Employment in Bangladesh Manufacturing Sector: Pattern and Implications for poverty reduction

From the perspective of poverty analysis what matters is not the growth alone but also the extent to which it is employment friendly. This paper, based on a BIDS study, aims to examine the interlinkages between poverty and growth via employment in the Bangladesh manufacturing sector, through carrying out an analysis of the relationship between the changes in the elasticity of employment and the changes in growth, based on CMI data. Employment elasticity with respect to value added (standardized to per enterprise) for the period I 980- 1998 estimates as 0.55 and 0.61 for the selected 3-digit and 4-digit level activities respectively. For most of the industries, however, the estimates of employment elasticity are found to be less than unity, much lower values in some cases, indicating that certain increase (decrease) in value added would lead to less than proportionate increase (fall) in employment in these activities. Such activities under 3-digit category are: Transport equipment, Industrial chemicals, fabricated metalled products, plastic products, Non-electrical machinery, Non-metallic products, Iron and steel and Fabricated metal products. At 4-digit level, the activities such as Iron & steel, Oil except hydro, Grain milling, Handloom textiles, Soup & detergents and Bricks & tiles are among those showing very low values of elasticity. Compared to the 1980s, the employment elasticities have almost invariably declined during the 1990s. Relatively higher values of employment elasticity in the 1980s indicate that the manufacturing sector possibly in the past used to generate more jobs, possibly of relatively less-skilled category. The lower values of employment elasticities during the 1990s might signify that the industrialization