A national budget is a calculation of a country’s potential income and expenditure -- a financial plan to estimate revenue and expenses over any given year. Employment refers to the state of having a job or being able to contribute to the economy. Whenever a person is employed, their income will increase and thus their purchasing power also increases.
A balanced budget is a necessity for the overall development of the country as it paves the way for the creation of employment. And yet the unemployment rate in the country has been increasing, according to the latest labour force survey in Bangladesh conducted in 2016 anyway.
According to the survey, more than 60 million people were employed at the time it was carried out; for reference, around 56 million people were employed in 2013. That means only a few million new jobs had been created in those three years. In other words, an average of 450,000 new jobs had been created every year in that period.
But since 2020, employment has experienced a sharp decline. That crisis was exacerbated by the Covid-19 pandemic. About 2 million young people enter the job market in Bangladesh every year, a large number of them try to enter the government or the private sector after completing their undergraduate or postgraduate studies.
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According to the London-based Economist Intelligence Unit (EIU), Bangladesh has the highest rate of the educated unemployed. Out of every 100 graduates, 48 are unemployed. That means one out of every two is unemployed. In the same vein, according to the International Labour Organization (ILO), the number of unemployed in Bangladesh stands at 30 million. A recent report by ILO states that about 3.7 million people in the country will be unemployed in 2022 which is at least 500,000 more than the pre-pandemic period.
Additionally, the country’s unemployment rate is also expected to rise to 5% in 2022 which is 0.6% more than the pre-pandemic period.
According to a study by the International Finance Corporation (IFC), 36% of the people working in micro, small, and medium sized enterprises of the country have become unemployed due to Covid-19. About 20% of Bangladesh’s GDP comes from these micro, small, and medium sized enterprises.
Meanwhile, a survey by the Power and Participation Research Center (PPRC) and the Brac Institute of Governance and Development found that the number of new poor stood at 24.5 million before the start of the second wave of Coronavirus. So, their housing, food, education, and medical capacity is declining. According to the South Asian Network on Economic Modeling, about 41% of the people in Bangladesh will go below the poverty line where, in 2019, it stood at 20.5%.
As a result, it will be all but impossible for our nation to achieve the relevant SDGs by 2030.
While this state of unemployment is being heard around the country, the government is preparing to announce a budget of Tk8,60,00,00,00,000 for the next 2022-23 financial year. In the new budget, the target level of GDP growth is being set at 7.5%.
Our employment has not grown at the rate that our GDP has -- the current GDP we are talking about is simply not employment-friendly. Millions of young people are currently jobless, unemployed, and unable to engage in business due to lack of necessary capital. The forthcoming budget should be closely monitored to ensure that it facilitates job creation and increases employment opportunities.
In this case some initiative can be considered.
First, we need to formulate an investment-friendly budget. Because, if Investment increases, there will be new industrial factories where new employment opportunities will be created. This is an alternative to normalizing the investment environment after the pandemic. Otherwise, private investment will not come.
Second, financial support should be given to rural micro, small, and medium enterprises -- 86% of the total industrial sector of the country is in cottage, small, medium, and small-scale industries. The number of cottage industries in the country is 122,315. There are 651,440 people working in such small sectors, of which 436,000 are women. Therefore, this industry stands to create more employment.
Third, if work can be expanded through the collaboration of entrepreneurs, new jobs will be created there as well. In order for the number of entrepreneurs to expand, it is necessary to give loans on easy terms and at low interest rates. The amount of loans issued needs to increase.
In this case, the supervision of the lending system of banks and financial institutions should be increased. The rate of investment should be increased by stopping the artificial income of banks. For this, Bangladesh Bank has to play a vital role.
After all, the budget for the next 2022-23 fiscal year is very important since it follows the pandemic, which means this budget cannot be conventional like before. In order to make the foundation of the economy sustainable a plan has to be taken to gradually reduce imports, including increase in domestic agriculture, increase in industrial production, increase in exports, so that employment increases as well.
Thus, in the formulation of this year’s budget, along with growth, importance should be given to increasing employment. But, given our current situation, I guess “reducing unemployment” would be more appropriate.
Rokibul Huda Majumder is a postgraduate student of economics at the University of Dhaka.
