Chennai: The World Bank finds that South Asia is facing an acute job-creation challenge with many countries in the region having large numbers of people in low-productivity employment.
“South Asia faces an acute job-creation challenge. The region must absorb tens of millions of young workers each year, yet private sector employment growth has lagged behind working-age population growth and economic output,” it said.
Agriculture employs more than 40 percent of the workforce in South Asia including nearly half in India, Bangladesh, and Bhutan. Farmers often operate informally on a small scale, generally being self-employed or working with family members. These jobs are typically less than half as productive as the economy’s average.
Finding more productive employment for these workers is critical if the region is to grow rich before growing old. Many existing, low-productivity jobs are subsistence level and would not be chosen if it were possible to earn a higher wage through a formal job in another sector. They are often chosen because the barriers to entry are small, and because other options are closed.
Formal employment is weak because of South Asia’s small average firm size, slow firm growth, lack of product market flexibility, limited openness to trade, and lower literacy rates. While jobs in agriculture have the lowest wage premium, the jobs with the highest wage premium are in business and financial services. These jobs also have significant barriers to entry, requiring high levels of education and skills.
South Asia’s working-age share peaks around 2034 and the region turns “aged” by 2049. Currently, aging is often neither productive nor financially secure—longer lives come with more years in poor health, older workers stay in informal, low-productivity jobs, and pension coverage is among the lowest in the world.
Older households use a smaller share of their spending on food and clothing and a larger share for services such as health care, hospitality, and communications. Seizing the opportunities offered by an aging society requires policy actions on all fronts at once: accelerating job creation while building old-age income support and health systems before aging pressures peak, finds the World Bank.
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