Bangladesh’s Demographic Dividend Has an Expiry Date

For years, Bangladesh has spoken confidently about its demographic dividend: a large working-age population capable of accelerating economic growth. But there is a problem with the word “dividend”. It sounds like something that will eventually be paid. Demography makes no such promise. A favourable population structure creates a demographic window, not an automatic dividend. The dividend comes only when people are healthy, educated, skilled and productively employed while that window remains open. Bangladesh has already moved through the most favourable phase of this transition. The challenge now is to convert its remaining demographic advantage into productivity before the population begins to age more rapidly.

Bangladesh’s demographic transformation has been remarkable. Fertility has fallen close to replacement level, life expectancy has increased, and the working-age population has grown substantially. The age-dependency ratio fell from around 90 dependants per 100 working-age people in the 1980s to 53 in 2022. Yet United Nations Population Fund (UNFPA) estimates that Bangladesh’s first demographic dividend, driven by the rising working-age share, peaked in the early 2020s. The favourable window has not suddenly disappeared, but the working-age share is expected to level off and eventually decline.

That changes the question Bangladesh must ask. It is no longer whether the country has a large young population but whether it can turn that population into productive human capital quickly enough. The warning signs are serious. In 2022, 41 per cent of young Bangladeshis were not in employment, education or training (NEET), rising to 62 per cent among young women. Bangladesh also spends below 2 per cent of GDP on education and below 1 per cent on health, according to UNFPA.

The jobs gap is even more revealing. World Bank analysis shows that over the past decade about 14 million young Bangladeshis entered the labour market, while only 8.7 million jobs were created. Between 2013 and 2022, the working-age population grew by around 1.5 per cent annually, compared with employment growth of just 0.2 per cent. Job quality is another concern: half of workers aged 15 to 29 are in low-paying jobs. This goes to the heart of the demographic dividend. A large workforce is an economic advantage only if an economy can employ it productively.

South Korea shows what can happen when demographic change is matched by economic transformation. As fertility declined and the working-age population expanded, Korea invested heavily in education and skills, while industrialisation and export-led growth created productive jobs. World Bank analysis estimates that the demographic dividend accounted for roughly one-third of Korea’s economic growth during this transition. Vietnam offers a more recent Asian comparison. It entered its demographic window in 2007, which UNFPA expects to last until around 2039, while investing in education, health, manufacturing and integration into international markets. Yet Vietnam is also ageing rapidly. The lesson is not that Bangladesh should copy either country. It is that demographic opportunity has an expiry date, and its value depends on what a country does while it lasts.

Bangladesh faces an additional challenge that earlier demographic success stories encountered far less intensely: rapid technological change. World Bank estimates that around 23 per cent of jobs in Bangladesh are exposed to artificial intelligence to some degree. Across South Asia, job listings in occupations highly exposed to AI and relatively substitutable by it have fallen by around 20 per cent since the emergence of generative AI. Young and moderately educated workers in business services, information technology and similar occupations are particularly exposed, even as demand for AI-related skills grows. Technology therefore raises the value of skills rather than reducing it. Bangladesh can no longer measure educational success primarily through enrolment, certificates or degrees. The more important question is what people can actually do.

Universities and training institutions need closer links with employers and emerging industries. Technical and vocational education must become a credible route into productive employment. Digital literacy and AI competence matter, but so do technical trades, manufacturing skills, healthcare capabilities, communication, analytical thinking and problem-solving. Learning must also continue beyond graduation. In a rapidly changing economy, skills acquired at 22 may no longer be sufficient at 35.

Another major source of untapped demographic potential is women. With 62 per cent of young women outside employment, education or training, Bangladesh cannot fully realise its demographic advantage while such a large share of its young female population remains economically disconnected. Childcare, safe transport, workplace security, flexible employment and market-relevant skills should therefore be treated as economic priorities. UNFPA describes greater female labour-force participation as a potential “gender dividend”.

Meanwhile, another demographic clock is ticking. People aged 60 and above account for about 9.3 per cent of Bangladesh’s population, projected to exceed 13 per cent by 2050. This shift will increase demand for healthcare, pensions, income security and long-term care. Though longer lives are a development achievement, it also introduces an economic risk: growing old before becoming sufficiently prosperous and financially secure. Since today's workers are tomorrow’s older population, their current productivity, earnings, savings and social protection will help determine whether Bangladesh can afford the costs of ageing tomorrow. Bangladesh could also pursue a second demographic dividend. As people expect to live longer; greater savings, investment and productivity can continue to support economic growth even as the age structure changes. But this dividend, like the first, requires deliberate choices.

Those choices should centre on three priorities: creating more productive jobs, investing substantially more in human capital, and bringing more people, particularly women, into productive economic activity. Technology, industrial policy and preparation for ageing should reinforce those goals. The priority must therefore shift from counting working-age people to increasing what they can contribute. Every young person who leaves education without marketable skills, every graduate unable to find productive work, every woman excluded from economic participation and every worker whose skills become obsolete represents part of the demographic opportunity being lost.

Bangladesh’s demographic dividend was never a permanent entitlement. It was a window. That window has not closed, but its most favourable phase has passed. Bangladesh still has time to turn its large working-age population into a more skilled, productive and financially secure generation. But demographic time moves in only one direction. The question is no longer whether Bangladesh has a demographic advantage. It is how much of that advantage the country can convert into lasting prosperity before the window narrows further.

_____________________________________

The writer is an academician and development strategist, currently serving at a foreign diplomatic mission in Dhaka. He can be reached at [email protected]