PM's response to planning commission study: Bridge the gap
Published : Friday, 8 February, 2019 at 12:00 AM Count : 212
Government is going to create 15 million jobs for the educated youths in the next five years. The Prime Minister Sheikh Hasina said this in her maiden address to the nation following the formation of her new government earlier of the last month. Her mode of voicing echoed as if it is mandatory to her which is read as the biggest responsibility ahead of us is to create jobs for the educated youths, and we have taken special plans for their employment. We have set a target to create 15 million jobs in the next five years. With this announcement she gave a specific message to the critics that our growth which is so far being termed by them as jobless.
Her announcement was a response to a recent study of the General economics Division of the Planning Commission. The study finds, Bangladesh's economy needs to grow at a rate of 8.0 per cent or more in the coming years to absorb the country's growing labour force. The report has warned that the country's present GDP growth rate does not seem to be sufficient to hit the target. Awami League underpinned 10 per cent growth target in its election manifesto. No doubt in our way to transforming economy from LDC to low income developing country, target 10 per cent achievement is not out of syllabus and attainable provided challenges in its way are run into.
Growth stands for its inclusiveness and that means providing wider scope for being employed by not only skill labour, but also for semi and unskilled one. Growth does not connote quantitative upgrading of some indicators. Qualitative uplift of life standard by reducing inequality to a great extent and enhancing life standard go for higher growth. Moreover we are committed to implementing SDG. In this connection, the challenges in achieving SDG-9 that deals with sustained and inclusive economic growth as well as decent work. So Going with PM's announcement and fulfilling her stand to hit target, we set to evaluate the entire related challenges that are coming across in way of implementation.
Regarding skill labour, the report of the planning commission itself said that there exists gap between demand for and supply of skilled workforce in the country. The difficulty of finding appropriately skilled workers is a substantial constraint to growth of industries. "Evidence also indicates that the skills of the workforce are not meeting the demands of emerging or indeed, established industries," the report argued. In the informal sector, where about 15 per cent of the labour force is engaged, half of the employment demands are for less than secondary education graduates. While university graduates are more likely to take professional levels of occupations, there seems to exist a mismatch between the labour market demand for academic specialties and academic disciplines that university students study.
The SDG progress report comes at a time when job creation in line with the nation's growing workforce is becoming a major focus for the country. It must have a strong correlation between economic growth and job creation. But our much applauded economic growth, sorry to say, is missing that correlation. Higher growth achieved without having proportionate creation of job opportunity. So growth translating into job creation should be the focus of our time and we have challenges there. Choice of technology and smoothness of investment up to the mark come first among the challenges.
Our secular trend of higher upliftment makes us believe that 10 per cent growth is achievable. China, the only country of the world saw a higher growth of 10 per cent in some recent past. But now it has been at descending stage and becoming blocked in 7 per cent. ADB, IMF and World Bank have their forecast of 7 to 7.2 per cent growth Bangladesh will achieve in 2019. So we understand what a big challenge we have before to reach 10 per cent growth target. Technically speaking, a country generally sees its growth target to be attained lies in a trend of strong relation between growth of GDP and investment/GDP ratio.
Technically it is said, incremental capital-output ratio or (ICOR). In the financial year 2016-18, we had average incremental capital-output ratio up to 4.13. Accordingly to reach 10 per cent growth target, we will need to have 41.3 per cent investment of the GDP and it needs a big jump and not so easy. In 2018, we see only 31.23 per cent of GDP came into investment and the main role here was being played by public investment. Dismay picture is private investment that is taken to be the main driver of growth, has been falling on its face for long.
Only 23.3 per cent private investment came into being. In 2009 it was 21.9 per cent. So trend says our private investment is still blocked in stagnancy. How to invigorate private investment is a big challenge to our growth to be hit target. Delay in land acquisition, gas, electricity and other infrastructural deficit and paucity in financial support from institutional sources are being traditionally blamed for contributing to private investment shyness. With this we add, too much profit expectation, trend towards siphoning off money abroad, unfavourable fiscal issues and disarray in financial institutions and systems matter no less for private investment not to be responsive.
Plugging internal resource deficit with external resources is given emphasis in planning commission study. It said, attracting more foreign direct investment along with other forms of foreign resources will be crucial for the country to attain the United Nations mandated SDGs. We are staying far behind in getting foreign resources in the form of foreign direct investment (FDI) even than Pakistan, not to speak of Vietnam, India and Sri Lanka. We have also some prejudices in this regard. To remove the ambivalence that characterizes the policies, it is desirable to evaluate the whole things systematically by appraising the prospective benefits and costs of private foreign investment.
Such an appraisal may then provide a more rational basis for determining the type of policy that is most appropriate for securing the maximum contribution from private foreign investment. As long as foreign investment raises productivity and this increase is not wholly appropriated by the investor, the greater product must be shared with others and there must be some direct benefits to other income groups.
These benefits can accrue to: domestic labour in the form of higher real wages, consumers by way of lower prices, and the government through higher tax revenue. Beyond this and most importantly in many cases, there are likely to be indirect gains through the realization of external economies. How far the Planning Commission strides towards fulfilling PM's announcement is to be seen.
Writer is a freelance contributor