Bangladesh’s potential to reap the benefits of its demographic dividend is under serious threat from persistent shortcomings in employment generation and productivity. A demographic dividend occurs when the working-age population (15–64 years) outnumbers dependants, including children and older people. Bangladesh is currently enjoying this golden opportunity, but inadequate policies and poor implementation are turning it into an economic risk. According to a recent World Bank report, the country has until 2045 to fully utilise its growing workforce. However, longstanding employment and productivity barriers could undermine this prospect.
Bangladesh’s working-age population is projected to peak in 2045, giving the country more time than many South Asian neighbours to benefit from this demographic advantage. Yet limited formal-sector jobs, low female labour force participation and shortages of skilled workers are preventing the country from translating this advantage into economic growth.
Despite millions of young people entering the labour market annually, decent employment opportunities remain inadequate. Around 84 per cent of the workforce, or approximately 58 million people, is employed in the informal sector, where job security, fair wages and social protection are largely absent. Even 44 per cent of university graduates work in this sector. The education system remains poorly aligned with labour market demands, while gaps in technical skills, vocational training, modern technology and investment continue to constrain productivity.
The demographic dividend will not last forever. Bangladesh is expected to experience rapid population ageing from 2030 onwards and reach an ageing-society threshold by 2051. Unless young people are absorbed into productive employment now, the country risks growing old before becoming rich. Failure to build savings and assets will place mounting pressure on healthcare and social security systems. Meanwhile, unemployment and low productivity are widening inequality and fuelling frustration among young people, threatening social stability.
The economic contribution of this demographic advantage has been significant. Since 2000, the expansion of South Asia’s working-age population has contributed an average of 0.4 percentage points to annual GDP growth and 1.1 percentage points to labour productivity growth. However, its contribution to GDP growth is projected to decline to just 0.1 percentage points by 2050. By 2049, people aged 65 and above are expected to make up 14 per cent of the region’s population.
Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, has stressed the need to help businesses create better jobs, equip young people with market-relevant skills and remove barriers to women’s workforce participation. Strengthening healthcare and ensuring income security for older people are equally important. Currently, only 17 per cent of South Asia’s working-age population contributes to pension schemes, while just 10 per cent of older people receive pension benefits.
We believe the government must act firmly to protect this historic opportunity. Investment in information technology, artificial intelligence, technical and vocational education must be prioritised. Industrialisation should be accelerated by attracting domestic and foreign investment, while young entrepreneurs need easier access to finance and simpler business procedures. Expanding women’s employment and building a skilled, productive workforce must also become national priorities.
Bangladesh cannot allow to waste this limited window. Without urgent reforms to transform its workforce and generate productive employment, the demographic dividend could turn from a national blessing into a demographic disaster.
