Jobs and wages shrank. Time to increase safety net

Amid lower job opportunities coupled with lower wages triggered by the pandemic, a contrasting picture sticks out – ultra-poor people's stake in national income dropped to nearly 3% from 3.35% in pre-Covid times, while the rich saw their share rise to 23.53% from 22.94%.

Inflated prices of daily essentials now add to the suffering of the disadvantaged who already took a big hit from Covid-19, experts say. 

In this situation, they have suggested reining in commodity prices to relieve limited-income people of an added cost burden, thus ensuring the economic recovery from pandemic shocks. 

And, to keep their purchasing power intact, if necessary, the government can offer cash incentives to the poor and expand the social safety net, they said on the concluding day of the two-day conference on "Bangladesh emerging from the pandemic: Coping experiences and policy choices". 

The Citizen's Platform for SDGs Bangladesh and the Centre for Policy Dialogue (CPD) jointly organised the event at a city hotel.

They put an emphasis on increasing productivity to enhance day-labourers' income, developing human resources through quality investments in education and health and ensuring an investment-friendly environment to achieve the LDC graduation, sustainable development goals and ensure a higher middle-income country status in the long run.

Presenting a study conducted in 2,600 households on the negative impacts of Covid-19 livelihood,  Professor Mustafizur Rahman, distinguished fellow at the CPD and core group member of the Citizen's Platform for SDGs, major disasters like Covid-19 immediately impact income and living standard. 

Coping strategy through the labour market and the recovery from losses also depends on the labour market, he noted.

The paper titled "Responding to Covid-19: Findings on employment related adjustments from household survey in Bangladesh" revealed that 61.57% of the employed population lost their jobs at some point, mostly in April-May 2020 when the general holidays or lockdown was in place owing to Covid-19.  

Around 85% of employed people in the pre-Covid period became unemployed because of the pandemic for more than one month.

Those who remained jobless for a month might dip into their savings. However, many had been unemployed for several months. And, marginalised people do not have savings to maintain their livelihood for a few months.

Earlier this year, they all returned to jobs, but many of them were forced to join agriculture and other low-wage jobs, Mustafizur pointed out.

There are more workers in the agriculture sector, but their contribution to GDP is comparatively low. Besides, many entrepreneurs turned farm labourers because of Covid-19. Wages of many eroded owing to reduced working hours, the economist said.

About 78% of the surveyed individuals had reduced expenditure to cope with the pandemic impacts, while 52% households changed dietary patterns involuntarily, Mustafizur, also said adding that about half of households experienced a decline in savings, and more than half of the households had to resort to borrowings.

Underlining the need for focusing on the labour market to help the poor recover from long-term pandemic effects, he said social protection schemes can play a role to handle the situation for the time being.    

The economist recommended increasing domestic demand to take them out of debt trap and make their income sustainable.

Mustafizur gave importance to good governance to ensure infrastructural development, especially repairs of rural roads, implement stimulus packages and draw in private investment.

Dr Sharmind Neelormi, an economics professor at Jahangirnagar University, said the agriculture sector contributes 14% to the GDP by employing about 44% of the labour force.

Labour productivity in Bangladesh is lower than in other Saarc countries. Per acre harvesting is also lower in Bangladesh. 

Dr Minhaj Mahmud, senior research fellow at Bangladesh Institute of Development Studies (BIDS) said, apart from a noticeable reduction in production, employment and income,  a lower level of data collection is also another reason to identify Covid-19 impacts.

Presiding over the session titled "Implications of Covid for the labour market", Asif Ibrahim, core group member of the Citizen's Platform for SDGs, said Covid-19 created tremendous negative impacts on the livelihood of the marginalised people in Bangladesh. People who were employed in the informal sector lost their income owing to becoming jobless.

Both unemployment and poverty increased  in urban and rural areas, he added. 

Terming additional costs of products a big challenge for ensuring livelihood of marginalised people, Zahid Hussain,  former lead economist at the World Bank's Dhaka office, said inflation has now appeared a risk to the ongoing economic recovery.

Growing demand apart, he mainly put inflated costs of commodities down to rising inflation.  

Presenting a paper titled "Towards an inclusive and equitable transition aligned with four national development ambitions", Dr Debapriya Bhattacharya, distinguished fellow at the CPD, suggested increasing quality investment in education and healthcare, speeding up vaccination and reducing inequality.

The economist also pointed out various problems on the way to coming out of the least developed country status, achieving SDGs and taking the country to a higher-middle income.

To deal with post-LDC challenges, he suggested focusing on regional markets, signing free trade agreements ​​with different countries as well as diversifying export products.

Economist Prof Wahiduddin Mahmud said progress on some indicators, such as maternal and infant mortality rates, has come to a standstill in recent times. 

In a year and a half, education has suffered a great loss. The participation rate of girls in education is relatively high, but their dropout rate is high too. 

He suggested taking steps to address these issues to ensure balanced development.

Dr Rounaq Jahan said the government has four big goals in front of it. Noting that it will not be possible to achieve all the goals at once, he said it is necessary to work keeping in view the priorities and the goals that are likely to be achieved.

CPD chairman Prof Rehman Sobhan said all the indicators of surveys done by the CPD and some other research organisations pointed out that the poverty situation remains more or less the same as the pandemic has approached the end of its two years.

But the finance minister is attempting to question this (finding) claiming that he had got more up-to-date information from the Bangladesh Bureau of Statistics (BBS) that things are now a good deal better than they were, he observed.  

"We of course have no evidence of this. If there is such evidence available to him that should be immediately shared so that we can incorporate it in our analysis," the senior economist said.

Citing "considerable differentiations" in commitments and deliveries of food and cash supports, Prof Rehman said though such interventions had some impacts, one-way delivery of such support at one point is "neither here nor there" when a crisis persists for two years in a row.

He cited the US example where households were delivered monthly cash handouts for one year and even more.

Over the period of time those who were facing problems at the outset of the pandemic are still continuing to face problems, he pointed out, citing latest research findings of CPD. 

He suggested investigation to find out reasons  – if there were problems in state support deliveries or because of the slowdown in economic recovery.

Prof Sobhan stressed the need to learn "whys" to decide "hows" for effective interventions to help a large segment of people out of vulnerabilities.

One of the lessons from the pandemic is that expecting banks, operating from air-conditioned cars or buildings in Dhaka, to deliver credit to the informal sector people engaged in SMEs is unscientific.

Upper-income corporate sectors have bigger access to bank credit as they are people who have legal identity and who have business with banks, he pointed out. 

"But the irony is that the very people with legal identity have a poor track record in servicing loans. It is the informal group which has been in many cases better in servicing credit," he said, regretting banks' hesitance in lending to small businesses.

He also lamented the poor services to migrant workers in terms of vaccination and flights to help them join overseas jobs in time. Remittance earners are mainstay of the country's balance of payment and foreign exchange reserves, but they are treated as "livestock rather than major partners of Bangladesh's economic success stories," he noted.