44% of university graduates in Bangladesh work informal jobs, World Bank report shows

A study by the World Bank has shown that about 44 percent of university graduates in Bangladesh work in the informal sector, highlighting the shortage of formal jobs despite the country’s large working-age population.

Titled “Demographic Change in South Asia: From Tailwinds to Headwinds for Development”, the report was launched at the Pan Pacific Sonargaon Dhaka on Tuesday, followed by a panel discussion on Bangladesh.

The report says around 84 percent of the working-age population, or about 58 million people, are employed informally.

It identifies the lack of formal jobs, low female participation in the workforce, and weaknesses in education and skills development as “major barriers to employment and productivity”.

The report said informal workers often lack appointment letters, job security, and legal protection, as well as a lack of standard wage structure.

The problem extends to larger businesses. Around 35 to 40 percent of workers in medium and large enterprises are employed informally.

Formal businesses in Bangladesh create jobs at an annual rate of just 2.7 percent, the report said, compared with an average of 5.4 percent across 82 emerging economies.

The shortage of regular jobs also pushes people into small businesses. Between 45 and 70 percent of informal entrepreneurs in Bangladesh, India, and Nepal said they started their businesses because they could not find other employment.

The World Bank based this finding on its analysis of the Bangladesh Bureau of Statistics' (BBS) 2022 Informal Sector Survey.

Small and medium-sized businesses have also been cutting staff rather than expanding their workforce. Employment growth in tourism and food-related industries remains slow, the report says.

The report also points to weak labour productivity in Bangladesh and India. Older businesses in both countries are falling behind newer firms in increasing output per worker.

Jean Pesme, the World Bank's division director for Bangladesh and Bhutan, said the country must act now to turn its demographic advantage into economic growth.

He called for policies to help businesses create better jobs, equip young people with required skills, and remove barriers to women's employment.

The report says Bangladesh's working-age population is expected to peak in 2045, giving the country roughly two decades to benefit from its demographic dividend.

But as the population ages, the number of dependants will rise, putting more pressure on the economy and increasing demand for healthcare and social protection.

Pesme also stressed the need to improve healthcare and old-age income support and increase domestic revenue to meet future spending needs.

The report highlights major gaps in healthcare access between urban and rural areas.

Although 70 percent of Bangladesh's population lives in rural areas, only 20 percent of healthcare workers are based there, the report shows.

The concentration of doctors in urban areas is 18 times higher than in rural areas.

Bangladesh also has the lowest pre-primary school enrolment rate in South Asia, at 36 percent, compared with the regional average of 62 percent. The report also notes a low government spending on education.

Primary healthcare facilities are poorly equipped to treat non-communicable diseases. Only 18 percent have all the components needed to provide the required care, while essential medicines and equipment are available at just 7.5 percent.

The World Bank says Bangladesh needs to invest in education, healthcare, and social protection while expanding formal employment to prepare for an ageing population.

Without timely action, the growing elderly population could place a heavier burden on the economy and the working-age population.

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