Macro Economics

MBA 510
Section: 3

A Comparative Analysis the Unemployment scenario of

Bangladesh.

Submitted by

Sahadat Hossain
ID:1930948

Submitted to
Dr. MD. Mahbub Alam
Professor
School of Business

Independent university,
Bangladesh

March 31st, 2020

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Introduction

 Unemployment occurs when a person who is actively searching for employment is unable to
find work. Unemployment is often used as a measure of the health of the economy. The most
frequent measure of unemployment is the unemployment rate, which is the number of
unemployed people divided by the number of people in the labor force.

A person is said to be "unemployed" if he or she is looking for work, is willing to work at the
prevailing wage, but is unable to find a job. The international standard definition of
unemployment adopted by the Thirteenth International Conference of Labor Statisticians (ICLS)
hosted by International Labor Office (ILO) is based on three criteria, which have to be met
simultaneously. According to this definition, the unemployed comprise all persons above the age
specified for measuring the economically active population who during the reference period
were: (a) "without work", i.e. were not in paid employment or self-employment as defined by the
international definition of employment; (b) "currently available for work", i.e. were available for
paid employment or self-employment during the reference period; and (c) "seeking work", i.e.
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had taken specific steps in a specified recent period to seek paid employment or self-employment
(ILO 1982).

The concepts and definitions regarding unemployment and underemployment recommended by

ILO are used by Bangladesh Bureau of Statistics (BBS) for the survey of unemployment and
underemployment in Bangladesh. According to usual definition of BBS, persons working less
than 15 hours without pay or profit in the family farm during the reference period are treated as
unemployed persons and those working less than 35 hours during the reference week, on the
other hand, are treated as underemployed persons. According to this definition persons engaged
in household activities during the reference period are treated as unemployed persons. According
to extended definition, persons engaged in household activities during the reference period are
considered as employed persons. Throughout this study, unemployment and underemployment
measured by BBS using usual definition will be used.

Bangladesh Unemployment Rate

Bangladesh's Unemployment Rate dropped to 4.29 % in Dec 2019, from the previously reported
number of 4.31 % in Dec 2018. Bangladesh's Unemployment Rate is updated yearly, available
from Dec 1991 to Dec 2019, with an average rate of 3.77 %. The data reached an all-time high of
5.00 % in Dec 2009 and a record low of 2.20 % in Dec 1991. The data is reported by reported by
World Bank.

In the latest reports, Bangladesh's Population reached 165.55 million people in Jun 2019. The
country's Labour Force Participation Rate increased to 58.74 % in Dec 2019.

Overall scenario of Civilian Labor Force Participation in Bangladesh:

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Civilian Labor Force is the sum of civilian employment and civilian unemployment.
These individuals are civilians (not members of the Armed Services) who are age 16 years or
older, and are not in institutions such as prisons, mental hospitals, or nursing homes. In
Bangladesh civilian labor force was 56 million in 1995-96(Figure: 1). It decreased to 40.7
million in 1999-2000(Figure: 2). Main reason behind that female labor force significantly
decreased to 8.5 million which was 21.3 million in 1995-96. After the labor force survey in 1995
definition of labor force participation was restructured and female education enrollment
increased. From 2002-03 to 2010 labor force participation was increasing. Total labor force
participation increased to 16 million from 2000 to 2010 because Female labor force participation
increased 102% in these 10 years.

Unemployment Status:
Now we consider unemployment status, we see total number of unemployed populations was 1.4
million in 1995- 96. Among the unemployed population 0.9 million was male and 0.5 million
was female. The unemployment trend of male and female was increasing. But in 2002-03 we see
the gap between male and female unemployed population was very high compare to other years.
From this figure we may say that in 2002-03 female participation increased more rapidly than the
male participation in labor force. Another observation also is found that there have ups and
downs of male and female unemployed population from the year 1995 to 2010. In figure 5, the
lines are going to upward but not in steady manner.

