Bangladesh’s manufacturing sector is losing its ability to create jobs despite strong output growth, raising concerns over future employment and the sustainability of the country’s growth model, economists and experts said at the 9th SANEM Annual Economists’ Conference in the capital on Saturday.
According to them, manufacturing expanded by 9.1 per cent annually over a decade till 2022, yet its share of employment fell to 11.3 per cent from 14.4 per cent in 2017, exposing a clear disconnect between output growth and labour absorption.
The sector still contributes about 25 per cent to gross domestic product, while industry accounts for 37 per cent, but job creation has failed to keep pace with expansion.
Workers are shifting towards lower-productivity sectors, with about 43 per cent of new jobs now concentrated in agriculture-related activities, signalling a move away from higher-value industrial employment.
The trend reflects a weakening link between growth and employment in Bangladesh, said World Bank Senior Economist Nazmus Sadat Khan.
Despite average GDP growth of 6.4 per cent between 2010 and 2024, job creation lagged as industry and services expanded while losing employment share, he said.
Using an autoregressive distributed lag model, he said the growth-employment relationship in Bangladesh is “relatively weaker compared to other countries.”
Sectoral data shows a structural reversal. Agriculture’s employment elasticity rose to 0.98, while industry fell to minus 0.04 and services also declined, meaning growth in these sectors is no longer generating jobs.
Khan said the trend is problematic as growth is increasingly producing jobs in low-productivity sectors, weakening overall economic quality and long-term income prospects.
“Bangladesh should reorient policy from growth-led employment to employment-led growth,” said World Bank Senior Economist Nazmus Sadat Khan.
He said incentives should be aligned with employment outcomes rather than output or profit.
He said high-elasticity sub-sectors such as accommodation and food services at 0.99, transportation and storage at 0.59, and construction at 0.11 should be targeted through tourism promotion and infrastructure development.
He cautioned that rising agricultural employment may reflect a lack of opportunities elsewhere rather than genuine job expansion.
He said the focus should shift to quality jobs, noting that skilled agriculture, forestry, and fisheries account for about 43 per cent of employment, while managers and professionals remain below 10 per cent.
He warned that failure to address the weakening growth-employment nexus could fuel youth disaffection, waste the demographic dividend, and undermine long-term growth prospects.
SANEM Research Associate Dipa Das said manufacturing employment is declining even as the sector remains central to the economy.
She said the contraction is particularly evident among women, pointing to widening gender disparities in access to industrial jobs.
She said urban residents, educated workers, and those with family members already in manufacturing are more likely to secure jobs, while women, rural populations, and those without formal education tend to remain in agriculture.
She said access is shaped by strong network effects, as a household member working in manufacturing makes others eight times more likely to enter the sector, in some cases increasing the probability by 12 percentage points.
This suggests access to manufacturing jobs is not broad-based and remains concentrated within existing networks.
She also warned that although the ready-made garments sector accounts for 80 per cent of exports, it is no longer generating jobs at previous levels, raising concerns ahead of the country’s graduation from least developed country status.
Highlighting global risks, International Labour Organization Country Director Max Tunon said 2.1 billion people, or 51 per cent of the global workforce, remain in informal employment, while 284 million workers live in extreme poverty.
He said that while global labour markets appear stable, deeper concerns persist over job quality and structural transformation.
Rising sovereign debt, limited fiscal space, global uncertainty, and the Middle East conflict are creating additional shocks to labour markets, particularly affecting informal workers, migrants, and small businesses, he said.
He added that Bangladesh has prioritised job creation but needs stronger social protection systems and active labour market policies.
Broadening the discussion, Andalas University master’s student Tidiane Guindo presented a regional analysis of labour productivity across ASEAN economies.
He said foreign direct investment remains the most consistent driver of productivity growth through technology transfer.
He highlighted an “innovation-productivity paradox,” where patent outputs boost productivity but broader innovation efforts fail due to weak links between policy frameworks and firm capabilities.
He said information and communication technology adoption supports productivity in developing economies, but its impact weakens without adequate skills and institutional capacity.
