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Employment in Bangladesh

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Bangladesh is situated in southern Asia, on the delta of the 2 largest rivers on the Indian subcontinent—the Ganges and Jamuna (Brahmaputra). It borders with India in the west, north, and east, with Burma (also known as Myanmar) in the southeast, and with the Bay of Bengal in the south. The country's area is 144,000 square kilometers (55,598 square miles), and it is divided into 6 administrative divisions (Dhaka, Chittagong, Khulna, Barisal, Rajshai and Sylhet) and 4 major municipal corporations (Dhaka, Chittagong, Khulna and Rajshahi). Comparatively, the territory of Bangladesh is slightly greater than the state of New York. Bangladesh's capital city, Dhaka, is located in the central part of the country. Bangladesh occupies the eastern part of the Bengal region (the western part of the region is occupied by the Indian state of West Bengal), which historically was part of the great civilizations in the northeast of the Indian subcontinent.
The population of Bangladesh was estimated at 129,194,224 in July of 2000, making Bangladesh the tenth-most populous state in the world. Having a total area the size of New York state, the country has a population equal to half that of the United States or 8 times the population of New York State. It has almost doubled since the 1960s, due to improved health, medical facilities, and longer life expectancy. In 2000 the birth rate stood at 25.44 per 1,000 (slightly higher than the world average), adding around 190,000 people every month. Meanwhile the death rate stood at 8.73 per 1,000. The estimated population growth rate is 1.59 percent, and if the current trend remains unchanged, the population could double within the next 45 years.
In 1970, the population of Bangladesh was about 66 million, and the country at one time had one of the highest birth rates in Asia. The country's population doubled between 1950 and 1977 and almost doubled again between 1977 and 2001, putting severe pressure on the natural resources and leading to land shortages. In the 1970s the government introduced population control and family planning initiatives, aided by various international organizations, including United Nations Children's Fund (UNICEF), United Nations Population Fund (UNFPA), and the World Bank. The fertility rate (the average number of children born to a woman) in Bangladesh declined from 6.8 babies per woman in 1965 to around 3 per woman in 1999. However, these population control initiatives were undermined by the fact that two-thirds of the population still lives in rural areas, where historically population growth was very high, and by the fact that almost two-thirds of the people in the country are illiterate. A number of issues still need to be addressed, including the supply of safe drinking water, malnutrition among children (which remains the highest in the world), early and forced marriages, and illiteracy among the population in general and women in particular.
The population growth in the country was offset by rapidly rising emigration of people, both permanent and temporary, in the 1980s and 1990s. The major destinations for Bangladeshi workers seeking temporary jobs are Kuwait, Malaysia, Qatar, Saudi Arabia, Oman, and the United Arab Emirates, where they are employed mainly in the low-skill and low-wage construction and service sectors and in agricultural plantations. Other popular destinations for emigration are Western Europe, the Americas and Australia, where large Bangladeshi communities formed during the last 3 decades. According to the CIA World Factbook, the emigration rate stood at the 0.77 migrant(s) per 1,000 populations in 2000, or around 1 million a year.

The main commercially viable natural resource in Bangladesh is gas, although there are reports of the existence of moderate-sized reserves of coal. Total gas reserves are estimated at 21,000 billion cubic feet. In 2000 Bangladesh utilized 370 billion cubic feet, mainly for domestic consumption. The major gas fields are situated in Greater Sylhet district, the Bay of Bengal, and Greater Chittagong district. Transnational corporations are keen to be involved in gas exploration in Bangladesh and its exportation to the huge Indian market; however the Bangladeshi government is resistant to the idea of exporting the gas, as according to local experts' estimates the proven reserves could run out within the next 30 to 40 years.
During the 20th century, Bangladesh like neighboring Burma (Myanmar) and Nepal largely missed the industrialization wave that changed the economies of many countries in the Asian region, such as Malaysia, Singapore, and Taiwan. At the beginning of 2001, manufacturing contributed about 24.3 percent of the GDP, providing employment to 6.2 million people or 11 percent of the workforce. Between 1989 and 1999, the manufacturing sector in Bangladesh grew at an average annual rate of around 7.2 percent, albeit from a very low base. The cheap, reliable, and abundant labor available in Bangladesh is attractive to the world's leading transnational corporations, but they have been very slow to move into the country, as they face regular industrial unrest led by radical trade unions, poorly developed infrastructure, red tape, and a very small local market. As in neighboring India, the Bangladeshi government promoted the idea of state-led industrialization combined with heavy state involvement in and state control of enterprise activities.
The manufacturing sector in Bangladesh comprises mainly small, privately-owned, often un-mechanized enterprises or large, state-owned, often loss-making enterprises. The main industrial centers are Dhaka, Chittagong, Khulna, and Rajshahi, which have (by local standards) well-developed transport infrastructure, including access to seaports and railways and the sizeable and very cheap unskilled and skilled labor force. The industrial enterprises concentrate mainly on the production of jute goods, ready-made garments, foodstuff processing, and chemical production.
Most of Bangladeshi jute goods are produced in large state-controlled enterprises for export to the United States, Europe, and other markets, contributing Tk13.3 billion in 1997-98 to the country's export earnings and Tk11.7 billion in 1998-99. According to the EIU Country Profile, Bangladesh accounts for 90 percent of world jute fiber exports. The jute processing enterprises are vulnerable to downturns in the regional and international market and experienced some recession in 1998-99. Additionally, during the last few years the demand for jute in the international market has been in decline due to increasing use of synthetic materials in the areas where jute was previously used. However, these jute processing businesses still have plenty of the cheap local supply of raw materials and, if they continue to improve the quality of their products, with efficient management and marketing they may expand their export potential.
During the last 2 decades Bangladesh has found a strong niche in ready-made garments (RMG), becoming one of the world's leading exporters of these products. There are around 2,600 small and medium-size garment-manufacturing enterprises, providing employment for about 1.4 million local workers, mainly women. Access to cheap and reliable local labor makes Bangladeshi RMG manufacturers very competitive in the international market, although most of the fabrics and machinery must be imported (in 2000 Bangladesh imported 160,000 metric tons of cotton from the United States). According to the U.S. Department of State, total clothing exports reached about US$5 billion in 1999-2000, mainly to the United States, Europe, and Canada. Bangladesh especially benefited from the multi-fiber arrangement with the United States and the generalized system of preferences with the European Union, which set special quotas for the RMG imports from Bangladesh. The RMG sector experienced rapid growth during the last 5 years, but with the rise of free trade and elimination of the quota system at the end of 2004, Bangladesh will face very tough competition from other Asian countries such as China, India, Indonesia, Thailand, and Vietnam.
Bangladesh has a well-established food processing sector, which relies on domestic agricultural production and is oriented mainly to domestic needs. It includes sugar refining and milling, production of edible oils, processing and preserving of fruits and fruit juices as well as fish processing, especially shrimp and prawns. As a tropical country Bangladesh has a plentiful domestic supply of exotic fruits and sea species.
In the 1990s 2 major changes affected the development of the industrial sector in Bangladesh. First, the end of the numerous military coups and the establishment of civil government brought in political stabilization, which attracted direct international investments and encouraged the inflow of foreign aid. Secondly, the policy of economic liberalization, structural adjustment, and privatization helped to increase the competitiveness of the local industries and encouraged them to search for new overseas markets. In order to promote the attractiveness of the Bangladesh economy, the government established special export-processing zones (EPZ). They are situated in Chittagong, Dhaka, Chalna (near Mongla port in Khulna) and in Commila, where investors are given access to well-developed infrastructure and enjoy tax breaks and other privileges. By the year 2000, the EPZs had attracted around US$415 million worth of foreign investments and more than 150 firms had moved there. According to the U.S. State Department, the United States is the single largest foreign investor in Bangladesh with total fixed direct investment of about $750 million. The major investment projects were in the chemical, electronics, and electrical industries. The United States is followed by Malaysia, Japan, and the United Kingdom and the next tier of investors are Singapore, India, Hong Kong, China, and South Korea. The U.S. State Department estimates U.S. investment in Bangladesh will be about $2.5 billion in 2 to 4 years.

Tourism is a small but rapidly growing sector of Bangladeshi economy. According to the International Labor Organization, together with the wholesale and retail sector it provides employment for almost 6.0 million people (1996), or around 10.8 percent of the labor force. Government statistics state that 171,000 tourists visited the country in 1998, contributing Tk2.4 billion to the national economy. Most visitors were from India, Australia, Germany, the United Kingdom, and the United States.
Tourism could only take off in the 1990s, after the stabilization of the political situation in the country and the end of the tribal insurgency in the Chittagong Hill Tracts area (southeast of the country). Bangladesh has huge potential for attracting foreign tourists as it has a deep cultural heritage, a number of ancient monuments and temples, and a rich natural heritage, including tropical forests, beautiful hills, rivers, and national parks. The country offers bargain-shopping and exotic souvenirs, as well as a wide variety of activities, from eco-friendly to adventure tourism. However, it needs to renovate and expand its hotels' infrastructure and other services, which are still underdeveloped.
The financial service industry remains underdeveloped in spite of a decade of major reforms conducted under the Financial Sector Reforms Program. According to the International Labor Organization, this sector provides employment for 213,000 people (1996). Since independence it has been under state control, as the major commercial banks were nationalized soon after independence. The local banks are often accused of providing poor financial services and being beset by corruption, inefficient management and capital inadequacies. Bangladesh lags behind in the introduction of computerized banking payment systems, the development of electronic payment systems, and electronic banking. The Agrani Bank, Janata Bank, Rupali Bank and Sonali Bank are the main financial institutions still under state control. They account for almost half of all deposits.
In 1999 the government launched a Commercial Bank Reform Project intended to improve the functioning of the private commercial banks. One bank has provided a success story: the Grameen Bank, which was founded by university professor Mohammad Yunus, pioneered in providing small credits to local communities in need. At present the IMF and the World Bank, which are often notoriously ineffective in the poor countries of Asia and Africa, have carefully studied the Grameen Bank's microcredit model with a view to applying it in other developing countries.
In Bangladesh, as in many other Asian countries, many small- and medium-sized businesses have been built around the retail sector and are often associated with small shops and restaurants. The retail sector provides employment for a large number of people, but it still remains relatively underdeveloped, due to a generally low level of income among the population. There are still a number of small family-run traditional shops and cafes, selling mainly locally-made products.
The United States has found that the enforcement of intellectual property rights is "weak" and that "intellectual property infringement is common." The Bangladeshi government has begun to address this problem seriously, introducing a new Copyright Act in 2000 in order to bring the country's copyright laws into compliance with the WTO. This act updated the Patents and Design Act of 1911, and some other outdated regulations.

Unemployment and underemployment
Table 5.1 shows the unemployment rates for Bangladesh, based on the usual definition. It can be seen that the unemployment rates are very low for both women and men, who suggests that the conventional definition is unsuitable for a country such as Bangladesh.9 Conceptual problems may be more complex for the female labor force. The underestimation of female unemployment may be higher as women often move out of the labor force when they become unemployed – becoming “discouraged workers”. Moreover, the overwhelming majority of the Bangladeshi female labor force is made up of either the self-employed or unpaid family workers.

These types of workers do not consider themselves unemployed even if they are without work (Myrdal, 1966). Also, in the case of women employed in the informal economy, open unemployment is less likely to be revealed since women in such employment may not openly seek a job. In the rural labor market there is no formal job search process for such workers. Unemployed workers do not receive any unemployment benefit in Bangladesh, and therefore do not have any incentive to reveal their unemployed status to interviewers.

The data on changes in male and female unemployment rates from 1989 to 2000 can also be taken from table 5.1. Both the male and female unemployment rates increased continuously over the entire decade. Besides insufficient job growth, this state of affairs may be the result of two other factors. First, during this period men and particularly women educated to SSC level and above entered the labor force in larger numbers but failed to find work. This issue will be discussed in further detail in section 5.3. Second, the formal labor market, where open unemployment is more visible, expanded during the decade.

Before the empirical data on underemployment is given, the methods for measuring unemployment and underemployment are explained and suitable indicators for analyzing underemployment in this context are put forward. Unemployment can be measured using two methods. The first chooses a norm for the standard hours of employment in a week, and those who work less than this norm are identified as underemployed. The LFS of Bangladesh uses 35 hours as the norm for the standard hours worked in a week.

Second, to take into account the extent of underemployment, the time criterion index of “unemployment equivalent” (UE) can be used. The UE is calculated on the basis of the difference between a hypothetical norm of supply of days over a year and the actual days of employment of a worker (Krishna, 1973; Khan et. al., 1981; Rahman, 1996). Table 5.2 shows the UE rates for both men and women: the rates for women are much higher than for men (20 per cent and 6.2 per cent, respectively, in 1995-96 and 16.8 per cent and 2.2 per cent, respectively, in 1999-2000) in both periods.

Table 5.3 gives the underemployment data for Bangladesh. Female underemployment rates are many times higher than the male rates, the figures being 45.5 and 13.0 per cent, respectively, in 1995-96 and 52.8 and 7.4 per cent, respectively, in 1999-2000. In urban areas, the underemployment rates for women and men were 38.2 and 4.7 per cent, respectively, while in rural areas the figures were 57.8 and 8.1 per cent in 1999- 2000 (see table 5.3). Underemployment is more common in rural areas since employment is more likely to be casual and so many families still share whatever is available for consumption. The female/male unemployment and underemployment rates show much wider gender disparities than any other labor market characteristics.