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Unemployment and Under Employment Situation:
Under employment increased from 16.6 percent to 20.3 percent during 2000 to 2010. During this
period 20.1 million new labour joined the labour force. The rate of employment is 3.1 percent
but the growth rate of labour force is more than the rate of employment. From the figure 3 and 4
it can be seen that in 1995-1996 the rate of unemployment was 2.5 percent and in 1999-2000 the
rate increased to 4.3 percent but from 2005-2006 the rate declined. In 2010 the rate of
employment increased but the rate of unemployment was also increased and stood at 4.5 percent.
The rate of unemployment was 2.5 percent in 1995-1996 but it increased to 4.5 percent in 2010.
(Table:4 & figure 3)

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 It can be seen form table 4 & Figure 3 that labour force growth rate is higher than the rate
of employment and the rate of unemployment is higher than the rate of employment. It is also
observed from figure 3 that except 2002-2003 the rate of unemployment is always higher than
the rare of employment.

It can be seen from Figure 4 that in 1995-96 unemployed was 1.3 million which increased to 1.8
million in 1999-2000. In 2005 & 06 unemployed was 2.1 million which stood at 2.6 million in
2010 which means 0.5 million additional unemployed. The trend of unemployment is rising.
Educated unemployment is a problem in Bangladesh. The percentage of educated unemployment
in Bangladesh is more than that of India. The percentage of educated unemployment in
Bangladesh is 14 percent and in India it is 11 percent. In Vietnam it is 5 percent only (6th five-
year plan) Table-5 shows unemployed persons aged 15 years and above by level of education
and unemployment.

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It is observed from the table no. 5 that the highest unemployment rate was for those with
educational level engineering or medical (14.27%) followed by HSC (13.74%) and Master
degree (10.25%). Unemployment rate as per definition of ILO is 4.5% but including the unpaid
family labour the unemployment rate stands at 14.16%. This rate is 6.63% for male and 31.49%
for female (LFS-2010). The under-employment rate for aged 15 years and over by economic
category at national level is 20.31% and for urban area 12.40% and for rural area 22.67% (LPS-
2010). In the agriculture sector there is seasonal unemployment which is a common feature of
Bangladesh agriculture. In the agricultural sector due to structural change and introduction 10 of
modern cultivation disguised unemployment has increased where marginal productivity of labour
tends to be negative or near to zero. Change in pattern of crop cultivation reduces employment
opportunities of agricultural labour. Educated unemployment is a great problem in the country.
Every year 3.5 lac students pass out holding degree and master degree from the colleges and
universities (23.10.14 The Daily Prothom Alo)

Youth unemployment:
Youth employment has a special significance in Bangladesh since the nature and extent of
employment of the youth is an important indicator of the additional employment generating
capacity of the economy. Alternatively, the extent of unemployment of youth labor indicates the
failure of the growth process to create enough jobs for the new entrants to the labor force and,
consequently, the loss of potential income and welfare. In quantitative terms, nearly 35 percent

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of the labor force in 2006 consisted of youth labor (15-29 years) although the share of youth is
about 40.6 percent in total working aged population (15 years and above). Between 2000 and
2006, although the total labor force increased by nearly 9 million, the number of youth labor
increased by 2.8 million. Significant gender difference in the growth of male and female labor
may also be noted during the period. While the absolute number of male youth labor increased
by 2.6 million, the number of youth female labor declined by 0.2 million mainly due to decline in
participation rate. The failure to provide adequate employment opportunities especially to youth
labor has significant economic and social implications in Bangladesh. The bulk of the country’s
unemployed labor belongs to the youth labor category. In 2003, the share of unemployed youth
labor in total unemployed labor was 60 percent revealing that 1.2 million out of a total of 2.0
million unemployed persons were youth. The trends are similar for both female and male youth
as well as in rural and urban areas. For the youth labor, the disadvantaged situation is also
reflected in high youth unemployment rate compared with the overall unemployment rate in the
country. While the unemployment rate for the labor force as a whole was 4.3 percent in 2003, the
youth unemployment rate was recorded at 6.3 percent.

Scenario of Unemployment in Bangladesh:

Bangladesh has been facing growing unemployment since its independence in 1971. Presently,
the problem has taken dreadful form. According to the labor force survey (LFS) 2005-06, more
than two million people, who constitute 4.3 percent of the labor force, were unemployed. The
survey also reveals that 11.6 million people, or 24.5 percent of the employed labor force, were
underemployed with limited working opportunities. The growth rate of employment has shrunk
by 50 percent while unemployment rose by 50 percent since 2003. Total paid employment
declined from 16 million in 1999-2000 to 15 million in 2002-03 and 15.2 million in 2005-06.
The survey reveals that annual employment growth was 2.2 percent during 2003-2006, compared
to 4.4 percent in 2000-2003 (BBS 2008). Absolute unemployment increased in all these years
because of the government's inability to generate new jobs.

