The World Bank has issued a warning about the slow pace of job creation in South Asian economies, which is not keeping up with the growing working-age population. This puts the region at risk of missing out on its demographic dividend. Franziska Ohnsorge, the Chief Economist for South Asia at the World Bank, expressed concern that employment ratios have been falling, leading to missed opportunities for growth.
According to data from the report, between 2000-2023, employment in South Asia grew at a rate of 1.7% per year, while the working-age population expanded by 1.9% per year. This resulted in the creation of an average of 10 million jobs per year, while the working-age population was growing by an average of 19 million a year.
Despite strong growth in India, where the economy is expected to expand at 6.6%, overall output growth in South Asia is estimated to be between 6-6.1% by the end of the financial year in 2025. However, job creation in India has been hindered by weak private investment despite government spending and growth in the construction industry.
The World Bank highlighted several policy weaknesses that need to be addressed to accelerate job creation in South Asian nations. These include implementing policies that incentivize productive firms to hire workers, streamlining labor and land market regulations, and being more open to international trade.
In conclusion, the World Bank’s report underscores the importance of addressing the mismatch between job creation and rising working-age populations in South Asian economies to avoid squandering their demographic dividend.
