Is Bangladesh's economy leaning towards capital intensive production approach? Can we say that output growth is characterised by concomitant employment growth? Indications seem not optimistic. Our Gross Domestic Product (GDP) grew substantially over the last decade despite interruptions caused by Covid-19, but employment generation has not progressed concomitantly though there have been also job cuts in several businesses or organisations on account of the pandemic impact. Draft employment policy 2020, 8th Five-Year Plan and the National Jobs Strategy paper recognise the fact of poor employment generation but are still far way from explaining the real reasons for slower growth of jobs , let alone quality of jobs.
It was apprehended that the economy would decline and be subject to substantial damage. Even in the worst stage of Corona incidence, the economy grew by 5.24 per cent. Joblessness has occurred but the overall condition has not shown tremendous deterioration. Bail-out (stimulus) packages worth more than Tk.1.00 trillion were given by the government for several forms of adverse effects caused to the economy. We have become able to glorify our hard-earned independence with the story of persistent GDP growth but that glory blooms partially because of poor fulfillment of employment goals. Let us look at the gap between our plan and performance and try to fathom out the core reasons of the pinpointed goal divergence.
What is the scenario of employment generation so far? Undeniably, we have inadequate or little updated information or statistics for measurement and evaluation of actual performance. It is important to note that we have an obligation to meet SDG targets concerning employment. Employment refers to not only jobs for non-entrepreneurs but also self-employment, i.e. employment through entrepreneurship.
Based on employment elasticity of 0.45 and average annual GDP growth rate of 7.4 per cent during 2016-2020, additional job creation and other projections (Table 1) were made in the 7th Five Year Plan (7FYP). One of the significant goals of 7FYP was to create good jobs, and increase the share of manufacturing employment from 15 per cent to 20 per cent. Categorical data on actual realisation of targets as per the plan are not available via web communication (while GDP growth data are available easily and abundantly). Direct evaluation of performance is thus difficult. Indirect index such as employment elasticities obtained from the 8th Five Year Plan is presented in Table 2.
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Table 2 presents information up to 2017 and it is seen that employment decreased in agriculture while it is the single largest source of employment (Labour Force Survey 2016-17). Service sector employment increased in the period 2010-2017. Alarming trend is observed in the manufacturing sector as its elasticity has slided to a level which is less than 50 per cent of what was in the period 2000-2010.This is a considerable deviation from the 7FYP goal of increasing manufacturing employment. As compared to GDP growth rates, the rate of employment generation has also declined by more than 50 per cent. We can have a summary picture from Table 3 in light of the 7FYP targets.
It is observed from the Table 3 that GDP growth performance during the period of 7th Five Year Plan was satisfactory up to the FY 2019 as actual achievement of growth rates exceeded the targets excepting that of FY2020 ( Covid-19 impact in 2019-20 is known to all).Target of domestic employment was realised to the extent of about 55 per cent while overseas employment almost doubled. However, we have perhaps bitterly experienced the plight and uncertainty of overseas employment from the adverse impact of Covid-19.
How is the number of jobs calculated to set targets in the plan? Total private investment increased by 97.58 per cent in FY2020 as compared to that in FY2015, but the linkage of new employment generation cannot be determined owing to lack of expected standard. However, industrial employment rose to 13.1 million in 2018 from 12.1 million in 2010, only 1 million jobs created in a span of 8 years (The Daily Star dated 17-08-2019). We tend to explain the situation with the help of declining employment elasticity. Thus, it is not possible to identify the micro-level reasons of deviations from planned targets. Here lies the basic weakness of planning for employment.
Traditionally, we find employment targets in the 8th Five Year Plan presented in Table 4. Job creation has been calculated on the basis of prescribed employment elasticity of 0.30. Table 4 demonstrates that both domestic and overseas employment targets have been downsized while it is crucial to escalate employment opportunities at a more increasing rate than before. We should not forget that GDP-employment elasticity was 0.57 a decade back. Our capacity to create jobs is ostensibly indicated by employment elasticity, but the core capacity lies in the willingness, level of profitability expectation, and the investment size of any entrepreneur.
The government plans for employment, but performance thereof is basically dependent on the private sector. We must have strong policy guidelines regarding allowable limit of automation, job formalisation, skill development, contractual relationship with the private entrepreneurs. Enterprises should be given normative criteria as to how many jobs should be created for a specific size of new or incremental investment. Pragmatic attitude and applied research for criteria development and compliance strategies are required. Would we move towards that direction as soon as possible in order to improve planning and monitoring?
Haradhan Sarker, PhD, is ex-Financial Analyst, Sonali Bank & retired Professor of Management.
