More and better-paying jobs: A turning point for Bangladesh's future
When workers shift from low-productivity activities such as subsistence farming to higher value-added jobs in manufacturing and services, incomes rise, people’s lives change, and the economy becomes more resilient.
Jobs are much more than a means to earn income and escape poverty; they provide dignity. Between 2016 and 2022, 14 million youth became working-age adults, but only 8.7 million jobs were added to the labour market in that period. That means nearly half of these youth could not find a job. For those who did secure a job, nearly 70% were employed in low-productivity agriculture. The manufacturing sector shed jobs.
Job creation has not kept pace with the country's economic growth. The country's young, growing workforce — expected to expand until the late 2030s — offers a demographic advantage, but with a limited time horizon.
The manufacturing sector offers paying jobs, but while it grew by about 9% annually between 2016 and 2022, its employment declined by nearly 10%. Possible reasons include rising automation, capital investments and the country's heavy reliance on the readymade garment (RMG) sector. The RMG sector accounts for roughly 82% of the country's total exports, but only around 6% of national employment, indicating that export success has not sufficiently translated into job opportunities. As Bangladesh is expected to graduate from the Least Developed Country (LDC) status in 2026, manufacturing exports, particularly garments, will face a tougher global trade environment.
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Bangladesh needs to create more jobs and better-paying jobs. Quality jobs — those that are well-paid, productive, and stable — drive long-term prosperity. When workers shift from low-productivity activities such as subsistence farming to higher value-added jobs in manufacturing and services, incomes rise, people's lives change, and the economy becomes more resilient. Quality jobs also strengthen social cohesion and provide a sense of purpose and security.
Labour market challenges are particularly acute for young people and women. Youth labour force participation has declined, and youth unemployment stood at 8% in 2023, and at 14% among those who went to university. Additionally, 16% of young people were neither in employment, education, nor training (NEET), with young women comprising 73% of this group and urban youth accounting for 63%.
Women face even steeper barriers to employment. One in five young women is not in employment, while that is the case for one in four educated young women. Urban female labour force participation fell sharply from 31% in 2016 to 25% in 2023. Many women have moved into agricultural work, predominantly in low-paid, informal work, where they now account for 58% of workers.
In contrast, their share of manufacturing employment has declined, reversing earlier gains in female labour force participation driven by RMG-led manufacturing growth. We need a better understanding of why women are getting out of jobs. A country cannot prosper while leaving half of its population behind.
Path to creating more and better-paying jobs in Bangladesh
Bangladesh needs to accelerate its economic growth and convert it into creating jobs that are stable and drive upward socioeconomic mobility. For this, the country needs to address three major constraints to job creation: the infrastructure gap, the skills gap, and the regulatory gap.
The infrastructure gap stems from rapid urbanisation that is outpacing the expansion of utilities and public services. Reducing the infrastructure gap requires increased investments in physical and digital infrastructure needed for firm expansion and economic diversification. This is not just about access, but also quality.
Reliable energy and utilities, modern transport networks, and digital connectivity are essential for lowering business costs, attracting the private investment needed for urban and rural jobs creation, particularly beyond the main industrial jobs corridor that runs from Dhaka to Chattogram. Given the substantial investment needs, mobilising private financing will be essential to complement limited public financing.
The skills gap is widened by a mismatch between the skills firms need and the skills job seekers have. Education and training too often fail to match labour market needs. They must be made more market-driven and job-relevant. Strengthening collaboration between industry and training institutions, expanding vocational and technical training, and scaling apprenticeships can ensure that education leads to opportunities.
Targeted programmes for women and youth can help integrate them into fast-growing sectors. These short-term priorities need to be complemented by improving outcomes and bolstering human capital.
The regulatory gap is reflected in the high costs of doing business faced by micro, small, and medium enterprises (MSMEs), which discourage expansion and hiring. The gap needs to be addressed for private sector competitiveness and economic diversification beyond the RMG sector, to new drivers of growth such as IT services, logistics, and agro-processing. This will lead to export dynamism and higher-quality jobs.
Ensuring a level-playing field by reducing barriers to trade and investment, simplifying regulations, addressing corruption and hassle, improving logistics, and expanding access to credit for MSMEs can unlock investment and drive innovation.
Further, the country needs to focus on increasing female labour participation. A multipronged strategy is needed to address the barriers prohibiting women from joining the workforce, including gender bias in education and pay, inadequate childcare and unsafe commutes, limited financing for female entrepreneurs, and social norms that limit female mobility and result in early marriages.
Bangladesh needs bold and urgent reforms to create more productive, better-paying jobs. The path forward is clear: enable the private sector to create jobs by putting in place the policies and regulatory reforms, and their enforcement, establish a business-friendly environment and level playing field, including transparent and clean tax systems, good governance, and transparent institutions.
Jean Pesme is the World Bank Division Director for Bangladesh and Bhutan
This article, part of the #BangladeshRising Blog Series, has been published under special arrangement with The World Bank
