Bangladesh faces narrowing window to turn workforce growth into economic gains, World Bank says

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Bangladesh workforce growth window

Highlights

Bangladesh has until 2051 to convert its workforce growth into economic gains before entering the 'aged economy' stage, outlasting most South Asian peers.
South Asia's working-age demographic boost to GDP is projected to fall from 0.4% since 2000 to just 0.1% annually by 2050, weakening productivity gains.
With 84% of Bangladeshi workers in informal jobs and 44% of graduates informally employed, delayed formal job creation and low female participation hinder the demographic dividend.

World Bank report outlines demographic timeline

According to The Business Standard, the World Bank says in its report, "Demographic Change in South Asia: From Tailwinds to Headwinds for Development," that Bangladesh remains one of the region's better-positioned economies to benefit from a demographic dividend, even as the broader South Asian window starts to close. The report, released on 3 November, says South Asia's working-age population is expected to peak and begin shrinking in less than a decade.

By 2049, South Asia is projected to become an aged economy, with 14% of its population aged 65 or older. Bangladesh is expected to reach that stage in 2051, giving it a longer runway than many regional peers to prepare for slower labour-force growth and rising old-age support needs.

Since 2000, the rising share of adults in prime working years has contributed an annual 0.4% increase to South Asia's GDP and 1.1% growth in labour productivity, according to the report. That contribution is projected to weaken sharply, with demographic change adding just 0.1% a year to regional GDP growth by 2050.

World Bank Vice-President for South Asia Johannes Zutt says economies in the region are ageing faster and earlier in their development path. He says countries need to create more and better jobs, strengthen infrastructure and prepare for ageing populations, while healthier older people could continue contributing to the economy through what the report describes as a second dividend.

Employment gaps and ageing costs raise policy pressure

Bangladesh has not yet fully turned its favourable age structure into broad employment and productivity gains. The report says limited formal job creation, low participation by women and persistent human capital gaps continue to hold back stronger economic returns from the country's workforce profile.

Around 84% of Bangladeshi workers, or about 58 million people, are employed informally, while 44% of university graduates also work in the informal sector. Formal firms are adding jobs slowly, and small firms have recently shed workers on average, underscoring the challenge of moving workers into more productive employment.

World Bank Division Director for Bangladesh and Bhutan Jean Pesme says the country's demographic opportunity depends on immediate action to help firms create better jobs, equip young people with market-relevant skills and remove barriers keeping women out of work. The report also recommends expanding access to finance for micro, small and medium enterprises, simplifying regulations and improving healthcare, education and skills development.

The Bank says Bangladesh also needs stronger healthcare and old-age income security ahead of its demographic transition, with higher domestic resource mobilisation needed to meet those costs. Across South Asia, healthcare, long-term care and pension systems remain weak, with only 17% of the working-age population contributing to a pension scheme and just 10% of older people receiving any pension benefit, the lowest coverage rate globally.

Our earlier article on Pakistan’s push to expand priority-sector lending outlined how the government is pressing banks to increase credit to housing, agriculture and SMEs, tying stronger lending performance to access to incentives. It also detailed specific lending targets through 2027 and the planned reforms—such as risk-sharing, regulatory updates, and public-private partnerships—meant to remove barriers to broader formal financing.

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