The average hours of employment are shown in table 5.4. In 1999-2000, men worked an average of 49 hours per week (a slight rise from 1995-96) and women worked on average 33 hours per week (a drop in hours worked since 1995-96). Since women work fewer hours than men and their underemployment rate is also higher, it is possible that the difference in total earnings of male and female workers is much higher than the difference in the wage rates of the two groups.
Any interpretation of female underemployment should take into account the fact that women undertake most of the domestic work (World Bank, 1996). Some of the time not spent in “employment” is, therefore, taken up by household duties, so the methodology for estimating the unemployment equivalent rates in future LFSs needs to take this into consideration (tables 5.2 and 5.3).

Educated and youth unemployment
Unemployment rate data by age show a significant difference between the male and female labor force. In 1999-2000, the unemployment rate was as high as 31.6 per cent for 15- to 19-year-old girls, whereas 3.9 per cent (for those aged 25 to 29) was the highest unemployment rate recorded in the male labor force (see table 5.5). The unemployment rates for young women increased dramatically between 1995-96 and 1999-2000, while the unemployment rates for young men showed a very different pattern: they dropped substantially for the 15-19 (from 8.1 per cent to 0.2 per cent) and 20-24 age groups (from 7.8 per cent to 0.1 per cent) but did not change very much for the 25-29 age group.

One of the most important factors that need to be analysed in relation to unemployment is its link with education. Table 5.6 shows that young educated women are facing rising levels of unemployment, which is in stark contrast to the unemployment pattern of young educated men. The unemployment rates for women with class I-X and SSC/HSC education levels rose sharply between 1996 and 2000. By contrast, the unemployment rate for young men with SSC/HSC level education declined slightly during this period. The supply of SSC/HSC educated women increased substantially during this period, since young women were given incentives (in the form of scholarships) to continue with secondary education. However, this was not accompanied by a commensurate increase in the number of job opportunities, with the resultant rise in unemployment rates. High unemployment levels among the welleducated are not only a concern for the workers themselves but is also a general socioeconomic problem: it is a waste of resources, with a consequential loss of returns.

The unemployment rate for young women may continue to rise if no specific measures are taken to generate employment for those who might lose their jobs in sectors facing a drop in demand. This is a distinct possibility in the RMG sector, which employs between 70 and 90 per cent of the female workforce (see table 5.7). The lifting of the Multi-Fibre Arrangement in 2004 and the loss of the quota in garment exports by Bangladesh already has had a negative impact on employment numbers in this sector.

Young women workers in the Ready Made Garment (RMG) sector already are facing redundancies on a large scale, and Bangladesh, therefore, needs to take steps to re-skill and reemploy them and generate new employment opportunities. A large percentage of female workers continue to face an uncertain future. Specific measures should be taken to generate more employment, in particular, for young and educated women who are being retrenched from the RMG sector.

Table 5.1 Unemployment rate in Bangladesh by sex, 1989-2000 (as a percentage)

Table 5.3 Underemployment rate in Bangladesh by sex, 1989-2000 (as a percentage)

Table 5.4 Hours worked per week by male and female workers, 1996 and 2000

Employment Promoting Growth in Bangladesh: Monetary and Financial Sector Issues
Reducing poverty remains a formidable challenge for Bangladesh. Although economic growth has improved in recent years, the better economic performance has not translated into satisfactory poverty reduction. Recognizing this disjuncture between the country’s record on economic growth and progress in poverty reduction, current policies emphasize that strong economic growth alone is not adequate for sustained poverty reduction in Bangladesh. For successful poverty reduction, the strategies must also ensure that the poor can get increasingly higher share of the benefits of growth.

In Bangladesh, almost all households depend on employment as their primary source of income. This is especially true for the poor households since the only abundant productive resource that the poor have is their own labor. Increasing employment opportunities and raising the returns to labor is therefore the most viable option to reduce poverty and meet the country’s human development goals. In this context, one important issue is to recognize that simply having access to employment is not enough to lift the poor households out of poverty. For reducing poverty, both quantity and quality of employment need emphasis for which economic growth alone is not adequate. This requires an employment-centered strategy to growth in which employment opportunities would expand for the poor along with returns adequate enough to raise the households out of poverty.

Obviously, in a ‘labor-surplus’ economy such as Bangladesh, the developments in the labor market are crucial to bringing about desirable changes in growth possibilities and meeting poverty reduction and other social goals. In particular, the expansion of decent employment opportunities through both wage and self-employment to absorb the growing labor force is a key challenge to ensure both rapid growth of productivity-enhancing employment and fulfill the poverty-reducing labor rights, such as the rights to work, employment, social protection, and social dialogue in an integrated manner.

Labor Market and Employment Structure
The estimated population of Bangladesh is 142.4 million in 2008, which is growing at a rate of 1.4 percent per annum in recent years. Of the total population, more than 70 percent live in the rural areas. The share of the labor force in total population has remained relatively stable at around 35 percent in the recent decade. The Labor Force Survey 2005-06 gives a labor force participation rate of 58.5 percent for the entire country. The rates are higher in rural (59.4 percent) than in urban areas (55.7 percent) and for illiterate people. The participation rate for women is significantly lower (29.2 percent) than that of men’s (86.8 percent).

The labor force in Bangladesh has expanded rapidly over the last two decades. The total labor force was 47.4 million in 2006 compared with 36.1 million in 1996. This shows that every year more than one million people enter the labor force and, given the present demographic trend, the growth of the labor force is unlikely to taper off during the coming decade.

The rural-urban variation in the labor force growth is also significant. Between 2000 and 2006, the rural labor force grew by 19 percent to 36.1 million; while the growth in urban labor force was from 8.7 million to 11.3 million, an increase by 30 percent. Among others, this reflects the impact of significant urbanization that has taken place in the country. In urban areas, females accounted for 24 percent of the labor force in 2006 compared with 19 percent in 1996. The size of the female labor force in the rural areas increased from 3.8 million to 8.6 million over the same period. While the total labor force participation rate increased from 52 percent to nearly 59 percent between 1996 and 2006, the male participation rate remained unchanged at around 87 percent but the female participation rate increased sharply from 16 percent to 29 percent.

Considering the total size of the population, the number of unemployed population is low. As per the ILO definition, the unemployment rate was 4.2 percent in 2006. This is not surprising in a country like Bangladesh since the participants in the labor force are compelled to engage in some work—even for few hours and at low wages in the informal sector—in order to subsist with his/her family.3 Thus the standard unemployment rate does not give a real picture of the supply-demand balance as well as the degree of inefficiency that prevails in the labor market.4 The un- and under-employment rates are generally higher among the youth and educated labor force especially among those with secondary or post-secondary and higher education.

Another important aspect of the labor market in Bangladesh is the formal informal divide in employment which has significant consequences for return to labor and security of employment. The concept captures forms of employment that lack regulatory, legal, and/or social protections. Informal employment is defined in terms of the nature of enterprise in which the work takes place (e.g. the informal sector) and the relationships in employment.

In 2006, the vast majority (79 percent) of the total employed labor was engaged in informal activities. The gender difference in this respect is wide: of the total female employed labor, 86 percent were employed in the informal sector while similar share was 76 percent for male labor. In terms of status of employment, self-employed/own account workers category forms the largest group accounting for 42 percent of total working labor in 2006 followed by unpaid family helpers (22 percent). The movement across different categories over time indicates increasing commercialization of the economy and higher mobility of the labor force across various activities. There exists, however, significant gender difference in terms of status of employment. More than 60 percent of the female labor (compared with less than 10 percent of male labor) worked as unpaid family workers in 2006. The majority of the poor women work as unpaid family workers or for daily wages in agriculture or in non-farm and family enterprises.

A noteworthy development in the case of female employment is the boom in the readymade garments (RMGs) sector in which nearly 90 percent of the employees are women. In 2006, about 32 percent of the employed women worked in non-agricultural sectors of which more than a third was engaged in the RMG sector. Garment industry jobs that tend to be concentrated in big metropolitan cities (Dhaka and Chittagong), have attracted many young women migrant workers from the rural areas, often from the poorer households. For these young women, factory work means not only higher earnings, but more status and responsibility relative to other work available in the rural areas including a sense of pride and empowerment at being able to support their families.

Table 1: Trend in Employment Pattern
The above highlights two important characteristics of the country’s employment situation. First, the problem of unemployment mostly affects the youth labor in Bangladesh. This suggests that the economy needs to generate employment opportunities for the youth at a much faster rate compared with the past. Second, the large majority of the unemployed youth are educated who are deprived of employment opportunities largely due to mismatch between supply and demand in the labor market, inappropriate and inadequate skills to effectively perform in the labor market, and slow pace of job creation particularly in the formal sector. The policy implications are clear: in order to meet the challenges in the labor market, Bangladesh needs to create jobs for the educated youth at a rapid rate, which will come mostly through rapid expansion of productive and skill intensive formal and informal sector activities.

Education and health status of the labor force
Access to the education system in Bangladesh continued to grow during the early part of the 2000s. This was particularly true of the secondary education system; between 1999 and 2003 the gross enrolment rate increased from 48% to 54% and implied an increase in enrolment of approximately 1.2 million students (BANBEIS 2006). Increases in female enrolment at secondary were even more pronounced and were partly driven by the female secondary school stipend programmes that have provided tuition free secondary schooling and a small stipend to all female secondary school students since the mid 1990s (Hossain and Kabeer 2004; White 2005). By 2003, female gross enrolment rates at secondary were 7 percentage points higher than male enrolment rates (BANBEIS 2006). These increases in secondary school enrolment have led to general increases in the level of education in the labor force during the 2000s (see Table 5).

Female education levels have increased at a faster rate than male education. Between 2000 and 2005 the average years of education for a female labor force participant had increased by over a year (see Table 5). By 2005 the education gender gap had narrowed considerably although men still had approximately half a year more education than their female counterparts. Levels of human capital are understood to determine both women’s participation in the labor force and also the type of work that they are engaged in (see for example Mahmud 2001). The changes documented in Table 5 suggest that the increased participation of women in wage employment and higher productivity non-farm self-employment has been driven by improvements in female education.


Notes: There is no information in the HIES on the number of years of education completed for individuals that are not literate. To generate years of education these individuals are assumed to have zero years of education. See Section 3 for a fuller discussion.

As would be expected education levels are higher for individuals engaged in nonagricultural activities and in particular salaried employment. In 2005, the average salaried worker had 3 years of post-primary education compared to only 2 years in 2000. As Table 5 shows the increases in the stock of education in the labor force were almost exclusively concentrated amongst this group. Average years of education for the self-employed in agriculture and day laborers did not change. It is also interesting to note that education levels of unemployed individuals tend to be higher than for employed individuals and have grown by a similar amount in absolute terms between 2000 and 2005.

Table 5 shows impressive gains in education for the labor force but at what level of education have the main increases in education occurred and which groups have been the main beneficiaries? Interestingly, increases in the stock of education have largely been due to increases in the labor force with some secondary education. In 2000, 26% of the labor force had some secondary education compared to 31% in 2005.

While this gain is impressive the increase is largely due to individuals that have started but not completed secondary education. This reflects the very high drop-out rates in secondary school. A survey in 2005 found that only one in five students entering non-government secondary school successfully completed the SSC (CAMPE 2006).

Increases in the education level of the labor force have not been spread evenly across the country (see Figure 1). The largest absolute increases have taken place in Chittagong, Dhaka and Sylhet, divisions that have also experienced the largest declines in poverty (see Table 1). Given the overall increases in the education of the labor force it is also surprising to see the relative stagnation, particularly of male education, in Barisal. It is also the case that increases in education have also been concentrated amongst the richer population groups. For example, between 2000 and 2005 the average education level of labor force participants increased by one year for the richest quintile compared to only 0.5 of a year for the poorest quintile (see Appendix Table 2).

Turning to the health of the labor force the HIES asks whether individuals have suffered from any chronic illnesses or disability during the last 12 months and whether they have suffered from illness or injury in the 30 days prior to interview. While these questions may not capture effectively the overall health status of individuals they both show general improvement. For example, in 2000, 19% of Draft for comments employed individuals reported that they had suffered from illness or injury in the last 30 days compared to only 15% in 2005.

Wage Levels and Labor Market Regulations
High wage rates are often blamed for slow growth of productive employment in the formal sector in less developed countries. Wage rates are considered high when total labor cost exceeds the productive contribution of the employed labor. Standard explanation of such labor market developments runs in terms of high wages and rigid labor market regulations (e.g. trade unionism and minimum wage laws). In Bangladesh, the total number of employed labor is estimated at 49.7 million in FY08. With current employment characteristics, about 10.4 million of the total employed labors are likely to be engaged in the formal sector while the rest are involved in informal activities.

For illustrating the high wage issue, we take a hypothetical policy goal of raising formal sector jobs by 25 percent (from 10.4 million to 13.0 million). For the purpose, we simulate how much the average wage of a formal sector worker needs to fall in order to achieve the above goal. For the simulation, we assume a wage elasticity of employment of -0.6 which is a typical value for countries like Bangladesh. With the above numbers, the average formal sector wage would have to fall by nearly 42 percent to generate 2.6 million new formal sector jobs. The resulting average wage of a formal sector worker would be Tk. 3,060 per month in 2008, which is 32 percent lower than the estimated household poverty line for the year. As a result, nearly 51 million people (10.4 million formal sector workers plus their dependents) would suffer.

On the other hand, 12.7 million people would benefit, that is, the 2.6 million workers getting new formal sector jobs and their 10.1 million dependents. If we assume that these workers with new jobs would come from informal sector activities, their earnings would rise by around 10 percent. However, these people would still be living below the poverty line and the total size of the formal sector would remain small at around 26 percent of the total employed labor. So, although the depth of poverty for a small segment of the labor force might be reduced with such policies, the net effect would be a marked increase of the incidence of poverty as a result of wage cut in the formal sector.

