Bangladesh’s job market is showing signs of stagnation as employment opportunities fail to keep pace with the growing number of young people entering the labour force, raising concerns over persistent youth unemployment and the country’s ability to generate quality jobs.
Economists and labour-market experts say the problem is no longer simply about creating more jobs but also about ensuring that available employment matches the skills and expectations of the country’s expanding educated workforce. They warn that weak private investment, sluggish industrial activity, inadequate diversification and a mismatch between education and market demand are preventing the labour market from absorbing young workers.
According to labour-market specialists, young people are particularly vulnerable because many new entrants have limited work experience, while employers are increasingly seeking specialised technical and professional skills.
Economist Dr Zahid Hussain, former lead economist of the World Bank’s Dhaka office, said Bangladesh’s employment challenge is closely linked to sluggish investment and weak economic activity.
“When investment slows, job creation also slows. New entrants to the labour market then face greater difficulty finding employment, particularly in the formal sector,” Dr Zahid Hussain told The Daily Industry.
He said Bangladesh needs to focus on employment-intensive investment rather than relying solely on economic growth figures. “Growth must translate into productive employment. Otherwise, the benefits of growth will not be distributed widely enough among young people,” he added.
Experts say the youth unemployment problem has become more complicated because the number of educated jobseekers is increasing. University graduates often prefer formal-sector jobs, while the economy continues to generate a significant share of employment in low-productivity informal activities.
Economist Dr Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the mismatch between education and employment demand is one of the major structural weaknesses in the labour market.
“We are producing a large number of graduates, but the economy is not generating enough suitable jobs for them. At the same time, industries often say they cannot find workers with the right skills,” Dr Ahsan H Mansur told The Daily Industry.
He said this mismatch can only be addressed through stronger links between universities, technical institutions and employers. According to economists, private investment remains critical for employment generation because the government alone cannot create enough jobs for millions of new labour-market entrants. However, private investment has been constrained by high borrowing costs, uncertainty, infrastructure bottlenecks, energy shortages and weaknesses in the financial sector.
The prolonged energy crisis has also emerged as a major obstacle to industrial expansion. Factory owners have repeatedly complained that shortages of gas and electricity are disrupting production, reducing capacity utilisation and discouraging new investment.
Economist Dr Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue, said the quality of employment is as important as the quantity of jobs. “The labour market is not only about whether people are employed. We also have to look at whether they are getting productive, secure and adequately paid employment,” Dr Debapriya told The Daily Industry.
He said Bangladesh faces a serious challenge in creating decent jobs for its growing educated population. “If young people cannot find appropriate employment after completing their education, the country faces a serious waste of human capital,” he said.
Experts also point to the widening gap between urban and rural employment opportunities. Dhaka and other major cities continue to attract young jobseekers because of the concentration of formal-sector employment, putting additional pressure on urban infrastructure and housing.
At the same time, many rural workers remain concentrated in agriculture and informal activities where productivity and wages are relatively low.
Former Bangladesh Bank chief economist Dr Ahsan H Mansur said Bangladesh needs to diversify its industrial base to create jobs for people with different levels of education and skills.
“The ready-made garment sector has created millions of jobs, but Bangladesh cannot depend on a single major industry forever. We need pharmaceuticals, leather, light engineering, agro-processing, electronics, ICT and other sectors to grow much faster,” he told The Daily Industry.
The ICT sector, in particular, has been identified as an area with strong potential for young workers. However, experts caution that digital-sector growth will require better internet infrastructure, advanced training and stronger English-language and technical skills.
Labour-market researchers also say the rise in the number of young people outside employment, education or training could have long-term economic and social consequences. Prolonged unemployment can reduce workers’ future earnings, delay household formation and increase economic dependency.
Economist Dr Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, said Bangladesh must treat youth employment as a strategic economic priority.
“The challenge is to convert the demographic opportunity into a productivity opportunity. That requires investment in skills, enterprise and decent employment,” Dr Hossain Zillur Rahman told The Daily Industry.
He said policy support should not be limited to large industries and should also encourage small and medium-sized enterprises, startups and local businesses because they have significant potential to absorb young workers.
Experts further argue that the country’s employment strategy should give greater attention to women and young people living outside major cities. Female labour-force participation remains constrained by social barriers, lack of safe transport, childcare difficulties and limited access to suitable workplaces.
According to analysts, increasing female participation could significantly expand household incomes and strengthen economic growth, but policies must ensure safe and flexible employment opportunities.
The private sector also argues that creating new jobs requires a more predictable business environment. Investors are seeking improvements in access to finance, tax administration, infrastructure, energy supply and regulatory services. Business leaders say companies are reluctant to expand capacity when demand is weak and the cost of doing business remains high. This has a direct impact on recruitment, particularly for entry-level workers.
Economists therefore believe Bangladesh needs a coordinated employment strategy involving the government, private sector, educational institutions and financial institutions. They recommend stronger vocational training, apprenticeships, industry-linked curricula and incentives for firms that hire and train young workers. Expanding entrepreneurship financing and simplifying regulations for small businesses could also help create self-employment opportunities.
Dr Zahid Hussain said policymakers should focus on restoring investor confidence and strengthening the overall business climate.
“Investment is the key variable. Without a recovery in private investment, it will be difficult to achieve the kind of employment growth that Bangladesh needs,” he told The Daily Industry.
Dr Debapriya Bhattacharya also stressed that employment data should be examined not only through unemployment rates but through wages, working hours, job security and productivity. “The real concern is whether the jobs being created are enabling young people to build sustainable livelihoods,” he said.
As Bangladesh’s working-age population continues to expand, experts warn that the window to benefit from the demographic dividend will not remain open indefinitely. Failure to create enough productive jobs could turn the demographic opportunity into a source of economic pressure.
The consensus among economists is that Bangladesh must move beyond headline growth figures and place employment at the centre of economic policymaking. Without stronger investment, industrial diversification, skills development and private-sector expansion, the country’s youth unemployment problem is likely to remain a major structural challenge.
