The informal sector and informal employment in Bangladesh

Informal economy has been a prominent feature of Bangladesh’s economy over the years. This report presents important information on the informal economy in Bangladesh, which can serve as inputs to evidence-based formulation of sector policies.

The paper highlights that the informal economy plays a significant in terms of the number of jobs it creates and its contribution to total economic output.

Findings include:

• informal employment dominates the country’s labour market, being estimated at about 89% of the total number of jobs, with female reporting a higher incidence
• informal sector accounted for more than 40% of the total gross value added of Bangladesh in 2010, with the highest contributions in agriculture and fishery
• however, informal workers are occasionally disadvantaged comparing with formal workers, particularly in terms of income and social protection coverage
• therefore, informal workers are more vulnerable to economic and social shocks

The document notes that the informal economy has become a growing concern in Bangladesh, and concludes that:

• informal enterprises need more access to loans and technical training and modern machineries
• comprehensive, detailed and up-to-date information about the informal sector and informal economy are needed
• such data is required to paint a clearer image of the state of the labour market, access to various social protection mechanisms, and the circumstances of the informal enterprises