Although labor unions are often considered as a major source of labor market rigidities, unions represent a small and diminishing share of the country’s labor force. Trade unions now represent only about 4 percent of the country’s total labor force. Moreover, few union workers seem to enjoy wage premiums since the ‘elite and senior workers’ who enjoy high premiums based on education and skill usually remain outside the labor unions. In general, the labor unions represent production workers belonging to semiskilled and unskilled categories. Thus labor unions are not an important source of labor market rigidities in Bangladesh. Similarly, minimum wages exert little influence on wage setting. So appropriate strategies for employment promotion in Bangladesh require measures to expand decent employment through comprehensive employment targeted economic programs, including measures to raise labor productivity, broaden credit availability especially to employment intensive sectors, and enhance access to economic and social infrastructure.

One of the important constraints in promoting employment-led growth in the country is the poor availability of information on employment and labor market situation. The promotion of effective employment policies requires reliable labor market information with which to evaluate success and identify the problems and potential solutions. Bangladesh needs to develop an annual employment information system that generates employment related data on a sectoral basis. In short, a coordinated approach to policy is called for in order to improve employment opportunities on a sustainable basis.

Promotion of employment and decent work in Bangladesh: Macroeconomic and labor policy considerations
Since its independence in 1971, Bangladesh has made some important strides towards growth and poverty alleviation2. However, given the relatively vast size of the population and existing levels of investment and growth, the current pace of economic and social progress does not leave much room for complacency. Nearly two fifths of the population still lives below the poverty threshold, and its per capita income is still among the lowest in the world. The development goals and “ends”, encapsulated in the Five Year Development plans, remain a far cry. This has called into question whether the instruments and policy “means”, currently in practice, are truly adequate in achieving those development goals.

There have indeed been major policy shifts during the mid-1980s and 1990s, when stabilization and structural adjustment programmes came into force, and diminished the large presence of the State and controls, and arguably, even weakened their functional roles towards a development agenda.

The macroeconomic policy stance adopted in Bangladesh since the mid-1980s appears to have unsuspectingly concentrated on prices and stability, and that during this period, a development vision remained somewhat blurred. A development agenda helps articulate economic and social progress in an economy. More significantly, such an agenda tends to identify a policy framework to reflect the concerns and values of the society. In other words, economic and other policy considerations are in principle embedded in the overall goals of the society.

Decent work essentially envisions a movement towards a socially just society, a process that would require a close interaction between economic and social policies. Labor policy instruments, usually understood to protect workers and to foster a healthy work environment, need to support the macroeconomic measures and the investment climate. Other policy instruments need to be construed in a similar way. It is contended that the neo-liberal paradigm, that informs the current macroeconomic policy and practice, and the implied labor policies, has been neither able to foster adequate growth and investment, nor to connect the social indicators in an effective manner. This is vindicated particularly by the employment and labor market performance over the past decade.

Employment effects of macroeconomic policies
The discussion in the previous section has attempted to underscore that over the past decade or more stabilization and structural adjustment programmes in Bangladesh have yielded a reasonable degree of price discipline. However, these have failed to show how stabilization connects growth, investment and employment. Since employment crucially depends on the level and growth of aggregate demand, the inadequacy of growth, relative to the high levels of poverty and underemployment), would account for less-than-potential employment generation in the economy. In a labor-surplus country like Bangladesh, therefore, there is thus the need to consider the goal of sustained labor demand as central to the objectives of macropolicy designs. In fact some have argued that the aim of achieving labor shortages must lie at the heart of a development strategy16. Growth of output, however, by itself would not automatically produce desired levels of employment. It is also the pattern of growth, the technology, and capital-labor distribution associated with growth, that is equally significant. For instance, if macroeconomic and trade openness policies influence greater outwardness of the economy, the employment scorecard would depend on how far employment is gained or lost in shifting investment from non-tradeables to the tradeable sectors. Critical to bringing about structural transformation in the Bangladesh economy, would require not only sustained labor demand, but also shifts in labor demand, away from low-wage, low-productivity sectors to relatively higher wage, higher productivity sectors. Liberalization and trade impulses may help in such transformation, but need not automatically do so.

The evidence on the net employment effects of stabilization and adjustment is difficult to compile except through indicative measures, and broad statistics. The gains in employment have been estimated by individual authors from recorded output growth, aggregatively or disaggregated by sectors, and by applying past estimates of employment elasticities.

Alternative estimates are suggested in the rather spaced-out Labor Force Surveys (LFS). Both can yield biases. The former can provide divergent employment figures since these are sensitive to slightest variations in the estimates of employment elasticities. The latter (LFS) often suffer from definitional inconsistencies, e.g. the introduction of “extended definition” to employment and unemployment17. The most recent LFS report provides an employment growth rate of around 3 per cent for the period 1995 to 2000. In an ILO/UNDP study, using the employment-elasticity method, employment growth during 1990/91-1995/96 was found to be 1.7 per cent. It is not clear how and where such a jump in employment growth took place between the first and second half of the 1990s. The latter study tries to provide examples of some perplexing, and often contradictory figures.

Employment losses from stabilization and liberalization programmes are also gauged by the increase or decrease of disaggregated sectoral growth. What is often not so evident is the employment effects of shifts in investment from non-tradeable to tradeable goods. While the RMG sector shows perceptible employment gains, several industries have suffered decline due to import competition. Furthermore, substantial employment losses are associated with public sector downsizing, privatization as well as restructuring of private enterprises. It is difficult to compile a total picture, given the lack of appropriate information.

The depth of the unemployment problem in Bangladesh is often elusive. Even if one were to accept 3 per cent employment growth as reasonable, one would note that it is still below the current labor force growth rate (3.4 per cent; Cf. LFS13). Thus, even with such a relatively high employment growth, the economy would not restrain a rise in the stock of unemployed let alone make any reduction possible in underemployment. Open unemployment has thus risen from 1.8 per cent to 4.9 per cent, during the past years. Even then, open unemployment at less than 5 per cent of the labor force is a rather spurious reflection of changes in the living standards. Open unemployment, given its definition, fails miserably to capture extensive work sharing and casual work practised in Bangladesh. In fact, the underemployment rate, which is around 31 per cent (Cf. LFS13), approximates far better the existing poverty incidence.

Thus, in the recent past, employment appears to have risen relatively satisfactorily compared to those in many Asian countries, but less so when compared to the current labor force growth rate. At the same time, given the recent trends in GDP growth, any further increases in employment growth would imply fall in productivity rates below 2 per cent. With such a current rate of productivity growth, a structural transformation of the Bangladesh economy would remain a rather long process.

The following table shows the shifts in the sectoral contribution to the GDP. Over the past two decades, agriculture’s share has declined from 42 to 25 percent; industry’s has increased from 16 to 24 per cent, while that of the service sector has increased to more than 50 per cent.


While the above apparently indicates a substantial change in the sectoral distribution of GDP, structural transformation of an economy would require shifts in labor demand to the higher productivity sectors. Table 6 provides the changes in the sectoral distribution of employment. Contrary to symptomatic trends in development, agriculture’s share in employment, instead of declining, has increased from 59 to 63 per cent. The share of industrial employment has declined from 11 to 9.5 per cent, with manufacturing employment accounting for a meager 7.5 per cent. Service sector employment has risen from 24 to 27 per cent. Given the acceptability of these statistics, one hardly discerns a perceptible change in the structure on the economy. While agriculture has grown by more than 4.5 per cent annually during the past few years, the average productivity remains relatively low. Wages in the sector have hardly risen, but by only 7 per cent of their 1969-70 levels (see Appendix Table A2). The ratio of agricultural to manufacturing wages has been declining. Added to the syndrome of relatively lower wages and productivity, employment in the sector has risen by a higher proportion, often engaged in work sharing.

The service sector accounts for more than 50 per cent of GDP. The service sector in Bangladesh, as is well-known, is curious amalgam of petty services, retail trading, personal, social and community services and several such, mostly informal, activities. Such services have grown both in urban as well as in rural areas (e.g. substantial non-farm and nonagricultural income, may accrue to a household which is primarily considered “agricultural”)19. In the absence of a sizeable modern service sector, the productivity of such petty and informal services is difficult to measure. Though generally dubbed as a low-income and low-productivity sector, one must note that the growth in this sector (accounting for half of the GDP) has contributed significantly to overall GDP growth over the recent past (see figure below).

The dismal employment performance in the manufacturing sector is a great puzzle. Employment in manufacturing has apparently fallen in both absolute and relative terms, possibly characterizing a syndrome of “de-industrialization” in the Bangladesh economy. This has occurred despite the substantial growth of jobs in the new, export-oriented industries, especially in the RMG sector. Employment has mostly suffered in the traditional sectors, esp. in those industries which have been adversely affected by competition from imports. One must note that while employment in the sector has declined, its relative contribution to GDP has increased, implying a possible rise in relative productivity. This is, to some extent, also reflected in increasing wages in manufacturing (see Figure 8; also Appendix Table A2), relative to the near stagnant wages in agriculture. Yet, contrary to received wisdom, à la Lewis and others, labor has hardly moved from agriculture to industry. The reasons for this need to be explored further: some attribute this to the strict labor market regulatory framework (“insider-outsider” theory), others to increasing capital-intensity in the manufacturing sector that is guided by technology and competitiveness considerations. It can be stated, with caution, that if the relative rise in productivity is an indicator of increase in shifts to tradeable goods, liberalization measures may have affected such an outcome.

Nevertheless, employment-intensity of such allocative shifts has been negative. Under such scenarios, Bangladesh would require a long time before achieving the preconditions of a labor market tightening towards structural change.

Labor market adjustments and the context of labor policies
Employment performance, and labor market developments are significant reflections of the outcomes of various reforms, adopted in the economic, labor policy and institutional fields. We have observed that very little progress vis-à-vis the goal of “full, productive and freely chosen employment”, which constitutes one of the four strategic objectives of ILO’s decent work framework. Unemployment in fact has risen; and underemployment, at 31 per cent, partly indicates the extent of labor underutilization. Equally significant, formal sector employment has hardly shown any increase (see Figure 9).

As a consequence of stagnant or slow growth of formal sector jobs in the public or private manufacturing sector, and increasing labor supply pressure in the agriculture sector, there has been an expansion in informal sector activities. These developments would only exacerbate the dualism that currently exists in the labor market. A fundamental objective of both macroeconomic and labor policies would lie in narrowing the formal-informal sector divide, through increased labor demand on the one side and through enhancing the quality of employment.

The decent work strategy indeed warrants an understanding of how macroeconomic and labor policies would interact to produce better employment and labor market outcomes. Employment, one would reckon, has both economic and social connotations; the latter deriving from the concept that labor is not a commodity, and that policies towards labor markets could not be the same, or have similar effects, as those towards other factor or product markets. And it is precisely within this context that labor market institutions and the labor regulatory framework (the “Labor Code”) have evolved.

These considerations are conspicuously absent or muted in the neo-liberal underpinnings of stabilization and liberalization. The macroeconomic policy stance here, which warrants an initial depression of effective demand (to ease a balance-of-payments crisis!), would thus imply an adjustment of labor supply and demand through lowering of wages and costs. If wages are sticky downwards, this would lead to further unemployment than warranted by the initial fall in effective demand. Further, in this orthodox framework of liberalization, wage declines are deemed necessary to sustain gains (esp. in the tradeable sector) from such expenditure-switching measures as devaluation.

The labor policy, dictated by the stabilization framework, thus calls for flexibility in real wages, and variability of labor costs, through which firms would adjust to price fluctuations. (It is important to note here that labor demand is influenced more by product market variations than wages). The labor policy further advocates employment flexibility and a reduction of the influences of labor market norms and institutions. Wages and employment flexibility together would then allow both short-term price adjustment as well as longer-term restructuring of enterprises.

In Bangladesh, it is difficult to compile hard evidence on how far labor markets were deemed “rigid”, and to what extent flexibility, both in terms of wages and employment, was achieved. The cursory and anecdotal information available point to a rather mixed picture. As noted earlier, real wages in the manufacturing sector somewhat increased, while agricultural wages remained largely static. Jobs appeared to have declined in the formal sector, through shedding of labor in civil service, privatization processes and restructuring and closure of enterprises.
Although there was a call from the protagonists of stabilization and liberalization reforms to flexibilize labor markets, there were no new immediate enactments. However, initiatives were taken to define new labor policies, and functional roles of the relevant stakeholders, through drafting a new Labor Code in 1994, in order to align labor policies to the new “liberalized” economic framework25. This regulatory framework is yet to be finalized and endorsed. Here, one must note that the above would apply to only a small fraction of protected labor in the formal sector. According to some rough estimates, only a fifth of the manufacturing sector workers and less than 3 per cent of all workers are protected by labor laws. The vast majority of workers, in the agriculture sector, rural non-farm sector, urban informal sector, casual laborers, own-account workers, are outside the confines of the regulatory framework. It needs to be noted, though, that there are mandated statutory minimum wages, etc. for rural and agricultural workers. There, the issue is one of noncompliance.

The rigidity of the formal labor market, it is often argued, stems from the following:
__ Inability of firms to exercise numerical flexibility (hiring and firing) often hindering major restructuring;
__ wage indexation, linked often to rising inflation and not to productivity;
__ non-wage costs, as mandated, (and which may not be linked to performance) hindering cost competitiveness.

There, however, exist very few searching reports to suggest that these elements, over the years, have led to labor market rigidity in general. Certainly, in specific public sector enterprises, banks and insurances, there is evidence of over-manning, and privatization of these is proving to be difficult. Politically lax decisions at the time of creating random employment in SOEs would now need to be matched by equally firm political negotiations and close social dialogue. Barring these, it would be difficult to establish that formal sector employment thus far is being inhibited by the labor regulatory framework28. Further research is needed to understand whether alleged labor rigidity is providing a “scapegoat” to greater recourse to capital-intensity in the private formal sector, which has registered substantial productivity growth in the recent years.

