Covid-19 impact: Low-income communities stare at grim reality

A welder in Dakshinkhan of Northern Dhaka, Rashid Khan has been out of work and stuck in the city since March 26 of this year.

For the last three years, he has been working at a welding shop and earning Tk8,000 per month.

He would send portion of the salary to his family in Rajarhat, Kurigram and keep the rest for himself.

In an interview with The Business Standard, Rashid expressed his distress, "I would not have survived this long had the shop owner not provided me with accommodation. I am somehow sustaining here in Dhaka, but I have not been able to send any money back home since March. I did not get paid for March and I do not think I will get paid for April either."

According to a research conducted by LightCastle Partners, so far, the ones most affected during this shutdown are 85 percent of the country's working population currently employed in the informal sector; the low-income community (LIC) and the lower-middle-income community (LMIC).

The study was conducted among 113 respondents which included urban low-income and lower-middle-income workers; mostly, RMG workers, retailers, service staff, domestic help, and industrial and technical workers in Dhaka division.

About six percent of them lost their jobs within the first 10 days of the shutdown.

Like Rashid, his co-workers are also stuck in the same situation and waiting eagerly to go back to work.

The Business Standard reached out to Rashid's employer, welding shop owner Morshed Ali, who said, "I run a small shop; I mostly make money on a daily basis. Now that there is no work, how can I pay my workers? I had some savings that is helping us survive for now, but I do not know how long we will be able to sustain."

With an average income of Tk14,384 per earner and lack of employment benefits and proper compensation, LIC and LMIC are the most vulnerable groups in this crisis.

The study saw a 30 percent decline in income among respondents.

With more than 50 percent of respondents having only one earning member in the house and each of them having three dependents, unemployment and loss in income have left them exposed to the undesirable effects of this pandemic.

Shahnaz Begum belongs to this 50 percent. She used to work as a domestic help to support her family residing in North Dhaka.

Due to the shutdown, she has not been able to go to work since first week of April.

Fortunately, the households she was working for have been paying her wages but according to her, Tk3,700 is not enough to sustain a family of three.

"I live with my husband and my daughter. We have to pay a monthly rent of Tk3,000. The landlord is willing to take the rent in instalments but I do not know how we will make up for this debt. My husband used to make Tk12,000 every month but he has not been getting paid since March. If the situation does not get any better, we do not know what we will do," said Shahnaz.

Shahnaz's husband Maksud worked as a supply supervisor at a small garment factory in Ashkona.

The factory – with a set up of just 20 machines, has not been able to generate any revenues since March as the order they were working on got cancelled.
This has left its employees in great distress.

The factory owner had promised that he would pay 50 percent of all employees' salary for the month of April. As of May, the employees are yet to receive it and they are still waiting for their salaries for March.

According to the research, hawkers, street vendors, and similar job holders witnessed a 70 percent decline in income, while public transport workers reported a loss of around 50 percent of their monthly income.

Commercial service sector workers and manufacturing workers lost one-third of their total income.

Respondents within Dhaka Metro faced the biggest decline in income; a 33 percent mean reduction in earnings across all professions, whereas clustered groups reported an average income loss of 20 percent.

Some workers (11 percent) have savings but the rest cannot survive the pandemic and economic downfall for over a month.

Due to the impact of Covid-19 on their livelihood, 32 percent of respondents have reduced their food expenses.

Inflated food prices and house rent among others, combined with low income or unemployment, have left the majority waiting for a massive financial shock.

One in every three respondents does not have the financial means to support their families during this shutdown.

The research found that only 19 percent of households had been reached through some in-kind support, the remainder stayed out of support safety nets.

Within two weeks of the shutdown, relief seekers had started gathering at road intersections in the city.  

On a late evening in mid-April, a correspondent from this daily saw 35 people at the Karwan Bazar roundabout waiting for anyone who might distribute food or money. All of them had lost work due to the shutdown.

One young man, Billal, who lives in Begunbari, said, "I am a rickshaw puller. I managed to earn a little even after the shutdown had begun. But now, the garage owner would not rent out a rickshaw to me because the shutdown is being enforced more seriously."

Lack of opportunities to earn back at home, transport lockdown, the uncertainty of workplaces reopening, and the hope of getting better aid in the capital have kept 88 percent of respondents living in Dhaka and the rest have migrated to their hometowns.

These people need the government and the development sector's support to help keep them afloat.

Researchers suggest the government to step up its role and reach out to the last-mile beneficiaries and ultra-poor population.

Together, with the development sector and workers' associations, they can create a database of vulnerable groups and mobilise support funds accordingly.

The government should ensure direct cash assistance, and take steps to protect jobs.

It can also extend rent and utilities amnesty to residents of urban LICs by indirectly compensating landlords – something that has been followed in many other cities globally.