The Financial Express

Employment generation: Plan and performance

| Updated: March 27, 2021 20:32:24

Employment generation: Plan and performance

Is Bangladesh's economy leaning towards capital intensive production approach? Can we say that output growth is characterised by concomitant employment growth? Indications seem not optimistic. Our Gross Domestic Product (GDP) grew  substantially over the  last decade despite   interruptions caused  by  Covid-19,  but  employment    generation  has  not  progressed  concomitantly though  there have  been also job cuts  in several   businesses or organisations  on account  of the pandemic  impact. Draft  employment  policy 2020, 8th Five-Year Plan  and the National Jobs Strategy  paper  recognise the fact of  poor  employment  generation  but are still far way from  explaining the  real reasons for  slower growth of jobs , let alone quality of jobs.

It was apprehended that the economy would decline and be subject to substantial damage. Even in the worst stage of Corona incidence, the economy grew by 5.24 per cent. Joblessness has occurred but the overall condition has not shown tremendous deterioration. Bail-out (stimulus) packages worth more than Tk.1.00 trillion were given by the government for several forms of adverse effects caused to the economy. We have  become  able to  glorify  our  hard-earned independence  with the story of  persistent  GDP growth  but  that  glory  blooms  partially because of   poor   fulfillment of  employment   goals. Let us look at the   gap between our plan   and performance and try to fathom out the core reasons of the pinpointed goal divergence.

What is the scenario of employment generation so far? Undeniably, we have inadequate or little updated information or statistics for measurement and evaluation of actual performance. It is important to note that we have an obligation to meet SDG targets concerning employment. Employment refers to not only jobs for non-entrepreneurs but also self-employment, i.e. employment through entrepreneurship.

Based on employment elasticity of 0.45 and average annual GDP growth rate of 7.4 per cent during 2016-2020, additional job creation and other projections (Table 1) were made in the 7th Five Year Plan (7FYP). One of the significant goals of 7FYP was to create good jobs, and increase the share of manufacturing employment from 15 per cent to 20 per cent. Categorical data on actual realisation of targets as per the plan are not available via web communication (while GDP growth data are available easily and abundantly). Direct evaluation of performance is thus difficult. Indirect index such as employment elasticities obtained from the 8th Five Year Plan is presented in Table 2.

Table 2 presents information  up to 2017 and it is seen that employment  decreased in agriculture while it is the single largest  source of  employment (Labour Force Survey 2016-17). Service  sector employment  increased  in the period 2010-2017. Alarming  trend is observed in the manufacturing sector as its elasticity has slided to a level  which is  less than 50 per cent of what was  in  the period 2000-2010.This is a  considerable deviation  from the 7FYP goal of increasing  manufacturing  employment. As compared to GDP growth rates, the rate of employment generation has also declined by more than 50 per cent. We can have a summary picture from Table 3 in light of the 7FYP targets.

It is observed from the Table 3 that  GDP growth performance during the period of 7th Five Year Plan was satisfactory up to the FY 2019 as  actual achievement of  growth rates exceeded the targets excepting that of FY2020 ( Covid-19 impact  in  2019-20 is  known to all).Target of domestic employment  was  realised to the extent of  about 55 per cent while overseas employment almost doubled. However, we have perhaps bitterly experienced the plight and uncertainty of overseas employment from the adverse impact of Covid-19.

How is the number of jobs calculated to set targets in the plan? Total private investment increased by 97.58 per cent in FY2020 as compared to that in FY2015, but the linkage of new employment generation cannot be determined owing to lack of expected standard. However, industrial employment rose to 13.1 million in 2018 from 12.1 million in 2010, only 1 million jobs created in a span of 8 years (The Daily Star dated 17-08-2019). We tend to explain the situation with the help of declining employment elasticity. Thus, it is not possible to identify the micro-level reasons of deviations from planned targets. Here lies the basic weakness of planning for employment.

Traditionally, we find employment targets in the 8th Five Year Plan presented in Table 4. Job creation has been calculated on the basis of prescribed employment elasticity of 0.30. Table 4 demonstrates that both domestic and overseas employment targets have been downsized while it is crucial to escalate employment opportunities at a more increasing rate than before. We should not forget that GDP-employment elasticity was 0.57 a decade back. Our capacity  to  create  jobs  is  ostensibly indicated  by  employment  elasticity, but  the core capacity lies in the  willingness,  level of profitability expectation, and  the investment size of  any  entrepreneur.

The government plans for employment, but performance thereof is basically dependent on the private sector. We must have strong policy guidelines regarding allowable limit of automation, job formalisation, skill development, contractual relationship with the private entrepreneurs. Enterprises should be given normative criteria as to how many jobs should be created for a specific size of new or incremental investment. Pragmatic attitude and applied research for criteria development and compliance strategies are required. Would we move towards that direction as soon as possible in order to improve planning and monitoring?

Haradhan Sarker, PhD, is ex-Financial Analyst, Sonali Bank & retired Professor of Management.

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