Nevertheless, workers in the organized sector are certainly better off in real wage bargains, which also tend to widen wage inequality between formal and informal labor, and more significantly, to restricting labor mobility. One must also note that even in the so-called protected sectors, there are inadequacies of the labor regulatory framework (lack of unemployment insurance; restricted social security coverage).This is particularly observed in cases of lay-offs/retrenchments. Retrenched workers may receive compensation, but little else in terms of their rehabilitation in the labor market.

All these labor market issues have profound implications for reviewing existing labor market policies and devising a comprehensive labor market policy framework that would relate well to the macroeconomic reforms, to focused development of competitive skills, as well as to ensuring of adequate protection to all workers and vulnerable groups, especially those susceptible to random macroeconomic shocks. Devising such a comprehensive labor market framework would constitute a critical instrument in the attainment of desired employment outcomes.

Towards decent work: A cursory view
The various issues discussed above concerning employment and labor market performances, at once, underpin economic and social concerns, and once again remind us of the need for simultaneously achieving material and social progress. These have been after all among the end objectives of past planned development in Bangladesh, as abundantly recorded in the country’s previous 5-year Development Plans. Perhaps it would not be an exaggeration to suggest that a focused pursuit (that was potentially possible, but often gone patchy) of these goals came to be superseded by the prerogatives of the stabilization and liberalization programmes. The fragile empirical foundations of these economic reforms, as noted earlier, have reinforced concerns over “development: which way now”.

The “decent work” agenda of ILO, introduced at the outset of this paper, attempts to resurrect the rationale and content of a development strategy in today’s era of stepped-up globalization. Through the simultaneous pursuit of its four strategic objectives – employment, social security, fundamental rights at work and social dialogue – the agenda demands a close interaction of economic and social policies. If negative social effects are seen linked to, and originating from the economic order (as often attributed to macroeconomic policy reforms), it is perhaps not enough to confine simply to mitigating these negative social effects. A close interaction of economic and social policies would thus imply seeking not simply a social legitimacy of economic policies, but also a priori determining economic legitimacy of the social order that a country envisions through its development framework. The DW agenda provides, in the world of work, a broad-based (unlike narrowly-defined targets) objective that is in conformity with the emerging international order towards integrated economic and social progress, underpinned by campaigns (at the national and international levels) against mass poverty and unemployment/underemployment, and breach of fundamental human rights.

In this section we shall provide a brief cursory account of where Bangladesh locates itself in the DW agenda, esp. in the pursuit of the four inter-related strategic objectives. A few cautions and caveats are in order. First, DW does not conform to achievement of a single statistic (e.g. per capita GNP) nor (as yet) to a composite index (e.g. the HDI of the UNDP). Second, since by its very nature, DW encapsulates outcomes of economic, social, legal and institutional changes (hence positive and normative elements), identification of relevant variables, and indicators of progress in each pose enormous challenges (Anker et al, 2002).

Third, while research is underway at the ILO to identify key measurable indices of DW the present author has made some estimations, based on variables identified in Anker et al. (see Appendix Table A3 for a full list of the DW indicators currently in focus). One must note that many of these indicators are individually, widely in currency; these are often not pieced together towards a succinct picture of social and material progress. Fourth, there are a lot of problems in respect of data availability, and in some cases, proxy variables or some subjective measurement need to be introduced. The significant point to note is that these variables largely attempt to capture the quantity and quality of employment.

Let us briefly scan through the broad changes in these variables, discussed along the four strategy objectives of DW. Table 7 provides a summary of statistics that are built around Anker et al (2002).
The first element concerns rights at work (note: “labor is not a commodity”), and is subsumed within a country’s overall commitments to upholding and promoting fundamental human rights. These rights are, in fact, constitutionally guaranteed at the national level, and contained in various universal declarations and conventions to which Bangladesh is committed. The ILO’s core labour standards, which form the basis of the first dimension of DW, are in conformity with these principles to foster respect for the fundamental rights in the world of work.

The core labor standards relate to promotion and safeguarding of freedom of association, and to the progressive elimination of child labor, forced labor and discrimination at work. So far as statistics are concerned, Bangladesh has ratified seven of the eight conventions that relate to the above rights. It is yet to ratify convention No. 138 (Minimum Age convention), one that underpins concerns over the use of child labor.

Ratifications of conventions is only part of the scenario. What is more important is their pervasive application and effective implementation. In addition to the legislative fiats and enactment of bills, a thorough policy mechanism and institutional framework are needed to be put in place. Thus, despite clear commitment of the government to eliminate child labor, the incidence of child labor remains high. It must be noted, though, that Bangladesh has taken several measures to combat child labor, and it may require some time before the benefits are registered. Again, while freedom of association is safeguarded, there are significant handicaps to development of healthy labor institutions and movements. On must note here that the labor market regulatory framework caters to less than 3 per cent of the workforce. The bulk of the workforce is outside the purview of whatever legislations exist.

Moreover, in the recent past, there had been great inertia in introducing workers rights, esp. freedom of association in the fast-growing RMG sector in general, and in the EPZs in particular32. The government has lately committed itself to introducing trade union rights in the EPZs.

Table 7. Selected Decent Work Indicators for Bangladesh*



Discrimination at workplace is another important dimension of respect for basic rights, gender discrimination in particular. Several studies appear to show that despite pervasive discrimination that still exists, Bangladesh has shown perceptible progress. Several statistical indicators on gender equality provide key focus on the relative opportunities of females with respect to males in the labor market, and also in the society in general. The data indicate that except for female labor force participation rate34, female unemployment rate, and female-to-male ratio in professional/technical occupation, all the other indicators registered varying degrees of progress over the years. In term of educational progress, both in primary and secondary school enrolment ratio (gross), there has been a steady increase in female enrolment. Moreover, indicators on political participation also showed some sort of a positive outcome, with overall Gender Development Index, assessing the relative position of the women in the society in terms of men, improving from 0.339 to 0.46835.

Employment, A second element of DW is work and employment. The employment performance has been discussed in the previous sections. It may be noted that the employment objective as stated in ILO’s convention 122 (yet to be ratified by Bangladesh) refers to a commitment to achieving “full, productive and freely chosen employment”. Bangladesh’s unemployment rate (less than 5 per cent) would appear to rank the country among the developed full-employment economies. We have noted the “flaw” in such estimates, and further that the time-related underemployment rate of nearly 31 per cent approximates the poverty levels in the country.

Of equal concern is that formal sector job growth has been stagnant. Formal sector job growth also allows possibility of formal employment relationships to emerge, which in turn could support the extension of the labor regulatory framework and decent work. The modern sectors have added very little to job creation, and public sector employment has fallen with the sector’s downsizing.

With the existence of extensive surplus labor, mostly work sharing in agriculture or informal activities, there has been an increase in the use of subcontract, temporary and casual work. Table 7 shows that temporary workers as percentage of employees rose from 15 per cent to around 24 per cent. Such a feature also contributes to increased insecurity and vulnerability among the workforce.

Another work-related feature, viz. the number of hours worked by and individual worker, also showed deterioration in working conditions (see Table 8). The latest LFS reveals that close to three-quarters of the employed workforce; whether in agriculture, industry or services, work for more than the standard 40 hours per week. This, in view of the high and persistent poverty, implies that work is not adequately remunerative, and that there is high incidence of the “working poor”.

Table 8 : Employed persons aged 15 years and over by weekly hours worked, 1999-2000
(Percentage distribution)


Employment, as noted, appears to have grown at around 3 per cent annually over the past few years. This appears as a fairly high growth rate, but not so considering the current labour force growth rate, and that much of this employment took place in low productivity informal sector activities. Nevertheless, if such a labour demand can be sustained through a higher growth rate (say 6-7 per cent), Bangladesh could perhaps experience a labour market tightening over the next few years.

Social protection, A third dimension of DW is social protection. At the outset it should be noted that social protection, as exists in the advanced Western European countries, is in a miniscule state in Bangladesh. The protected workers in the civil service, public enterprises, autonomous agencies and limited private sector firms enjoy varying scheme of pensions, provident fund, and health and group/life insurances. The Labor Act of 1965 provides for some unemployment benefits to workers of establishment that come within the purview of the labor code. Social protection, thus defined, fails to cover the bulk of the workforce anywhere else.

In the absence of any formal mechanisms of social protection, almost the entire workforce is in some sense vulnerable, and hence there is little basis to report progress on. Nevertheless, Bangladesh has over the past decades supported a large number of surrogate approaches, including the well-known micro-finance and multi-purpose programmes (BRAC, Grameen Bank are some laudable examples), to protect incomes and jobs of the poor. These include special employment schemes, expenditures directly targeted to the poor, income transfers, public works programme, training and access to assets, etc. While the bulk of these projects, whether conducted by the government or NGOs, have been under scrutiny concerning their coverage or inadequacy of benefits, a few have indeed made perceptible impact.

These targeted programmes, inadequate as they are in coverage, have been among the only source of “protection” from the vulnerabilities and shocks that have arisen out of the stabilization and liberalization processes38. In point of fact, these appear to constitute a critical basis of management of natural disasters which so frequently afflict people’s employment and income entitlements. A well-designed and well-coordinated safety net programme could ensure wider coverage and more systematic protection.

In terms of public expenditures, those on education and health have registered an increase during the two time periods considered (see Table 7). Social sector allocation in the ADP has also gone up substantially.

Strategic thinking is needed on how best Bangladesh could make the first steps towards devising a comprehensive approach to social protection, how far this could be made feasible given financial and institutional constraints, and how the various stakeholders (business and workers groups, public expenditure support, civil society), could come together proactively in such an initiative.

Social dialogue, The fourth dimension of DW concerns social dialogue, an instrument that fosters democratic principles, and cooperation among the business groups, workers groups and the government. Again, as transparent from the discussions of the three previous elements of DW, the extent of tripartism and/or bipartism is confined to the very small formal sector. Public and private sector employees together constitute less than 5 per cent of the workforce. Of that less than 3 per cent have union membership. The bulk of the workforces are thus not formally organized, which restricts their ability to negotiate.

Within the unionized workforce, the density rate has declined over the two periods at stake (Table 7). The number of strikes and lockouts, and workdays lost as a result of such strikes, appears to have declined. While these features bode well, it may be noted that most often such (general and industrial) strikes are triggered more on political beckoning than on considerations of real demands of the common employee/worker. The multiple national federations of trade unions have close affiliation to major political parties.

Another important feature of the weak industrial relations system concerns representation and voice of women workers, who are entering into wage work in fairly large numbers. This trend has come about with the upsurge in RMG manufacturing and exports.

Until recently, RMG sector was exempted from introducing trade union rights, and even now, there is pervasive fear among women workers to organize. In fact women workers are more vulnerable in such industries, and all the stakeholders need to recognize and support their basic rights at workplace.

While the new Labor Code (drafted in 1994) is in the process of finalization, one must note that its effectiveness would lie in building social consensus on its details, and forging of fair compromises on potentially conflictual situations, such as observed in the process of privatization. A healthy labor movement should be encouraged, not discouraged; an efficient industrial relations system should be extended, not weakened; labor market institutions should be de-politicized, and not abused towards political gains.

There is certainly tangible interrelatedness among the indicators of these objectives. For instance, an increase in gender development index is closely associated with an increase in females in educational enrolment. Similarly, a stationary state in the growth of formal modern sector jobs is associated with a sharp increase in temporary and insecure jobs. While these positive associations may connote elements of “synergy”, there may be others that denote “trade-offs”.

The design of macroeconomic and labor policies: broad considerations
In Bangladesh, a primary goal of paramount priority lies in achieving “full, productive, fully chosen employment” if it were to achieve sustained poverty reduction. Formulating such an employment strategy would require articulating the combination of macroeconomic and labor policies which would engage the labor force in expanding productivity and national wealth ensure their basic social protection and develop the necessary policies and institutional framework for resolving distributional conflicts. While decent work for all would necessarily tend to imply employment for all (i.e. full employment), there are indeed questions of trade-offs and sequencing here. Is there an issue of jobs first, good jobs later?

This has possibly been the trajectory followed in some of the South-east Asian countries where growth and employment were generated under strictly controlled labor policy regimes. However, the social consequences of the Asian economies crisis tend to bear out that “administered” labor market flexibility and lack of appropriate social safety mechanisms created much more vulnerability among the workforce than if these mechanisms were in place44. The need for building up social safety net measures and social protection framework alongside economic and employment performance has been greatly reinforced by the recent volatile record of globalization. Greater integration with the global economy is required, but it is also necessary to create safeguards to withstand greater exposure to external shocks.


Asia is lower than in any other part of the world except perhaps the Middle East. Bangladesh is at the lower end of the South Asian spectrum and intuitively to those who know the country this seems inexplicable, given that key catalysts of female employment, viz. secondary school education and fertility rates, have had such impressive performance. Unlike other countries in South Asia, however, here has been a sharp growth – an increase of almost one and a half times - in women’s employment in Bangladesh in the last decade (1995-2003) coinciding with economic growth and better opportunities.

But rates are still very low at 26 percent for women 15-59 years of age. The gender gap in employment too, while narrowing slightly, still remains very high as male labor force participation is close to universal. However, the prevalence of working for a cash wage is low for both men and women, with less than one fourth of all men and less than four percent of all women working for a cash wage83. Unlike other parts of South Asia urban-rural differences in employment rates in Bangladesh are very small and also unlike other countries, urban women tend to be employed more than their rural counterparts. This is due in large part to the lower importance of agriculture in women’s employment as we shall see in the rest of the chapter.

