Rethinking social protection in Bangladesh: What role can active labour market policies play? – The Daily Star

Report on Bangladesh’s Social Protection System and Active Labour Market Policies in the Context of Sustainable Development Goals

Overview of Bangladesh’s Social Protection System

Bangladesh’s social protection system, with a history of experimentation since the early 1990s, has significantly contributed to poverty reduction. The government allocates approximately 15% of its national budget, equivalent to about 2% of GDP, across nearly 95 social security programmes. Recent revisions have improved system coherence; however, the system remains fragmented and relief-oriented, primarily addressing immediate vulnerabilities rather than anticipating long-term economic structural changes. This approach has left critical gaps unaddressed.

Challenges in Aligning Social Protection with Labour Market Dynamics

The social protection system shows limited responsiveness to emerging labour market and socio-economic changes, including rising unemployment, informality, and skill mismatches. Labour-market-focused interventions constitute only 3.57% of total social protection spending, allocated to 19 programmes, restricting support for productive employment and labour market transitions.

Active Labour Market Policies (ALMPs) and Their Growing Importance

In response to increasing labour market pressures, Active Labour Market Policies (ALMPs) have gained renewed relevance. ALMPs aim to improve employability, job matching, and facilitate entry into productive work. The International Labour Organisation classifies ALMPs into five categories:

1. Skills Training
2. Public Works
3. Employment Subsidies
4. Self-Employment Support
5. Labour Market Services

Recent labour market data highlights the urgency of ALMPs:

• National unemployment rate: 3.66%
• Graduate unemployment: 13.5% (more than double from eight years ago)
• Youth unemployment: 8.07%
• Young people not in education, employment, or training (NEET): 8.56 million

These trends indicate a gradual erosion of Bangladesh’s demographic dividend, emphasizing the need for effective labour market interventions.

Current Labour Market Interventions in Bangladesh

• Public Works Programmes: Employment Generation Programme for the Poorest provides short-term employment and supports community infrastructure.
• Technical and Vocational Training: Short courses for various age groups, ranging from one to five days.
• Wage Subsidies: No formal schemes currently; however, a temporary BDT 5,000 crore loan package during COVID-19 helped preserve jobs in export-oriented industries.

Despite these efforts, challenges include siloed operations, weak industry linkage, and prioritization of enrolment over employment outcomes, limiting long-term employability improvements.

Policy Recommendations for Strengthening ALMPs within Social Protection

To enhance the effectiveness of social protection and labour market policies, the following recommendations are proposed:

1. Embed ALMPs systematically within the social protection framework to support sustained and productive employment.
2. Align training programmes with industry demand to improve employability.
3. Expand internships and apprenticeships, prioritizing vulnerable groups such as poor youth, women, and informal workers.
4. Consolidate fragmented labour market programmes for better coordination.
5. Strengthen labour market information systems to guide policy and programme design.
6. Pilot targeted wage or hiring incentives within fiscal constraints.

International Experiences and Lessons for Bangladesh

Several countries provide valuable lessons on integrating ALMPs with social protection to achieve Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty), SDG 4 (Quality Education), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities):

Vietnam

• Expanded vocational training centres and partnered with global firms (Samsung, LG).
• Targeted rural youth with industry-relevant skills.
• Facilitated transition from low-productivity agriculture to manufacturing.
• Demonstrated how ALMPs can drive structural economic transformation.

Ethiopia

• Productive Safety Net Programme combines public works, skills training, savings support, and small business grants.
• Helps vulnerable households build resilience against shocks like droughts.

Rwanda

• Kora Wigire Entrepreneurship Programme supports youth, especially women, to start small enterprises through training, finance access, and toolkits.

Latin America

• Chile’s Women’s Employment Subsidy offers cash incentives to low-income women, improving formal employment.
• Colombia’s Youth in Action combines training, stipends, life skills, and internships, increasing youth employment.

Africa (Kenya and South Africa)

• Public works and youth employment programmes linked to skills development and labour market demand improve employability.

Advanced Economies

• Denmark: “Flexicurity” model combining flexible hiring, income support, and active job-search assistance maintains low unemployment and rapid re-employment.
• Germany: Dual apprenticeship system integrates classroom and workplace training, ensuring smooth school-to-work transitions and low youth unemployment.

Conclusion

For Bangladesh to advance its social protection system in alignment with the Sustainable Development Goals, particularly SDG 8 (Decent Work and Economic Growth) and SDG 1 (No Poverty), it is imperative to develop coherent, demand-driven, and targeted active labour market policies. These policies should prioritize vulnerable populations and integrate training, income support, and employer engagement. By consolidating fragmented programmes and embedding ALMPs within social protection, Bangladesh can transform social protection into a catalyst for inclusion, productivity, and long-term economic resilience.

Author: Dr. M Abu Eusuf, Professor of Economics, Department of Development Studies, University of Dhaka; Executive Director, Research and Policy Integration for Development (RAPID); Founder Director, Centre on Budget and Policy, University of Dhaka.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 1: No Poverty
   • The article discusses Bangladesh’s social protection system aimed at reducing poverty through various programmes.
2. SDG 8: Decent Work and Economic Growth
   • Focus on active labour market policies (ALMPs) to improve employability, job matching, and productive employment.
   • Addressing unemployment, especially youth and graduate unemployment.
   • Promoting skills training, apprenticeships, and labour market services.
3. SDG 4: Quality Education
   • Emphasis on technical and vocational training, skills development, and apprenticeships.
4. SDG 5: Gender Equality
   • Targeting vulnerable groups including women, with examples such as Chile’s Women’s Employment Subsidy and Rwanda’s entrepreneurship programme for women.
5. SDG 10: Reduced Inequalities
   • Focus on inclusive labour market policies that prioritize poor youth, informal workers, and marginalized groups.

2. Specific Targets Under Those SDGs Identified

1. SDG 1: No Poverty
   • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation.
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including young people and persons with disabilities.
   • Target 8.6: Reduce the proportion of youth not in employment, education or training (NEET).
3. SDG 4: Quality Education
   • Target 4.4: Increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment.
4. SDG 5: Gender Equality
   • Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.
5. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

3. Indicators Mentioned or Implied to Measure Progress

1. Unemployment Rates
   • National unemployment rate (3.66%).
   • Graduate unemployment rate (13.5%).
   • Youth unemployment rate (8.07%).
   • Number of youth not in education, employment, or training (NEET) (8.56 million).
2. Social Protection Spending
   • Percentage of national budget and GDP allocated to social security (15% of national budget, 2% of GDP).
   • Percentage of social protection spending allocated to labour market programmes (3.57%).
3. Programme Outcomes
   • Employment outcomes post-intervention (e.g., effectiveness of public works, training, subsidies).
   • Number of people enrolled versus number successfully transitioning to employment.
   • Effectiveness of wage subsidies and loan packages in preserving jobs.
4. Skills Development Metrics
   • Number of participants in technical and vocational training programmes.
   • Industry linkage and relevance of training to labour market demand.
5. Gender and Vulnerable Group Inclusion
   • Participation rates of women and vulnerable groups in employment programmes.
   • Impact of targeted subsidies and entrepreneurship programmes on women’s employment.

4. Table: SDGs, Targets and Indicators

Source: thedailystar.net