Informal Sector of Bangladesh

7/29/2019 Informal Sector of Bangladesh

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Presented by:Presented by:

Md. Mozahed HossainMd. Mozahed HossainDeputy SecretaryDeputy Secretary

Ministry ofMinistry ofLabourLabour and Employment, Bangladesh Secretariatand Employment, Bangladesh Secretariat

The views expressed in this presentation are the views of the author and do notnecessarily reflect the views or policies of the Asian Development Bank Institute

(ADBI), the Asian Development Bank (ADB), its Board of Directors, or thegovernments they represent. ADBI does not guarantee the accuracy of the data

included in this paper and accepts no responsibility for any consequences of their

use. Terminology used may not necessarily be consistent with ADB official terms.


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Informal Sector & NonInformal Sector & Non--RegularRegular

Workers of BangladeshWorkers of Bangladesh

According to the definition of InternationalAccording to the definition of InternationalLabourLabour OrganisationOrganisation (ILO)(ILO) --

'' the informal sector consists of small'' the informal sector consists of small--scale, selfscale, self--

employed activities (with or without hire workers)employed activities (with or without hire workers)typically a low level oftypically a low level oforganisationorganisationand technology,and technology,

with primary objective of generating employment andwith primary objective of generating employment and

incomes. The activities are usually conducted withoutincomes. The activities are usually conducted without

proper recognition from the authorities, and escapeproper recognition from the authorities, and escape

the attention of the administrative machinerythe attention of the administrative machinery

responsible for enforcing laws and regulations.''responsible for enforcing laws and regulations.''


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NonNon--Regular EmploymentRegular Employment

Generally Non-regular workers means -

Non Regular employment refers to the use

of specific form of employment arrangement

that provides no security of tenure forworkers and exclude them from receivingnon wage benefit.


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BackgroundBackground

Industrialization starts in Bangladesh in theIndustrialization starts in Bangladesh in the19601960s.s.

After independent (1971), governmentAfter independent (1971), governmentnationalized all the major industries andnationalized all the major industries andfactories.factories.

From early 80s Govt. startsFrom early 80s Govt. starts privatisationprivatisation andand

encourage private investment;encourage private investment; In this dilemma, informal sectors are nowIn this dilemma, informal sectors are now

increasing in large scale and state owned sectorsincreasing in large scale and state owned sectors

are becoming smaller.are becoming smaller. Due to increase informal and private sector,Due to increase informal and private sector,

nonnon--regular workers has been increasing as wellregular workers has been increasing as wellin both formal and informal sector.in both formal and informal sector.


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Present Labor Force StatusPresent Labor Force Status

Total WorkforceTotal Workforce :: 49.5 million49.5 million

MaleMale : 37.3 million: 37.3 million

FemaleFemale :: 12.1 million12.1 million

Formal SectorFormal Sector :: 10.2 million10.2 million

Informal SectorInformal Sector :: 37.2 million37.2 million

Source: Labor Force Survey 2005Source: Labor Force Survey 2005--06 by BBS06 by BBS


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Sector wise employmentSector wise employment

47.447.4TotalTotal

0.80.8Finance & business services and real estateFinance & business services and real estate

0.10.1Electricity, gas & waterElectricity, gas & water

0.10.1Mining & quarryingMining & quarrying

2.62.6Community & personal servicesCommunity & personal services

2.62.6Health, education, public administration & defenseHealth, education, public administration & defense4.04.0Transport, storage & CommunicationTransport, storage & Communication

7.87.8Trade, Hotel & RestaurantTrade, Hotel & Restaurant

1.51.5ConstructionConstruction

5.25.2ManufacturingManufacturing

22.822.8Agriculture, forestry & fisheriesAgriculture, forestry & fisheries

Total NumberTotal Number

(million)(million)

SectorSector



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Workers employed in any establishment shall beWorkers employed in any establishment shall be

classified in any of the following classes accordingclassified in any of the following classes accordingto the nature and condition of work; namelyto the nature and condition of work; namely

(a) apprentice (b) badli (c) casual(a) apprentice (b) badli (c) casual

(d) temporary (e) probationer (f) permanent.(d) temporary (e) probationer (f) permanent.