Research on Bangladesh’s labor market has until now not addressed the issue of female labor force participation rates. Early studies had tried to address determinants of labor force participation and drivers of household labor supply and some anthropological work has addressed cultural factors that affected women’s work85. More recent literature is replete with analysis of the impact of employment on women’s status86 but few have asked the question – why is women’s labor force participation in Bangladesh so low? This is beginning to change as even newer work is addressing these questions using special surveys in the context of the “new employment opportunities” in Bangladesh.

Measuring women’s work is a challenge in most countries that have not paid special attention to this. Men and women have distinct employment trajectories; women are more likely to be in part-time employment, to undertake market work from the home, or take up work during periods of shock. Standard labor force surveys often fail to capture this as employment. Women’s contribution to the household economy similarly is not monetized. Other factors such as timing of survey can also affect women’s workforce participation, especially in South Asia, where women tend to take up paid work during periods of drought88. In Bangladesh as well, most micro studies find higher employment rates of women than do national surveys and there are concerns that national surveys do not capture the full extent of women’s work.

Bangladesh- Trends and Patterns in Labor Force Participation
Figure 4.1 shows the trends in labor force participation over almost a decade from 1995. While women’s employment across age groups has seen a growth, the striking increase is for the younger age groups. In contrast, the labor force participation for younger men has seen a decrease. Thus, the labor force participation of the 20-24 year old women has increased almost two and half times over the period 1995-2000, but that of men in the same age group has declined. This is in keeping with the literature on the garment industry which employs women in their late teens and early twenties. The second major change is the growth in labor force activity for the older ages, – over 60 year olds - especially among men. Therefore, while both women and men stay longer in the labor force, this trend is much more pronounced for younger women and older men.


Changes in Economic Activity for Men and Women 1987-2000
Both in terms of the proportion of workers and in terms of time women are heavily involved in poultry raising, crop cultivation, animal husbandry, non-farm services and homestead gardening. Since these are mostly homestead-based activities, it is convenient to carry them out in-between conducting domestic duties. The activities in which women are involved relatively full-time are non-farm services. Educated women are mostly engaged in these activities. In contrast, the major economic activities for men are crop cultivation, non-farm services business and shop keeping animal husbandry, and transport operation.

During 1987-2000, women have increased their labor substantially for poultry raising, homestead gardening and non-farm services, but reduced labor on crop cultivation, animal husbandry, and cottage industries. Men have also reduced labor supply substantially on crop cultivation, and construction work but increased it in non-farm services, business and transport operation.

The importance of cultivation in generating employment is on the downward trend because of the continuous reduction in farm size under population pressure. Similarly, labor is moving out from low-productive cottage industries with the expansion of rural roads and electrification.

Overall between 1999 and 2003 women’s employment has grown more than twice that of men in various sectors. While the garment sub-sector has certainly provided a new type of employment yet its contribution to the overall increase in female employment is small compared to other sectors. We find that the predominant growth in women’s employment is from the health and community services and also, though to a smaller extent, the agricultural sector, and to and even smaller extent, in manufacturing. Almost every other sector has registered a decline in the share of women’s employment.

Looking at these trends, women’s employment as teachers and health care workers seems to a large extent to be responsible for the growth in employment.

If the growing importance of agriculture in women’s employment is counter-intuitive, given the decline in the share of agriculture in GDP, recent analysis points to the growth of the livestock subsector as a possible reason. Women are more involved in livestock rearing now more than they were earlier and this could be related to the impact of micro-credit on women’s livelihoods. While changes in other sectors do not translate into much in terms of actual numbers of women involved, it is worth exploring in future analysis why the share of both fisheries and of wholesale and retail trade in Bangladeshi women’s employment is declining.

The truly inexplicable part of the trends in Bangladesh is the sharp rise – about 2.5 times - in employed women reporting unpaid work and a commensurate decline in every other category, including self-employed, employees and day laborers.

The proportion of employed women who reported unpaid work rose from 18.6 percent in 1995 to 48 percent in 2003, indicating that about half of all women workers are engaged in unpaid work. Hossain et al (2004) similarly find that during 1987-2000, decline in the participation of women in market activities outside the household, a mild increase in home-based economic activities and a substantial decline in female domestic labor (table 4.3).


Micro credit has had direct and indirect impact on employment
Despite the fact that micro credit can finance only relatively low return self employment and therefore have only imperceptible impact on household income poverty, evaluation studies provide evidence that it does lead to employment expansion, particularly for women94. The effect of micro credit has been to absorb the growing supply of married female labor from poor households, contrary to the belief that women did not have the time for income earning activities due to their heavy reproductive workloads. Thus, many women who had previously not been involved in any directly productive activities became self employed with access to NGO loans95. In general, returns to micro credit financed activities that women are likely to take up (food processing, bamboo craft, livestock) have lower returns than activities that men take up (tailoring rickshaw pulling and peddling), but since the opportunity cost of female labor has declined (women have less reproductive and domestic workloads than before) it makes sense for women to pursue micro credit financed employment so long as returns are sufficient for loan repayment at current interest rates.

In the process of bringing loans into the household many women have in fact become entrepreneurs in their own right, contributing to the process of “deepening of entrepreneurship across the different levels of the society”. The “informality” of micro credit and the delivery mechanism through informal women’s groups actually helped to “nurture … a functional space in an institutional environment’ where not only formal rules and regulations were very exclusionary for the poor but more specifically exclusionary for women”. Thus, the informal group around micro credit emerged as a separate space for poor women that allowed them to recognize their weaknesses and consolidate their own strengths, and provided the launching pad to enter the male dominated public space of entrepreneurship. Within this space they were able to ‘learn’ the rules of the game, how to handle household based micro enterprises in the context of intra household power dynamics, and how to effectively operate larger group enterprises (land lease, water selling, pond fishery) in the context of broader societal power dynamics.

Another reason for women’s concentration in non-market work is the poor access to paid work in general as evidenced in the low proportions of all individuals who receive any cash payment.

Only 10 percent employed women and 22 percent of employed men aged 20-55 receive any cash wages. This is also substantiated by Hossain et al’s (2004) survey which finds that that the proportion of hired female labor in total labor force is very small (11.6 percent) compared to the corresponding for men (34.6 percent) in 2000. In 1987, the corresponding figures were 18.6 percent and 42.4. This indicates that women have faced a sharper decline than men in wage employment – 38 percent as against 18 percent Calculations from the LFS indicate that when they do get paid in cash, women’s wages are on average 60-65 percent of men’s wages. While the gap in rural wages in Bangladesh has declined somewhat from 1995/96 to 2002/03, the gap in urban wages appears to have increased.

Regional employment results may appear counterintuitive
Bangladesh is all too often seen as a homogenous entity and regional variations not explored in great detail. However, as we see in the chapters on norms and violence, region is a very important variable. If gender norms drive labor force participation we would expect the norms to be replicated in outcomes. But we find that this relationship is far from clear. There are only small regional differences at the bivariate level, except that the proportion of women employed in Dhaka is a little over 18 percent and in Sylhet over 25 percent.

However, these differences become important when we look at those who received cash income. Here, Sylhet and to a smaller extent, Rajshahi, lead over other divisions. Finally, in the multivariate analysis predicting the odds of participating in the labor force, both Sylhet and Rajshahi show a higher and statistically significant probability of women being employed compared to Dhaka (see Table A4.2 in Annex 3).

Wage rates by division indicate that for casual laborers, the gap is widest in Rajshahi and Chittagong and narrowest in Barisal. For salaried workers, Sylhet and Dhaka show the highest wage gaps, but overall, most divisions have similar gender gaps in wages. At the multivariate level, women’s wages are largely determined by educational level and to a smaller extent by division. But, for men, division is very significant. Thus, we find that for male workers, Chittagong and to a smaller extent, Barisal have an advantage in wages over Dhaka. On the other hand, Rajshahi workers have a large disadvantage. For women, Dhaka seems to have the greatest advantage and Rajshahi the greatest disadvantage (Table 4.5).


Bangladesh’s Female Garment Factory Workers:
The urban garments industry is an important component of the Bangladesh economy, as its earnings constitute approximately three-quarters of Bangladesh’s total export earnings. The boom in the urban garments industry has had a major influence on Bangladesh’s female labor market, creating more than one million formal sector jobs for women. Previously, women with low educational attainment or from rural areas had been confined to the informal labor market, and female formal sector employment had been the preserve of a small educated elite.

However, the garment sector employs only a small share of the total working age population but it has had immense symbolic and real benefits for women’s access to labor markets.

The casual labor market in Bangladesh: Testing for wage discrimination
Just a little over 4 percent of all women and 13 percent of employed women are casual workers in Bangladesh. Overall, women laborers put in about 80 percent of the hours that men do and receive about 62-65 percent of the wages that men receive in the casual labor market. About 27 percent of women casual workers are housemaids and another 21 percent are agricultural workers. The rest are in other low-paying jobs, such as embroidery, tailoring etc. In contrast, about 20 percent of all men and 24 percent of employed men are casual laborers, and over 60 percent work in agriculture.

Oaxaca-Blinder Decomposition of Male-Female Wage Gap for Agricultural Laborers 2003 (Individuals aged 20-55 not attending school)
Based on the decomposition, we find that 18.5 percent of the difference in agricultural wages is explained by “endowments” and the rest (81.5 percent) is due to “discrimination”. To our knowledge very few studies have measured wage discrimination in Bangladesh and the one that has found it to be highest in the agricultural wage labor market in the selected sites (Akter, 1999), and the Indian casual labor market shows similar results (Das, 2006). We are hesitant to use the term “discrimination” to characterize the part that is not explained by endowments due to the fact that the model may have limited explanatory power in explaining the determinants of agricultural wages. Keeping in mind this caveat, we can hypothesize that women may well do better staying out of a labor market where both entry and wages have significant barriers.


Garment workers with young children have also devised ways of child care that allow them to accommodate their long work hours: they leave their children behind in the village with parents or in laws.

They are much more likely to use mainstream banking services, plan to buy land with their savings and invest their savings or loan it out104. Contribution of women workers to the household budget is also relatively more common among garment workers than non garment workers, either in cities or in rural areas. One micro-study based on a survey of garment workers showed that a third of garment workers sent money home compared to 13 percent of urban self employed workers and 10 percent of wage workers.

However, garment work is not seen as a long term occupation and the majority leaves upon getting married. It may well be the case that a significant percentage of the women currently working in the garment industry, who see themselves as temporary migrants, may not in fact return to their villages. They may marry in the city and withdraw from factory work once they have children and either take up a form of wage work more compatible with their domestic responsibilities or set up their own microenterprises.

This is evident from the fact that quite a fair proportion of self employed women and even women wage workers in urban areas had been garment workers at an earlier stage in their lives and, as might be expected, many of these women had learnt their skills in the garment industry.

However, we are less clear about type of work women are assigned and other factors that determine wages and wage gaps.


Bangladesh has made some noteworthy progress in the matter of economic growth and poverty reduction since the early 1980s. In 2005-2006 GDP growth reached 6.6 percent from an average of 3.8 percent per annum in the 1980s. During this period, the share of population below poverty line has fallen from 62.6 percent in 1983-84 to 44.3 percent in 2000.

Economic growth, employment and wages are three fundamental factors that helped reducing poverty in Bangladesh. Government policy directed towards economic growth, creation of employment and improving wages play a crucial role in reducing poverty. Among these policies, government expenditures on education, health, infrastructure, and agricultural development have been most instrumental. Economic theory provides rationale for government expenditure; correcting market failure and improving are the two primary ones. When a market economy fails to allocate resource efficiently, market failure occurs. One such example is the case of “externalities”. Government can curb negative externalities (for example, pollution) and promote positive externalities (for example, education and health) by means of regulation, taxation and subsidy, and public provision. Hence, the justification of government provision of pure “public” good is clear.

Poverty reduction considerations may also lead the government to provide “private goods”- those which are disproportionately consumed by the poor – through transferring resources to a targeted group of people who are unable to make provisions by themselves due to market failure. Theoretically, a market based economy can distribute income in a socially unacceptable ways, and in these cases the government often feels obligated to protect the poorest vulnerable segment of the society through interventions. Food and housing services are some of the main antipoverty program. But none or very few societies have managed to reduce poverty through direct welfare transfers alone. Education and health expenditures which help reduce human poverty and increases employability and productivity are indirect but more sustained way of reducing poverty.

Government spending is also needed to provide an enabling environment for the private sector. Much of the impact of public expenditure can be viewed as establishing infrastructure for economic growth in the broadest sense – social infrastructure like education and health and physical infrastructure like roads and highways, energy and power, and fertilizer. For the market to operate smoothly to create growth these infrastructures are needed and yet in most of the cases it is beyond the capacity of the private sector to provide for these. Hence, it is usually the government who provides for these infrastructures – here lies the crucial link between public expenditure and poverty reduction.

Particular attention is paid to the major determinants of poverty. These are growth, employment and wages – variables which have been propounded to have considerable impact on the reduction of poverty by studies carried out by the International Labor Organization (ILO) and United Nations Development Program (UNDP). Focus, of this study, has been to see how different public expenditures affect these variables and thus affect poverty. This study is organized as follows: first, we provide an overview of the trend in poverty and public expenditure in the next section. Here we propose a link among public expenditure, employment and poverty reduction in Bangladesh. In the following section we provide a review of different types public expenditures in Bangladesh. Third we propose an analytical framework for the analysis. Fourth, empirical estimation and results are discussed followed by conclusion with policy recommendation.

