UNEMPLOYMENT IN BANGLADESH

1. Definition of Unemployment
Unemployment (or joblessness) occurs when people are without work and actively seeking work. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. During periods of recession, an economy usually experiences a relatively high unemployment rate.

2. Types of Unemployment
Voluntary versus Involuntary Unemployment: At a very basic level, unemployment can be broken down into voluntary unemployment- unemployment due to people willingly leaving previous jobs and and now looking for new ones- and involuntary unemployment- unemployment due to people getting laid off or fired from their previous jobs and needing to find work elsewhere. Not surprisingly, economists generally view involuntary unemployment as a larger problem than voluntary unemployment since voluntary unemployment likely reflects utility-maximizing household choices. Economists distinguish between various overlapping types of and theories of unemployment, the major ones are called: Cyclical or Keynesian Unemployment Frictional Unemployment Structural Unemployment Classical Unemployment Hidden Unemployment

1. Cyclical or Keynesian Unemployment: Cyclical or Keynesian unemployment, also known as deficient-demand unemployment, occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and mass unemployment results. 2. Frictional Unemployment: This type of unemployment occurs because of workers who are voluntarily between jobs. Some are looking for better jobs. Due to a lack of perfect information, it takes times to search for the better job. Others may be moving to a different geographical location for personal reasons and time must be spent searching for a new position. 3. Structural Unemployment: Changes occur in market economies such that demand increases for some jobs skills while other job skills become outmoded and are no longer in demand. For example, the invention of the automobile increased demand for automobile mechanics and decreased demand for farriers (people who shoe horses). 4. Classical Unemployment: Classical or real-wage unemployment occurs when real wages for a job are set above the market-clearing level, causing the number of job-seekers to exceed the number of vacancies. 5. Hidden Unemployment: Hidden, or covered, unemployment is the unemployment of potential workers that is not reflected in official unemployment statistics, due to the way the statistics are collected. In many countries only those who have no work but are actively looking for work

(and/or qualifying for social security benefits) are counted as unemployed. Those who have given up looking for work (and sometimes those who are on Government "retraining" programs) are not officially counted among the unemployed, even though they are not employed. Natural Unemployment/Full Employment: Full employment does not equate to zero unemployment. Some unemployment is normal in a market economy and is actually expected as part of an efficient labor market. Full employment is defined as the level of employment that occurs when unemployment is normal, taking into account structural and frictional factors. The natural rate of unemployment is that amount of unemployment that occurs naturally due to imperfect information and job shopping. It is the rate of unemployment that is expected when an economy is operating at full capacity. At this time in the U.S., the natural rate of unemployment is considered to be about 5%.

3. Unemployment in Bangladesh
History of Unemployment in Bangladesh: Historically for a long time British administration was the main cause of this problem. After ending Mughol regime when British came in Sub continent (India, Pakistan, Bangladesh) they started to do business, they exploited the sub-continent. They did not establish any Industry which is helpful to remove the unemployment problem. Though some Industry was made but all of them were placed in Indian Territory. So Bangladesh region was neglected from the British period. After ending British rule in 1947 Pakistan adopted the same rule they established all kinds of Industry in West Pakistan not in East Pakistan. As a result of Pakistani monopoly rule we saw the freedom fighting war in 1971. After nine months continuous war it is divided and named East Pakistan as a Bangladesh. After 1971 Bangladesh has been facing political crisis badly. As a result no government can take long term massive step to remove the unemployment problem. Current Situation: Bangladesh, like other developing countries, suffers from large-scale disguised unemployment in the sense that, even with unchanged techniques of agriculture a large part of the population engaged in agriculture could be removed without reducing agricultural output. Beyond agriculture, disguised unemployment also exists in large industries, offices and organizations, particularly in the public sector. Unemployment among the educated youths is one of the major problems in Bangladesh. The unemployment rate for the population having secondary school certificate level education and above is significantly higher than those with a lower level of education. The unemployment rate for educated women is higher compared to that for the male population. The historic levels of unemployment in Bangladesh is given in the following chart:

Unemployment
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2006 2007 2008 2009 2010 2011

The current unemployment level though stands at 5%, it is to be noted that due to underemployment and other reasons the real unemployment level is close to 30%. The labor force in Bangladesh grew faster than the population and had almost doubled between the year of independence and mid 1990s. The employment on man-year basis has, however, increased and the absolute unemployment, as well as underemployment had reduced. The rate of underemployment was 38.78% in 1972-73 and 27.95% in 1996-97. According to a study of the International Labor Organization (ILO), the rate of growth of unemployment in Bangladesh was 1.9 per cent in the decade of the nineties. But the growth in unemployment currently is 3.7 per cent. The ILO figures also show Bangladesh in the twelfth position among the top twenty countries in the world where unemployment is rising. The number of the unemployed in Bangladesh now is estimated at 30 million. The way the rate of unemployment is increasing, it is feared that at this rate unemployment would soar to some 60 million by 2015. According to another estimate, every year some 2.7 million young persons are becoming eligible for jobs whereas only about 0.7 million of them are getting employment. The number of the 'disguised unemployed' an economic term meaning underemployed people or employed to a degree less than their potential, is some 32 percent.

