Going beyond growth: How Bangladesh can tackle poverty and inequality through job creation

I have always known Bangladesh as an example of resilience and poverty reduction. The country is globally recognised for its success in reducing poverty, backed by economic growth despite daunting challenges. 

In a recent visit to a village in Khulna in Bangladesh's coastal region, I met with a group of mothers who earn a living from planting and guarding saplings on the very polders that protect their communities from cyclones and tidal surges. I saw firsthand their hard work and determination to provide better education and opportunities for their children. 

This is but one example of the resilient and determined spirit that underpins Bangladesh's story of overcoming adversity.

Between 2010 and 2022, 9 million people were lifted out of extreme poverty, and 25 million people from moderate poverty. Living standards improved, as did access to essential services like electricity, sanitation, and education. Rural areas have emerged as increasingly important drivers of this progress, benefiting from improved connectivity and increased agricultural employment.

However, these achievements need unpacking and a deeper analysis as significant challenges loom large. The pace of poverty reduction has slowed since 2016, and economic growth has become less effective at reducing poverty, and income inequality has risen. Job creation stalled in the manufacturing sector, particularly affecting women and youth. Progress is being held back by infrastructure and service quality gaps. High enrolment hasn't translated into learning gains, and congestion is choking off agglomeration benefits. 

Accelerating poverty reduction will require ensuring economic growth benefits more people, notably women and youth, and improving the quality of jobs. The Bangladesh Poverty and Equity Assessment: Navigating the Road to Prosperity, launched last week, examines these patterns in detail.

Bangladesh's progress is real—but it has been slowing and becoming less inclusive

After 2016, the benefits of economic growth did not reach everyone equally. While overall spending in the country has gone up, most of the gains were enjoyed by richer households. Inequality in consumption remained stable nationally, but income inequality increased, rising from 51 to 54 Gini points. The poorest families have seen very little improvement in what they can afford. 

And since 2022, rising inflation and job losses have pushed vulnerable households into poverty and reduced real income for the poorest. Microsimulation-based estimates suggest that poverty increased from 18.7% in 2022 to 21.2% in 2025. Some 62 million Bangladeshis—roughly one third of the population—are vulnerable to falling back into poverty. 

Though social assistance programs more than doubled between 2016 and 2022, half of the poorest families did not receive any social assistance benefits, while 35% of the richest did in 2022. Social protection coverage in urban areas increased from 16 to 34.5% of households between 2010 and 2022, but leakage to better-off groups persisted. On top of this, electricity, fuel, and fertiliser subsidies favoured wealthier households. In 2022, these subsidies accounted for 22% of the poorest households' disposable income, yet the richest urban households alone captured nearly half of total electricity subsidy spending. 

Current growth trends may undermine future poverty gains

Between 2010 and 2016, Bangladesh created about 1.1 million jobs annually, driven mainly by rapid industrial expansion. But, from 2016 to 2022, an agricultural resurgence accounted for nearly two-thirds of new employment – generating most of the 1.5 million new jobs created each year. This made rural areas—not cities—the engine of poverty reduction—a shift that reverses the typical development path where countries move away from agriculture.

Youth unemployment also remained high, reaching 28% for tertiary-educated women and 25% for men. Women bore the heaviest burden. In urban areas, educated young women face unemployment rates of 18%. Female labour force participation in urban areas dropped 10 percentage points to 24% between 2010 and 2022, while in rural areas it increased by 15 percentage points to 51%.

Climate risks compound these challenges. Even under optimistic scenarios, climate impacts could cut agricultural GDP by one-third and displace 13.3 million people by 2050.

Toward a policy agenda for job creation 

The fastest path to reducing poverty and inequality is through job creation, particularly for youth, women, and vulnerable populations. A business-as-usual approach will not be enough. Comprehensive action across four interconnected priorities is needed:

First, strengthening productive employment through improved connectivity, quality infrastructure, expanded tertiary education, vocational training and skills development—including policies deliberately supporting women's labour force participation.

Second, supporting trade and improving the business environment and firm competitiveness by simplifying tariffs and licensing, and reducing logistics bottlenecks.

Third, mobilising private capital and digital technologies in agriculture to support agribusiness development and raise incomes for the poor.

Finally, improving fiscal and institutional efficiency by strengthening social protection, improving targeting and shock responsiveness, and reallocating subsidies toward more equitable uses.

Together, these can restore the pro-poor growth that lifted millions from poverty—this time building the resilience needed to sustain it.

A new chapter of shared prosperity

Bangladesh has inspired through its success at reducing poverty at scale, although the pace slowed after 2016. Recent setbacks—rising poverty, deteriorating job quality, deepening vulnerability—underscore the urgency of a new approach.

Bangladesh stands at a crossroads. Its decades-long development journey demonstrates what is possible, but inequalities will persist when economic growth does not translate into more and better-paying jobs for those who need them most.

With strategic investments in infrastructure and human capital, paired with timely and ambitious reforms, Bangladesh can build a resilient economy where opportunity is widely shared. With that, I am confident that the mothers I met in the coastal region will see their own lives improve and their children grow up with equal opportunities for shared prosperity.

Jean Pesme is the Division Director for Bangladesh and Bhutan at the World Bank.

This article, part of the #BangladeshRising Blog Series, has been published under special arrangement with The World Bank.