How can Bangladesh integrate the remaining half into its labour force?
Despite Bangladesh’s demographic potential, nearly half of its working-age population remains outside the labour force, with youth and women facing the brunt of unemployment
The backdrop of the July uprising was the quota reform movement, driven by frustration over the job system and unemployment. However, after the country's political shift, the focus on unemployment appears to have faded while broader reforms are being addressed.
Nobel laureate Professor Dr Muhammad Yunus envisions a "three-zero" world, one of which is zero unemployment. As the Chief Adviser of the interim government, he now has both the opportunity and responsibility to make his own country a role model.
However, for Bangladesh, this remains a distant dream. Given the limited tenure of the interim government, it can at least take visible steps and formulate sustainable policies to tackle unemployment.
Keep updated, follow The Business Standard's Google news channel
The International Labour Organisation (ILO) has released a new report titled World Employment and Social Outlook 2025, outlining the current state of the country's labour market. According to the report, nearly half of Bangladesh's working-age population remains outside the labour force, highlighting a significant underutilisation of the country's demographic potential.
According to ILOSTAT, the labour force participation rate stands at 49.5%. Alarmingly, the NEET (Not in Education, Employment or Training) rate has reached 30.9%.
The report underscores Bangladesh's persistent challenges, including high youth vulnerability—especially among women—the prevalence of low-productivity jobs, and the dominance of informal employment, particularly in the agricultural sector. These factors continue to hinder economic progress and social justice.
Mohammad Nazmul Avi Hossain, a labour economist at ILO Bangladesh, firmly believes that job creation is the only way to tackle the unemployment crisis.
"At the end of the day, jobs need to be created to absorb the excess supply of labour, and there is no other way the labour market will improve without creating employment opportunities, particularly targeting youth and women," he told The Business Standard.
To generate employment, he emphasises the need for increased public and private investment. Diversifying the manufacturing sector is crucial in this regard.
To address the country's unemployment issue, the interim government has formed a task force. On 30 January, Education and Planning Adviser Professor Wahiduddin Mahmud handed over the task force's report to Chief Adviser Professor Muhammad Yunus.
As entrepreneurship is the most effective way to create jobs, the task force report highlights the need to encourage young people to become entrepreneurs from an early stage. Aspiring young entrepreneurs should be provided with financial support through access to credit from financial institutions and incentives from the government.
Moreover, bureaucratic hurdles and red tape must be minimised to improve the ease of doing business for new and young entrepreneurs. They should also have the opportunity to receive mentorship from experienced and successful business leaders.
According to Hossain, the highest priority should be the effective implementation of the National Employment Policy (NEP) 2022, in alignment with other national policies and strategies, to create decent jobs for all.
"The government must design and implement active labour market policies, which are crucial for addressing labour market challenges. Formulating a National Wage Policy could be a good starting point to strengthen labour market institutions (LMIs) as they transition towards formality," he suggests.
The ILO report also noted that, despite a decline in inflation, it remains high, diminishing the real value of wages. Real wage growth has been observed in only a few advanced economies, while most countries are still recovering from the effects of the pandemic and inflation.
"The government must design and implement active labour market policies, which are crucial for addressing labour market challenges. Formulating a National Wage Policy can be a good start to strengthening labour market institutions (LMIs) as they transform into formality"
Thousands of university graduates struggle to find employment despite their education. In fact, the World Bank reported that graduate unemployment has tripled in the last nine years, preventing Bangladesh from fully benefiting from its demographic dividend.
One of the major causes of graduate unemployment is the disconnect between academia and industry—in other words, the gap between skills and job market needs. The task force report also found that the majority of graduates, particularly those from national universities, are obtaining degrees in fields with minimal relevance to the job market.
"Due to technological transformation, we need demand-driven skills development initiatives to address skill gaps and future skills needs. A comprehensive and dynamic labour market information system can help address skill mismatches and support the efficient functioning of the labour market. Above all, Bangladesh must ensure adequate employment opportunities for youth to capitalise on the demographic dividend," Hossain said.
The task force report suggests integrating mandatory non-IT technical vocational training within college curricula at national universities to equip students with practical skills relevant to emerging job markets. Industrial attachments should also be made a mandatory component of all non-arts and non-social science tertiary programmes, ensuring students gain hands-on experience in their respective fields.
To align with emerging job markets, the report further recommends that all public and private universities should introduce programmes in future-oriented employment sectors such as smart manufacturing (industrial production engineering/management using IoT and robotics technology), green/sustainable business management, cybersecurity, data analytics/big data, AI-based health technology, EdTech, and AgroTech.
It is worth noting that a major factor contributing to Bangladesh's high unemployment rate is gender disparity. Women face significantly higher unemployment rates than men.
The labour force participation rate for men stands at 78.5%, while for women, it is only 21.25%. Moreover, while 11.1% of men fall under the NEET category, the figure rises sharply to 49.3% for women.
This suggests that one of the most effective ways to boost labour force participation is to integrate more women into the workforce. Doing so would not only reduce gender-based inequality but also increase overall labour market participation.
To tackle female unemployment, the task force recommends creating an enabling environment for young women.
According to the report, to empower young women in the workforce, favourable conditions must be established to support their participation in employment and entrepreneurship. These include access to training, safe transportation, housing, and affordable childcare. Additionally, efforts should be made to eliminate gender biases in financing for women entrepreneurs.
"We need increased coverage of social protection schemes targeting unemployed youth and women," noted Hossain.
Finally, the task force highlighted another crucial issue: access to job information. Many job seekers lack awareness of available opportunities. Job vacancies should be widely advertised through various channels, including newspapers, local radio, noticeboards, websites, and social media.
Establishing job information centres in remote areas could further improve access, while career counselling services should help job seekers navigate the employment market effectively.