International labor migration from Bangladesh
The annual growth rate of the global migrant population increased from 1.2 per cent in 1965-1975 to 3 per cent in early 2000 (Abella, 2002). Among all kinds of migration, the movement of workers is the most dominant, accounting for almost 80 per cent of the total migrant population. The increase in the movement of labor is indicative of increased employment opportunity in the global market. Over recent years, migration has enabled many people to obtain productive, fulfilling and creative work. However, for many others, it has failed to provide jobs of acceptable quality. Instead, migration has resulted in inhumane work conditions, in which the basic labor rights of the workers are not respected.

Bangladesh is one of the major labor-sending countries of the world. Each year a large number of people voluntarily migrate overseas for both long- and shortterm employment. This paper attempts to assess the current state and future potential of short-term international migration in creating decent work opportunities for migrants from Bangladesh. It highlights the key role played by migration in creating jobs for Bangladeshi workers and in making a major contribution to the economy of Bangladesh. However, the paper also focuses on the other side of this success story: the exploitation of many migrant workers both in the process of migration and in the migrant labor market and the problems which many of them face in realizing basic labor rights.

Employment is a major avenue through which migrants aspire to attain a better standard of living. The scope of voluntary international migration in creating decent work can be analyzed in terms of the four pillars of decent work: employment; rights at work; social protection; and social dialogue. The first indicator would be access to full employment, to wages that ensure a decent standard of living and to work that provides personal satisfaction. The second indicator would be the recognition of rights for individuals at work and the extent to which those rights are enjoyed in practice. The third indicator would constitute the arrangements for social protection that are in place. Finally, the fourth indicator would be the availability of mechanisms for employers and employees to negotiate and protect rights at work.

Importance of short-term migration to the national economy
Labor migration plays a vital role in the economy of Bangladesh which has a very narrow export base. Ready-made garments, frozen fish, jute, leather and tea account for four-fifths of its export earnings. Currently, garments manufacturing is treated as the highest foreign exchange earning sector of the country (US$4.583 billion in 2003). However, if this is adjusted for the cost of imports of raw material, then the net earnings from migrant workers’ remittances is higher than that of the garments sector. In 2003, net export earnings from ready-made garments (RMG) were estimated to be between US$2.29 billion and US$2.52 billion, whereas net earnings from remittances were US$3.063 billion. In fact, since the 1980s, contrary to popular belief, remittances sent by migrant workers have played a much greater role in sustaining the economy of Bangladesh than the garments sector.

During the period 1977-1998, the annual average contribution of remittances was 26.5 per cent (Siddiqui and Abrar, 2001). This has been used in financing the import of capital goods and raw materials for industrial development. In 1998-1999, 22 per cent of the official import bill was financed by remittances
(Afsar, 2000; Murshid, 2000). The steady flow of remittances has resolved the problem of foreign exchange constraints, improved the balance of payments and helped increase the supply of national savings (Quibria, 1986). In the year 2000, total amount of remittances was equivalent to 50 per cent of the country’s development budget. The Government of Bangladesh treats foreign aid (concessional loans and grants) as an important resource base for the country.

However, the amount Bangladesh received through remittances last year was twice that of foreign aid.
The contribution of remittances to Gross Domestic Product (GDP) has also grown from a meagre 1 per cent in 1977-1978 to 5.2 per cent in 1982-83. During the 1990s, the ratio hovered around 4 per cent. However, if the unofficial flow of remittances is taken into account, the total contribution of remittances to GDP would certainly be much higher. Murshid (2000) finds that an increase of BDT (Bangladesh Taka) 1 in remittances would result in an increase in national income of BDT 3.33. In view of the post-MFA threats on the export garments industry, the importance of labor migration as a foreign exchange and job generator can hardly be overemphasized.

Bureau of Manpower, Employment and Training (BMET)
The BMET is the executing agency of the Ministry of Expatriates’ Welfare and Overseas Employment in respect to processing labor migration. The BMET was created in 1976 by the Government to ensure maximum benefit from labor migration to the national economy. Since the promulgation of the Emigration Ordinance of 1982, it has been working as the implementing agency of the Ordinance. Currently BMET is responsible for a wide range of functions including: control and regulation of recruiting agents; collection and analysis of labor market information; registration of job seekers for local and foreign employment; development and implementation of training programmes in response to specific labor needs both in the national and international labor market; development of apprentice and in-plant programmes within existing industries; organizing pre-departure briefing sessions; and resolving legal disputes.

Private recruiting agencies
In the 1970s, the government was responsible for carrying out the functions of recruitment. However, since 1981, this role has been carried out by private recruiting agents, as part of private sector development. The private agencies work under license from the government. On their own initiative, they collect information on demand and orders for foreign employment. After obtaining permission from the BMET, the agencies recruit workers as per the specifications of the foreign employers and then execute the procedures involved in their deployment. Over time, the recruiting agencies became organized under the Bangladesh Association of International Recruiting Agencies (BAIRA). This association was formed in December 1984 with representatives of 23 recruiting agencies. By 2002, the association had a membership of around 700 agencies.

Bangladesh Overseas Employment Services Limited (BOESL)
In 1984, the then Government also established the Bangladesh Overseas Employment Services Limited (BOESL) as a limited company to take on a direct recruitment role. By February 1999, BOESL had recruited a total of 8,900 workers i.e., 0.31 per cent of the total number of those who went overseas though the official channel (Table 3).

Individual contracts
About 55-60 per cent of recruitment is conducted through individual initiatives and social networks. Usually, persons already deployed in the host countries arrange visas for their friends and relatives through their own contacts. Sometimes these visas are sold to interested parties. Those who obtain a visa through this process pay less than those who pass through formal recruiting agents. The risk of fraudulent practices in the former is also considered to be less compared to the latter (Siddiqui, 2002).

Legal and regulatory framework of labor migration
In the past, Bangladesh has signed agreements with Iraq, Libya, Qatar and Malaysia on sending labour. In these instances, the Government handed over the expected minimum set of standards to the governments of those countries. For the first time, in 2003, the Government of Bangladesh signed a memorandum of understanding with Malaysia, under which Malaysia would take 50,000 workers over the years 2004 and 2005. In addition to setting out the number of workers to be employed over the stipulated period, the agreement also laid down rights at work (i.e., wage scales, working and living conditions); level of social protection (i.e., provident fund, gratuity, medical care and compensation); and access to instruments of social dialogue (freedom of association).

During the Asian financial crisis, the Malaysian government imposed a ban on receiving labour. When the financial crisis ended, the ban was lifted but Malaysia announced that over the next five years it would only be receiving labour from certain countries, Bangladesh excluded. A new labour-sending country – Nepal – was added to the list. However, Malaysia was an important labour market for Bangladesh, which the Government did not want to lose. As a result of major efforts at various levels, Bangladesh succeeded in reaching agreement on the resumption of migration to Malaysia. New terms were negotiated stipulating higher wages. However, the new agreement imposes tough restrictions on migrant workers, including a ban on changing jobs and marrying local women, and requires the Bangladesh government to repatriate any migrant workers in breach of the contract.

Extent of employment
BMET data show that from 1976 to July 2003, over 3 million Bangladeshis worked abroad as short-term migrants (Table 1). The data show a yearly average flow of around 214,098 from 1991 to 2002, with the highest number migrating in 1999 (268,182). A large number of Bangladeshis are also believed to have gone to the Middle East through unofficial channels. Overall, short-term migration has created employment for a large number of Bangladeshis.

Main destinations
The major countries of destination for short-term migrants from Bangladesh currently include: Bahrain, Brunei, Iran, Kuwait, the Libyan Arab Jamahiriya, Malaysia, Oman, Qatar, Saudi Arabia, Singapore, the Republic of Korea, and the United Arab Emirates (UAE). Saudi Arabia alone accounts for nearly one half of the total number of workers who have migrated from Bangladesh since 1976.

However, the labor market for Bangladeshi migrant workers is not static. During the 1970s, for example, Saudi Arabia, Iraq, Iran and the Libyan Arab Jamahiriya were some of the major destination countries. While Saudi Arabia has remained the top destination, Malaysia and the UAE also became important receivers. Malaysia used to be the second largest employer of Bangladeshi workers. However, since the Asian financial crisis of 1997, the number of Bangladeshis migrating to Malaysia has plummeted (see Table 1) and the UAE has taken its place.

Type of employment
BMET has classified short-term migrants to the Middle East and South-East Asia into four categories: professional, skilled, semi-skilled, and unskilled. Doctors, engineers, teachers and nurses are considered as professional workers. Manufacturing or garment workers, drivers, computer operators and electricians are considered as skilled, while tailors and masons as semi-skilled. Housemaids, agricultural workers, hotel workers and menial laborers (e.g., cleaners, cart loaders, and carton pickers) are considered as unskilled workers. Table 2 shows the percentage share of different skill categories of migrants from 1976 to 2003. Only a small proportion of migrants are professionals (4.40 per cent), 31 per cent of them are skilled, 16 per cent semi-skilled and 47 per cent are unskilled workers.

Sex ratio
BMET data also show that Bangladeshi migrant workers are predominantly men. From 1991 to 2003, a total of 2,754,693 people have migrated overseas for employment. Of these, only 17,512 were women (Table 4). During the period 1991-2003, women constituted less than 1 per cent of the total number of migrants from Bangladesh. During 1991-95, women accounted for 0.98 per cent of the total migrant flow, and in 1997 this was down to 0.76 per cent. Although the 1999 figure (0.14 per cent) suggests the stemming of the flow of female migration from Bangladesh, the figure rose to 0.67 per cent in 2003. The International Organization for Migration (IOM) and the United Nations International Research and Training Institute for the Advancement of Women (INSTRAW) (2000) and Siddiqui (2001) estimated that the number of female migrants might be 10 to 50 times more than the official figures. One reason for this is the imposition since 1981 of government controls on the migration of unskilled and semi-skilled female workers. These have included an outright ban (from 1981 to 1987 and again, for a short time, in 1997), and at other times, a series of restrictions. Since 2003, the restrictions apply only to unskilled and semi-skilled women workers under the age of 35, who are not allowed to migrate on their own.

Age and educational level
The BMET data are not disaggregated by age or educational level. However, different micro-studies conducted in migrant-prone areas have shown that most of the migrants were young (15-30 years) when they first migrated (Siddiqui and Abrar, 2000; Afsar, 2000; Murshid, 2000) and a substantial majority were either illiterate or their educational background was limited to schooling from class one to Secondary School Certificate (SSC).

Flow of remittances
The Bangladesh Bank12 documents remittance flows to Bangladesh from all over the world. These data show that the remittances sent by overseas wage earners have grown over time, increasing from a paltry US$23.71 million in 1976 to US$2617.92 million in 2002 (Table 5). However, the yearly growth rate of remittances is much less than the growth rate of the total number of migrant workers. Throughout the last 25 years, the remittance flows broadly indicate anaverage yearly increase of around 10 per cent. The main reason for the gap between the number of migrants and remittance flows is that in recent years Bangladesh has exported more unskilled and semi-skilled migrants, whose wages are rather low compared to those of previous skilled and professional workers. In addition, wage rates have fallen drastically over the past decade (Siddiqui and Abrar, 2001).

One half of the total remittances came from one country, Saudi Arabia. Over the years, the United States of America (USA) has become the second largest remittance-sending country. Even though the number of migrant workers is low in the USA, majority of the migrant workers there are professional or skilled workers and wages are higher14. Kuwait and the UAE are third and fourth. Short-term migrants use different methods in sending remittances, involving both official and unofficial channels. Officially, the transfer of remittances takes place through a demand draft issued by a bank or an exchange house; travellers’ cheques; telegraphic transfer; postal order; account transfer; automatic teller machine (ATM) facilities; electronic transfer; or in kind.

Creation of domestic jobs
In addition to direct employment, migration has also indirectly contributed to the creation of employment. Recent studies (Siddiqui and Abrar 2001, Murshid 2000) have shown that the family members of migrants have used a portion of their remittances in generating income and employment. Siddiqui and Abrar found that 100 families from Tangail and Chittagong spent 11.24 per cent of their remittances in agricultural land purchase, 2.24 per cent in either paying off or taking out a mortgage on land for cultivation, 5 per cent was invested in micro- and small enterprises and another 3.5 per cent was utilized in savings, bonds and insurance. A further 7.19 per cent of the total remittance went into financing the migration of other household members (Table 6). In addition, the capacity of the migrants’ families to buy consumer items helps sustain local small businesses and producers.

Meanwhile, demand for better management of migration has created jobs in the public sector as well. A new ministry has been created with a state minister, secretary and other associated staff. Forty-eight skill-training centres and the BMET are among the major agencies creating jobs in the public sector. The movement of migrants also has relevance in determining the size of the Ministry of Civil Aviation, and Customs and Immigration Departments. Migrants also constitute a majority of the customers of Biman Bangladesh airlines. The presence of airlines of the Gulf and South-East Asian countries has also created jobs for a large number of people. A powerful private sector has emerged, centered around the recruitment industry. Private recruiting agencies, their agents and sub-agents, travel agencies, medical centres and inter-state transportationowners and workers all earn their livelihood through their involvement in processing migration.

Payment of wages
The study also looks at the regularity of payment of wages for migrant workers. Out of the 100 interviewed, 56 stated that they received their salaries regularly without any delay. However, 43 experienced delays in the payment of wages, varying from 10 days to 180 days. In one extreme case, a female migrant worker in the UAE did not receive any payment of wages throughout the entire year she worked in a garments factory.

