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Rising contractual employment threatens job security

Published : Wednesday, 16 April, 2025 at 12:00 AM  Count : 355
Dr Matiur Rahman
In recent years, Bangladesh has witnessed a significant shift in its labor market, particularly in the growth of contractual employment. This trend, while reflecting global economic changes, has brought both opportunities and challenges to workers, employers, and policymakers alike. The rise of contractual employment has had a profound impact on job security, transforming the nature of work, affecting income stability, and creating a new set of economic realities for the workforce.

The expansion of contractual employment in Bangladesh can be attributed to various factors, including economic globalisation, the shift towards a more service-oriented economy, and the increasing demand for flexible work arrangements. As companies seek to stay competitive in a rapidly changing economic environment, they increasingly rely on short-term contracts to meet fluctuating labor demands. The private sector, in particular, has been at the forefront of this transition, adopting flexible workforce management strategies to reduce costs and improve efficiency. Sectors such as textiles, construction, education, and technology have been especially prone to this shift, as businesses seek workers with specialised skills on a temporary basis rather than maintaining a large permanent workforce.

The rise of contractual employment is also linked to the evolving nature of labor laws in Bangladesh. While labor laws have historically focused on securing long-term employment with extensive benefits, these protections have become less relevant in an increasingly globalised economy. Many companies, particularly multinational corporations, prefer the flexibility of hiring contractual workers who can be easily hired and dismissed according to business needs. Additionally, these workers typically do not receive the same benefits and protections as their permanent counterparts, which helps businesses reduce overhead costs.

One of the most notable impacts of this rise in contractual employment is the erosion of job security for many workers. Traditionally, permanent employment provided a sense of stability and security, with workers often enjoying long-term contracts, job benefits, and retirement plans. However, the rise of short-term contracts and freelance work means that job tenure is often uncertain, and workers are more likely to experience periods of unemployment between contracts. This lack of job stability has left many workers in a precarious position, unsure of their future employment prospects.

The insecurity associated with contractual employment has significant implications for workers' well-being. Financial instability is one of the most immediate concerns, as workers face challenges in managing their income from one contract to the next. Unlike permanent employees who receive regular paychecks, contractual workers may experience gaps in income, making it difficult to plan for long-term expenses such as housing, healthcare, and education. This uncertainty also affects workers' ability to save for the future, as they may not have access to pension plans or other retirement benefits.

On the other hand, there are some benefits to the rise of contractual employment, particularly for younger generations entering the workforce. Contractual work offers a degree of flexibility that can be attractive to those who are not looking for long-term commitments or those who prefer a more fluid work-life balance. Young professionals, in particular, may value the opportunity to gain experience in different industries and fields, which can help them build diverse skill sets. Moreover, the rise of freelance and contractual employment can encourage entrepreneurship, as individuals have the opportunity to offer their skills to multiple employers without being tied down to a single company.

Despite the perceived benefits for both employers and workers, the rise of contractual employment has created new challenges for labor unions and policymakers. The lack of job security and benefits for contractual workers has raised concerns about the erosion of workers' rights. Labor unions, which traditionally advocated for permanent employees, have had to adjust their focus to address the needs of contractual workers. They have started to call for greater protections for these workers, including access to social security, healthcare, and other basic benefits. However, the legal and regulatory framework in Bangladesh has been slow to adapt to these changes. While there are some laws in place to protect workers' rights, they often fail to address the unique challenges faced by contractual employees adequately.

Furthermore, the rise of contractual employment has had broader socio-economic implications. As more people enter the labor market under contractual terms, the wage gap between permanent and contractual workers has widened. Permanent employees typically earn higher wages and receive more comprehensive benefits, while contractual workers often face lower pay and fewer benefits. This disparity has contributed to growing income inequality in Bangladesh, as the wealth generated by businesses is increasingly concentrated among a small group of permanent employees and employers.

In addition to income inequality, the rise of contractual employment has also impacted social mobility. Permanent employment has traditionally been viewed as a pathway to upward mobility, with employees able to build stable careers and gain access to a range of benefits that enhance their quality of life. However, the precarious nature of contractual employment has made it more difficult for workers to achieve long-term financial stability and social advancement. For many workers, the lack of job security means that they are unable to invest in their education or professional development, limiting their ability to move up the economic ladder.

While the rise of contractual employment in Bangladesh reflects broader global economic trends, it has introduced significant challenges for workers and employers alike. While it offers greater flexibility for both parties, the impact on job security, income stability, and long-term career development cannot be ignored. Policymakers and labor unions must work together to address the evolving needs of the workforce, ensuring that contractual workers are afforded the same protections and opportunities as their permanent counterparts. Only through such efforts can Bangladesh achieve a more inclusive and equitable labor market that provides security for all workers, regardless of their employment status.

The writer is a researcher and development worker


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