, said growth sustainability in terms of financial capital, human capital and natural capital has not been ensured over the years in Bangladesh.

Bangladesh is graduating from the list of the least developed countries and the country is in line to achieve the status of the upper-middle income, but the question remains if growth would be inclusive and sustainable.

Dr Rizwanul Islam in his paper said the role of labour is evident in the economic development in the last five decades in three major drivers of growth, including the high-yield crop varieties during the 1970s and 1980s, the readymade garment industry since the mid-1980s, and overseas migration. 

The simple growth decomposition shows the growing importance of labour productivity in overall output growth as well as in manufacturing sector growth, he added.

He said real wages started rising only after 2000 although there was acceleration in growth, whereas real wages declined when growth was being driven more by labour productivity.

Recovery in real wage trends started again from FY16, but the Covid-19 pandemic put an end to that recovery again.

The paper revealed that the number of surplus labour is increasing over the years in Bangladesh. There were 17 million surplus labour in 1996 and the number increased to 24.7 million in 2017.

Dr Rizwanul Islam said high costs, low wages, poor working and living conditions, denial of basic workers' rights, discrimination and xenophobia remain a major concern for the overseas employment.

The average cost of international migration from Bangladesh is $5000, which is $2000 from India and $1000 from Sri Lanka.

Cost of migration per person is twice of GDP per capita in Bangladesh, while it is half of GDP per capita in the Philippines and one-fourth in Sri Lanka.

The cost of migration is roughly equivalent to 20 months' salary of an average unskilled worker in Bangladesh.

In the concluding session, CPD distinguished fellow Prof Raunaq Jahan said Bangladesh has seen remarkable achievements in several indicators of human development and economic growth.

"But, our political development has not kept pace with our social and economic development. We have failed to institutionalise democracy."

"Our governance system has failed to uphold rule of law, transparency and accountability, which are essential to deepen the quality of democratic system we all want to build." Prof Raunaq said.

Prof Rehman Sobhan, chair of the session, summarising the presentations and remarks at the four-day event, said Bangladesh's policymakers need to learn from the country's rewarding 50-year journey and think the way forward to achieve the durable democratic society as envisioned by Bangabandhu.