||The investment program will support the Government of Bangladesh's reforms in skills development, anchored in the National Skills Development Policy (NSDP), 2011. It will support large-scale private sector involvement and public-private partnership, which is critical to meet existing and future labor market needs and to reduce the skills gap. This in turn is crucial for Bangladesh to move away from the 'low-skill, low-wage equilibriumm' to a 'higher skill, higher wage virtuous cycle' to become a middle income country. The program will help the government to scale-up skilling of new entrants and up-skilling of existing workers to contribute to higher growth of priority sectors. The program will strengthen skills development in Bangladesh and support transition to a sector-wide approach (SWAp) by establishing a unified funding system and enhancing overall coordination of the currently fragmented system.
|Project Rationale and Linkage to Country/Regional Strategy
The Bangladesh economy has grown rapidly at about 6% annually since 2003, up from 5% in the 1990s. The poverty headcount index declined sharply from 57% in 1992 to 31% in 2010. Social indicators have improved significantly, particularly for women. However, despite impressive progress, the 2010 labor force survey indicated that more than 60% of the labor force has either no education (40%) or up to primary education (22.8%) and less than 2% have any kind of vocational training; about 2 million young people enter the labor force every year. The average wage per worker has remained low at Tk200 per day for day laborers and Tk3,500 per month for garment workers.
With the approval of the National Education Policy and the NSDP, the government embarked on major education and training reforms. The National Education Policy emphasizes the overall importance of education and training, while the NSDP reinforces the importance of skills development and opens up the sector for major policy and institutional reforms. Bangladesh has achieved gender parity in primary and secondary education participation since 2000. Women''s labor force participation grew from 26% in 2003 to 36% in 2010. A major opportunity for the country comes from its declining dependency ratio, from a high of 108% in 1974 to 66% in 2010, leading to an increasing share of the working age population in the next three decades. However, this opportunity cannot be capitalized on unless urgent investments are made in much higher quality schooling combined with at least a four-fold increase in skilling and/or up-skilling of the labor force, which is expected to increase from 56.7 million in 2010 to 78 million in 2025.
In its Perspective Plan 2021, Bangladesh articulates its vision to achieve middle-income status by 2021, including reducing the poverty rate by half. To accelerate economic growth from the current 6% to 8% and above, the government must address the skills shortage one of the key binding constraints. Skills development requires a two-pronged approach. First, it must be anchored in foundational skills that come from high-quality schooling combined with relevant vocational and technical skills to capitalize on the demographic dividend. Second, it requires scaling up skills training by four to eight times the current annual training capacity to (i) increase labor force productivity to contribute to higher average household income leading to higher gross domestic product, (ii) double exports within 10 years, (iii) double remittances through higher skills leading to higher per capita remittances, and (iv) promote economic diversification including trade facilitation and industrialization.