Looking for jobs? Wait for economic recovery!

Following the high-stakes February national election, many hoped for an immediate turnaround in Bangladesh's persistent job crisis. 

However, Finance Minister Amir Khosru Mahmud Chowdhury has cautioned that stabilising the fragile economy will take time, with reforms expected to restore stability within two years before growth regains momentum.

The recently unveiled FY27 budget serves as the first major test of this stabilisation strategy. It projects higher GDP growth, stronger investment inflows, increased revenue collection and lower inflation. 

Yet amid this long list of goals, one glaring omission stands out: a target for reducing the unemployment rate.

However, the budget is not silent on employment. Promises of job creation are scattered throughout the document of the budget speech. 

But there is no forecast for how many jobs will be created in the economy in the upcoming years, and no benchmark for how far unemployment should fall.

Economic growth is expected to create jobs and improve living standards.

Rather than direct employment programmes, the budget bets on human capital investment, private sector incentives and sectoral support, trusting that the right conditions will eventually translate into jobs. It may, but without a target, there is no way to know if it does.

Instead of introducing large-scale, direct employment programs, the budget relies on strengthening human capital, increasing private investment, and providing sectoral incentives, with the expectation that jobs will emerge through broader economic growth.

This logic is familiar to development economists: a healthier, better-educated workforce should attract foreign direct investment (FDI), raise productivity, and expand employability. Simultaneously, improved business conditions are expected to encourage enterprise growth. Together, these factors are intended to generate employment over time.

Constraints of a supply-side-led approach

First, human capital investments take 10 to 15 years to yield returns, while youth unemployment is an immediate crisis.

According to the Bangladesh Bureau of Statistics Labour Force Survey 2024, 8.85 lakh graduates are unemployed, and youth aged 15 to 29 account for over 76% of total unemployment. This points to a structural lack of labour demand, not only a skills gap.

Second, FDI-driven job creation depends on industrial capacity, including infrastructure, logistics, and regulation, which remain constrained in key sectors.

Third, skills development is not closely aligned with current investment trends.

This raises a key question: when jobs are expected to emerge indirectly from growth, how certain is their arrival?

The budget's core strategy: Human capital first

The FY2026–27 budget, with a record outlay of Tk9.38 lakh crore, emphasises human capital through higher spending on health and education. 

Health allocation stands at Tk69,409 crore (about 1% of GDP), while education receives Tk1,36,606 crore (around 2% of GDP). These investments aim to improve productivity and long-term employability.

This marks a shift in priorities. However, improving employability is not the same as creating jobs, as education and health do not automatically generate labour demand.

This distinction is evident when looking at global experience.

How some countries turned skills into employment, and others did not

Countries that successfully converted human capital investment into mass employment, such as South Korea and China through state-led industrial policy, and Vietnam through export-oriented manufacturing and FDI attraction, combined supply-side improvements with strong labour demand creation.

By contrast, countries such as Tunisia (post 2011) and Egypt (since the 1990s and especially after the 2000s reforms) expanded higher education but struggled to absorb graduates into productive sectors, resulting in persistent unemployment and underemployment despite human capital gains.

Meanwhile, the FY27 budget of Bangladesh provides the supply; the demand remains largely unaddressed.

No comprehensive roadmap in FY27 budget

The budget speech identifies employment generation as a key pillar of economic recovery and inclusive growth, introducing initiatives such as employment exchanges, expanded vocational training, a Smart Skill Bank, tax incentives for freelancers and startups, and measures to support overseas employment.

Many of these proposals mirror commitments in the BNP's 2026 election manifesto, which pledges to create 10 million jobs through investment, skills development, and private sector expansion.

However, while both emphasise employment, the budget focuses more on improving employability and labour market participation than on directly creating new jobs.

Employment exchanges connect job seekers with employers through registration and skills matching, improving efficiency but not creating jobs.

Similarly, the Skills for Industry Competitiveness and Innovation Program (SICIP) trains around 220,000 people, with jobs for 65 % of them targeted. However, training does not automatically create jobs when labour demand is weak.

The budget's focus on the digital economy includes tax incentives for ICT and freelancers and claims the IT sector could generate 200,000 direct and 800,000 indirect jobs, alongside a Tk500 crore Startup Fund. However, startups typically do not generate large-scale employment early on.

It also highlights industrial expansion, with Bepza Export Processing Zones in Patuakhali and Jashore projected to create 100,000 and 150,000 jobs. While significant, these remain investment-led rather than direct employment measures.

Creative industries and sports are mentioned as emerging sectors, but their scale limits large job creation potential compared with manufacturing, construction, and agriculture.

On overseas employment, the BNP manifesto targets 2 million workers abroad annually, supported by loans and training. The budget reflects this through skills verification, a Smart Skill Bank, Probashi Card, and migration loans, though a lower allocation for the Ministry of Expatriates Welfare and Overseas Employment than in revised FY2025–26 raises implementation concerns.

key weakness of the budget's employment agenda is the absence of measurable targets. It does not specify expected job creation, training outputs or unemployment reduction for FY2026–27, leaving no clear benchmarks to assess progress.

Without a clearer link between skills, investment and job creation, employment remains an aspiration rather than a defined policy outcome, with measurable outcomes still missing.