JBS Vol 21. Num 1. 2019 - Why is the Relative Preference for Government Jobs on the Rise in Bangladesh? Evidence from Labor Force Surveys

Mustafizur Rahman
Md. Al-Hasan

By using the quantile counterfactual wage decomposition method, this article examines why public sector jobs are becoming more attractive in Bangladesh. The article quantifies wage differentials between the public and the private sectors, and examines the changes in earning inequalities between groups (public versus private) and within groups (across the various wage deciles), in response to the pay scale revisions introduced for public sector employees in Bangladesh. The analysis reveals that following successive revisions, and more particularly in view of the revision introduced in 2015, public sector jobs in Bangladesh have become more attractive for job seekers looking for salaried employment. Whilst there has been a shift along the entire range of wage distribution spectrum, this trend is becoming more evident for job seekers with tertiary education, which is clearly revealed by the quantitative exercise carried out for this study. It is also interesting to note that, while the higher-paid private sector employees appear to have been able to adjust their salaries in response to government pay scale revisions, this is not the case for the relatively low-paid employees. Additionally, public sector jobs have the added advantage of non-wage benefits that are not available in equal measure for most private sector jobs. All these factors have combined to produce the recent shift in preference in favor of public sector jobs in Bangladesh. The article argues that the recent “quota movement” in Bangladesh, with the demand to revise the existing quota system for public sector jobs, reflects this shifting preference on the part of new job market entrants in Bangladesh.