Unemployed population aged 15 years and over by sex and residence:

Table-1 shows the unemployed population of 15 years and over during 1999-2000 to 2010. The
number of unemployed populations increased in Bangladesh during the 10 year-period (1999-
2000 to 2010). In 1999-00 total unemployed population was 1.7 million that increased to 2.6
million in 2010. The same trend is seen in case of unemployment for male and female and urban
and rural areas. Number of unemployed male population increased from 1.0 million in 1999-00
to 1.6 million in 2010. Similarly, the unemployed female population increased from .66 million
to 1.0 million in the same period. In the urban area, total unemployed population increased from
0.5 million in 1999-00 to 0.9 million in 2010. Unemployed population also shows rising trend in
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the rural area. In 1999-00, total unemployed population in the rural area was 1.2 million that rose
to 1.7 million in 2010. The same rising trend is also observed for both male and female
unemployed population in the urban and rural area.

Table-1: Unemployed population aged 15 years and over by sex and residence,
1999/2000-2010 (in millions)

Bangladesh 1999- 00 2002-03 2005-06 2010

Total 1.7 2.0 2.1 2.6

Male 1.0 1.5 1.2 1.6

Female .66 0.5 0.9 1.0

Urban

Total 0.5 0.6 0.5 0.9

Male 0.3 0.4 0.3 0.5

Female 0.1 0.2 0.2 0.4

Rural

Total 1.2 1.4 1.6 1.7

Male 0.7 1.1 0.9 1.1

Female 0.4 0.3 0.7 0.6

Source: BBS, 2008 and 2010.

Unemployment rates for population aged 15 years and Over by sex and
residence:

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Table-2 and Figure-1 show the unemployment rate for population 15 years and over during
1999-2000 to 2010. According to the labor force survey 2010 the rate of unemployment stands
at 4.5 percent in 2010 which was 4.3 percent in 2002-2003 and 1999-2000. In the urban area, the
unemployment rate was 6.76 percent in 2010, whereas it was 5.0 percent in 2002-2003 and 5.8
percent in 1999-2000. On the other hand, the unemployment rate was 3.91 percent in the rural
area in 2010 which was 4.1 percent in 2002-2003 and 3.9 percent in 1999-2000.There exists sex
differentials in the unemployment rate where the unemployment rate for male was 4.05 percent
in 2010 and it was 4.2 percent in 2002-2003 and 3.4 percent in 1999-2000. In the urban area, the
unemployment rate for male was 5.0 percent in 1999-2000 and 4.6 percent in 2002-2003 which
increased to 5.37 percent in 2010. In the rural area, the unemployment rate for male was 2.9
percent in 1999-00 which increased to 4.0 percent in 2002-2003, again reduced to 3.33 percent in
2005-2006 and further increased to 3.64 percent in 2010. For the females, the unemployment rate
for Bangladesh, urban and rural area was 7.8 percent, 8.3 percent and 7.6 percent in 1999-2000
which decreased to 4.9 percent, 6.2 percent, and 4.4 percent respectively in 2002-2003 but again
increased to 7.0 percent, 6.7 percent and 7.2 percent respectively in 2005-2006. In labor force
survey 2010, the unemployment rates for females in Bangladesh and rural area reduced (5.81 and
4.54 percent respectively) but increased in urban areas (10.0 percent).

The rising trend of unemployment is also shown in Table-3 and figure-2 for the period 1983-84
to 2010. We see that the employed population increased from 27.9 million in 1983-84 to 54.1
million in 2010. In the 1980s, the number of unemployed populations was around 0.5 million
which increased sharply to 2.0 million in 2002-2003 and further to 2.6 million in 2010. This
means that employment opportunities are not enough to absorb the increasing labor force. The
contribution of formal sector or organized sector in the total employment is very meager in
comparison with that of informal sector. In 2010, the total employed labor force was 54.1
million out of which only 6.8 million (12.5 percent) were employed in the formal sector and 47.3
million (87.5 percent) were employed in the informal sector (BBS 2012).

Table-2: Unemployment rates for population aged 15 years and Over by sex and residence,
1999/2000-2010

Residence Total Male Female

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1999-2000

Bangladesh 4.3 3.4 7.8

Urban 5.8 5.0 8.3

Rural 3.9 2.9 7.6

2002-2003

Bangladesh 4.3 4.2 4.9

Urban 5.0 4.6 6.2

Rural 4.1 4.0 4.4

2005-2006

Bangladesh 4.2 3.4 7.0

Urban 4.3 3.6 6.7

Rural 4.2 3.3 7.2

2010

Bangladesh 4.5 4.05 5.81

Urban 6.76 5.37 10.0

Rural 3.91 3.64 4.54

Source: BBS, 2008 and 2010.

Percentage

Figure-1: Unemployment Rate, 1999/00-2010.

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 Table-3: Employed and unemployed population (15+ years and above) of Bangladesh
over time, 1983-84 to 2010 (in millions)

Employment 1983- 1984- 1985- 1995- 1999- 2002- 2005- 2010

status 84 85 86 96 2000 03 06

Employed 27.9 29.0 30.5 34.8 39.0 44.3 47.4 54.1

Unemployed 0.5 0.5 0.4 1.3 1.7 2.0 2.1 2.6

Source: BBS, 2008 and 2010.

In Million

Employed Unemployed

Figure-2: Employed and unemployed population (15+ years and above) of Bangladesh, 1983-84 - 2005-
06.

Rate of unemployment (percent) by age group, sex and residence:

Table-4 and Figure-3 show the rates of unemployment by age, sex and residence in labor force
survey 2010. The highest unemployed rate has been observed for the age group of 15-19 (10.6
percent) followed by age group of 20-24 (7.1 percent) and 25-29 (5.4 percent). The same pattern
also followed in case of the male and female. In case of male, the highest rate of unemployment
has been observed for age group 15-19 (9.8 percent) followed by 20-24 (6.8 percent) and 25-29
(4.3 percent). In case of female, the respective unemployment rates for the same age group are
11.4 percent, 7.7 percent and 7.3 percent. Unemployment rate is much higher in the urban area
than in the rural area for all age group.

In Bangladesh people of age 15-29 years are called youth. According to the latest labor force

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survey (LFS 2010), the total youth labor force is 20.9 million i.e 36.87 percent of total labor
force (BBS 2012). The youths are the main driving force of an economy. The progress of a
country depends, to a great extent, on the participation of the youths in economic activities.
Table-3 shows the pattern of youth unemployment (already discussed above) in Bangladesh.

Table 4: Rate of unemployment (percent) by age group, sex and residence in 2010

Bangladesh Urban Rural

Age
grou
p Total Male Female Total Male Female Total Male Female

Total 4.50 4.10 5.70 6.50 5.70 8.30 4.00 3.60 4.90
15-19 10.6 9.80 11.4 12.4 11.7 13.4 10.1 9.80 10.6
20-24 7.10 6.80 7.70 9.90 8.70 11.5 6.30 6.20 6.40
25-29 5.40 4.30 7.30 7.90 6.30 10.8 4.60 3.70 6.20
30-34 4.20 3.80 4.80 5.60 5.00 6.90 3.60 3.40 4.00
35+ 2.40 2..40 2.70 3.90 3.90 3.80 2.00 1.90 2.40

Source: Labor Force Survey (LFS), 2010

Percentage

Age Group

Unemployment Rate

Figure-3: Rate of unemployment (percent) by age group,

sex and residence in 2010

Unemployment by level of Education:

Generally, education is expected to reduce unemployment among the people. However, it is
interesting to note that unemployment in Bangladesh increases with the level of education. The
highest unemployment rate is observed for the people having engineering and medical degree
(14.3 percent) followed by HSC or equivalent (13.74 percent) and Secondary School Certificate
(SSC) or equivalent (7.73 percent). The unemployment rate is slightly reduced for Master’s
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Degree/ and equivalent degree holders (10.3 percent). It is notable that unemployment rate is
lowest (0 percent) for technical/vocational degree holders. Unemployment is very low (2.8
percent) for the people who have no education. Among the general educated people,
unemployment rate is lowest among the degree/equivalent holders (0.5 percent) (Table 5and
Figure-4).

