Rising Unemployment in Bangladesh a Threat to Social Stability

Bangladesh is the world’s leading producer of all sorts of jute and jute products. The country exports around 85 per cent of its production, either as a raw product or made into bags, sacking or carpets. Together with garments and textiles, jute is one of Bangladesh’s most important foreign currency earners.

But since autumn 2008 the demand for jute has strongly decreased, says Ebari Khan of the Bangladesh Jute Spinners Association: "Americans, Australians - most of our regular customers refuse to receive goods. They keep telling us to delay their orders due to the global recession." Bangladesh jute factories had to slash production by 40 percent. Some of them have already been shut down. Around 30,000 employees lost their jobs.

Millions of jobs threatened

"It's a very, very bad situation", says Ebari Khan. "The workers are panicking right now. They believe if the government does not come up with any package to protect the industry, then all the jute mills will close very soon." In this case nearly two million people would be out of work. The same might happen to 2.5 million people employed in the garment industry, if the export quota continues to decrease.

Another foreign currency earner may also falter: the migrant workers’ remittances. Millions left Bangladesch in the past years to seek jobs in countries like Saudi Arabia, Malaysia, South Korea or Hongkong. Their earnings help their families back home and keep the economy going. But this may change, says Uttam Kumar Deb, economic expert at the Dhaka based Centre for Political Dialogue: "This year, the number of people going abroad for work has been reduced. Recently, the Malaysian government has decided to postpone or withdraw visa given to 55,000 workers from Bangladesh who are supposed to go to Malaysia for work. This will have a negative impact domestically because every year there is a large number of people joining the labour market, and we don’t have an adequate number of jobs!"

ADB calls for employment generation programmes

The Asian Development Bank (ADB) recently pointed out that the developing countries will be dramatically affected by the worldwide recession. ADB South Asia-Director Ashok Sharma warned in Australian Radio:

"It has a direct impact on the labour market. And when there is a loss of jobs, then there is a cascading down. Many children cannot go to school, the schools close, then the teachers lose their jobs. This is a very downward spiral. So what we are advising is: direct employment generation programmes under these circumstances will help the common person most and most immediately. At the same time you can keep reforming, reform the fiscal side , the financial sector side. But stem the job losses!"

Workers in the Bangladesh jute production have submitted a recommendation to the government asking it to protect their industry and to prevent job losses.

Unless Bangladesh provides some incentives, it cannot be competitive, experts say. They suggest an integrated programme which balances productivity growth and employment generation with investment incentives. But if the government doesn’t act soon, they say, it may not only be Bangladesh’s economy that is at stake but also the country’s social stability.