Are We Misdiagnosing Bangladesh’s Skills Gap?

Bangladesh’s labour market has a quirk: tertiary-educated workers are more likely to be unemployed than those with lower levels of education. The 2024 Labour Force Survey puts unemployment among tertiary-educated Bangladeshis at 13.5 per cent, roughly three times the national rate. Nearly 885,000 graduates were unemployed.

The standard explanation is a skills gap. Universities are producing graduates without the capabilities employers need. The usual prescription follows: reform curricula, expand technical education, teach digital skills and make young people more employable.

Skills shortages are real. But should graduate unemployment be read as simply a failing education system? This author would argue there is more to the story.

A diagnosis shaped by the skills gap

The Economic Census 2024 shows that among economic units reporting difficulties, 9.46 per cent identified the unavailability of skilled manpower. 85.89 per cent cited insufficient capital, 34.42 per cent difficulty accessing loans and 18.77 per cent infrastructure problems.

The census cannot speak for every large or specialised employer. But it does make the usual diagnosis look incomplete. The problem may lie as much in the economy’s capacity to use educated labour as in the capabilities graduates bring to it.

More than 92 per cent of Bangladesh’s economic units are individually or family owned. The average permanent establishment employs just 3.79 people, falling to 1.92 among individually or family-run establishments. Private limited companies average more than 67 workers.

Much of the digital-skills debate starts with workers. Yet,only 2.44 per cent of manufacturing units use computers or information technology in production, according to the Economic Census. Graduates are expected to become more digitally capable. The returns on those capabilities depend heavily on firms investing in the technologies and processes that can use them.

When firms cannot use new capabilities

The transition from education to work is weak. PPRC’s State of the Real Economy 2025 found apprenticeship accounting for just 0.1 per cent of reported employment modes, with apprenticeships and similar formal pathways into stable employment described as virtually absent.

Graduates are often expected to move directly from degrees to workplace performance. Employers complain that they are not job-ready, while universities struggle to anticipate requirements that firms may not systematically communicate.

The failure runs through a chain: education into capability, capability into productive employment, and productive employment into higher productivity.

An unfilled vacancy is not automatically evidence of a skills shortage. Wages, location, finance and investment can constrain hiring. Treating each as an employability problem risks prescribing training where the constraint lies elsewhere.

Skills reform needs productive transformation

Skills reform will achieve far less without productive transformation alongside it. Training for advanced manufacturing makes sense where firms are actually investing in advanced manufacturing. Technology adoption needs people capable of using it. Claims of skills shortages should be examined alongside wages, vacancies, hiring behaviour and investment.

Better labour-market intelligence would help tell these problems apart. We need to know when the constraint really is skills and when it lies in wages, investment, technology, location or demand.

Unless the productive economy develops alongside the people being educated for it, Bangladesh risks producing more qualifications without enough of the economic opportunity that was supposed to make education a viable investment case.