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Structural Transformation and Absorption of Surplus Labour

Author

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  • RIZWANUL ISLAM

    (Former Special Advisor, Employment Sector, International Labour Officer, Geneva.)

Abstract

The process of economic growth and development involves transformation of the structure of economies that results in a reduction in the share of agriculture and a rise in the share of industries and services in total output as well as employment. Although manufacturing is expected to play the role of the engine of growth and absorption of surplus labour, the experience of developing countries shows that all countries have not been equally successful in this regard. That has led to the search for alternative pathways to the absorption of surplus labour. The present paper addresses this question with particular focus on selected countries of South Asia, viz. Bangladesh, India and Nepal. The analysis is more detailed on Bangladesh, and focuses on whether surplus labour has been exhausted and on how effective the alternative pathways can be. The empirical evidence presented in this paper indicates that it is difficult to utilise the available surplus labour fully and productively without industrialisation. Of course, there are differences in conditions and possibilities even within South Asia. But the limitations of the service sector as an engine of overall economic growth and as a means of absorbing surplus labour seem to be clear. For Bangladesh, data on real wage trends and the persistence of low quality employment show that despite labour market tightening, the economy of the country continues to exhibit signs of the existence of surplus labour.

Suggested Citation

  • Rizwanul Islam, 2017. "Structural Transformation and Absorption of Surplus Labour," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 40(3-4), pages 105-136.
  • Handle: RePEc:ris:badest:0813
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    References listed on IDEAS

    as
    1. Ajit Singh & Sukti Dasgupta, 2005. "Will services be the new engine of economic growth in India?," Working Papers wp310, Centre for Business Research, University of Cambridge.
    2. Leanne Roncolato & David Kucera, 2014. "Structural drivers of productivity and employment growth: a decomposition analysis for 81 countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(2), pages 399-424.
    3. Amjad, Rashid & Yusuf, Anam, 2014. "More and better jobs for Pakistan: Can the manufacturing sector play a greater role," MPRA Paper 59518, University Library of Munich, Germany.
    4. Kucera, David, & Roncolato, Leanne., 2012. "Structure matters : sectoral drivers of growth and the labour productivity-employment relationship," ILO Working Papers 994717343402676, International Labour Organization.
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    Cited by:

    1. Shahidul Islam & Subhadip Ghosh & Mohua Podder, 2022. "Fifty years of agricultural development in Bangladesh: a comparison with India and Pakistan," SN Business & Economics, Springer, vol. 2(7), pages 1-41, July.
    2. Tongam Sihol Nababan & Elvis Fresly Purba, 2023. "Labour Absorption In Manufacturing Industry In Indonesia: Anomalous And Regressive Phenomena," Papers 2311.01787, arXiv.org.
    3. Md. Tuhin Ahmed & Omar Raad Chowdhury, 2024. "Who is more Likely to be Underutilised in the Labour Market of Bangladesh?," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(4), pages 1015-1044, December.

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    More about this item

    Keywords

    Structural Transformation; Surplus Labour; Economic Growth; Industrialisation; Agriculture;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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