Addressing Youth Unemployment & Building Skills for the Future

    LightCastle Analytics Wing
    LightCastle Analytics Wing
    Youth Unemployment

    Bangladesh has sustained a high GDP growth over the past decade that has put to bed the old moniker of “basket case” and helped position the country as one of the world’s fastest-growing economies. Though the predictions from multilateral organizations for FY20-21 are highly varied from one another, The Bangladesh Bureau of Statistics(BBS) reported a 5.24% GDP growth in  FY19-20 despite the effect of COVID-19. As Bangladesh speeds its way towards the status of a middle-income country in line with the Government’s Vision 2021, it has faced a setback with the onset and persistence of the global pandemic. COVID-19 has shone a light upon the existing problems persisting in the development of labor and the consequent decline in the employability of their skills.

    The case is arguably most pronounced through the burgeoning rate of youth unemployment. According to the joint study conducted by the International Labour Organisation (ILO) and the Asian Development Bank (ADB), the country’s youth unemployment rate could rise two-fold to 24.8 percent in 2020. The rate was 11.9 percent in 2019.[1]  This was the initial prediction based on the assumption that the coronavirus threat could not be properly contained within a year. Given the still-high rates of infection at the time of writing and the threat of a possible second wave during the winter months of 2020, fears are yet to be assuaged. 

    The Lockdown Generation or The New Lost Generation?

    Hemingway coined the term “The Lost Generation” for the post WWI youth stricken with anxiety and a lack of purpose. The Youth in the wake of the Pandemic have parallel symptoms and may be called “The Lockdown Generation”. 

    Fresh graduates and youth in both urban and rural settings have seen a lack of openings in the job market– a long-persisting problem in Bangladesh. This issue is explained by a number of factors. 

    • The low barrier to entry and exit of the informal sector, along with its absence of tax burden makes it a more attractive prospect for a large number of youth in Bangladesh. Much of the employment in the informal sector goes unrecorded and incomes undeclared.
    • There is a large gap between the skills in demand in the job market in Bangladesh and what schooling or formal education provides. In many cases, academic qualification and degrees are forfeit when partaking in job-searches as induction or formal job training will be necessary. The state of training and skill-building in Bangladesh is not yet at a scale to sufficiently generate employment demand on a macro level.
    Youth Unemployment
    Table: Percentage of People in Workforce receiving training / Source: ILO
    • A lack of private investment in Bangladesh is a reason behind the lack of job market development. Private investment incentives by the government aim to promote such improvements in the labor market. Private investment has been stagnant around 22-23 percent for a number of years. During FY20-21, it reached 23.40 per cent of GDP, up from 22.07 per cent five years ago, according to the Bangladesh Bureau of Statistics (BBS)[2].  Inflow of FDI may be a lucrative channel in this regard.
    • The COVID-19 Crisis has dramatically affected the finances of many businesses and forced either pay-cuts, lay-offs or halts in employment unless for essential positions. This left the market relatively barren for entry-level jobs. 

    Throughout its impressive development, Bangladesh has not yet been able to shake off the global opinion that domestic labor is cheap. Inflation targets have been continually met by the government’s prudent fiscal spending and monetary policy, and living standards have ameliorated significantly. However, labor productivity and real wages have not risen at such rates. Low productivity, low unionization, combined with an abundant supply of labor willing to work at any given time have kept real wage growth at bay.

    Sl.CountryPer Worker Productivity
    (‘000 of USD as of 2016)
    1.Bangladesh 8.6
    2.Cambodia6.2
    3.China24
    4.Hong Kong110.5
    5.India16
    6.Indonesia24.9
    7.Myanmar10.6
    8.Pakistan16.4
    9.Sri Lanka30.7
    10.Vietnam10.2
    FIGURE: Per Worker Productivity / Source: Asian Productivity Organization, 2018

    One of the best ways to tackle this low labor productivity and bridge the dispersion between in-demand skills in the job market and skills attained through formal education, is the prevalence of Technical and Vocational Education and Training (TVET).

    The main incentive for building and implementing TVET programs is how they will compound and develop the employability of labor by equipping them with the necessary skills for the job market. This will also reduce costs of training by businesses and allow for greater labor productivity. Governments in African countries such as Rwanda, Ghana, and Uganda have already developed nationalised bodies to facilitate TVET as a means of curbing their youth unemployment. In Malaysia, up to seven ministries provide certification upon completion of TVET programs. Sri Lanka is currently planning to implement TVET as a mandatory subject in their school curriculums. In the wake of another industrial revolution, vocational training will go a long way in helping youth adopt new technology and skills in future workplaces.