The same study also throws light on the practice of overtime worked by factory workers. The nature of jobs was such that 59 of the interviewees had to work overtime on a regular basis, 44 worked up to five hours’ overtime and 15 worked up to eight hours. Of the 41 who did not do overtime, only 13 mentioned that either their work did not entail overtime or they chose not to work overtime. The rest (28) reported that they stayed for longer periods at work but that this work was not counted as overtime. This was because the targets set for completion each day were hard to reach within the stipulated eight-hour working day. As a result, they had to stay longer hours as a matter of routine in order to complete their daily work. When the migrants worked overtime during holidays, 10 of them were paid less than their basic wage and 21 of them were paid the equivalent of their basic wage as overtime. Thirteen received one and half times their basic wage and only seven received twice their basic wage as overtime.

Officially, in most of the countries where Bangladeshis migrate, there was provision for payment of overtime at one and a half times the normal rate of pay during working days and twice the basic rate at weekends.

Officially, the interviewees were required to work for six days with a one- day break every week - usually on Friday. However, as many as 27 interviewees said that they had to work on most of the holidays and could usually enjoy a weekend holiday only once or twice a month.

Changing jobs
Those who work at the low-skills end receive much lower wages than the national minimum rate. This encourages other employers of the receiving country to try to lure them away with a nominally higher wage rate. To reduce the scope for this kind of job change, the employers withhold all forms of documentation such as job contract, travel documents and passports from the migrant worker. In their negotiations with the government of Bangladesh, the receiving countries ensure that the occupational mobility of the labourers they are hiring is minimal. The 1982 Ordinance treats the return of overseas workers before finishing the contract as a punishable offence. Under such circumstances, the ability of migrant workers to assert rights in the labour market is restrained in many ways. Workers without documents in their possession have major problems in seeking legal redress when employers do not honour the conditions of contracts. The lack of possession of documents also curtails the right of migrant workers to move freely in the city of employment. In Malaysia, in particular, workers are routinely harassed by the law enforcement agencies in the event of a minor offence if they fail to produce any form of identification.

Contract substitution is another measure practiced by some employers, which curtails the rights of migrant workers. On arrival in the country of destination, workers are made to sign a second contract which includes reduced wages and lower living and working conditions. In some cases, workers are given a different job than that stipulated in the original contract. In Malaysia, some of the migrant workers end up working on plantations while their original contracts were to work in factories. In Saudi Arabia, workers are often hired as cooks and security guards and then sent to work as agricultural labourers. Because of the extreme hardships faced working on plantations and in the agricultural sector, a considerable number flee these jobs to seek other types of employment. Through the network of Bangladeshi workers, some of the migrants manage to obtain jobs with better terms and conditions.

However, having left the jobs for which they had obtained visas, they become undocumented workers and vulnerable to many additional forms of exploitation. The majority of unskilled and semi-skilled Bangladeshi workers did not have any knowledge about the labour laws of the countries to which they migrated. As a result, it is easy for employers to violate existing laws relating to wages and working and living conditions.

Health care
Access to health care is also part of a social protection system. The level of health care available to migrant workers in the destination countries inevitably varies from one country to another. In Saudi Arabia, for example, under a government policy entitled “Health for All”, primary health care services are available in the major cities, irrespective of the workers’ legal status (Mannan, 2001). In the UAE and Bahrain, migrants can receive health care from the general hospitals. However, the costs of medicines and tests have to be borne by the migrants themselves. Some companies and factories have their own authorized medical service providers, which provide annual medical check-ups for migrant workers. In some cases, on the recommendation of their supervisor, the employer agrees to bear the cost of medical services. While in Malaysia and Singapore health care is covered under the terms of the job contract, in the Republic of Korea, the cost of health care is borne by the migrants themselves. In case of the regular migrants, accidents and unnatural deaths are covered through compensation packages in all these countries.

Social protection in Bangladesh for Bangladeshi migrant workers
In 1990, on the basis of the Emigration Ordinance of 1982, the Government of Bangladesh created a fund for ensuring the welfare of wage earners. The Wage Earners’ Welfare Fund is funded through subscriptions from migrant workers; the interest earned on the deposit of licenses of recruiting agencies31; a surcharge of 10 per cent on the fees collected through Bangladesh missions abroad; and individual and institutional contributions. The subscriptions paid by migrant workers constitute the bulk of the Fund. These comprise a fee of BDT 100 per person under a group visa, BDT 300 for an individual visa with the attestation of the Bangladesh missions in the country concerned and BDT 800 for an individual unattested visa.

The Fund was created with eight specific objectives: (a) the establishment of a hostel-cum-briefing centre; (b) the organization of an orientation and briefing programme; (c) the establishment of a welfare desk at the airport; (d) the transfer of the bodies of deceased migrant workers; (e) providing assistance to sick, disabled and stranded migrant workers, (f) providing financial help to the families of deceased migrant workers; (g) providing legal assistance to the migrant workers through the embassies and (h) the establishment of a recreation club and information centre under the auspices of the Bangladesh missions abroad. Through another Circular, the government included two additional elements in the list of objectives: the establishment of hospitals and the reservation of beds in existing hospitals for migrant workers and their families; and the provision of education facilities for the children of migrant workers. The Circular also stated that, if necessary, the Fund could also be disbursed to schools where the children of migrant workers were studying.

Trade unions
Trade unions have been in existence in Bangladesh for a long time. Today at least 20 are active in Bangladesh. However, a study (Siddiqui, Malik and Abrar, 1999) on trade unions and migrant workers show that these organizations have yet to associate themselves in any major way with migrant worker issues. The study, which involved interviews with the leaders of the main trade unions found that the trade union movement in Bangladesh was not well-informed about migrant worker issues. As a result, none of their manifestos or programmes of action had any reference to migrant workers. However, the trade unions surveyed felt strongly about the exploitation of Bangladeshi migrant workers. A number of trade union federations made representations to the Government following newspaper reports of the plight of Bangladeshi migrant workers in Malaysia following the economic crisis in the Asia region. Yet none of the unions has any exclusive support service for migrant workers.

There are some basic conceptual problems with regard to the involvement of trade unions with migrant worker issues. Trade unions are membership-based organizations. As such, they can legitimately represent those who are their members. However, it is difficult to locate outgoing migrant workers and convince them to become members of trade unions. Moreover, migrant workers reside in another country, where the Bangladeshi trade unions do not have any access. The scope for trade union activism is limited in the majority of the Bangladeshi labor-receiving countries of the Gulf region and South-East Asia. Trade unions do not exist in Saudi Arabia. And although Kuwait, Qatar, Bahrain, Malaysia, and Singapore all have trade unions, Bangladeshis are not allowed to become members of those organizations. Elsewhere, there have been some contacts between Bangladeshi trade unions and trade unions in the Republic of Korea and Malaysia.

The gradual shrinking of the formal sector worldwide has thrown up new challenges for the trade union movement. An innovative response from the trade union movement would be to increase the scope of its work by widening its membership base to include the informal sector. In this context, migrant workers could be an important focus for the diversification of trade union work. Through their international affiliates such as the World Trade Union Congress, the World Federation of Trade Unions and the International Confederation of Free Trade Unions, the Bangladeshi trade unions could pursue migrant worker issues at international forum.

Within Bangladesh, the trade union movement could play an important role in urging the Government to design and implement national policies for the protection and promotion of migrant workers’ rights. By mobilizing their organizational structure, they can disseminate information about the improper practice of the recruiting agencies and about wages and conditions of employment overseas. In this way, potential migrants from the organized sector could be helped to make informed choices about whether to migrate. Similarly, the trade unions could also make migrant workers aware of their rights and obligations under the national and international labor standards of the receiving country.

Another potential area where trade unions could play an innovative role is in the reintegration of returning migrants in the labor market. On their return, migrant workers often bring in specialized skills. In the absence of any database for returning migrants, the trade unions could take the initiative to help link up the migrant worker with a potential recruiter of his/her expertise. While such activities go beyond the trade unions’ traditional role of collective bargaining, they could help ensure better choices of employment, better work and living conditions abroad, and better reintegration.

Why undertake an analysis of gender differentials in the labor market?
The labor market is one of the most important mechanisms for transmitting the benefits of economic growth to different groups in society. Female participation in the labor market not only provides women with an access to income, it can also be an effective means of socio-economic empowerment. Women’s labor force participation can change the dynamics of the entire labor market and the female labor force can play an important role in the economic growth of a developing country such as Bangladesh.

As the share of women in the formal economy in many Asian countries including Bangladesh has been rising, researchers and policy-makers have recently begun to pay more attention to the implications of this phenomenon. Formal-sector employment of women has special features, such as regular hours of employment and a regular salary, working in a group and so forth, and is expected to increase women’s empowerment. Nonetheless, the role of women in the labor market can only be fully understood by analyzing the labor force as a whole from specific gender perspectives, since in southern Asian countries (as well as in other parts of Asia), a large segment of both the male and female labor force is engaged in informal employment. An understanding of the dynamics of the labor force participation of women requires an analysis of the complex interrelationship between employment in the formal and informal economies in modern manufacturing and other traditional sectors, and in various statuses and types of employment. The objective of this study is to examine these inter-linkages and to assess the changes in the female labour force in Bangladesh. Two different aspects of the female labour force can be highlighted by such an analysis: first, its role in the socio-economic development of the country and, second, the gender differences in labour market outcomes and their implications.

Table 2. 1 A comparison of male and female LFPRs in selected countries (as a percentage)

Table 2.2 Labor Force Participation Rate of Bangladeshi population aged 10 and over, 1984-2000 (as a percentage)

Table 2.4 Labor force participation rate by sex and age group, 1996 and 2000 (as a percentage)
Table 2.5 Labor force participation rate by marital status and sex, 2000 (as a percentage)1
Table 2.6 Labor force segregated by marital status and sex, 1996 and 2000 (as a percentage)1

Table 2.7 Activity rate of Bangladeshi population aged 15 and over by level of education and sex, 2000 (as a percentage)


Policy implications for improving the quality of the female labor force
Breaking the above cycle will require several forms of action that will need to be tackled simultaneously. Poorer women need to be encouraged to participate in higher education, and to obtain this goal they need to be given adequate financial support. The quality of basic school education poses a constraint to entry into higher education, so the quality of rural and government-backed schools attended by poorer girls also needs attention. If the quality of the female labour force were to rise, then more private employers might hire women workers. In addition, private-sector employers might start recruiting more women if the public sector were to employ more women at all levels and publicize good performance. The Government’s “affirmative” action of recruiting women who perform well in public examinations (SSC, HSC and above) might also set an example.

Table 3.1 Educational attainment levels of male and female labour force by area, 2000 (as a percentage)

Table 3.2 Changes in educational attainment levels of male and female labour force, 1991-2000 (as a percentage)
Table 3.5 Distribution of the male and female labour force by skills level and area, 2000 (as a percentage)

Gender differences in employment characteristics
This chapter examines male and female employment characteristics, focusing on the changing patterns in gender differences during the period 1990-91 to 1999-2000. The characteristics covered include the following:
• the sectoral composition of employment;
• employment status; and
• type of employment.

Sectoral composition of employment
Sectoral changes in the primary (agriculture), secondary (manufacturing) and tertiary (services) sectors can affect women and men differently, and in particular can help sustain employment growth for women. However, frequent shifts in the sectoral composition of employment can involve adjustment costs, and the prevailing notion is that the female labour force entails greater costs.

The data on sectoral employment growth and on the composition of total employment are shown in tables 4.1, 4.2 and 4.3. The data on the sectoral composition of employment show that the major sectors of agriculture, manufacturing, trade, and community and personal services employ the largest numbers of women (see tables 4.1 and 4.2). Table 4.2 shows that the agriculture sector employs roughly the same proportion of men (50 per cent) as women (46 per cent). The most pronounced difference between male and female employment is in the community and personal services sector.

At the national level, 50.2 per cent of the male labour force is engaged in agriculture, forestry and related work, 16.7 per cent in the wholesale and retail trade and 7.7 per cent in transport, storage and communication services. The agriculture and forestry sector employs the highest share of women (45.6 per cent), followed by the community and personal services sector (18.8 per cent), in which only 3.9 per cent of the male labour force is engaged, then manufacturing (17.7 per cent) and trade (6.3 per cent). In urban areas, the wholesale and retail trade employs 26.9 per cent of men (and only 10 per cent of women), while the second largest share of male workers is in the transport, storage and communication services sector (16.4 per cent for men and 0 per cent for women), indicating that distinct gender differentials exist in the sectoral distribution of male and female employment. In urban areas, the highest percentage of women are employed in the community and personal services and household sector (35 per cent), while manufacturing is the second largest employer of women (25 per cent). In rural areas, these percentages are 17 and 15 per cent, respectively, and the largest percentage of women is engaged in agriculture (56 per cent).

If employment growth in these sectors is examined (see table 4.36), a comparison ofthe first and second half of the 1990s shows significant sectoral shifts in the structure of female employment. The most important feature is the positive growth seen in manufacturing employment during the late 1990s, despite the sector’s modest average annual growth rate of 2.7 per cent, which was negative in the earlier period. An obvious interpretation of this phenomenon would be that a structural change in the economy led to slow but steady industrialization. However, the conclusion may not be that straightforward if one then looks at employment growth in the trade and agriculture sectors. There was a dramatic change in the annual growth rate of female employment in trade: it slowed down from 61.8 per cent during 1990-95 to just 0.6 per cent per annum during 1996-2000.

Employment growth in the primary sector was also negative during the early 1990s but it increased to 41 per cent per annum during the latter half of the decade. A closer look at the data on the changes in the female labour force in agriculture shows that almost all the growth took place in the poultry and livestock sector, that is, among the self-employed. Indeed, the large increase also suggests that part of it is due to more accurate enumeration in the most recent LFS.

