Over the past decade, Bangladesh was widely regarded as one of the fastest-growing economies in the world, with official statistics consistently reporting annual GDP growth rates of 6 to 7 per cent. These figures underpinned a triumphant development narrative—one that was as politically convenient as it was economically assertive. Although concerns about the reliability of these growth figures—particularly given the lacklustre performance of investment and government revenue—had been voiced for years, it was not until the political transition in 2024 that such doubts began to receive more rigorous and widespread scrutiny. Independent analyses—including those based on energy consumption and satellite data—have since suggested that the previous regime may have overstated growth. Still, beyond the statistical embellishment, there is broad agreement that the economy did register sustained—if more modest—growth, with much of the dynamism concentrated in manufacturing and the export-oriented readymade garment (RMG) sector. More consequential, however, are the employment figures produced by the same statistical agency, the Bangladesh Bureau of Statistics (BBS). Unlike the GDP estimates, the labour market data has faced little dispute—and the story it tells is both clear and sobering.

The GDP-Employment Disconnect

Between 2010 and 2023, GDP grew by an average of 6.5 per cent annually, yet employment expanded by just 2.2 per cent. The employment elasticity of growth dropped from nearly 1.0 in the early 2000s to 0.12 during 2013–16, remaining well below 0.5 since. This signals a troubling decoupling between output and labour absorption. Nowhere is this more evident than in manufacturing. Between 2013 and 2023, manufacturing value added grew at nearly 10 per cent per year—yet total employment in the sector declined by 1.3 million, with the share manufacturing jobs in the country’s total employment declining from 16.4 to 11.6 per cent. The readymade garment industry provides a telling example of how elusive job creation has become. Between 2010 and 2023, RMG exports more than tripled—from $12.5 billion to over $38 billion—yet employment in the sector remained flat at around 4 million. In the early 1990s, every $1 million in garment exports generated roughly 545 jobs; by 2023, that figure had fallen to fewer than 90. This perplexing development reflects, amongst others, rising automation and capital-deepening production processes, fuelled by investment in many physical infrastructure projects that did not help much with job creation. Bangladesh appears to be experiencing a form of what Dani Rodrik describes as premature deindustrialisation—where the share of manufacturing jobs begins to fall well before a country reaches the income levels at which such trends were historically seen in today’s advanced economies. The failure to translate industrial expansion into productive employment—particularly for youth and women—raises serious concerns about the inclusiveness and long-term sustainability of its growth and economic prosperity.

The Defeminisation of Manufacturing and the Ruralisation of Female Employment

Beneath the broader jobs crisis lies a gendered transformation. While earlier industrial growth, particularly in garments, expanded female employment—women once made up nearly 80 per cent of the RMG workforce—this trend has sharply reversed, falling to just 39 per cent in 2023. Between 2013 and 2023, the female share in manufacturing fell from 40 to 26 per cent, i.e., in absolute terms, women’s employment declined from 3.8 to 2.1 million. This retreat spans to many sectors beyond garment. Capital-intensive restructuring and automation have disproportionately displaced women, who were more concentrated in repetitive, low-skilled tasks. Notwithstanding the overall female employment rose by 7.7 million during the same period. This apparent contradiction is resolved by geography: urban female employment declined, while rural areas absorbed nearly all the gains. This reflects not improved opportunity, but a reallocation into informal, low-productivity rural work. Agriculture now employs nearly 45 per cent of the labour force despite contributing just over 10 per cent of GDP. For women, concentration in this sector is growing. The result is a simultaneous defeminisation of manufacturing and feminisation of rural informality, reinforcing occupational segregation and undermining gains made in industrial employment.

The Crisis of Youth Unemployment and Skills Mismatch

Youth unemployment poses a serious and persistent challenge in Bangladesh, with young people making up nearly 79 per cent of the country’s unemployed. Although official data show a decline in the youth unemployment rate—from 10.2 per cent in 2016–17 to 7.3 per cent in 2023—this figure is based on a minimal threshold that classifies anyone doing just an hour of paid work per week as employed. As a result, it fails to capture the broader and more complex reality of widespread underemployment among the youth. Nearly one in five youths are not in employment, education, or training (NEET), with rates significantly higher for young women. Female NEET stood at 22.1 per cent in 2023, and women aged 15–29 made up nearly two-thirds of the total NEET population. A growing disconnect between education and employability is a key concern. Among tertiary-educated youth, the unemployment rate rose sharply—from 7 per cent in 2013 to 31.5 per cent. This can be attributable to such factors as quality of education not fulfilling industry expectations, oversupply in certain academic streams, and persistent mismatch between qualifications and labour market demand. Technical and vocational education remains underdeveloped and often marginalised in both perception and policy. Compounding this problem is the lack of meaningful engagement between academic institutions and industry, which is evident in the limited alignment of curricula with practical skill requirements. Opportunities for internships or structured apprenticeships are also in short supply, leaving many young people without the exposure or experience needed to transition effectively into the workforce.

Informality, Underemployment, and the Quality of Work

Even when jobs exist, quality remains low. Over 84 per cent of employment in Bangladesh is in the informal sector, with 97 per cent of jobs in agriculture and 96 per cent among women are informal in nature. Informality means no social protection, job security, or prospects for advancement. Underemployment is also widespread, particularly among the educated. The Labour Force Survey 2023 shows that more than 60 per cent of the underutilised workforce is aged 15–29. Tertiary graduates often work part-time or below their qualification level, while overseas migrants—another major labour outlet—are overwhelmingly placed in low-skilled roles. In short, the labour market traps much of the workforce in low-productivity, insecure, and vulnerable employment—undermining the very promise of economic progress.

Confronting the Employment Challenge Head-On

The divergence between growth and jobs cannot be just treated as a statistical artefact; it is a structural fault line. If unaddressed, Bangladesh not only risks missing its demographic dividend and entering the next development phase with heightened inequality, youth frustration, and stagnant productivity. Therefore, a bold employment strategy must centre on five priorities:

1. Retool industrial policy to promote labour absorption without being just protective for achieving industrial growth only. Incentivise sectors with high job potential—light manufacturing, agro-processing, and care services—rather than only capital-intensive growth.

2. Increased public investment in education, health, and care services is extremely critical. These sectors are labour-intensive and less susceptible to automation. As private investment remains low due to uncertain returns, government leadership is critical to catalyse job creation and crowd in private capital.

3. Bridge the education-to-employment gap gap through a national internship scheme, expanded technical and vocational training, and stronger industry-academia linkages. Education must be oriented towards employability, not credentials alone.

4. Prioritise labour market formalisation, starting with simplified registration, microenterprise support, and incentives for formal hiring. Informality must be addressed to improve productivity and resilience.

5. Advance gender-inclusive employment reform by addressing structural constraints on women’s participation—ensuring safe transport, access to childcare, and targeted digital and STEM training to prepare women for emerging opportunities.

The failure to generate decent, secure, and inclusive jobs—particularly for youth and women—has far-reaching implications. Without meaningful employment opportunities, economic gains risk being hollow, and social stability increasingly fragile.