World Bank report highlights employment and investment stagnation in Bangladesh

A World Bank report titled ‘Bangladesh Development Update 2026’ highlights a significant disconnect between economic growth and job creation in Bangladesh. While the country maintained an average GDP growth rate of 6 percent over the last decade, productivity, investment, and employment have not kept pace.

Between 2016 and 2024, approximately 2 million people entered the labor market annually, but only about 900,000 new jobs were created. Notably, seven out of every ten new jobs were generated in the agricultural sector, while employment in the industrial sector actually declined.

The report identifies a ‘productivity paradox’ where the top 10 percent of frontier firms control 75 percent of formal sector sales and 69 percent of export earnings, yet contribute only 15 percent to formal employment. Most job creation occurs in small, non-frontier, market-dependent firms that face severe constraints, including complex bureaucratic processes, electricity shortages, and limited access to finance.

Operational challenges include long wait times for licenses and permits, which are nearly double those of competing nations. Additionally, 71 percent of firms suffer from unreliable electricity, resulting in an average annual sales loss of 9 percent. Disparities in tax policies were also noted, with the ready-made garment sector receiving significant tax advantages compared to the standard corporate income tax rate of 27.5 percent.