Such fluctuations in sectoral employment growth are expected to reflect the respective sectoral GDP growth rates (assuming that sectoral employment elasticity is not likely to change very much). The sectoral growth trends in GDP experienced fluctuations during these two periods. The primary, secondary and tertiary sector growth rates reversed during the two halves of the decade (see table 4.4). The changes in manufacturing employment contradict the trends in sectoral growth, while the growth trends in agriculture and female employment moved in the same direction. Moreover, the large growth in trade during the early 1990s came to a halt during the latter part of the decade. Growth in agriculture and manufacturing should have created the impetus for growth in the tertiary sector, which was not the case if one looks at the figures for trade. Thus it is impossible to explain the fluctuations in female employment in terms of changes in the sectoral growth rates. A large part of the differences during the two periods may be a result of using the two labour force definitions (extended and usual).

Two factors largely explain the decline in the number of women employed in manufacturing in the early 1990s:
• A large number of loss-making state-owned enterprises (SOEs) were closed down.
• The privatized SOEs shed excess labour, and the chances for re-employment of these workers were poor.

These forces, however, should be weighed against the many jobs created in the readymade garment (RMG) sector. Therefore, the negative trend of female employment during this period cannot be readily explained. Given such anomalies, it is not surprising that the quality of data on the sectoral distribution of employment has been questioned by many researchers. Other data sources on employment growth in manufacturing (such as the BBS’s Census of Manufacturing Industries) provide somewhat different trends in employment growth. Therefore, the way the sectors are defined and identified need to be verified in the LFS, in order to avoid data problems, such as those reflected in table 4.3.

Employment status
The distribution of male and female workers by employment status is shown in table 4.5. Between 1991 and 2000, there was a fall in the percentage of self-employed women. Not only is the percentage of women in the “employer” category rather small, but the period also seen a decline. The fall in the number of employers, in fact, holds for both the female and male labor force, although women fare more badly. These are serious matters of concern, since being self-employed or an entrepreneur can enhance a woman’s decision-making powers.

About 40 per cent of female workers are in the hired labour category (consisting of employees and casual day labourers). Regular employment (as employees) is preferable because of its higher earning prospects, better employment security and social standing. However, since 1996 there has been a decline in the percentage of female employees. This conforms with the usual hypothesis that the progress of economic reform policies (which, in Bangladesh, took place during the 1990s) leads to the casualization of the workforce. The casualization of the male labour force started during the early 1990s but was less pronounced. The percentage share of female day labourers increased from 13.3 per cent in the early 1990s to 19 per cent at the end of the decade, while for men the share increased from 21 per cent to 26.1 per cent. More importantly, the largest share of women was found in the “unpaid family worker” category: 33.9 per cent in 1990-91 and 34.1 per cent in the late 1990s.

Type of employment
The importance of formal employment for women’s empowerment has already been mentioned. The data on the distribution of male and female employees by formal and informal employment in the public and private sectors are presented in table 4.6. Two aspects of job typology deserve attention:
• formal versus informal; and
• position in the job hierarchy.

In 1999-2000, only 9 per cent of female workers, compared with 27 per cent of male workers, were employed in the formal (private plus public) sector. Within the formal sector, the female-to-male ratio is low in the government/autonomous sector (autonomous organizations are those which come under the Government’s revenue budget but otherwise govern themselves) – the share of this sector in total female LF is at a half the rate for men, and in the private sector it is even lower at 26.5 per cent.

This is to the disadvantage of women, since formal-sector jobs have more attractive benefits packages and carry higher status in society. Moreover, the overall percentage of women in formal employment declined substantially – from 20.8 per cent in 1995-96 to 8.9 per cent in 1999-2000, that is, by more than 50 per cent. By contrast, the percentage of men in formal employment grew from 17.5 per cent to 26.9 per cent in the same period, reflecting a rise in gender inequalities in the labour market.

A number of factors contribute to the lower representation of women in the formal sector. The overall view of society regarding the role of women in the labour market discourages the recruitment of women in the formal sector. On average, women have lower educational levels than men, which puts them at a disadvantage, even when high levels of education are not required for the job. Moreover, women often wish to reenter the labour market after their childbearing years, and their age acts as a barrier. In the public sector, women over 30 not already employed by the Government are barred from applying for new government posts.

Social factors behind female unemployment and underemployment
A simultaneous rise in both the open unemployment and underemployment levels of female workers and the substantial decline in the underemployment rate for men, imply that it is men who have mainly benefited from new job opportunities. This also indicates that female employment levels will not rise until all unemployed and underemployed men have been absorbed into the labour market. Indeed, as long as there are male workers available, employers in Bangladesh tend to employ them first rather than break with tradition. The employers interviewed for this study revealed that they prefer to continue employing men for jobs that they have traditionally performed because they feel they would not gain anything by employing women. Moreover, employers believe that men’s experience contribute to higher productivity, and that in many activities, including crop agriculture, women have less experience (Rahman, 1990).

A more in-depth examination of the traditional norms of the role of women in society reveals why jobs are segmented according to sex. More male workers will be employed, even if there are women in the labour force willing to work for lower wages, because the traditions and values prevailing in Bangladeshi society support such practices. And preferences based on genders that are not commensurate with profitability and efficiency will continue as long as these strong social forces and traditions are in operation.
An important factor contributing to job segmentation, especially in the country’s rural areas, is the relatively greater weight attached to a woman’s domestic rather than market activities. These social forces creating gender differentials are based on the age-old patriarchal traditions and values that still prevail in most parts of Bangladesh (except in some tribal areas in the north and south-east). These dictate that the adult male members of a household are the breadwinners and should, therefore, seek employment first (Westergaard, 1983; Cain, 1977). If there is a need to supplement their earnings, only then will the female members of a family consider participating in the labour force. Women are thus viewed as “secondary earners”, with society considering the reproductive role of women to be supreme.

The prevailing social view that attaches predominance to the domestic role of women implies that, even if women are engaged in some form of economic activity, whenever a contingency arises on the domestic front, they are required to respond, either by withdrawing from the labour market or by cutting down on the number of hours they work.

The second important implication of traditional attitudes is that only a few types of jobs are considered suitable for women, which continues to enforce the traditional division of labour between women and men. Women are expected to work close to the home, which is especially true of women living in rural areas. Such women are usually engaged in crop processing (rice, jute, lentils and so on), while male workers work in the fields. Women only do field work for crops grown in the vicinity of the home, which enables them to carry out domestic chores alongside their economic activities. In the industrial sector, women tend to be employed in the “lighter” industries and involved in the more tedious operations that require skills traditionally perceived as “feminine”. Most women also prefer jobs close to home, even in urban areas: public transport may be limited, transport costs may be high and commuting time is long if the job is located far from home. Given such job segmentation in the labour market and the gender constraints women continue to face, employment opportunities are generally much more limited for women than for men; as a result, the unemployment and underemployment rates for women are higher than those for men.

Urban employer attitudes, wage inequality and the prospects for growth in female employment
This section examines the linkages between social factors and wage differentials, and their implications for the expansion of job opportunities for urban women.11 There has been extensive analysis (Amsden, 1980; Boserup, 1970; Gregory and Duncan, 1981; Rahman, 1996) of the presence of gender-related wage discrimination, its measurement and the related welfare implications for female workers. However, there has been far less discussion on the impact of male-female wage differentials on the prospects for female employment.

The presence of pure wage discrimination that is unrelated to skills and efficiency should, in fact, lead to enterprises that de facto practise discrimination by preferring to hire women. One would expect the proportion of female employees to be higher in enterprises with higher wage discrimination. This hypothesis is, in fact, contained in the prevailing notion that a high percentage of women are employed in the rapidly expanding export-oriented sectors because they are willing to work for lower wages, which ensures labour competitiveness in the international market. However, although the ratio of male-to-female wage rates may influence the gender composition of employees in certain enterprises, it should be kept in mind that the non-wage costs and benefits of employing women as well as social attitudes can also influence the decision of who is employed. If wage discrimination only compensates for non-wage costs, a higher level of discrimination will not lead to the employment of more women, because in terms of net value added women may not contribute any more than men.

Women’s willingness to accept lower wages is linked, to some extent, to their lower bargaining power. The ratio of women to men among the employees of a given establishment may also affect their bargaining power. Therefore, the positive impact of wage discrimination on female employment may only continue up to certain levels, after which a larger percentage of female workers within an enterprise will be able to increase their bargaining power. Therefore, an employer’s incentive to increase the proportion of female employees will not necessarily be sustained after that level. As a result, the association between the ratio of male-female wages and the ratio of the male-female composition of employees could be weakened.

Moreover, the employment of a larger percentage of female workers by an enterprise can also affect the bargaining power of its male workers. If male workers find that their employer can replace them with readily available female workers, they will be in a weaker bargaining situation than men working in enterprises that employ only small numbers of women. Male workers are aware that an employer who has no experience of hiring women will not, suddenly proceed to hire large numbers of female workers. Since little bargaining power results in lower wage rates, male workers in enterprises with a larger percentage of female employees are more likely to be paid less than male workers in enterprises employing a smaller percentage of women. This could act as an incentive to employers to hire more female workers.

The data on male and female wage rates have been used by Rahman (1996) to examine the impact of the proportion of female workers in enterprises on wage rates. It was found that a higher percentage of female employees have a negative impact on both male and female wage rates. In addition, there are certain non-wage advantages to employing women, which urban employers in particular regard as important (see figure 5.1). Female employers:
(a) are docile, thus labour management is easier;
(b) do not belong to unions;
(c) are usually secondary earners and so making them redundant may be easier;
(d) have little bargaining power in the labour market, not only because of the large excess supply of female labour but also because of the fear that losing a job will lead to domestic problems (in the form of ill treatment by the husband, children’s frustration, and so on).

Figure 5.1 shows that women gain access to employment in urban areas because employers derive both wage and non-wage advantages from them. These are indirectly linked to the high opportunity costs of male labour in urban areas. Does this mean that a further drop in wage rates would increase female employment levels? The data presented in Rahman (1996) show that, although the ratio of female-to-male wage rates slightly declined over the past decade in a number of manufacturing subgroups, the percentage of female employees fell slightly rather than rose. Moreover, female wage rates are already close to the poverty threshold. Therefore, a drop in wage rates would be neither desirable nor sufficient enough to raise the employment levels of women.

The cost of hired labour, especially in formal urban sectors, consists not only of the direct wage payment but also of a non-wage component. The non-wage costs include a number of elements among which “recruitment costs” are the most important and so have been widely discussed. Recruitment costs include the costs related to the recruitment of new workers as well as the costs arising from the adjustment and training period for each new worker. Therefore, workers who leave a job after only a short while impose a higher recruitment cost to the employer than workers who stay for a few years. A widespread perception is that female workers have a higher turnover rate than male workers. Many employers believe that women leave jobs more readily than men, because of more family responsibilities, marriage, changes in the husband’s workplace and so on and, therefore, that employing female workers will entail higher recruitment costs per worker than male workers. However, survey data show that the differences between male and female employees in this respect are small (Rahman, 1996).

A more important aspect of non-wage costs for female employees arises from the need for special facilities, which include utilities and amenities at the workplace, for example, separate toilets, a crèche, and so on. In male-dominated workplaces, the necessary facilities for men already exist, so the addition of women’s facilities is viewed as an additional cost.

Even though empirical evidence shows that the costs of having female employees are not much higher than those of men, employers’ perceptions can be very different. Therefore, an examination of how far these perceptions play a negative role in the prospects for female employment is pertinent to this discussion. To obtain an insight into employers’ attitudes on hiring female workers, discussions were held with a number of employers in certain the subgroups in the Ready Made Garment (RMG) sector. Box 5.1 highlights the opinions of RMG entrepreneurs concerning the advantages and disadvantages of hiring male and female labour. From the description below, it emerges that the advantage of having male workers in urban sectors is rooted in the negative gender biases towards women in society. By contrast, in the current social environment, women can only obtain “preferential treatment” through hard work and on account of their loyal and docile nature.

Policies for improving female employment levels
Although there is no evidence that female employees take more leave or require the provision of expensive physical facilities at the workplace, an apprehension about these problems prevails among employers, especially in the sectors with few female workers. Such fears act as a deterrent to the employment of women and can do more harm than the actual costs involved. Therefore, feminist groups and policy-makers need to campaign to change employers’ attitudes by publicizing the fact that women workers are dependable and that it makes good business sense to employ them.

There has been a suggestion that the Bangladeshi Government should avoid introducing regulations that increase the costs of female workers and thereby discourages their employment, such as regulations concerning the legal provisions on maternity leave (World Bank, 1996). However, withdrawing the basic facilities provided by labour laws may not be well-advised. Indeed, many studies show that the costs of providing maternity leave are not high. Neither is it desirable to reduce the maternity protection benefits, if at all provided, at the detriment of health of women workers and their children. Hence, there should be increased acceptance by the employers that if they would like to have a stable workforce in the RGM sector, for example, they should be prepared to provide the basic social benefits both for maternity protection and child care.

Non-governmental organizations (NGOs) and government directorates responsible for labour welfare should campaign to encourage raising the age at which women marry, which would create an uninterrupted employment period for young women. They need to introduce facilities and support services to help women carry out their jobs more easily, such as childcare, transport to the workplace, working women’s hostels and so forth. Existing facilities are not only inadequate; they are also not available to lowincome workers. Most of the support services for female workers are currently provided by the (extended) family. However, if women are to be able to take up proper roles in the labour market, formal and efficient support services will be required.

Policies need to be adopted to raise the ratio of female to male employees in the public sector, which would set an example to the private sector. The current age limit for the entry of women into public-sector employment also needs to be raised or lifted altogether.

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