1. Introduction
Bangladesh’s factor endowment has long been characterized by limited land & material resources and labour abundance, which originates from a huge population squeezed in a very limited geographical area. Its performance in utilizing labour has largely been of the Lewsian pattern of economic development with unlimited labour surplus with a difference though. Instead of employment in the “capitalist” or urban-industrial sector, absorption of the surplus labour of rural origin or urban natives has been in sectors such as construction (for variety of skilled and unskilled work); transport (in which work includes those of drivers, fare collectors & helpers, and drivers of various informal modes of transportation such as rickshaws & ‘laguna’); petty trading (which include street vending, hawking and operating small shops); repair services; hotel & restaurant (cooks and service staff); waste (waste pickers engaged in resource recovery from wastes for reuse & recycling); household service (work of griho kormis); and casual work on a daily basis which includes seasonal work, and short-term work. Informality is the dominant practice in engaging labour in these sectors or those who work as own-account workers. Precariousness of work in these sectors arises from the associated risk, short-term nature of employing without any written contract, insecurity, and inability to meet basic needs of own and support the respective household. Work as griho kormi is mostly done by women and more and more on an hourly or piece-rate basis. Agriculture is still a major labour absorbing sector and backbone of the economy for feeding this country of sixteen million plus population. Along with agriculture, which is largely a sector of informal employment, the sectors noted above avccpint for 85% of the “employed labour” of the country. Yet the two sectors that draw national and international attention are not these as much, if not at all, as it is the instances of readymade garments (RMG) and overseas employment. Reason is they contribute to increasing foreign exchange reserves which serve the needs of the formal economy and its highups. Ironically,the work terms of RMG and overseas workers are also similar to those of more well-known informally employed labour.
The hype of “Bangladesh miracle” hides the above realities. Setting aside the social, political, and environmental cost, if there is a success story to be told it is about utilization of surplus labour for generating economic surplus and thereby capital accumulation. Regrettably, it has been with crude labour exploitation in terms of wage or salary, work terms, and working conditions at workplaces or worksites. The newly emerged entrepreneur class soon after national independence of Bangladesh saw a gold mine in the huge labour pool eager to work for any wage to survive. This labour pool was not limited only to the unskilled rural migrant in the urban labour force. A large pool of school, technical institution, college, and university graduates with diplomas and degrees were also coming out in big numbers every year to work with any salary offered. This supply side situation matched well with the obtaining demand side once the short-lived attempt to adopt a so-called ‘non-capitalist road to development’. Subsequent to the first regime change, a new beginning started with the capitalist market system and the private sector at the helm of investment undertakings. The already existing real estate sector got a big boost, particularly from housing demand in Dhaka. Its transformation from a provincial capital to a national capital made it a magnet for investment and capital accumulation. Its primacy in the urban hierarchy of the country relative to urban population, investment & employment, enrollment at university level education, health services, etc. has become high and is still growing. All this has led to increased demand for labour for the construction & housing, transportation and hotel & restaurant services in major metropolises, particularly in Dhaka — one of the world’s major mega-city, a dubious distinction though — merely because of the size of its population. Whereas all this denotes expansion in the already existing labour absorbing sectors of production and services, readymade garments (RMG) and overseas employment became two big new additions in the list of major labour absorbing sectors of the country.
Although the benefit of labour utilization in the form of economic surplus generation and capital accumulation cannot be captured through available data, its ultimate gain is reflected in economic growth, which has been steady for several decades now. What has been remarkable is that despite different types of governance — military, democratic, and autocratic — economic growth pace has remained steady at 5%-7% per year for the last forty years. But this near rosy scenario collapses once the social and environmental costs are considered. Doing that comprehensively is beyond the scope of this short article. We shall take only one indicator, employment, arguably the most important one for human survival in an exchange economy in which all basic needs are to be met through purchases. It is because of this that employment has assumed unprecedented importance in this time of market economy, which was not the case not only in agrarian or peasant economy but even when self-reliant mode still prevailed and livelihoods existed without market intermediation. It is in this background that employment is the focus of this article. Its coverage includes employment related precariousness of the overwhelming majority of the working labour (Section 2); why it is so or reasons & causes are discussed in Section 3; and then an outline for a way out from employment precarity is added in Section 4. The article ends with concluding remarks (Section 5).
