Why Bangladesh’s Fast Economic Growth Is Failing to Deliver Enough Quality Jobs

A new ILO study finds that Bangladesh’s economic growth has become increasingly disconnected from job creation, with rising self-employment, informality and declining real wages despite strong output growth. The report warns that Bangladesh must focus on creating productive jobs and diversifying its economy to ensure future growth benefits workers.

Bangladesh has long been seen as one of South Asia’s most impressive development success stories. Over the past two decades, the country has combined steady economic growth with rapid poverty reduction, largely driven by its booming ready-made garment industry. But new research suggests that the country is entering a more complicated phase of development.

A recent study by the International Labour Organization (ILO), using labour market data from the Bangladesh Bureau of Statistics and economic indicators from Bangladesh Bank, the World Bank and the International Monetary Fund, argues that Bangladesh now faces a crucial challenge: reconnecting economic growth with employment. The study comes at a time when the economy is dealing with high inflation, declining foreign reserves and financial sector pressures. At the same time, Bangladesh is preparing to graduate from Least Developed Country status in 2026, a milestone that will also bring new economic challenges.

Growth Has Slowed and Pressures Are Rising

Bangladesh’s economy has begun to slow in recent years. GDP growth has fallen to below four percent, the weakest pace since the COVID-19 pandemic. Inflation has also remained high, pushing up the cost of essential goods and reducing household purchasing power.

These economic pressures have created uncertainty for families and businesses alike. While policymakers have focused on stabilizing the economy, researchers warn that the condition of the labour market deserves equal attention. A strong economy is not just about growth numbers; it must also provide decent jobs for people.

When Growth Does Not Create Enough Jobs

The study shows that strong economic growth in the late 2010s did not lead to enough job creation. Between 2017 and 2022, Bangladesh recorded growth rates above six percent in most years before the pandemic. Yet unemployment increased during the same period.

An even bigger concern is the type of jobs being created. Instead of stable wage employment, many workers have moved into self-employment and informal work. Millions of people now earn a living through small household businesses, farming or casual services. While these activities provide income, they often lack job security, steady wages or social protection.

This shift suggests that economic growth alone is not enough to improve living standards if it does not produce productive and secure jobs.

Industry Is Growing, But Jobs Are Not

Another surprising trend is the changing structure of the economy. In most developing countries, workers gradually move from agriculture into industry and services as economies grow. But Bangladesh has seen the opposite in recent years.

The share of workers in agriculture has increased even though the sector contributes less to the economy than before. Meanwhile, manufacturing and industry have expanded in terms of output but not in employment. This means factories are producing more goods without hiring many additional workers.

Technology and automation partly explain this trend. The ready-made garment industry, which once created large numbers of jobs, has modernized its production processes. Machines and digital systems have improved efficiency but reduced the need for low-skilled labour. As a result, job opportunities in manufacturing have not kept pace with economic growth.

Youth and Women Face the Biggest Challenges

Young people are among the most affected by the changing labour market. Youth unemployment remains significantly higher than adult unemployment. Many educated young people struggle to find jobs that match their qualifications, while others are forced to accept informal work with low wages.

Women also face barriers in accessing stable employment. Female labour force participation increased during the pandemic, especially in rural areas. However, researchers believe this was mainly due to economic hardship. Many women entered informal agricultural work to support household incomes when earnings declined.

In addition, women have been affected by changing hiring patterns in the garment sector, which historically employed millions of female workers.

The Need for a Job-Focused Growth Strategy

The report argues that Bangladesh must place job creation at the centre of its economic strategy. In the short term, government spending could help stimulate employment through labour-intensive infrastructure projects and targeted job programmes for youth and women.

In the longer term, the country needs to diversify its economy. Bangladesh currently relies heavily on garment exports, which account for most of its export earnings. Expanding into new sectors such as pharmaceuticals, electronics, information technology and tourism could create new employment opportunities.

Bangladesh’s economic progress remains significant, but the next phase of development will require a new focus. Sustaining growth is important, but ensuring that growth creates quality jobs may be even more crucial for the country’s future.