84pc of workers in informal jobs; low female participation, skills gaps and weak pension coverage pose major challenges
Bangladesh has around two decades to turn its large working-age population into a driver of economic growth, but limited formal employment, low female labour-force participation and persistent skills gaps threaten to undermine the opportunity, according to a new World Bank report.
The country’s working-age population share is projected to peak in 2045, giving Bangladesh more time than most South Asian economies to benefit from its demographic dividend. However, the window will not remain open indefinitely, and urgent reforms are needed to create better jobs, improve productivity and prepare for an ageing population.
The findings were presented in the World Bank’s latest report, Demographic Change in South Asia: From Tailwinds to Headwinds for Development, released on Tuesday.
The report highlights that Bangladesh has yet to fully translate its favourable population structure into employment and productivity gains, despite having a large pool of people in their prime working years.
Around 84 per cent of the country’s workers, or approximately 58 million people, are employed informally, while 44 per cent of graduates also work in informal jobs, reflecting the difficulty of securing formal employment even with higher educational qualifications.
Formal firms are creating jobs slowly, while small firms have recently shed workers on average, the report said.
“Bangladesh’s demographic opportunity depends on what it does now: help firms create better jobs, equip young people with market-relevant skills, and remove barriers that keep women out of work,” said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan.
He also stressed the need to strengthen healthcare and old-age income security, noting that financing the country’s ageing transition would require stronger domestic resource mobilisation.
South Asia’s demographic window narrowing
The report said South Asia currently has around 1.17 billion people of working age, offering the region a significant opportunity to boost economic growth through employment and productivity improvements.
However, the region’s working-age population is expected to peak in less than a decade and subsequently begin shrinking. By 2049, South Asia is projected to become an aged economy, with 14 per cent of its population aged 65 or above.
Bangladesh is projected to reach this stage in 2051.
Since 2000, the growing share of adults in their prime working years has contributed an estimated 0.4 percentage points to South Asia’s annual GDP growth and increased labour productivity by 1.1 per cent annually.
But the annual contribution of demographic changes to economic growth is expected to decline to just 0.1 percentage point between now and 2050.
The World Bank noted that South Asia is ageing faster and at a lower level of per capita income than comparable emerging and developing economies.
“South Asian economies are aging faster and earlier in their development journeys,” said Johannes Zutt, World Bank Vice President for South Asia.
He called for policies and infrastructure that create more and better jobs, strengthen the gains from the youth dividend and prepare countries for population ageing.
Jobs, skills and women’s participation
For Bangladesh, the report identifies employment generation and human capital development as critical priorities.
Expanding productive employment will require creating a more favourable environment for businesses, improving access to finance for micro, small and medium enterprises (MSMEs), and streamlining regulations that constrain private-sector expansion.
Improving education and vocational training is equally important to ensure that young people acquire skills relevant to changing labour-market demands.
The report also emphasises removing barriers to women’s employment, as greater female participation could help countries make better use of their available workforce.
Ageing brings a second challenge
While Bangladesh has more time than several regional economies before its working-age population peaks, the report warns that preparations for ageing must begin now.
Across South Asia, healthcare, long-term care and pension systems remain inadequate for a population living longer but not necessarily healthier.
Only 17 per cent of the region’s working-age population contribute to a pension scheme, while just 10 per cent of older people receive pension benefits—the lowest coverage globally, according to the report.
The World Bank recommends strengthening healthcare, long-term care and pension systems while encouraging savings and investment to improve productivity.
For Bangladesh, this means pursuing two priorities simultaneously: creating sufficient productive jobs to capitalise on its remaining demographic dividend and building stronger social protection systems for the future.
The report’s central message is that demographic change can support development only when countries translate their population advantages into productive employment, higher incomes and adequate protection in old age.
For Bangladesh, the next two decades could therefore prove decisive in determining whether its large working-age population becomes a lasting economic advantage or a missed development opportunity