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Why unemployment rate is decreasing
MD ASADUZ ZAMAN
Unemployment has declined in Bangladesh, and although this means more people are contributing to the economy, analysts are not too upbeat about the development as most of the growth took place in agriculture.
This is because the statistics show that opportunities for jobs in industry and service-related sectors are not growing at an adequate pace, they said.
Data of the Bangladesh Bureau of Statistics (BBS) indicate that the number of unemployed people declined by 60,000, or 2.3 percent year-on-year, to 25 lakh in the April-June quarter of 2023.
“This is not good news for us [the economy] as it means that opportunities for expansion in formal sectors are not being properly used,” Ahsan H Mansur, a noted economist, said yesterday.
“It is like we are not moving forward,” added Mansur, who is an executive director of the Policy Research Institute (PRI) of Bangladesh.
Mansur also said it is mostly people who lack the necessary skills to move to the industrial service sectors that involve themselves with agriculture.
The number of job holders in the country stood at 7.07 crore in the April-June period.
However, employment in the service sector dropped to 2.74 crore from 2.75 crore during the corresponding period a year ago.
On the other hand, employment in the industrial sector grew by 40,000 to 1.21 crore at the same time.
In the case of agriculture, employment rose to 3.11 crore from 3.08 crore, according to the BBS’ quarterly Labour Force Survey released late last month.
As such, the data shows that the agriculture sector is still the country’s main source for jobs, accounting for 44 percent of the overall employment figures.
Rizwanul Islam, an economist and former special adviser for employment at the International Labour Organisation (ILO) in Geneva, said the increased employment in agriculture is contrary to expectations.
“This implies a reversal of the trend of development,” he added while pointing out that the decline in employment in the service sector contradicts the usual pattern of development.
Islam also said that while there was a small rise in employment in the industrial sector as a whole, the figures may have actually declined in the manufacturing segment.
He pointed out that overall employment grew by only 0.33 percent compared to the country’s 6 percent growth in gross domestic product, which is very low.
Additionally, the growth in employment is low compared to that of the labour force.
“But the true trend in informal sector employment is not known because detailed data has not been reported,” Islam said.
A key indicator of the performance of the labour market is the trend in real wages, which has been falling for more than a year.
“Considering all this, I don’t see any reason to celebrate the decline in unemployment. Such figures say very little about the real situation due to the manner in which they are measured,” Islam added.
As defined by the BBS, a person is considered unemployed when they have not worked for even an hour for an entire week or are temporarily absent from their position.
“So, alternative indicators are needed to understand the real situation,” Islam said.
The BBS survey also indicates that unemployment increased among men but decreased among women.
The PRI’s Mansur agreed that the definition of unemployment does not reflect the real situation.
“If we get the proper underemployment scenario, we will understand the real situation,” he said.
As per ILO guidelines, underemployment includes persons who, even though they worked or had a job during the reference week, were willing and available to work at better or more adequate positions.
Aziza Rahman, project director of the Labour Force Survey, said the BBS conducted the study in line with the ILO’s definition of unemployment.
“Our full report may be published next month [September], where the BBS will publish the details of underemployment,” Rahman added.