How to tackle unemployment in Bangladesh

By leveraging successful international strategies and investing in youth employability at home, Bangladesh’s unemployment problem can become an opportunity for innovation and growth

Strong economic growth, attracting foreign investment and industrial development are essential pillars of national progress. Where there is a lack of a skilled and fully committed workforce, these developments risk not realizing their potential.

Addressing this gap underlines the urgent need for targeted workforce development, especially through vocational training closely aligned with sector demands. Such coordination would help employees increase their employability and contribute directly to sustainable economic growth.

Why it is now more important to tackle this ’employability gap’

Despite economic progress, Bangladesh continues to struggle with rising unemployment. The unemployment rate rose to 3.51% from 3.27% at the end of 2023, adding around 240,000 people to the unemployed pool and bringing the total to 2.59 million.

This increase disproportionately affects skilled youth and women, exposing deeper structural problems in the labor market that economic growth alone cannot solve.

The recovery from the Covid pandemic has been uneven, with many industries still struggling to return to pre-pandemic levels. About 61% of the workforce, mainly in the informal sector, lost their jobs during the pandemic.

Although there has been some recovery, job creation in key sectors such as agriculture and services remains slow. This slow recovery in these sectors limits employment opportunities, especially for those who rely on these sectors for work.

Global factors such as the war between Russia and Ukraine have further complicated Bangladesh’s employment landscape by disrupting industrial production, exacerbating the jobs crisis. These disruptions have particularly affected the agriculture and services sectors, which are the main source of employment for a large part of Bangladesh’s workforce.

The intertwined effects of pandemic recovery challenges and global tensions are placing significant pressure on employment prospects in these sectors.

Youth unemployment is an urgent problem: in 2023, 15.7% of young people will be unemployed. Nearly 30% of people aged 15 to 29 are NEET (no education, employment or training), which represents a significant missed opportunity for economic growth.

Among educated youth, women face even more serious barriers, with an unemployment rate of 24.62% in 2023 – significantly higher than that of men. Women’s labor force participation remains disproportionately low, with an unemployment rate of 7.5% in 2023, much higher than that of men.

This gender gap in employment underlines the need for employment opportunities that better match the qualifications of young people. And at the same time points out the need for initiatives designed to enable women to enter the labor market and remain active.

If the potential of women in the economy is not utilized, Bangladesh’s economic ambitions will remain limited. Addressing these gender differences is therefore crucial to promoting inclusive, sustainable growth.

To leave or to stay?

The previous government set an ambitious goal for 2024: create 1.52 million jobs domestically and send 610,000 workers abroad.

While there has been a marked increase in employment abroad – especially in Malaysia and the Middle East – domestic job creation has struggled, especially among small and medium-sized enterprises (SMEs).

Investment constraints and infrastructure challenges continue to hinder SME growth, which is essential for robust job creation and economic diversification.

Expanding employment opportunities abroad provides short-term relief, but matching domestic skills with the demands of the global labor market will ensure that Bangladeshi workers remain internationally competitive.

In fact, sustainable development depends on strengthening the domestic labor market.

The interim government should prioritize promoting a supportive environment for SMEs, as these enterprises are crucial for job creation and provide long-term stability for the economy. A targeted approach to SME growth will be essential to increase economic resilience and reduce dependence on foreign labor markets.

Ways forward

Many countries have effectively tackled youth unemployment by adapting education to market demand and promoting entrepreneurship. For example, Germany has implemented the dual education system, which combines classroom learning with practical work experience, reducing the skills gap and keeping youth unemployment low.

Similarly, South Korea’s investments in vocational training and technological innovation have created a highly skilled workforce that has fueled rapid economic growth.

Singapore’s Startup SG initiative, which provides financial support and mentorship to early-stage companies, is another model that has fostered a vibrant startup ecosystem and boosted youth employment.

These global examples provide valuable insights for Bangladesh in its efforts to engage youth and tackle unemployment.

By leveraging these successful international strategies, Bangladesh can turn the unemployment problem into an opportunity for innovation and growth.

The interim government, which is currently considering education reforms, should prioritize vocational training that meets the demands of modern industry. A curriculum rooted in practical, hands-on experience ensures graduates are job-ready and well-prepared for the changing demands of the workforce.

Investing in skills development, especially for youth, is crucial to tackling rising unemployment and ensuring Bangladesh’s competitiveness in the global economy.

Fast-growing sectors such as technology, renewable energy and digital services offer significant potential for job creation, making them ideal areas for workforce training. Emphasizing job skills in these areas can provide Bangladesh’s youth with the expertise needed to thrive in a changing economic landscape.

Furthermore, supporting young entrepreneurship will enable young people to create employment not only for themselves but also for others, promoting a self-sustaining economic model.

The interim government should also prioritize supporting entrepreneurship by providing financial incentives and mentorship programs, especially for startups in technology-driven fields. Startups play a crucial role in driving innovation and job creation while increasing economic resilience.

The focus should be on reforming the education system to prioritize vocational training, supporting industries to create domestic jobs and promoting entrepreneurship as a viable career path.

If Bangladesh effectively engages its youth in the workforce, the country will be well positioned to achieve sustainable economic growth.

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Sketch: TBS

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Sketch: TBS