Impact of COVID-19 on the Economy and Job

Market of Bangladesh

Chapter 1: Introduction
1.1 Background:

Covid-19 first identified on December 31,2019 in Wuhan, China. After that in March 11, 2020
World Health Organization (WHO) declared COVID-19 a pandemic. Bangladesh reported the
first Covid-19 case on March 8, 2020 and the virus spread slowly in the initial period although, a
rapid case increment started in April. The government initially declared a 10-day general holiday
from March 26 to reduce the spread of novel coronavirus. The holiday was later extended till
April 11 and then to April 14. Again, it was extended to April 25 in the fourth phase, May 5
in the fifth phase, May 7 to May 16 in the sixth phase and finally up to May 30 to
tackle the worsening coronavirus situation in the country. There have been 1,560,155
infections and 27,635 coronavirus-related deaths reported in the country since the pandemic
began. Because of pandemic global economy could lose $4 trillion worth output. It push half
billion people into poverty.

Covid-19 affected every individual. Many people died and their income source hampered
because of covid-19 which affected economic activity of whole world. The overall economy of
Bangladesh attacked with a heavy impact on education system, job market and businesses.
Covid-19 creates a huge pressure on the labor market of Bangladesh as many people become
jobless. In Bangladesh, the population living below the national poverty line dropped to 20.5% in
2019 from 24.3% in 2016 because of Covid-19.Bangladesh is the 2nd largest exporter of
garments and this sector affected much during this lockdown period as many order cancelled and
demand of consumer also decreased .Total GDP decreased to 2.37% in 2020 from 8.15% in 2019
due to economic shutdown. It also affected the agriculture sector because of transportation
problem and the declining price of vegetables. Particularly, the poor segment of the population
who have very small or no saving at all is the focused victim of the economic
breakdown. COVID-19 has pushed rickshaw-pullers, transport workers, day laborers, street-
vendors, hawkers, construction laborers and the employees of hotel, motel and restaurants
back into poverty.As the economic impact of pandemic is not good so business, organization
cut offs their employees so that they can reduce cost. COVID-19 increased the graduate
unemployment rate across the world. The world unemployment rate rose to 6.47% in 2020 from
5.37 in 2019. Bangladesh unemployment rate increase to 5.30% in 2020 from 4.22% in 2019.
Based on the views of the UGC‟s (University Grants Commission) report, every year about
350,000 graduates are entering the job market and almost half of them are remaining
unemployed.
According to Bangladesh economic association, during the lockdown of 66 days 36 million jobs
were lost. A fresh graduate is a person that has just recently graduated, and do not have any
prior work experiences. Fresh graduate become highly affected because of this economic
condition and they also missed the opportunity of work experiences due to lockdown. So, to
enter the job market early in this year are likely to be not possible for them. This effect on their
mental wellbeing as well.

1.2 Justification:

As Covid-19 is a recent pandemic which hits the economy of Bangladesh much and create
employment issue by affecting every sector, this research is important to measure the condition
of unemployment and underemployment situation of Bangladesh due to it. Moreover, it will give
the descriptive statistics analysis of key economic indicators of the respondents which help to
took necessary steps for post- covid situation.

1.3 Literature review:

Ahmed (2020 a) in “Bangladesh at work in the era of COVID-19: Job creation and inclusive
growth” state that, The corona virus disaster has caused two types of employment loss such as
temporary lockdown-induced job loss and permanent impact job loss. Some company reduce
employee to cut off cost but some small organization, startups didn‟t survive in this covid period
and the employees permanently loss their job.

According to Ferdous et al. (2019) in “Analyzing the Factors Contributing to Graduate

Unemployment” low demand and huge supply of, lack of professional skills, ineffective
education system, outdated curriculum, lobbing, corruption and political affiliation, and frequent
occurrence of crisis, recession and pandemic is the main reason behind the graduate
unemployment of Bangladesh. As many organization layoff people so there is an imbalance of
demand and supply of labor in the market that create this job crisis. For this reason graduates are
not getting job and getting no work related experiences.

Altig (2020) in “Economic uncertainty before and during the covid-19 pandemic” found
economic uncertainty and fallout of economy. COVID-19 also changed the buying patterns of
consumers, people now start save their money for future uncertainties, which reduces the
production and profitability. That‟s why most of the companies adopted the lay-off policy, which
pushed thousands of graduates out of a job.

Saynisch and Dzau et al.(2016) also suggests in “Assessment of economic vulnerability to

infectious disease crises” that, an infectious health disease as global health should not be
neglected, Public health should have the capabilities to fight those threats. Its clear that,
Bangladesh don‟t have the proper planning to deal with the pandemic and that directly to the
economy and job market.
Bhuiyan et al. (2020) in “COVID-19-related suicides in Bangladesh due to lockdown and
economic factors” state that, 37% female and 63% male are unemployed graduate which make
Bangladesh 2nd in the highest graduate unemployment country in south asia. As many graduates
become unemployed for long time, many people loss their job during pandemic, Earning
member died on the pandemic creates a job crisis and it effect on the mental health of the
candidates as well.

Rendahl (2016) in “Fiscal policy in an unemployment crisis” state that, government spending
could potentially reduce unemployment in the unemployment crisis, output could be increased
both in that crisis and in the future. In this covid period around 40000 new job create but most of
the job required soft skill. From a recent news it declared that The Government has allocated 100
crores BDT to set up 28 Hi-Tech parks in order to improve local startup ecosystem and IT
infrastructure development, which will generate ICT-based employment opportunities for the
fresh graduates.

In a journal named „An Extensive Review of Health and Economy of Bangladesh Amid Covid-
19 Pandemic” by Mohiuddin(2020) mentioned that, Bangladeshi graduates are facing challenges
for securing white-collar jobs and more than two-third of the job seekers remain unemployed
after two or three years of graduation. During this pandemic many graduates didn‟t get the job of
their choice. Most of the time they join in lower position to survive but they have the ability to
join in high position.

According to the report “Youth and Covid-19: impacts on jobs, education, rights and mental
well-being” by ILO(2020), 65% of the youth reported having learning less after the
coronavirus outbreak . As per the report, 38 % of the youth are uncertain of their career
prospects as the ongoing crisis is expected to create more obstacles for the labor market and to
lengthen the transition from school to work for many individuals. As Bangladesh is a developing
country the online education system is not as advanced as foreign country. There might be some
obstacle like internet issue, electricity issue which hampered online class and they didn‟t get the
proper knowledge which may affected on their career.

“Vulnerabilities to COVID-19 in Bangladesh and a Reconsideration of Sustainable Development

Goals” by Salma begum et al. (2020) state that, The slum people in the city areas and the rural
poor who rely on daily income for their everyday livelihood are some of the worst victims of
COVID-19. Because of lockdown they didn‟t go to work and it also affect on the economy.

Huq (2017) in “Entrepreneurship Education and University Students' Entrepreneurial Intentions

in Bangladesh.” found that, Both domestic and foreign investors feel unsecured to invest in
Bangladesh. which creates an obstacle to open new business and when there is less job generate
employment opportunities for graduates is not possible, so graduates remain unemployed.
1.4 Hypothesis

H 1 : Because of COVID-19 epidemic unemployment rate can be increased.

H 2 : Economic condition of Bangladesh may be affected by the COVID-19 epidemic.
H 3: We also hypothesize that there is a relationship between job markets and the economy.

1.5 Objective

 To understand how Covid-19 might affect the careers of graduates.

 Impact of COVID-19 on the unemployment problems in Bangladesh and find out
possible solutions.
 Find out the link between economic condition and job creation.