4. Causes of Unemployment
The most obvious reason of the rising unemployment in Bangladesh is that not enough jobs are being created. Despite the overall unemployment figure being relatively respectable at 5%, the youth unemployment is a much bigger concern. Every year, around 1.5mn graduates are entering the labor force but not nearly enough jobs are being created per year. The national youth unemployment rate was just 2.9 percent in 1995. But it then soared to 8 percent in seven years, and to 13.4 percent in 14. That is a lot higher than other nations in the region, such as India's 11 percent.

A Bangladesh Bank study noted that the total labor force grew by 8.8 million to 49.5 million in 2006. Of these, nearly 35 percent were youth aged 15-29. A survey conducted by the Bangladesh Bureau of Statistics shows that annual employment growth was 2.2 percent during 2003-2006, compared to 4.4 percent in 2000-2003. Rushidan Islam Rahman, research director of Bangladesh Institute of Development Studies (BIDS), says mismatch between the qualification of the youths and the demand for qualification of the manufacturing sector is contributing to a rise in unemployment. Also, the underlying growing population is adding to the problem all the time. Thus, the primary reasons for unemployment in Bangladesh can be summed up as the following broad categories: Growing population and labor force Not enough job creation Migration by sub-qualified people from rural areas to urban areas Mismatch of expectation of labor force candidate and job in concern Demographic of our country at the moment is such that young people (between the age of 2340) is more in comparison to other age groups. Thus, the addition to labor force every year outpaces the overall population growth Defective education system: Bangladesh education system is very defective. It has little provision for vocational training for a learner. It fails to give him an independent start of life. The number of educated unemployed people is increasing day-by-day for the cause of the session jam in the higher educational institutions.

5. Ways to Reduce Unemployment:

The unemployment rate in Bangladesh is theoretically considered to be at around 5.0 per cent. But it is practically, as noted by Mr. Muhith, close to 30 per cent, with "disguised unemployment" and "underunemployment" taken into consideration. And the problems of unemployment in Bangladesh are further compounded by the fact that 1.8 million youths enter its job market every year when the size of backlog unemployed workforce is estimated at 25 million - about one sixth of its total population. In this backdrop, the Finance Minister has underlined the need for creating 2.3 million jobs annually in an effort to make a dent into the existing unemployment situation. This, indeed, is a daunting task. Some recommendations to reduce the unemployment problem have been given below: 1. Create a National Office of Employment to develop long term strategies and oversight of the Bangladesh labor market in order to track trends, analyze data, research emerging problems, and prepare early interventions. 2. Identify growing and potential industries and the skills they will need in future staff. 3. Design a plan which allows for the rapid retargeting of training courses as Community Colleges and vocational schools are traditionally 5 to 15 years behind current needs. 4. Renovate the processes of State Unemployment Offices by implementing coordinated support programs in which workers participate as part of receiving unemployment benefits and employers participate as a means of meeting their future needs for staff. 5. Provide incentives for employers to hire more part-time workers 6. Technical education can be emphasized to fill up the increasing demand for technical manpower both in local as well as to enter into skilled global manpower market which appears to be a huge opportunity for our hardworking and talented youths. 7. In addition to technical education, high emphasis on vocational education at secondary and senior secondary levels are very important. This can make much of the youth self-employed.

6. Conclusion
Bangladesh's experience about tackling its massive unemployment problem has been unsavoury on most counts in recent times. Employment growth rates in the economy have, thus, been disappointing even in the scenario of a relatively high growth rate of its output during the last one decade or more. And this challenge is particularly acute in the formal or modern sectors where productivity and wages are relatively high. Independent studies have revealed that the share of formal employment, either total or outside of agriculture, has declined or stagnated in recent years. The level of investments is the most critical determinant of the extent of job creation. In that sense, the factors -- weaknesses in basic infrastructure, financial systems, property rights and regulatory regimes or barriers -- that conspire to constrain investment, do also ultimately impact job creation. There are no quick fixes to all such problems. But the government must be more pro-active about dealing with them in a determined manner, if it really means business about tackling unemployment problem on a priority basis. A set of sectoral growth-promoting policies that can generate large number of productive jobs merits here a serious consideration. For that purpose, employment generation has to be factored into economic policies for both private and public sectors at the macro as well as sectoral levels. Economic growth is, no doubt, important but even more so is its quality, measured particularly in terms of its capacity to generate rewarding jobs. Promoting entrepreneurship is also another focal point for public policy actions, in view of its essential role, by making it easier to start and nurture more jobcreating small enterprises in the peri-urban areas. For the rural areas, the policy-mix has to be somewhat different, aiming at more job creation programmes outside agriculture with some novelty in approach to encourage establishment or relocate readymade garments (RMG), textiles and other footloose as well as agro-based industrial units. Public policies to help mainstream employment into economic growth and, thus, augment job creation at appropriate sector levels will then make some sense, going beyond rhetoric.