According to a recent report by the International Labour Organisation (ILO), Bangladesh needs to enhance its annual labor productivity by 1.5 percent to reach the status of a high-income country by 2050.

Currently, the nation’s labor productivity growth stands at 4.1 percent per year, falling short of 6.0 percent to meet this ambitious goal.

The findings were published in the ILO’s report, ‘The Asia Pacific Employment and Social Outlook 2024’, released on Tuesday.

The report highlights persistent employment issues across the Asia-Pacific region and underscores the necessity for inclusive policies to mitigate the impacts of an aging population.

“While Bangladesh currently has the potential to reap massive demographic dividends from a youthful labor force, investments are needed for modern skills and access to quality employment,” said Tuomo Poutiainen, the ILO’s Country Director for Bangladesh. He emphasized the dual challenge Bangladesh faces: capitalizing on its young workforce while preparing for a rapidly aging population. The country is projected to transition into an aging society by 2048.

Poutiainen highlighted the importance of investing in the care economy and social protection systems, including pension schemes, to address these demographic shifts. These measures are vital to support an aging population and ensure sustainable economic growth.

The report provides a broader analysis of the Asia-Pacific labor markets, noting that while the region has rebounded well from the global pandemic, it continues to grapple with deep-rooted challenges. These are exacerbated by the region’s rapidly aging population, which will significantly alter the economic landscape.

Unemployment in the Asia-Pacific region will remain at 4.2 percent in 2024 and 2025, equal to 87.8 million people out of work. Although the unemployment rate is lower than pre-pandemic levels, there is considerable variation across different subregions and countries.

A notable concern is the region’s jobs gap, which stood at 164 million in 2023. This figure includes individuals, particularly women, who wish to work but are unable to seek employment due to care responsibilities. The report also highlights the persistence of working poverty and informal employment.

Despite decades of economic growth, many workers still engage in low-quality, informal jobs. In 2023, two out of three workers were in informal employment, reflecting only a modest improvement over the past decade.

The report also discusses the rapid aging of the population in the Asia-Pacific region.

By 2050, the ratio of people aged 65 and above is expected to double, significantly increasing the economic dependency ratio. This demographic shift presents a significant challenge for sustaining economic growth.

East Asia is anticipated to experience the largest demographic drag on growth, with a projected decrease of 0.3 percentage points per year. Meanwhile, South Asia is expected to see a substantial decline in its demographic dividend.

For Bangladesh, the path to high-income status by 2050 requires a multifaceted approach. Increasing labor productivity is crucial, but this must be coupled with broader economic reforms and targeted investments in human capital. Enhancing skills training and education, particularly for the youth, is essential to ensure a skilled and adaptable workforce.

Improving the quality and inclusiveness of employment is vital. Efforts to formalize the labor market and reduce informality will help secure better working conditions and social protections for workers. Strengthening social protection systems, including pensions and healthcare, is critical to supporting an aging population and reducing economic vulnerability.

The government’s focus on these areas, alongside strategic investments and policies, will be essential in overcoming the challenges outlined in the ILO report.