    Leveraging Skill Building on TVET

    Categories of TVET in Bangladesh

    1. Formal TVET:
    Secondary level of formal TVET courses can be availed upon completion of 8 years of schooling. Subsequently, a certificate of diploma can be availed upon completion of secondary and higher secondary level of TVET.

    2. Short duration skill training:
    Which includes training courses and programs for building specific skill-sets and generally do not span a period greater than one year. Programs are typically formally recognized and offer certification upon completion.

    3. Non-formal or informal training:

    Non-formal refers to training which is imparted through organizations not officially recognized by a governing body and hence not providing a recognized certification. Informal training includes coincidental or passive learning from friends, family etc.

    Youth Unemployment
    Table: Overview of TVET Statistics, 2018 / Source: BANBEIS (Bangladesh Bureau of Educational Information and Statistics)
    Youth Unemployment
    Figure: TVET Institutions by Area / Source: BANBEIS

    Issues with TVET Development

    Currently, the government of Bangladesh is aiming for a 100% parity in terms of education attainment. In the case of TVET, there is a considerable shortfall in reaching this target. Bangladesh Bureau of Educational Information and Statistics (BANBEIS) estimates that gender parity in TVET is only at 23% as of 2018. There is a clear lack of women participation in Vocational training programs and this is reflected by the higher proportion of unemployed graduates, represented by female graduates [3].

    Youth Unemployment
    Figure: Gender Parity for TVET in Bangladesh / Source: BANBEIS

    The Education Watch Report, 2016 [4] observed from CAMPE’s(Campaign for Popular Education) survey from the same year, observed a growing a trend in proportion of people opting for Short Duration Skill Training over time and also showed a positive correlation between the availing of said training with food security status, measured across socioeconomic demographic segments. This brings to focus the importance of improving the effectiveness of Social Security Net Programmes in Bangladesh.

    Improving TVET effectiveness and Generating Youth Employment for the Future

    • The International Labor Organization (ILO) currently has the National Strategy for Promotion of Gender Equality in TVET to bridge the gender disparity in participation rate. This will be an important step in addressing the issue of relatively low participation of women in the Bangladesh labor force.
      (Read also: Female Unemployment in Bangladesh: Are We on The Right Track? [5] )
    • The International Labor Organization (ILO) has formulated The National Training and Vocational Qualifications Framework to reform and improve delivery of TVET in Bangladesh. There is still a gap between what Bangladesh TVET currently offers in terms of curriculum, compared to the programs in Malaysia or Sri Lanka, owing mainly to the low level of technology adoption. Frameworks such as this will aim to scale up the quality and size of TVET institutions in Bangladesh, 95% of which are privately owned.
    • Some changes can be brought to the curriculum or degrees offered in Tertiary Education Institutions across the country to better address the skill gap that exists through communication and collaboration with private or public employers. Additionally, Vocational education can be offered as supplementary to the degrees. These may also serve an additional networking function and help the transition from university to workplace for students.

      In addition to TVET, Youth Employment Generation can be tackled in a number of different ways.
    • Incentivising and improving Private Investment can be an avenue to generating more jobs in the formal sector.
    • Incentives to draw more of the youth towards entrepreneurship such as technical advice, easier loan facilities, tax benefits etc can be useful in creating a multiplicative effect in youth employment generation.
       
    • The Government of Bangladesh is aiming to create 30 million new jobs by 2030 and has drafted a new policy tilted National Employment Policy 2020. As part of this, training institutes will be set up in divisions and there are plans to set up an Employment Department as part of the Ministry of Labor and Employment designed to generate skilled labor and provide them with jobs. This policy should work together with existing TVET institutions to improve their funding, reach and activity. [6]

    It is imperative that a culture of life-long learning is instilled across all educational and vocational training institutions across the nation to ensure that the growth we are experiencing in terms of GDP does not peter out as we look ahead to the future.

    Sartaz Zahir, Content Writer and Sanjir Ali, Senior Business Consultant and Project Manager at LightCastle Partners, have prepared the write-up. For further clarifications, contact here: [email protected]

    References

    LightCastle Analytics Wing

    LightCastle Analytics Wing is the research division of LightCastle Partners. It is tasked with producing periodic reports on the different sectors of the economy, analyzing trends in markets and making methodical, thorough and intelligent analysis to improve strategy and drive business growth.