Will human capital develop with cuts in health and education allocations?

The revised Annual Development Plan (ADP) was passed at the National Economic Council meeting held on 12 March. The reason given for cutting the allocations in the health and education sectors was the failure to spend the allocated funds.

Bangladesh presently is going through a period of demographic dividends. This is a time when the country needs to increase allocations in the education and health sectors to create human capital, but instead the allocations have been decreased.

Where is the initiative to increase the capacity of these ministries which fail to spend the allocated funds? It is not as if the ministries failed to properly utilise the allocated funds only this year. This has happened in the past too. So why wasn’t a strategy adopted from beforehand to increase this capacity?

There is grave doubt as to whether the country’s policymakers have grasped the significance of this democratic dividend. If the working age (15-64 years) population of a country increases and the dependent age (0-14 and 64+) population decreases, then the demographics are conducive for the country and the opportunity is created to take advantage of this by means of accelerating economic growth.

Presently over 65 per cent of the population in Bangladesh is of working age. But just because a majority of the population is of working age, doesn’t necessarily mean that they will enjoy the benefits of demographic dividends. Some may think that Bangladesh will reap these benefits anyway since it has a high number of working age people. But that is not so. Bangladesh is merely passing through the span of time that is favourable to benefit from the demographic dividends. If these circumstances are not properly exploited, then full benefit of this cannot be achieved. There are certain factors to be noted if advantage is to be taken of the situation.

Firstly, we have a working age population, but they must receive good education. Secondly, their good health must be ensured. Thirdly, there needs to be investment in the financial sector through which employment can be generated. Fourthly, good governance must be ensured.

If there is an environment conducive to implementing all this, then the working age population can be put to use in the third phase of the demographic transition model where birth and death rates decrease and the age structure changes. A country will be able to reap the benefits of demographic dividends if the favourable age structure of the population, quality education, a productive and skilled workforce, economic policies and investment in employment opportunities and good governance functions in a well-planned manner.

The UN Population Division’s latest (2022 edition) demographic projection indicates that Bangladesh will be able to reap the benefits of the first demographic dividend span of time up until 2033. After that, the size of the dependent population will grow, particularly the elderly population. The time when the benefits will come to a complete halt will be around 2049.

Various studies that analyse the estimated projection indicate that this time will end even earlier. But Bangladesh now must concentrate on working seriously with this first demographic dividend. At the same time, policies and strategies must be drawn up for the second demographic dividend because the number of elderly people will increase and the young population will decrease.

There must be plans in place to ensure how the elderly people can be utilized at the time, how they can be kept healthy and active, and how they can be kept in touch which advanced technologies to remain skilled, and how profits can be earned from savings and investment. But at the moment the main focus is on achieving Bangladesh’s first demographic dividend. This opportunity will not be repeated again. It comes only once for a nation.

According to the demographic transition model, in the first phase of a country and birth rate and death rate are both high. In the second phase, death rates decrease and birth rates increase. In the third phase, birth rates decrease and death rates decrease. This is when the number of working age people increase, creating opportunity to benefit from the demographic dividends. There are many countries in the world that have failed to make proper use of this opportunity or to make use of it at all.

Then again, there are certain countries, particularly many countries of East Asia like Singapore, South Korea, Japan and China, even Thailand, which have used this advantage in a planned manner and have succeeded in accelerating economic development. So, extensive employment opportunities must be created to put this advantage to use.

Bangladesh has a working age population, but unless they can be ensured in a planned manner of good education, good health along with employment, then the demographic dividends cannot be achieved. The rate of unemployment among youth is very high at the moment in the country, particularly in the case of higher education. Also the youth (15-29 years) who are not in education, employment or training (known as NEET), are also high in number (29.6 per cent, BBS latest labour survey, 2022).

According to the population and household census 2022, the NEET rate among 15-24 year old youth, is 34.26 per cent. In order to develop a skilled workforce, Bangladesh should give particular attention to technical and employment-oriented education.

The matter of achieving demographic dividends is totally absent in Bangladesh’s Population Policy 2012. It is urgent, therefore, to update this policy. Before 2016, this issue was not taken into consideration in any policies of Bangladesh, not even the education, health and youth policies.

The matter first came into discussion in a limited manner in the seventh five-year plan (2016-2020). Later, it also appeared in the eighth five-year plan, but not as any specific short, mid and long term plan.

However, the Bangladesh Perspective Plan (2021-2041) did talk about developing human resources through quality education and achieving democratic dividends. It mentioned how much should be invested in education and health, but that was in no way adequate.

Education and health are two extremely important sectors. Allocation for education will reach 4 per cent of the GDP in 2041. And the allocation for health will reach 2 per cent of the GDP in 2041. The present allocation in education and health is far below international standards, even compared to South Asian counties. It is said that a country’s allocation in the education sector should be at least 4 to 6 per cent of its total GDP (20 per cent of the total budget) and in health it should be 5 per cent (15 per cent of the total budget), but this is not so in Bangladesh.

In order to benefit from the country’s demographic dividends right now, it is important to immediately invest more in education and health. If the investment is not made now but in 2041, the time for reaping maximum benefits of the demographic dividend would have passed and the country will not be able to reap due benefits from this.

At such at juncture it is most unwarranted that the allocation for health and education in the revised ADP has been cut. This is the time to increase allocations in the national budget for education and health, or increase investments to create a well educated and healthy productive skilled workforce. Above all, to achieve the demographic dividends, there must be democratic growth and good governance alongside investing in education and health.                  

* Mohammad Mainul Islam is professor at the Population Sciences Department, Dhaka University. He may be contacted at mainul@du.ac.bd

* This column appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir