Job creation to be an uphill task
Bangladesh would face an enormous challenge in creating jobs due to inadequate domestic financing, global recession, fall in export demand and spooked business confidence, said an economist yesterday.
"Alternatively, the slow pace of domestic demand, destruction of capital base, high interest and limited access to finance are obstacles to making self-employment," said Sayema Haque Bidisha, research director of the South Asian Network on Economic Modeling (Sanem).
She was speaking at a virtual discussion on "Covid-19 and the Challenges of Labour Market in Bangladesh".
Through the keynote presentation, Bidisha, a professor of economics at the University of Dhaka, said the challenges of employment against the background of Covid-19 can broadly be linked to major avenues such as for example fall in domestic demand, fall in global demand, the upsurge in labour supply because of returning migrants, restricted productive activities and slow pace of private investment.
With depressed global growth and infection rate still being high, attaining 8.2 % growth and desired private investment will be quite challenging, she said.
"With lockdown and added stress from school closures and lesser access to childcare facilities, female labour force participation can fall further."
Bidisha needed relaxing conditionality and interest on loans, channelling funds through microcredit agencies instead of formal banking channels and separating loan schemes for returning migrants, women entrepreneurs and youth.
Greater diversification of export is necessary by giving incentives to potential sectors such as for example leather, chemical, pharmaceutical, IT, nursing and robotics for the absorption of workers, Prof Bidisha said.
She suggested a careful re-designing of incentives depending on protecting the rights of the staff and creating a separate fund for providing loans to those who might get let go in the coming months.
Employment generation is a problem for the past decade while employment elasticity of growth has been declining and remained low, said Selim Raihan, executive director of the Sanem.
He said that in the short- to mid-term, the near future looks bleak and the depressing effects on employment and wages may continue. The government's policy response linked to the existing labour market challenges has been weak and inadequate.
"One major challenge is the insufficient information and lack of up-to-date data on the labour market. The prevailing social back-up programmes cannot address these growing challenges."
He recommended that beneath the current crisis, the federal government should go for an enlarged deficit budget to invest high on social back-up programmes generally, and labour market-related programmes specifically.
Ahsan H Mansur, executive director of the Policy Research Institute, said scarcity of data is a major challenge to research on the labour market.
Currently, the country is facing three challenges: containment of Covid-19, issues of unemployment and livelihood, and supporting the recovery of the economy, he said.
As the economy has exposed, there's been a slow upward movement, Mansur said.
"However, it appears a sub-optimal point will be reached in this manner. This is determined by the response from the federal government and the private sector."
Mansur expressed his concern about investments, saying the private sector is not going to invest unless the situation gets better.
"While there must be investments in the general public sector, there may be the issue of resources."
He underscored the value of a focused recovery strategy. Attracting investments deflecting from China ought to be an integral part of Bangladesh's recovery and post-recovery strategy.
According to Mansur, stimulus packages for big business are being disbursed quickly but there's been a delay in disbursing the stimulus packages for SMEs.
This must be addressed immediately, said the former senior official of the International Monetary Fund.
Tuomo Poutiainen, country director of the International Labour Organisation, stressed public employment programmes.
He said that stimulus shouldn't only be for business and liquidity but also should have a give attention to jobs and employment.
Poutiainen highlighted the necessity to invest in micro, small and medium enterprises, especially concerning the rural economy.
"It is crucial to emphasise SMEs and self-employment to ensure that it could activate the labour market and boost the economy."
Prof Shamsul Alam, a member of the overall Economics Division beneath the Planning Commission, said that lots of things are depending on the overall situation of the spread of the infection.
Labour productivity has increased both in rural and urban areas, he said.
While enrollment in technical and vocational education and training (TVET) programme was 1 per cent in 2009 2009, it rose to more than 16 per cent in 2018-19. Structural changes also have taken place in the composition of employment.
Monitoring and analysis of the stimulus package are also necessary, he said.
He said the Seventh Five Year Plan did not generate employment needlessly to say.
Sanem's Chairman Bazlul Haque Khondker said there's been very little fiscal response from the federal government to tackle the monetary challenges of the pandemic.
"Other countries have initiated a much more aggressive fiscal response," he said, pointing out that social protection issues linked to the labour market ought to be in the discussion.
Imran Matin, executive director of the Brac Institute of Governance and Development, brought to attention the movement of labour in the ICT-based market and said assortment of data on the labour market should also take this into account.
As the near future outlook perceived by almost all of the persons is uncertain, it is going to affect business confidence and labour dynamics, he said.
"The uncertainty is not just about income but also infection. The interdependence of this perception and real economic trends are critical."
