World Bank report: Over 60% of graduates in informal work, labour supply may exceed jobs by 13 million by 2050

Bangladesh’s working-age population will grow over the next two decades, but if enough jobs are not created for them, this workforce could become a major pressure on the economy, a World Bank report has warned. The bank forecasts that by 2050, labour supply in the country could exceed employment by 13 million.

The challenge was set out in the World Bank’s 2026 report titled “Demographic Change in South Asia: From Tailwinds to Headwinds for Development”. The report was launched on Tuesday at the Sonargaon Hotel in the capital.

The report said more than 60 percent of people in Bangladesh with a bachelor’s degree or higher are now engaged in various informal jobs, where their incomes are 45 to 84 percent lower than workers in the formal sector.

The report said the biggest weakness of Bangladesh’s labour market is the lack of quality employment. At present, 84 percent of the country’s total working population — 58 million people — work in the informal sector.

These jobs generally have no appointment letters, fixed wages or job security, the report noted. Workers remain at risk of losing their work at any time.

This informality is not limited to small businesses or small firms. Even in medium and large firms, 35 to 40 percent of total employment is informal, the report said. In Bangladesh, India and Nepal, 45 to 70 percent of entrepreneurs in the informal sector said they started a business or their own initiative because they did not get an alternative or regular job. For Bangladesh, the World Bank analysed the Bureau of Statistics’ 2022 informal sector survey.

Job creation in formal firms is also slower than expected. Employment in such firms in Bangladesh is growing at 2.7 percent a year, compared with an average of 5.4 percent across 82 emerging economies worldwide.

Low productivity has added to this employment weakness. Growth in output per worker in firms in Bangladesh and India is lower than in most countries, the report said. Employment is also growing slowly in tourism and food-related sectors, and a section of small and medium firms is reducing worker numbers instead of hiring new workers.

The report warned that Bangladesh does not have much time left to take advantage of its large working-age population — the demographic dividend. The benefit of a large young population will be available for only another 19 years. After the working-age ratio peaks in 2045, the elderly population will begin to grow.

By the World Bank’s calculation, by 2051 the number of people aged 65 or older in Bangladesh could rise to 14 percent of the total population, turning Bangladesh into an ageing society. Although Bangladesh has more time than neighbouring countries, it must rapidly increase investment in employment and human resource development to use the opportunity. India has only eight years to use this opportunity, and Bhutan five years, the report said.

Without rapid progress in employment, productivity and human resource development, the state will have to take on large additional responsibilities, including healthcare for the elderly population, before becoming a rich country, the report warned.

World Bank Regional Practice Director Jem Mete, Chief Economist for Asia Francisca Liselotte Onsorg and Operations Manager for Bangladesh and Bhutan Gail Martin were present at the launch. A panel discussion that followed was attended by Social Welfare Minister Abu Jafar Md Zahid Hossain, State Minister for Planning Jonaid Abdur Rahim Saki, PPRC Executive Chairman Dr Hossain Zillur Rahman, and CPD Executive Director Dr Nazneen Ahmed, among others.

The report also set out inequality between cities and villages in the health sector. Although 70 percent of people live in villages, only 20 percent of health workers work there. The density of doctors in cities is 18 times higher than in villages. Only 18 percent of primary health centres have all the elements needed to treat non-communicable diseases. Necessary medicines and equipment are available in only 7.5 percent of centres. Only 1.6 percent of upazila health complexes have injectable insulin and 38 percent have metformin. Fewer than 1 percent of facilities have all the elements needed to treat heart disease.

On education, the report said enrolment in pre-primary education is 36 percent, compared with a South Asian average of 62 percent. Social protection spending is also the lowest among countries in the region. Children under five receive only 2 percent of total social protection spending. The government old-age allowance for the elderly is 500 taka a month, only 5 to 8 percent of the average income of poor rural families, and inflation has further reduced its real value.

The report also said that although a universal pension programme was launched in 2023, there is no significant pension programme for workers in the informal sector, even though most people in the country work in that sector. Low tax revenue collection is also making it difficult to increase necessary government spending on health, education and social protection.

To address this situation, the World Bank recommended increasing investment in primary education and healthcare, making formal finance easier for small and medium firms, and improving workers’ skills. It also emphasised increasing women’s participation in the labour market.