Workers Classification

permanent type work

should not be treated astemporary work

And after 30 days of continuation work,

worker should be permanent

According to the Labour Act, 2006 -


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Employed persons by formal and

informal sector

2.132.139.549.547.857.854.014.017.97.96.986.982.82.89.159.157.647.64OthersOthers

90.8590.8579.2479.2482.0182.0168.9268.9266.3566.3566.9666.9685.6985.6976.1876.1878.4478.44InformalInformal

6.726.7211.2211.2210.1410.1427.0727.0725.7425.7426.0626.0611.5111.5114.6714.6713.9113.91FormalFormal

100100100100100100100100100100100100100100100100100100TotalTotal

PercentPercent

FFMMTotalTotalFFMMTotalTotalFFMMTotalTotalRuralRuralUrbanUrbanBangladeshBangladeshSectorSector



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Conditions of the WorkersConditions of the Workers

In Bangladesh, more than 80 percent workersIn Bangladesh, more than 80 percent workersare involved in the informal sector.are involved in the informal sector.

Comparing to the informal sector, workers of theComparing to the informal sector, workers of the

public sectors are enjoying better condition inpublic sectors are enjoying better condition inBangladesh.Bangladesh.

Low wage, poor working conditions, absence ofLow wage, poor working conditions, absence of

social safety net, no job guarantee and so manysocial safety net, no job guarantee and so manyhazardous things are still existing in the informalhazardous things are still existing in the informalsectors.sectors.


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Recent Change in BangladeshRecent Change in Bangladesh

Labor MarketsLabor Markets


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Changing Pattern in EmploymentChanging Pattern in Employment

Outsourcing (e.g. Security, cleaning etc.)Outsourcing (e.g. Security, cleaning etc.)

Contractual (e.g. MultinationalContractual (e.g. MultinationalCompany/Agency)Company/Agency)

Daily Basis (e.g. Informal Sectors)Daily Basis (e.g. Informal Sectors) Hour basisHour basis

Master rollingMaster rolling

Employed byEmployed by labourlabour contractorcontractor


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Major Types of Informal &Major Types of Informal &

NonNon--Regular workRegular work

AgricultureAgriculture

ConstructionConstruction

Domestic workDomestic work

DayDay labourerlabourer HawkerHawker

TransportTransport

Small manufacturerSmall manufacturer

FishingFishing

SalesSales

ProductionProduction Service providerService provider


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Reasons for increasingReasons for increasing

informal workinformal work

Decrease of state ownedDecrease of state owned organisationorganisation & increase& increaseof private sectorof private sector

River erosionRiver erosion

Cyclone, flood and other natural disasterCyclone, flood and other natural disaster Decrease of agricultural landDecrease of agricultural land

MigrationMigration

Lack of EducationLack of Education

MongaMonga


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Govt. Position & InitiativesGovt. Position & Initiatives

))Increasing employment opportunity. Work for 1Increasing employment opportunity. Work for 1person from 1 family;person from 1 family;

))LabourLabour law amend to regulate the employmentlaw amend to regulate the employment

relationship and to ensure workers protectionrelationship and to ensure workers protection))Skill develop for internal and externalSkill develop for internal and external

employmentemployment

))Increasing Social Safety net includingIncreasing Social Safety net including LabourLabourWelfare Foundation Act, 2006Welfare Foundation Act, 2006


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Government Position & InitiativesGovernment Position & Initiatives

))Govt. is aware enough about workersGovt. is aware enough about workersvulnerability due to flexibility of employment. Sovulnerability due to flexibility of employment. So

there are safety clause inthere are safety clause in labourlabour law for theirlaw for theirwagewage

BangladeshBangladesh LabourLabourAct, 2006Act, 2006

Section 121Section 121

Provided further that when the wages of a workerProvided further that when the wages of a worker

employed by the contractor is not paid by theemployed by the contractor is not paid by thecontractor, the wages shall be paid bycontractor, the wages shall be paid by

the employer of the establishment and the samethe employer of the establishment and the same

shall be adjusted from the contractor.shall be adjusted from the contractor.