2. Magnitude of Employment Precarity
Since 2010 Bangladesh Bureau of Statistics (BBS), as part of the labour force survey (LFS), has been regularly collecting data on key indicators of labour market (KILM), which include ‘employment in the informal economy’ composed of informal employers, own account workers, unpaid family labour, and informal wage employees. Informal wage employment refers to all jobs that lack contractual rights, legal status, social protection, health benefits and labour law privileges”. Collection of data on labour market indicators including that of informal employment and publishing those denote a great stride for contributing to labour market analysis. Most remarkable development in this regard has been adopting a definition for measuring informal employment. As a result, we now know, as per the Labour Statistics in Bangladesh, in 2018, that of the 63.5 million total labour force of the country, 60.8 million are reported as ‘employed’ (BBS. 2018, p. 121). The same report in the following page adds that of these employed workers 51.7 million are informally employed, which means 85% of the employed labour force work with work conditions characterized by “lack of contractual rights, legal status, social protection, health benefits and labour law privileges”. This proportion has remained around 87-85% since 2010. The vast proportion implies that in a country of about 160 million plus population with a labour force of 63.5 million, only 9.1 million are employed in the formal economy which include both public sector and private sector formally employed employees. Of these 9.1 million less than two million, mostly of the public sector are covered by privileges of pension, contributory provident fund and some health service benefits. Thus, even of the “formally employed”, 88% are not covered by the social security system, except minimum wage and this is the case with the private sector’s employees. In recent years benefits for the public sector employees have improved. This is however not the case with the private sector, which lags in providing the social security benefits to its employees and nothing at all to their temporarily hired employees and workers. Ironically, they hire foreign hands with fat salaries in the middle of a huge employment problem in the country. This also adds to capital outflow from the reserves that has been growing from the hard work of the RMG workers, many of whom are young women; and the overseas workers, who leave their family behind, for working in the Arab or Middle Eastern deserts as drivers or construction workers.
Without considering such employment, particularly those who are in informal employment, Bangladesh’s employment and unemployment data is misleading. Bangladesh’s unemployment rate is always lower than those of most of the developed countries. For example, the unemployment rate in 2016-2017 stood at only 4.2 percent, which is lower than most developed countries’ unemployment rate. Perhaps because of the realization of the misleading nature of low unemployment rate, BBS has devised an indicator denoted as “long term unemployment rate” , i.e., “people who have been unemployed for one year or longer.” As per this indicator, the long-term unemployment rate is 15.2%. Then there are those in the labour force who are `underemployed` by criteria of time (i.e., employed for a limited number of hours); qualification & experience (nature of employment is not what qualification & experience warrant); and income (i.e., income earned is below what is required from a work to meet basic needs). Although BBS notes about these criteria for determining the size of underemployed, it does provide an estimate on the basis of all three indicators for measuring underemployment. On the basis of this author’s previous work, it can be safely said that about one-third of the ‘employed labour’ are likely to be underemployed if estimated by using these three criteria. The reason for the low unemployment rate or high underemployment in Bangladesh is poverty. Poor cannot remain unemployed. They are to create their own job or income earning activity, which are largely informal employment in diverse economic activities as noted at the outset.
3. Why Is It So?
Let us first take note of the supply and demand side factors that are defining the adequate employment generation challenge in Bangladesh. On the supply side, the factors include huge population base and its continued growth, dominance of youth & working age population, increase in women participation in the labour force & work beyond household work, release of labour force from agriculture as more and more technology-intensive farming practices are adopted, and the combined effect of all this leading to the urban ward migration of rural labour force. Meanwhile urban labour force in itself is also increasing through natural population growth in urban areas. On the demand side of the labour market, the major changes include informalization of formal employment which has been in place in the name of flexible enterprise, subcontracting or outwork practices, multiplication of trading and service activities, expansion of the construction & transport sectors, and increased demand for household service work. Need for service workers for eating facilities including restaurants & hotels has become another major source of demand for informal employment. Labour requirements for the RMG sector have been another major demand source, particularly for women labour. It is to be noted that RMG appears as a formal sector industry by enterprise characteristics, but employment characteristics would make a large proportion of RMG as a sector of informal employment. Indeed, one study found 68% of RMG employees & workers as informally employed. Weak enforcement of labour laws and weak trade unions, if not absence of those altogether, also contribute to such employment as being of informal nature.
‘Jobless economic growth’ is a phrase that is used to denote the current Bangladesh situation of limited employment growth relative to economic growth rate. I am not sure if it is even a legitimate expectation that job expansion is inherent in economic growth. Profit motive is bound to be accompanied with an employment and output trade-off. It is becoming increasingly possible for mechanization of the production process. Low labour cost has not led to expansion of formal employment. It has rather added a momentum to informalization of employment. Avoiding hassle with workers and labour or industry ministry inspectors are some of the good reasons for not increasing the size of employment as the crude phase of labour exploitation is waning.
Arguably, expectation of job expansion from economic growth has been a wrong expectation, in the first instance. Generation of employment, particularly of the kind that has been associated with the “capitalist” sector or modern urban-industrial sector of Arthur Lewis, has been waning since the 1960s. Let me illustrate with the example of Adamjee Jute Mills. Its establishment in the fifties was accompanied with a compound for thousands of workers to work in shifts. Along with bungalows for the managerial class, workers’ dormitories, clinics and schools for the children of the workers were established. This was also during a process of capitalist development. Capitalism of the fifties or sixties and capitalism since the eighties is qualitatively so different, perhaps globally but it is so much the case in contemporary Bangladesh, particularly in terms of workers’ plight.
