The manufacturing industry's share to Gross Domestic Product (GDP) in Bangladesh is more than 24 per cent. Such contribution has been on the persistent rise since 2005-06. During the period of 15 years, annual industrial GDP growth rates were positive but the continuity of gradual up-trends was broken with fluctuations. However, the question is : how many jobs have been created in the same period against a specific unit of total assets or investment ? Of course, we know the total number of jobs created, but how far employment generation is proportionate to investment growth matters a lot.
If we explain actual job creation capacity, we can be aware of the real scenario of the poor rate of employment generation. Industrial contribution to GDP is the highest among all other sectors, but employment elasticity is awfully disappointing. As planner, we have substantially curtailed the desired rate of the elasticity to 0.30 in the 8th 5-year plan while we achieved 0.57 in 2010.We cannot understand why the government maintains a concessional attitude towards the private sector for determination as well as realisation of planned targets relating to employment .
Conceptually inter-industry and even intra-industry variations in employment-investment ratio suggest that it is possible for an enterprise to raise employment per unit of investment in many cases. Undeniably, job creation capacity virtually depends on investment productivity, profitability, legal obligation, and after all, on the sense of responsibility of entrepreneurs. It is, however, one of the most important stakeholder responsibilities for an industry to create as many jobs as possible to satisfy the people's expectations since businesses require active cooperation from the people.
Job creation capacity of a firm may be expressed in terms of the quantum of investment deployed for creation of one job. This capacity varies from enterprise to enterprise even in the same industry. So there arises a question as to the level at which optimum or normative capacity should be set. It is highly desirable that a firm creating a job against the lowest size of its investment ( or whose EIR is the lowest) as compared to peer firms of the same industry would be termed as one with optimum job creation capacity level.
The mysteries of slow growth of jobs can be preliminarily unveiled by looking at the investment- employment ratio ( i.e., the size of investment of an enterprise that creates one job) and its variations within and across the industry. The ongoing discussion aims to present micro-level evidence of job creation rates in different industries and firms of the country. Overall data on employment and investment are not available in suitable formats. Bangladesh Economic Review 2020 (particularly the chapter on industry) reveals some data on in
Table-1 shows that there are four pharmaceutical companies and their investment against one job ranges from Tk.3.0 million to Tk10.06 million. Accordingly, varying levels of investment to employment (one job) are observed in other industries selected and presented in the table. If some firms of the same industry employ workforce irrationally and irresponsibly, we cannot expect employment generation in desired proportion. Degree of automation appears to be the most dominant determinant as evidenced by the significant variation in the employment to Investment ratio (EIR) in peer firms of the same industry.
It is seen from the Table-2 that industrial enterprises located in BSCIC industrial estates generated every job against Tk.3.36 lac. Job creation capacity seems to be much higher than elsewhere. This information on low EIR provides an opportunity for an empirical analysis of employment generation endeavour.
It is indicated by Table 3 that the lowest amount of investment for creating one job in EPZs was Tk.4.86 lac (specifically in Uttara EPZ) while the highest investment against one job was Tk.13.69 in Dhaka EPZ. Investment size variation in EPZS may be due to several factors (mainly varying degree of automation and industry category ). It is necessary to have an insight into the EPZs' data on EIR to explore the possibility of higher rate of employment generation.
Table-4 presents very important information regarding actual rates of industry-category based employment generation relative to investment. EIR varies from 5.66 lac to 590.56 lac. Automation level is probably the underlying cause of poor job creation capacity in several industries.
Tabulated information gives a snapshot of poor employment generation capacity in the country. Greater the size of investment for one job, lower the job creation capacity and vice versa. The above information is indicative and useful but not conclusive. We need to undertake surveys and engage in dialogues and negotiations with the representatives of businesses to develop employment generation criteria. Each category of industry / firm / enterprise must be contractually issued a prescriptive rule to create jobs. 'How much investment of a particular type of business should provide how many jobs' would be the rule. Until and unless we fix up the normative standard for creating one job, we cannot get our targets fulfilled.
Would the government create jobs? No, it is the private sector that will do the task. Private entrepreneurs would, of course, decide and act independently to carry on their business, but they are also legally and ethically bound to respond to the call of the government for the greater interest of the public. Unforgettably, the government is the mouthpiece of the people and a segment of the people has no right to disregard the rights of the whole people of a country. Harmonious business-government relation is very essential and can amicably resolve any problem including slower pace of employment generation .
Haradhan Sarker, PhD, is ex-Financial Analyst, Sonali Bank & retired Professor of Management. [email protected]