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Demographic Dividend and Youth Labour Force Participation in Bangladesh

Rushidan Islam Rahman
Research Director
Bangladesh Institute of Development Studies, Dhaka

Abstract/ Executive Summary:

Sector and status (type) of employment have been used as indicators for the assessment of change of structure of employment. Agriculture accounts for the dominant share of employment in Bangladesh. This is true for young workers as well as older ones. The labour market is characterised by a preponderance of self and (unpaid) family employment. Agriculture accounts for 52 per cent of young workers. This share has risen substantially from 2006 to 2010. The share of industry has slightly increased, while the share of service has been on the decline. The changes in the sectoral pattern are consistent with the changes in the status of employment described above. Within agriculture self/family employment predominates and therefore with a rising share of agriculture in youth employment, it is no surprise that the role of unpaid family employment has increased. From 2006 to 2010, the number of young women in agriculture increased from 2,562 to 5,068 thousand (by 98 per cent), while the increase for young male workers is only 316 thousand (6.8 per cent). In fact, a large share of women in the labour force actually is engaged in the family’s livestock raising activities (Rahman 2013). Therefore, with rising LFPR of young women, the weight of agriculture and unpaid family employment is on the increase. However, the growing share of youth labour force in agriculture cannot be solely attributed to women’s growing involvement in family’s agriculture and especially livestock unit. Data show that the share of male youth employed in agriculture has also risen from 2006 to 2010. In fact, both share and number of male youth employed in non-agriculture have declined during this period. Thus there has been a decline in the labour absorption capacity of the non-agricultural sectors. Otherwise, young workers show a preference for jobs in the non-farm sector which is evident from the qualitative observations (for example in Rahman 2007). The largest share of the youth labour force is engaged in the agriculture sector. The growth of young labour force and especially the young female labour force has taken place in agriculture. Although the SFYP document highlights the role of “demographic dividend” and youth labour in the process of economic growth, in the actual strategy formulation context, employment has been viewed in an aggregate sense. The disaggregation of targets and strategies for youth and the older labour force is somewhat absent in the document. As discussed earlier, Bangladesh possesses a sizeable “demographic dividend” in the form of a youth labour force. Strategies for effective use of this potential is expected to come from SFYP and some guidelines are desirable even if separate target setting for age-sex groups or attempts for influencing the labour market may distort incentives and may not be practicable in a market economy.

Keywords: Demographic dividend, Labour force, Labour, Labour wages, Non-farm, Agriculture,

Location: In Bangladesh

Start Date: 00-00-2006

End Date: 00-00-2010

Program Area: Resource Development and Management

Commodity: Income generation, Employment, Labour wages

Objectives:

To examine whether a potential demographic dividend exists in Bangladesh.

Methodology:

The present study is based on secondary data provided by National Sample Surveys, in particular by Bangladesh Labour Force Survey (LFS) Reports of various rounds. Other secondary sources used in this study include various publications of the Bangladesh Bureau of Statistics, Planning Commission and various government ministries. Sizes of YLF (aged 15 to 29 years) were respectively 14.5 and 20.9 million in the years 2000 and 2010. During this period about 6.4 million youth have joined the labour force in Bangladesh. During the two sub-periods of 2000 to 2006 and 2006 to 2010, the average annual growth of the youth labour force has been 3.48 per cent and 4.09 per cent per year respectively. In 2010, 36.9 per cent of total labour force came from the youth group (15 to 29 years), which is higher than the share in 2006. This can be considered as a demographic dividend (of course in a potential sense) because this has resulted mainly from the growth of population and only a small increment results from the rise of labour force participation rate, if there was no growth of youth population. The growth rate of youth population was 1.93 per cent and 3.46 per cent per annum during 2000 to 2006 and 2006 to 2010 respectively. LFPR among youth has risen from 51.7 per cent in 2006 to 53.2 per cent in 2010. Increment in youth labour force due to the rise of LFPR has been calculated as only 0.45 million. Increment due to population growth has been 2.65 million. Proper utilisation of the potential demographic dividend requires a correct enumeration of its availability. So the question is whether we have counted the youth population correctly. It is well known that population census or large scale surveys suffer from age misreporting. Under-enumeration of the female population is often substantial in the developing countries of Asia and Bangladesh is no exception. Apart from overall under enumeration, this problem is more pervasive when one comes to certain special age groups: these are 10-14 years and 15 to 19 years aged women. Existing social taboo and violence against young women discourage reporting the presence of girls in these age groups. On the basis of Labour Force Survey (LFS) 2006, sex ratio (number of male/number of female) in the three age groups 15-19, 20-24 and 25-29 is 1.31, .88 and .79 respectively, whereas the overall sex ratio is 104.13. In 2010, these were 1.10, .82 and .86 respectively. Sector and status (type) of employment have been used as indicators for the assessment of change of structure of employment. Agriculture accounts for the dominant share of employment in Bangladesh. This is true for young workers as well as older ones. The labour market is characterised by a preponderance of self and (unpaid) family employment. Data on sector and status of employment among youth labour force have been shown. Agriculture accounts for 52 per cent of young workers. This share has risen substantially during 2006 to 2010. The share of industry has slightly increased, while the share of service has been on the decline. The changes in the sectoral pattern are consistent with the changes in the status of employment described above. Within agriculture self/family employment predominates and therefore with a rising share of agriculture in youth employment, it is no surprise that the role of unpaid family employment has increased. From 2006 to 2010, the number of young women in agriculture increased from 2,562 to 5,068 thousand (by 98 per cent), while the increase for young male workers is only 316 thousand (6.8 per cent). In fact, a large share of women in the labour force actually is engaged in the family’s livestock raising activities (Rahman 2013). Therefore, with rising LFPR of young women, the weight of agriculture and unpaid family employment is on the increase. However, the growing share of youth labour force in agriculture cannot be solely attributed to women’s growing involvement in the family’s agriculture and especially livestock unit. Data show that the share of male youth employed in agriculture has also risen during 2006 to 2010. In fact, both share and number of male youth employed in non-agriculture have declined during this period. Thus there has been a decline in the labour absorption capacity of the non-agricultural sectors. Otherwise, young workers show a preference for jobs in the non-farm sector which is evident from the qualitative observations (for example in Rahman 2007).

Source of Information: BIDS Research Report, July-2014.

Article Link (Online Journal):

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

One of the policy documents which requires an examination in this context is the Sixth Five-Year-Plan of Bangladesh. In this document, employment generation has been viewed as a strategy of accelerated growth as well as for the reduction of poverty. In the macro policy and strategy part, such emphasis has been found in several places. For example, “The employment challenge in Bangladesh is to create high productivity, high earning good jobs (p.45).” “Encouraging higher female participation in the labour force and enabling them to undertake gainful jobs and stay in the labour market will contribute to higher growth” (p.46). This calls for indicating changes in the structure of employment through the withdrawal of labour from agriculture and informal sectors to higher productivity jobs in the manufacturing and formal service sector. “The employment responsiveness of growth in manufacturing needs to increase to absorb more labour. The average productivity of all sectors, especially agriculture, has to grow to provide better returns to labour” (Planning Commission 2011:46). Although the SFYP document highlights the role of “demographic dividend” and youth labour in the process of economic growth, in the actual strategy formulation context, employment has been viewed in an aggregate sense. The disaggregation of targets and strategies for youth and the older labour force is somewhat absent in the document. As discussed earlier, Bangladesh possesses a sizeable “demographic dividend” in the form of a youth labour force. Strategies for effective use of this potential is expected to come from SFYP and some guidelines are desirable even if separate target setting for age-sex groups or attempts for influencing the labour market may distort incentives and may not be practicable in a market economy.

Knowledge Management: Report/Proceedings