The staggering rate of unemployment among university graduates in Bangladesh, and the difficulty faced by employers in securing a skilled workforce, pose a conundrum for the country's development journey, with implications regarding productivity, growth, social welfare and integration in the global value chain.
A World Bank study found that more than a third of university graduates remain unemployed for one or two years after graduation. The unemployment situation is dire for graduates of National University (colleges offering degrees in tertiary education), as 66% of these graduates are unemployed, according to a BIDS study.
On the other hand, higher education can be the key to a 'decent' job, as found in a study by the South Asian Network on Economic Modelling (Sanem) on labour and employment, which may be a key reason behind the youth's pursuit of higher education.
Notably, the skill level of the graduates seeking employment is unsatisfactory to employers. According to one study by the Centre for Policy Dialogue (CPD) in 2021, a shortage of skilled applicants for professional positions had been reported by 46% of employers.
The study also identified lack of work experience and required qualifications as two other major issues. In 2019, the World Bank found that 69% of employers reported a shortage of applicants for highly-skilled positions such as professionals, technicians and managers.
While it can be argued that there is ample evidence to ascribe skill mismatch to unemployment among graduates, the issue, however, requires further examination in the broader context of institutional deficiency, the private sector's engagement with public initiatives, and inter-generational inequality.
The agency of the young students enrolled in universities and colleges also becomes an issue of interest in this regard, as they are the primary and perhaps the most prominent stakeholders in this matter.
The graduates' skill level is but a reflection of the educational training they received from the academic establishments they were enrolled into. The quality of the training, therefore, becomes a major, if not the prime, determinant of the graduates' employability.
If the employers do not find candidates to be skilled enough, then the responsibility, to a large extent, lies with the academic status-quo, which is more or less configured by state institutions, in terms of resource distribution and policy design.
Since, without a reconfiguration of the academia, which may involve a large-scale shift in curriculum and insistence on best practices on the part of the administration, it would not be possible to upskill the graduates, the logical deduction is that the capacity and political will of the state institutions have to be reoriented as well.
However, it would be unreasonable to acknowledge the role of state institutions without recognising the obligation of the private sector to ensure a skilled workforce. Much discussion has been dedicated to the issue of industry-academia collaboration, a lacking that can be argued to be one of the driving forces behind skill mismatch.
So far, the record of industry-academia collaboration is poor. A tracer study in 2018, found a "serious" lack of collaboration between university and industry, with only 40% of the surveyed employers and 65% of the surveyed departments maintaining some kind of collaboration.
The areas of collaboration were found to be reviewing and updating curriculum, arrangement of internships, opportunity to visit the workplace, professional network with teachers and recruitment of new employees.
Thus, the scope of these collaborations is quite limited, as there is little to no investment in capacity building or academic research on the part of the private sector. The private sector, the other primary stakeholder in the matter, needs to engage with academia on its initiative, for its own sake.
Notably, private sector-led initiatives to upskill young employees are also lacking. Rather, there is a tendency to recruit candidates with experience, which indicates a tendency of free-riding and ultimately leads to market failure in terms of skill gap.
The extent to which intergenerational inequality influences the skill level of an individual, might be a matter of further research. However, the tracer study mentioned above found a strong correlation between parents' education and graduate employability: more than 40% of the graduates, whose parents have at least a master's degree, got a job after graduation, whereas in the case of the graduates whose parents have no formal education, the employment rate is only 21.9%.
Moreover, the study found that in the case of graduates whose father has no formal education, the unemployment rate is 56%. There is thus room for argument that parents' level of education is a significant factor behind skill level. Graduates whose parents did not have access to tertiary education are, therefore, more likely to be unemployed. In this connection, intergenerational inequality needs to be taken into account as a possible factor behind graduate unemployment.
The demands and targets of the young graduates need to be weighed in any policy action as well. The youth have their perceptions of job opportunities in private sectors, which in many ways shape their interests and aspirations. The "Youth Survey 2018", conducted by BIGD, found that around 57% of females and 42% of males preferred government jobs, for better salaries, facilities and job security.
The survey also found a significant portion of the youth, about 20%, aspire to go abroad in search of better living and career opportunities. In the 2020-21 academic year, 8,598 Bangladeshis were granted study permits by the United States alone, according to the 2021 Open Doors Report on International Educational Exchange.
According to the Foreign Admission and Career Development Consultations Association of Bangladesh (FACD-CAB), US scholarships for Bangladeshi students may double in number in 2022. Other top destinations include Canada, the UK, Australia, and Japan. Many of these students may not return and participate in the domestic labour force.
Perceptions of scope for a better salary, job security, and better living are shaping the career preference of the graduates. It might be so that, just as employers do not find enough skilled candidates, many of the new graduates, especially skilled ones, also do not find job opportunities in the private sector to be good enough, and opt for government jobs or study or work opportunities abroad.
Policymakers, as well as private sector stakeholders, therefore, need to come to terms with the agency of young graduates, otherwise, the domestic industry will not be able to accommodate even a skilled workforce.
Omar Raad Chowdhury is a Research Associate at Sanem. Email: firstname.lastname@example.org
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.