4. Way Out from Employment Precarity
This section briefly specifies a policy agenda and public action programs including potential areas of social entrepreneurship undertakings.
Regulating employment practices: In view of the magnitude of the labour force in the country, unregulated employment practices are bound to hurt labour interest. Reliance on the market economy needs to be coupled with employment regulation for ensuring an income for employees that is adequate for meeting basic needs of meals, shelter with sanitation facility, health care and educating children is a long way, if ever.
Not allowing informalization of employment by the formal enterprises: Flexible enterprise concept is often used for contracting out work services that used to be an integral part of institutions, organizations, business houses and enterprises. Because of these security guards, cleaners, and motor pool service with drivers are no more integral part of such institutions or organizations. Subcontracting, outwork, and piece rate work are other examples of informalization of formalization. ILO as a custodian of labour rights tends to promote formalization of informalization, which is a futile effort in the presence of informalization by the formal sector in order to reduce cost for increasing profit. Government through its Ministry of Labour and Employment and related organizations including ILO and Trade Unions need to bring an end to the ongoing process of informalization of formal sector enterprises.
Expansion of formal employment and improving employment conditions: Government incentive system to the employers must be conditioned with expansion of employment and improvement of working conditions including ensuring employee rights.
Green infrastructure building and service provisioning at cost price: A synergic development strategy would constitute to undertake green infrastructure creation that will increase green jobs with reduced emissions and for cleaning up the environment. Cost recovery by charging for services will ensure reinvestment.
Doing away with employee-worker dichotomy: When an employer employs a person, he or she is an employee. An employee of course can be of different levels or categories as per qualifications, skills, experience and can be employed for varying time periods. All this however does not warrant to have a category of employees who will be called workers. By doing so, a dichotomy is created in terms of contract and compensation associated with the task for which one is employed. Of course, this is not an issue that is limited to Bangladesh. But it is important for Bangladesh because most employment falls in the workers category with all its consequences in terms of precarity.
Discarding minimum wage with basic need meeting income package: Irrespective of level, work is meant to earn a living and that living cost is to be based on the basic needs of the individual. Basic needs packages include cost of food, rent for housing accommodation, health and education for children.
Housing accommodation for employees: Rental accommodations for employees close to workplaces. All employers are required to provide such rental accommodation close to workplaces.
Improved toilet and other sanitation services for women and men at workplaces and worksites. Informal enterprise operators’ work for long hours without having toilets, water or sanitation services around their workplaces. City authorities’ providing of such services, with user pay provision, will contribute to improve the hygienic conditions.
Shelter, education and health services for the children of the informal sector participants/self-employed: Most dangerous sign associated with informal employment is that such work or employment is being transferred from one generation to the other. Prospect of a construction worker’s son becoming a construction worker or a rickshaw driver’s son becoming a rickshaw driver is very real. So is the case for a griho kormi’s daughter becoming a griho kormi. To avert this prospect, taking away the children from worksites & streets for putting in housing accommodation and education ought to be a priority action program.
Instituting a contributory social security system: Precarity of the informally engaged labour force largely associated with the situation a day without work may entail no meal for the day — not only for himself or herself. Any health problem may set off disaster. State or government has largely abdicated responsibility of the social security system for citizens in general and the informally engaged labour force. This is thus an area in which work site based or neighborhood based social entrepreneurship for establishing social security systems in which self-contributions and those of government, local government authorities, philanthropists, and local leaders will be mobilized.
5. Concluding Remarks As alluded to above, this author witnessed Thailand’s transformation from a rural-agricultural economy to an urban-industrial economy. This change denotes a near classical example of Lewisian pattern of development in which a labour surplus economy has largely become a labour-scarce economy. In this transformation the double-digit economic growth sustained for about ten years made it all the difference compared to Bangladesh. In our case, the economic growth pace is still below the mark. More importantly, Thailand as a land rich country, compared to population, could use surplus labour for generating economic surplus and capital accumulation without much hardship to its labour force. Bangladesh’s factor endowments thus require non-market actions, along with reliance on market for ensuring adequate job creation with a level of earnings that would allow meeting basic needs for living. Such an approach has become more crucial since the onset of COVID devastation. Unsurprisingly, the government package of support has been dispatched to the employers instead to the employees of industry such as RMG and nothing to those who are informally employed despite them being the vast majority of the labour force of the country.
Dr. ATM Nurul Amin , Professor Emeritus of Asian Institute of Technology, is a PhD in economics of University of Manitoba. Prior to joining AIT in 1987, he taught at Rajshahi University and Jahangirnagar University. After retiring from the AIT, he taught at North South University and Brac University. Other positions and institutional affiliations include Senior U.N. Fellow, United Nations and Regional Development; Visiting Fellow, Institute of Development Studies, University of Sussex; and Visiting Professor Wuhan University. Professor Amin’s research interests and publications are in the areas of urban informal sector and urban environmental management.
