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Unemployment and Poverty Situation in Bangladesh

The Unnayan Onneshan (UO), an independent multidisciplinary think-tank, in its current monthly issue of the Bangladesh Economic Update, calls for labour-intensive productive capacity expanding restructuring of the economy in order to stave off increasing unemployment and decelerated decline in the incidence of poverty.

The research organisation points out an increasing trend in unemployment together with increased underemployment, declined employment in formal sector, rising youth unemployment, and higher participation of women in labour force.

Referring to increasing unemployment, the think-tank finds that the number of unemployed population increased at an annual rate of 5.29 percent during the period of 2000-2010 and increased from 1.70 million in 2000 to 2.60 million in 2010. If the current trend continues without active actions, the UO projects that total unemployed population may increase to 3.3 million by 2015.

As regards underemployment which occurs when a person works less than 35 hours in a week, a total of 10.99 million, which is 20.31 percent of the total employed labour force, were underemployed in 2010, according to latest available official statistics.

The Unnayan Onneshan notes that underemployment is high in rural areas and among the female labour force. In 2010, of total labour force, underemployed labour constitutes 22.67 percent in the rural areas compared to 12.40 percent in the urban areas and 34.15 percent of female workers compared to 14.40 percent of male workers. Of the total number of underemployed labour force, nearly 47 per cent were female.

Pointing to the informalisation in employment, the UO observes that the number of employed labour in informal sector increased to 47.3 million in 2010 from 29.3 million in 2000 with an annual rate of increase of 6.14 percent.

Referring to increased youth unemployment, the research organisation evinces that in 2010, the portion of unemployed youth labour aged 15-29 was 61.54 percent of total unemployed population revealing that 1.6 million out of a total of 2.6 million unemployed persons were youth.

Noting the increasing number of female labour in total labour force, the think-tank notes that during the period of 1995-2010, the female labour force grew by 14.20 percent which is seven times higher than the growth of male labour force.

The labour force grew from 40.70 million in 2000 to 56.70 million in 2010 with a rate of increase of 3.93 percent per annum. The absolute size of the labour force increased by 39.3 percent or by approximately 16 million people over the same period. Total employed and unemployed population were 34.8 million and 1.4 million respectively in 1995, whereas the numbers increased to 54.5 million and 2.6 million respectively in 2010.

The Unnayan Onneshan opines that the increasing rate of unemployment coupled with low rate of wage is dragging the population below the poverty line in the country.

As regards reduction in the rate of decline in poverty, the Unnayan Onneshan points out that the incidence of poverty witnessed a slower pace during 2005-2010 compared to 2000-2005. The incidence of poverty decreased by 9.8 percentage points during 2000-2005 (from 49.8 percent in 2000 to 40 percent in 2005), whereas the following five years (2005-2010) saw a decline by 8.5 percentage points (from 40 percent in 2005 to 31.5 percent in 2010).

Referring to the spatial differences in the reduction in poverty, the Unnayan Onneshan notes that the pace of poverty reduction is slower in urban areas than in the rural areas. The incidence of poverty in rural areas decreased from 58.7 percent in 1991 to 35.2 percent in 2010 with an annual average decreasing rate of 1.24 percent, whereas in urban areas, the incidence of poverty decreased by 1.13 percent per annum from 42.7 percent in 1991 to 21.3 percent in 2010.

The UO notes that the budgetary allocation in poverty reduction has been, on average, decreasing at 1.56 percent since FY 2008-09, thereby signifying further deceleration in the decline in poverty incidence. The total allocation in poverty reduction constitutes 59.59 percent in FY 2008-09, 55.92 percent in FY 2009-10, 56.67 percent in FY 2010-11, 50.60 percent in FY 2011-12, 52.67 percent in FY 2012-13 and 51.79 percent in FY 2013-14 of total budget outlay.

The Unnayan Onneshan urges for adoption of creative social policy framework to address the increased feminisation, migration, youth unemployment and informalisation.

The research organisation calls for labour-intensive restructuring of the economy, facilitation of skill development of the labour force, and bringing about appropriate changes in labour market policies in the economy.

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