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Bangladesh must raise labour productivity for dev: ILO

Bangladesh must raise labour productivity for dev: ILO

Bangladesh must increase labour productivity by 1.5 per cent each year to fulfil its ambition of becoming a high-income country by 2050, as the country is expected to see its demographic dividend decline heavily due to an increased old-age dependency ratio, said a global report.

Seven countries in the Asia-Pacific region, including Bangladesh would require an acceleration of productivity growth by 2 percentage points or less to achieve high-income status, according to the ‘Asia Pacific Employment and Social Outlook 2024’ released by the International Labour Organisation on Tuesday.

According to the report, Bangladesh needs to attain an annual productivity growth rate of 6 per cent to become a high-income country by 2050 compared with the current labour productivity of 4.1 per cent.

To realise these gains, structural barriers and lack of training opportunities need to be overcome to allow the region’s large pool of workers who are ready to take up better jobs at higher productivity and pay to meet their potential, ILO report suggested.

It also said that significant policy reforms and better implementation of existing standards were also needed to reduce inequalities, improve labour market prospects for older workers and ensure equitable pension systems to address the impending demographic changes.

The ILO report projected that old-age dependency ratio in Bangladesh to climb to 0.23 by 2050 from the existing 0.09 and the ratio was higher than India, Nepal and Pakistan.

The report said that the Asia-Pacific region was undergoing rapid population ageing, with the ratio of people aged 65 years and above expected to double by 2050.

This demographic shift will significantly increase the economic dependency ratio, posing challenges for sustaining economic growth, it mentioned.

‘East Asia is projected to see the largest demographic drag on growth of 0.3 percentage points per year; South Asia is expected to see its demographic dividend decline a lot,’ the ILO said.

ILO country director for Bangladesh Tuomo Poutiainen said that while Bangladesh currently had the potential to reap significant demographic dividends from its youthful labour force, investments in modern skills and access to quality employment were essential.

He also emphasised the importance of recognising the rapidly increasing aging population, with estimates indicating that the country would transform into an aging society by 2048.

‘Adequate investments in development of care economy and social protection systems, including pension schemes will become increasingly important,’ Poutiainen said.

Despite aging populations, the region can maintain continued income growth per capita over the coming decades if strong productivity growth is sustained, the report said.

It also mentioned that the labour productivity in emerging economies in Asia and the Pacific was less than one-third of that in high-income countries across many sectors, underscoring the significant potential for improvements in efficiency and income.

The ILO outlook also found that the Asia-Pacific labour markets have recovered well since the global pandemic, but face deep seated challenges that are being compounded by the region’s rapidly ageing population.

The report projected that unemployment in the region would remain roughly unchanged in 2024 and 2025, at 4.2 per cent, which corresponds to 87.8 million out of work in 2024.

According to the report, persistent issues related to working poverty and informality remain, with a substantial proportion of workers still engaged in low-quality, informal employment despite decades of economic growth.

In 2023, two in three workers were in informal employment, marking an improvement of only 2 percentage points over the past decade, it mentioned.

‘The Asia-Pacific region may be ageing rapidly, but it is not going to run out of workers. There is, however, an urgent need to ensure that those looking for decent work can access the training and opportunities they need so that evolving labour market demands can be met,’ ILO regional director for Asia and the Pacific Chihoko Asada-Miyakawa said.

The report also underscored the need for robust social dialogue involving workers, employers, and governments to address these multifaceted challenges.

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