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))Govt. established Workers Welfare Foundation whereGovt. established Workers Welfare Foundation wherespecial provision has been made for informal sectorspecial provision has been made for informal sector workers;workers;

))Protection of Informal sector workers has considered inProtection of Informal sector workers has considered inupcoming amendment ofupcoming amendment ofLabourLabourAct, 2006;Act, 2006;

))Social Safety Net Scheme has been increasing throughSocial Safety Net Scheme has been increasing throughalternative skill training arrangement;alternative skill training arrangement;

Expansion of LL coverageExpansion of LL coverage))According to theAccording to the LabourLabourAct, 2006 Chapter 1 Section 4Act, 2006 Chapter 1 Section 4

((dhadha))

Due to the initiative of Govt. the number of workersDue to the initiative of Govt. the number of workersbecame 10 instead of 25, which created opportunity tobecame 10 instead of 25, which created opportunity to

cover more workers under legal framework;cover more workers under legal framework;


continue...continue...

This act shall not apply to agricultural farms whereless than 10 workers are normally employed


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))According to theAccording to the LabourLabourAct, 2006 Chapter 1,Act, 2006 Chapter 1,

Section 2 (7)Section 2 (7) --

Due to the initiative of Govt. the number ofDue to the initiative of Govt. the number ofworkers became 5 instead of 10, which createdworkers became 5 instead of 10, which created

opportunity to cover more workers under legalopportunity to cover more workers under legalframework;framework;


continue...continue...

factory means any premises including the precinctsthereof whereon 5 or more workers ordinarily work

on any day of the year and in part of which amanufacturing process is being carried on.


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BangladeshBangladesh LabourLabourWelfare Foundation Act, 2006Welfare Foundation Act, 2006

Definition:Definition:NonNon--government sector where a workergovernment sector where a workers work or job conditionss work or job conditionsetc. are not covered within ambit of theetc. are not covered within ambit of the LabourLabourAct (of 2006)Act (of 2006)and related rules and where workersand related rules and where workershave limited opportunity tohave limited opportunity to

be organized.be organized.

Service Provision:Service Provision:@@ ensure welfare of the workers and his familyensure welfare of the workers and his family

@@ initiate and implement different projects for the welfare of thinitiate and implement different projects for the welfare of thee

workers and his familyworkers and his family@@ provide financial assistance to worker especially who isprovide financial assistance to worker especially who is

incapable or disabledincapable or disabled

@@ treatment or financial assistance for ill workertreatment or financial assistance for ill worker

@@

financial assistance to his family when a worker dies infinancial assistance to his family when a worker dies inaccidentaccident

@@ scholarship or stipend to the meritorious family member ofscholarship or stipend to the meritorious family member ofworker for educationworker for education

@@ group insurance for the life insurance of worker and for thatgroup insurance for the life insurance of worker and for that

pay premiums to the insurance company from the fundpay premiums to the insurance company from the fund


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Challenges for FutureChallenges for Future

EnvironmentalEnvironmental

99Job losses due to climate change especially in theJob losses due to climate change especially in thesector of Agriculture, fisheries in costal belt, which willsector of Agriculture, fisheries in costal belt, which willmake the workers more vulnerablemake the workers more vulnerable

EconomicEconomic

99Economic recessionEconomic recession

99NonNon--tariff Barriertariff Barrier

SocialSocial

99 Due to over population increase social unrest andDue to over population increase social unrest anddecrease employment opportunities.decrease employment opportunities.

99 Due to fast growing automation informal workers willDue to fast growing automation informal workers willnot be able to cope with new technology, which willnot be able to cope with new technology, which willmake them moremake them more vulnerable.vulnerable.


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Govt. future needGovt. future need

Amend and expansion of theAmend and expansion of the labourlabour law tolaw to

ensure the rights and regulate the informalensure the rights and regulate the informaleconomy;economy;

Capacity building ofCapacity building oflabourlabour inspection andinspection and

directorate;directorate; Support SME, rural and agroSupport SME, rural and agro--based industries tobased industries to

create employment generation;create employment generation;

Vocational and Skill development for alternate;Vocational and Skill development for alternate; Create job opportunity in rural areas.Create job opportunity in rural areas.


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Thank youThank you

Informal Sector of Bangladesh

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