Industries created more jobs amid slowdown. Economists find it puzzling
Bangladesh's industrial sector witnessed a growth in employment in the first quarter of 2024 while the farming and service sectors shed jobs during the period, according to the latest Quarterly Labour Force Survey (QLFS) data.
However, the findings raised questions among economists, who were puzzled by the growth at a time when the economy had been facing a slowdown due to high inflation, a downtrend in export growth, and falling imports.
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During the January-March period of this year, the country had 1.27 crore employed people in the industrial sector, representing a 4 percent year-on-year increase.
On the other hand, employment in the agricultural sector, which accounts for the largest share of jobs, dropped 0.34 percent year-on-year to 3.18 crore in the quarter.
The service sector, the second-highest employer, recorded a 1.22 percent year-on-year decline in employment in the quarter, illustrated data from the QLFS, published yesterday by the Bangladesh Bureau of Statistics (BBS).
"It is hard to explain. It raises many questions," said Zahid Hussain, former lead economist of the World Bank's Dhaka office, in his instant reaction.
"Amid the economic slowdown, how can employment in industries under the formal sector grow?"
The QLFS showed that overall employment increased marginally -- less than one percent year-on-year to 7.11 crore in the quarter.
An additional 60,000 people found jobs in the first quarter of this year compared to the same quarter of the previous year.
Hussain said in the last two quarters, meaning July-September and October-December, the country's gross domestic product (GDP) growth had declined.
The BBS data on quarterly GDP growth showed that it had halved to 3.78 percent in the October-December period of FY24, which was the slowest in at least three quarters, as manufacturing output growth declined sharply.
He said the ready-made garments and textile industries are major sources of employment. In terms of US dollars, export earnings growth declined even during peak season.
"Due to automation, we have also seen that job opportunities in the apparel sector have reduced," he said.
So, he said, an increase in jobs in small factories that operate informally might explain the growing employment in the industrial sector.
"But the question is regarding where such enterprises get stimulus from. As we know, the purchasing power of low-income people has been reduced as real incomes have been falling due to high inflation over the past two years."
The BBS data on wage rate index, a measure of the increase in wages of unskilled and semi-skilled workers, showed that inflation had been outpacing wage growth over the past 26 months.
Hussain added that import control measures by the authorities to overcome the dollar shortage, combined with the prevailing energy crisis and erosion of purchasing power, make the rise of employment in the industrial sector hard to explain.
The unemployment rate also climbed compared to the preceding quarter, with the jobless population increasing by 2.4 lakh in the first quarter of this year, according to BBS data.
The economist cited this spike in the number of unemployed people and an increase in the working-age population above 15 years who are not in the labour force.
"If there are available jobs in the industry, the question is why more working age population are not finding work. On one side, the number of those not in the labour force has increased. On the other side, the number of those employed in industries has increased. It is totally a riddle," he said.
Echoing the same, Sayema Haque Bidisha, a professor of economics at the University of Dhaka, said the latest data did not provide a clear picture.
One explanation may be increased job opportunities in the construction sector rather than manufacturing, she added.
However, Bidisha said there could be certain improvements in small and medium enterprises, which may have contributed to the overall growth.
Rizwanul Islam, a former special adviser, employment sector at the International Labour Office, Geneva, said a lack of data meant it was not possible to say why employment in manufacturing had increased.
The number of jobs in the agriculture sector has declined, which is what should happen, he added.
"But we can't say whether the rise in employment in industries is due to the push factor from agriculture or due to a real increase in demand," he said.
"The push factor may have driven a good number of people to seek jobs outside agriculture in low productivity activities, some of which may have been classified as industry. If that happened, it can't be regarded as good news."
The QLFS also showed that the rate of unemployment among men increased in the first quarter of 2024. In the case of women, the unemployment rate dropped.
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