Bangladesh Country Paper: Employment Effects of Different Development Policy Instruments

r4d Working Paper 2015/5 by Selim Raihan, Bazlul Haque Khondker, Farazi Binti Ferdous and Syed Al-Helal Uddin

ABSTRACT: The developments in the labor market lie at the heart of Bangladesh’s on-going structural transformation processes having significant bearings on agricultural productivity, and farm and non-farm sectoral linkages and thus eventually overall growth and poverty alleviation prospects. Bangladesh has its basic comparative advantage in terms of endless supply of unskilled cheap labor, but it failed to ensure sufficient remunerative employment generation. Traditional sectors can’t provide good remunerative employment to the new entrants in the labor force. Besides, modern industrial sectors are flourishing slowly and should be designed in a pro-poor labor intensive nature. Despite higher economic growth, employment grew at a relatively slow rate since the 1990s. At the aggregate level, agriculture is still the largest sector of employment. With the labor force growing faster than the employment potential, the number of unemployed persons increased over time. Against these backdrops, this paper provides an overview of the Bangladesh economy, development strategies, trade policies, labor market and associated dynamics and political economic issues.