Loans for Skills Training to Boost Jobs and Wages in Bangladesh

MANILA, PHILIPPINES — The Asian Development Bank (ADB) will lend $350 million to Bangladesh to help public and private institutions scale up skills training for 1.25 million young workers so they are well-equipped to find jobs and meet the changing needs of today’s labor market.

“Bringing together the public sector with the private sector to provide the vocational and technical skills that employers need will mean more and better-paid jobs and ultimately help Bangladesh shift its economy to a higher level,” said Sungsup Ra, Director in ADB’s South Asia Department.

Two thirds of the Bangladesh workforce had only minimal education and only 4% has received any kind of training. Moreover, the skills development system can only meet about 20% of training needs, meaning many youth cannot find good jobs, underemployment is rife, and wages remain low. Women, in particular, suffer from a lack of skills training.

By 2025, Bangladesh is expected to have 78 million workers, up from 56.7 million in 2010. However, Bangladesh will only be able to take advantage of this demographic shift if it makes urgent investments in higher-quality schooling and at least a four-fold increase in skills training. The government’s National Skills Development Council has been working to promote skills since 2011 as part of its vision of achieving middle-income status by 2021.

The total cost of the government’s Skills for Skills for Employment Investment Program is estimated at $1.07 billion. ADB loans for the program will be made in three tranches as part of a seven-year financing facility. It is expected to be complemented by $200 million in cofinancing from the Government of Bangladesh, $30 million from the Government of Switzerland, $400 million from other development partners, and $90 million from the private sector.

The investment program will support skills training in 15 priority sectors, starting with six sectors: garments and textiles, leather, construction, light engineering, information technology, and shipbuilding. A major target of the program is to boost job placement to around 70%, from about 40% now.

The first $100 million tranche of the facility is expected to be signed in the coming weeks with the second expected in mid-2016 and the third in mid-2018.

The first tranche will target 40,000 women and disadvantaged people, including those with disabilities. It will also support 32 public training institutions under three ministries, nine industry associations, microcredit organization Palli-Karma Sahayak Foundation (PKSF), and Bangladesh Bank Small and Medium Enterprise Department.

By 2015, the program aims to help set up a National Human Resource Development Fund to scale up skills training. The program will also support the government’s plan to establish a new ministry or authority for skills development.