Alternative Approaches to Full Employment in Bangladesh Role of the Non-farm Sector

Abstract

The slow growth of employment in the modern manufacturing sector has raised scepticism on how far, and how quickly, Bangladesh economy could productively absorb its large pool of surplus labour, and attain full employment. Following Ranis and Stewart (1993), the present paper re-engages (in) and examines the potential role of rural non-farm activity (RNA) in wiping out rural unemployment and underemployment, as it did in the case of some East Asian countries. This paper explores the extent and pattern of RNA growth in Bangladesh, its impact on jobs and incomes, as well as on labour market formations. The study contends that changes in rural labour market are often not reflected as structural change due to the presence of informality within the three traditional sectors. It explores pathways to enhancing rural non-farm employment and assesses the prospects of reaching full employment. Finally, the study stresses the need for a comprehensive policy framework and coordinated strategy for a vigorous growth of rural non-farm enterprises, in order to increase the potential for higher productivity jobs, household incomes, and to enhance aggregate demand.