We have the lowest minimum wage in Asia-Pacific. It is high time to revise it

The price hike has been a global problem. It has reached a dangerous level since the Russia-Ukraine war as these two economies significantly contribute to global oil, gas and wheat exports. The disturbance in the supply chain caused by the war also gave rise to turmoil in the global commodity markets. 

The governments around the world, as a result, are attempting to justify the price hike.  In such a pandemic and war-torn time, this could be a reasonable and plausible contention. However, justifications alone will not suffice for front-line workers living on the minimum wage.

Similarly, labourers working outside the minimum wage cap are also suffering the setbacks of price hikes. Many daily wage earners/working people are not even aware of the minimum wage given they have grown accustomed to being paid below the nominal amount. 

They should be paid wages that follow the minimum wage range at least. Otherwise, their vulnerabilities may create anarchy in different levels of individual, family, community, social, and even national life. Such a social calamity will hinder the speedy infrastructural progress of the country, like the Padma Bridge, which is slated to be completed this year. 

Bangladesh has achieved astounding economic growth, averaging more than 5% per year over the last ten years, and has been progressing further with infrastructure development in recent years, a feat that has been praised by almost every international association. 

However, when it comes to paying our workers - our human resource - the minimum wage, Bangladesh finds itself sitting at the bottom of the pile. When comparing the minimum wage with neighbours such as India ($215), Nepal ($396), Pakistan ($491), and Sri Lanka ($247), it is obvious that our minimum wage of only $48 (ILO, 2019) is dismal. 

Focusing on the real wage growth of Bangladesh between 2010 and 2019, real minimum wages decreased by 5.9% (annually), which paints a dire picture. Bangladesh is the only country in the Asia Pacific region where the minimum wage does not even graze the lowest international poverty level. 

In addition, the price of daily commodities has increased significantly over the last few years, but the revisions or increase in the minimum wage have not been implemented to favour the poor, since December 2018. Bangladesh revises the minimum wage every five years. However, the revision period should be shorter in such a rapidly growing country to adjust to national and international issues. 

An unsettling fact is that the garment sector is the only sector where minimum wages of Tk8,000 are being implemented, while many other sectors directly or indirectly ignore labour laws or minimum wage guidelines. Apart from that, the process to apply for minimum wage is fraught with complexities. The ground reality for daily wage workers' appear bleak. 

Although the Bangladesh Bureau of Statistics reported inflation rate is in the range of 5.4% to 5.7%, and more details on food and non-food inflation are presented in Chart 1, the real market survey shows a different picture. 

Infograph: TBS

Vegetables and many other commodities are being sold now at 2-3 times higher than in FY 2019. Therefore, the numbers are unconvincing. Furthermore, the central bank's survey on inflation expectations also found that the annual average rate of inflation is likely to cross the 6.0% level by the end of the current fiscal year. It may even reach as high as 8.5% by the end of December this year. In a recent report, the IMF is also cautious about the inflation rate, and it is predicted to be higher than expected inflation given the current economic and international situations.

"The Gini index is a measure of the distribution of income across a population. A higher Gini index indicates greater inequality, with high-income individuals receiving much larger percentages of the total income of the population," the report reads. The trend between the years 1992 and 2016 (as shown in Chart 2) shows that the inequality of income has increased in Bangladesh, a trend playing out in the US economy as well. 

Furthermore, the World Bank (WB) report 2016 shows (Chart 3) that the income share of the bottom 40% of Bangladeshi people is about 21%, while the share of the wealthiest 10% of people is 27%. However, given the trend in the last 5 years, there is a possibility that income distribution probably has not improved. As such, one could expect that inequality may have increased in the previous few years and may increase further in the future. 
 
The gap between the price hike and minimum wage does not only exacerbate workers' living inequality, but also influences the lower-middle-class families consisting of children and elderly parents who may require medical care.

This gap has also been creating a work-family life imbalance, especially in urban areas. The price hike also impacts the nutritional status of women, who traditionally sacrifice their food and other health related requirements for the sake of children and male members of the families.

As a result, in the long run, malnutrition levels could spike, not only destructively affecting women's health but also ruining families. According to medical experts, most females in Bangladesh already have malnutrition problems, and a price hike could aggravate the situation. 

Our GDP has been enjoying enviable growth and it is a matter of appreciation, but if the majority of the people, i.e., workers/labourers, do not get the benefits of it, we cannot deny our participation in creating an unequal society where more people are malnourished than healthy. 

We acknowledge that the government is tirelessly taking initiatives to tackle the price hike. But while ensuring price stability, it is high time to consider increasing the minimum wage for the common folk who are the backbone of our economy. 

Md Asadul Islam, PhD and Mohammad Enamul Hoque, DBA are Assistant Professors at BRAC Business School

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.