Bangladesh failing to cash in its demographic dividend: WB
Graphics: Agamir Somoy
Bangladesh has a massive working-age population, but due to slow job creation, low female labor force participation, and a persistent skills deficit, the country is failing to capitalize on its favorable demographic dividend.
As a result, it is missing its high production targets and economic growth goals. This alarming picture was revealed in the World Bank’s 2026 report titled “Demographic Change in South Asia: From Tailwinds to Headwinds for Development.” The report was published on Tuesday at a hotel in Dhaka.
According to the report, the proportion of Bangladesh’s working-age population will reach its peak in 2045, after which the elderly population will begin to rise rapidly. By 2051, the proportion of people aged 65 or older will reach 14 percent, transforming Bangladesh into an “aged society”.
Although the timeframe to leverage the demographic advantage is limited, Bangladesh’s preparation in employment, education, healthcare, and social protection remains weak, putting the country at risk of turning into an aged society before growing rich.
Projections indicate that Bangladesh has nearly two decades to fully reap the benefits of this demographic transition. However, the World Bank emphasized that urgent structural reforms are required to generate sufficient employment, equip workers with market-relevant skills, and boost overall labor productivity.
At the same time, strengthening healthcare and social security systems is essential to withstand the economic pressure of an aging demographic.
The report warned that Bangladesh has not yet fully mobilized its favorable population structure to drive growth in employment and productivity. Around 84 percent of the total working-age population - numbering nearly 5.8 crore (58 million) - is engaged in the informal sector.
Alarmingly, over 60 percent of individuals holding a bachelor’s degree or higher education fail to secure formal jobs and are forced into informal work, where their earnings are 45-84 percent lower than those of workers in the formal sector.
This demonstrates that a vast number of citizens remain without quality employment despite receiving higher education.
In the country’s formal institutions, the annual job growth rate stands at a mere 2.7 percent, whereas the average rate across 82 emerging economies is 5.4 percent - meaning Bangladesh’s employment creation rate is half of the global emerging market average.
Moreover, labor productivity growth remains low, and small and medium enterprises (SMEs) are reducing workforce numbers rather than hiring new employees.
According to World Bank forecasts, by 2050, the labor supply in Bangladesh could outpace job availability by 1.3 crore (13 million), meaning that despite a growing working-age workforce, providing adequate employment for everyone will become increasingly difficult.
While business enterprises are creating formal jobs at an extraordinarily slow pace, small firms have seen a decline in average worker strength in recent years. Higher education no longer guarantees placement in the formal sector, while low female participation and continuous gaps in education and training further constrain the nation’s capacity to utilize its vast human resources.
The report also highlighted that Bangladesh’s expenditure on social protection is the lowest in South Asia. The government’s monthly old-age allowance is just Tk 500, which accounts for a paltry 5-8 percent of the average income of poor rural households. Although a universal pension scheme was launched in 2023, there is still no significant pension coverage tailored for informal sector workers.
Jean Pesme, World Bank director for the Bangladesh and Bhutan Region, said, “Bangladesh’s demographic opportunity depends on what kind of programs the country takes now. Helping institutions create good quality jobs, transforming youth into market-relevant skilled labor, and removing barriers to women entering the workplace.”
Johannes Zutt, World Bank vice president for South Asia, said, “South Asian countries’ economies are aging faster and earlier than their development.”
The report launching event was attended by World Bank Regional Practice Director Cem Mete, Chief Economist for Asia Franziska Lieselotte Ohnsorge, and Operations Manager for Bangladesh and Bhutan Gail Martin.
