Bangladesh's agricultural sector has re-emerged as a major source of employment since 2017 as the manufacturing sector lost momentum and shed workers, according to a latest World Bank (WB) study.
Around seven out of every 10 new jobs created during the period were absorbed by the agriculture sector, while 4.2 million net new female jobs also came from agriculture.
The reversal was borne entirely by women, who lost ground in both industry and services between 2016 and 2024. During the period, women lost around 1.1 million jobs in industry and 0.8 million in services.
According to the study, the shift towards low-productivity agricultural employment has weakened labour income growth and slowed poverty reduction due to low wages and poor productivity.
The report warned that such structural weaknesses in the labour market have left households with limited capacity to absorb additional shocks, including those arising from the ongoing conflict in the Middle East.
Delivering the keynote presentation, Dr Dhruv Sharma, lead author of the report and senior economist at the World Bank, presented the findings of the latest Bangladesh Development Update at a dissemination event held on Monday.
He said job creation failed to keep pace with the growing working-age population between 2016 and 2024, leading to a problematic re-concentration of labour in agriculture.
"Improving the business environment is central to sustaining growth and absorbing a rapidly expanding workforce," Dr Sharma said.
"Reducing regulatory uncertainty, offering targeted deregulation, strengthening competition and easing constraints to firm growth will help unlock private investment and jobs," he added.
He also noted that high inflation had outpaced wage growth, significantly reducing the purchasing power of low-income households and leaving many families financially vulnerable.
According to the study, an estimated 1.4 million additional people fell into poverty in 2025, while the national poverty rate is projected to rise from 18.7 per cent in 2022 to 21.4 per cent in 2025.
The report also projected Bangladesh's real GDP growth to slow to 3.9 per cent in fiscal year 2025-26.
The Policy Research Institute of Bangladesh (PRI), jointly with the World Bank, organised the event titled "Bangladesh Development Update: Special Focus - A Business Environment that Delivers Jobs" at the PRI conference room.
Chairing the session, PRI Chairman Dr Zaidi Sattar said job creation remains Bangladesh's biggest economic challenge.
Referring to youth unemployment, estimated at nearly 40 per cent, he stressed that growth, employment and poverty reduction are deeply interconnected.
He said Bangladesh's remarkable poverty reduction between 1990 and 2020 -- when the poverty rate declined from 60 per cent to 18.7 per cent-was largely driven by export-led growth and trade liberalisation.
"Growth, jobs and poverty reduction go hand in hand in the Bangladesh context. Without growth, there will be no job creation, and without jobs, poverty reduction cannot be sustained," he said.
On remittances, Dr Sattar questioned whether the government's additional 2.5 per cent cash incentive remains necessary, given the taka's 30-40 per cent depreciation, which already encourages remittances through formal channels.
The discussion also highlighted distortions in the country's tax incentive structure.
Dr Sattar noted that the ready-made garment sector continues to enjoy significantly lower corporate tax rates compared to other industries, while high protective tariffs keep domestic prices above international levels and discourage export diversification.
The report further highlighted a structural imbalance in the economy, noting that "frontier firms" account for nearly 70 per cent of exports and 75 per cent of revenue generation, while contributing only 15 per cent of total employment.
Dr Sattar also questioned whether export-oriented firms are generating proportionately fewer jobs than domestically oriented firms and called for further research on the issue.
Speaking at the event, Centre for Policy Dialogue Executive Director Dr Fahmida Khatun stressed the need for Bangladesh to move away from a growth model dependent on low-cost labour and domestic protectionism.
She said many existing jobs remain informal, low-paid and unstable, and stressed the need for clear "sunset clauses" to ensure government protection for emerging industries remains temporary.
She also identified weaknesses in the banking sector as a major obstacle to affordable financing for private sector growth.
Foreign Investors' Chamber of Commerce and Industry Executive Director TIM Nurul Kabir highlighted the recent decline in foreign direct investment, blaming inconsistent fiscal and taxation policies for weakening investor confidence.
He said sudden regulatory measures, including unexpected supplementary duties imposed by the National Board of Revenue, discourage business expansion and reduce potential employment opportunities and tax revenue.
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