South Asia risks "squandering demographic dividend" if jobs don't keep pace: World Bank

The World Bank warned on Tuesday that South Asian nations run the risk of “squandering its demographic dividend” because job creation is not keeping up with the growth in the working-age population.

“The danger is the demographic dividend is missed. Its squandered,” Franziska Ohnsorge, World Bank Chief Economist for South Asia was quoted as saying by news agency Reuters.

According to data in the report, between 2000 and 2023, employment increased 1.7% annually while the working-age population climbed 1.9% annually.

When the working-age population grew by an average of 19 million per year, the region added 10 million employment annually on average.

For the fiscal year that ends on March 31, 2025, the World Bank projects that South Asia’s output would grow by 6.1% to 6.1%. This growth will be mostly driven by India, whose economy is predicted to grow at a rate of 6.6%.

The central bank of India projects a stronger 7% growth rate throughout this time.

Following the pandemic, India’s growth has recovered significantly thanks to government spending and, more recently, the construction sector. However, private investment in the third-largest economy in Asia has remained low, which has hampered the creation of jobs.

With the exception of Nepal, India’s employment ratio fell significantly between 2000 and 22. However, according to World Bank estimates, early evidence points to a recovery in 2023 that could partially erase the earlier decline.

“Overall, during 2000–23, employment growth was well below the average working-age population growth and the employment ratio declined.”

In its research, the World Bank stated that in order to hasten the creation of jobs, South Asian countries must address a number of policy shortcomings.

These include labor and land market rules that are simplified, policies that incentivize profitable businesses to hire staff, and increased trade openness with other countries.

(With agency inputs)