There exists variation between male and female among the educated unemployed people. For the
male, the highest rate of unemployment has been found with HSC or equivalent educational level
(11.83 percent) followed by medical/engineering degree holder (10.54 percent) and Master’s
Degree holders (8.23 percent). By contrast, the highest rate of unemployment among the female,
has been observed for medical/engineering degree holders (30.84 percent) followed by Masters
or equivalent degree holders (19.87 percent) and HSC or equivalent degree holders (19.52
percent). In addition, there exists rural-urban variation in the rate of unemployment among the
educated people. In the urban area, the highest rate of unemployment has been observed for HSC
or equivalent degree holders (17.04 percent) followed by engineering or medical degree holders
(14.73 percent) and for Masters or equivalent degree holders (11.48 percent). But in the rural
area, the highest rate of unemployment has been observed for medical or engineering degree
holders (12.33 percent) followed by HSC or equivalent level (11.35 percent) and Masters or
equivalent degree holders (8.56 percent).

Table 5: Rate of unemployment (percent) by level of education in 2010

Bangladesh Urban Rural

Age group
Total Male Female Total Male Female Total Male Female
Total 4.5 4.0 5.7 6.5 5.7 8.3 3.9 3.6 4.9
No education 2.8 2.3 4.1 3.8 3.4 4.6 2.6 2.1 3.9
Class I-V 3.8 3.4 4.7 5.1 4.4 6.4 3.5 3.1 4.2
Class VI-VIII 5.2 4.8 5.9 5.6 5.1 6.9 4.6 4.7 5.7
Class IX-X 7.2 6.8 7.9 9.1 7.4 12.4 6.5 6.5 6.8
SSC/equivalent 7.3 7.5 6.8 9.7 9.4 10.6 6.2 6.7 4.8
HSC/equivalent 13.7 11.8 19.5 17.0 13.9 25.4 11.4 10.4 14.6
Degree/
0.5 0.4 1.3 0.4 0.4 0.6 0.6 0.3 2.0
equivalent
Master’s/
10.3 8.2 19.9 11.5 9.2 20.0 8.6 6.9 19.4
equivalent
Engineering/
14.3 10.6 30.8 14.7 11.7 27.6 12.3 5.9 48.1
medical
Technical/
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
vocational
Others 2.9 0.0 9.7 0.0 0.0 0.0 3.9 0.0 23.4

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Source: BBS 2012

Percentage Unemployment Rate

Education Level

Figure-4: Unemployment Rate by Education Level.

CONCLUSION
The problem of unemployment has taken dreadful form in Bangladesh and it has serious
economic, social and political problems. Unemployment aggravates poverty, deteriorates law
and order situations and political stability all of which are threat to our national security. The
severe unemployment problem in Bangladesh especially unemployment among the youth is like
a bomb which can blast any time. The government should immediately address the matter and
adopt the measures forwarded above to fight this big problem. Otherwise it will be difficult to
rein in the problem of growing unemployment and once it will shatter our national security.

Reference
ADB, 2009: “Informal Employment in Bangladesh”, ADB Economics Working Paper Series, No
155, ADB, Manila.

ADB, 2001: “Rural Development Priorities for Poverty Reduction in Bangladesh” A Study by
Bangladesh Resident Mission, Asian Development Bank, Dhaka, November 2001.
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Bangladesh Bureau of Statistics (BBS) 2008: Report of Labor Force Survey, 2005-2006,
Ministry of Planning, Government of Bangladesh, Dhaka.

Bangladesh Bureau of Statistics (BBS) 2012: Report of Labor Force Survey, 2010, Ministry of
Planning, Government of Bangladesh, Dhaka.

Bureau of Manpower, Employment and Training (BMET), Government of Bangladesh. website:

http://www.bmet.org.bd

Government of Bangladesh (GOB) 2012: Bangladesh Economic Review, 2011, Ministry of

Planning, Government of Bangladesh, Dhaka.

Statistics. Statistical Year Book, 2012, 32nd edition, Bangladesh Bureau of Statistics.

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