Nation in turmoil: the economic roots of Bangladesh unrest

What began as protests about job quotas grew into a wider movement feeding on grievances relating to autocratic rule, rigged elections, economic inequalities, and corruption. The country can now reset

Mohammad Ponir Hossain/Reuters

A man holding a Bangladesh flag stands in front of a torched vehicle at the Ganabhaban, the Prime Minister's residence, after the resignation of PM Sheikh Hasina in Dhaka, Bangladesh, on August 5, 2024.

Nation in turmoil: the economic roots of Bangladesh unrest

Abdel-Rahman Ayas

last update on 07 Aug 2024

Protests and violence in Bangladesh that has left more than 400 people dead culminated this week in the country’s autocratic leader Sheikh Hasina fleeing to India, with the subsequent dissolution of parliament.

The student-led unrest began in early July over government job quotas, which young graduates saw as discriminatory. It then broadened into anger over deep economic disparities, despite the nation’s rapid growth led by the garment industry and infrastructure projects.

In a familiar tale, the riches of these success stories have not benefited all, which has led to widespread frustration, not least at the corruption that became endemic under Hasina, while many also accused her government of stifling democracy.

While the political dynamics of this unrest are crucial, the underlying economic causes are equally significant in understanding the depth and persistence of the crisis.

A good news story

Hailed as one of the fastest growing in the world, Bangladesh’s economy has achieved significant milestones in recent decades, becoming the second-largest in South Asia and the 35th largest globally. In terms of purchasing power parity, it ranks 25th.

Mohammad Ponir Hossain/Reuters — View of a mural of Bangladesh Prime Minister Sheikh Hasina vandalised by protesters, a day after her resignation, in Dhaka, Bangladesh, August 6, 2024.

The country has transitioned from a frontier market into an emerging market, becoming a member of the South Asian Free Trade Area and the World Trade Organisation.

In the fiscal year 2021–22, Bangladesh registered a gross domestic product (GDP) growth rate of 7.2% despite the global pandemic, underscoring its resilience and robust performance.

This growth has been driven by several key sectors, including the booming ready-made garments industry, which has made Bangladesh a powerhouse in textile exports.

In the fiscal year 2021–22, Bangladesh registered a GDP growth rate of 7.2% despite the global pandemic, underscoring its resilience

The country is home to the highest number of green garment factories worldwide, with many achieving Leadership in Energy and Environmental Design (LEED) certification.

Additionally, Bangladesh's pharmaceutical industry has seen impressive growth, with local companies meeting 98% of the domestic demand for medicines. Yet despite these impressive achievements, the benefits of growth have not been evenly distributed.

It comes down to jobs

The country faces significant challenges, particularly in terms of jobs for its young and educated population. Youth unemployment is alarmingly high. Around 18 million young Bangladeshis are out of work, in a nation of 171 million people.

This disparity has created a growing sense of frustration and disillusionment, particularly among university graduates who feel excluded from the boom. The protests began with a specific demand: the abolition of quotas in civil service jobs.

These quotas reserved a third of government positions for relatives of veterans from Bangladesh's 1971 war of independence. The system, seen as discriminatory, was resented by the young and educated, who felt it denied them fair job opportunities.

The government eventually reduced the quotas to 5% after a Supreme Court ruling, but by then the damage had been done. The protests had grown into a much broader anti-government movement, fuelled by anger over economic hardship, corruption, and the shrinking space for democratic expression.

Jobs/growth mismatch

The job quota controversy highlighted a critical issue in Bangladesh's economy: the mismatch between economic growth and job creation. While the country's GDP has grown impressively, employment opportunities have not.

The all-important garment industry primarily employs low-skilled labour, not the kind of skilled jobs that graduates seek. This has led not just to unemployment but to under-employment, whereby those with qualifications cannot use their skills and knowledge.

Youth unemployment is alarmingly high, with 18 million young Bangladeshis out of work, yet quotas reserved a third of government positions for relatives of veterans

Corruption has also been a persistent bane in Bangladesh. Under Hasina's administration, it became a focal point of public discontent. Allegations of corruption have touched some of the highest echelons of government, including key aides to the prime minister.

The perception of widespread corruption has deepened the sense of injustice, with Bangladeshis already grappling with rising living costs and limited jobs.

The corruption scandal surrounding former police chief Benazir Ahmed, who is under investigation for allegedly amassing millions of dollars illegally, has stoked public anger.

For many, these scandals highlight a system in which the rich and powerful get to accumulate more riches and power with impunity, while the rest of the population struggles to make ends meet.

The frustration was a significant driver of the protests. People demanded not only political change but also a fairer distribution of the country's wealth.

A fragile democracy

While the economic causes of the unrest are central to understanding the current crisis, the political dimensions cannot be ignored.

Abu Sufian Jewel/AFP — Anti-government protestors attempt to vandalise a statue of Sheikh Mujibur Rahman, Bangladesh's founding father and parent of the country's ousted Prime Minister Sheikh Hasina, in Dhaka on August 5, 2024.

Sheikh Hasina's tenure has been marked by increasing authoritarianism. Critics say she stifled dissent, manipulated elections, and undermined democratic institutions.

The main opposition, the Bangladesh Nationalist Party (BNP), boycotted the 2014 and 2024 elections, saying they were rigged in favour of Hasina's Awami League. This lack of a credibility in the democratic process left many feeling disenfranchised and angry.

The protests were fuelled in part by the government's heavy-handed response to dissent, including excessive use of force by the police, the imposition of nationwide curfews, and the cutting of internet access. It was all seen as trying to silence opposition.

Yet it only galvanised the protest movement. Calls for Hasina's resignation grew. The military is currently seeking to construct a caretaker government to oversee a return to democracy.

The protests were fuelled in part by the government's heavy-handed response to dissent, including excessive use of force by the police

What began as a protest over jobs and quotes grew into anger over the country's deep economic inequalities and political authoritarianism, embodied by Hasina.

Aamir Qureshi/AFP — A man reads the front page of a newspaper with an article on Bangladesh, in Islamabad on August 6, 2024, a day after Bangladesh's Prime Minister Sheikh Hasina was ousted by anti-government protestors.

It serves as a cautionary tale to other countries with rapidly growing economies but where growth is not inclusive, leaving large segments of the population—particularly the youth—feeling left out, marginalised, and frustrated.

Corruption and the erosion of democratic rights have further inflamed these grievances, leading to a nationwide movement demanding change.

As Bangladesh navigates this turbulence, the challenge will be to address these underlying economic and political issues to restore stability and build a more equitable society.

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