Inflation falls at slower pace than it rose
Wage struggles persist as the gap between earning and cost of living remains high
Inflation dropped in December as it did in the past three months since the August peak, but it still remains above 8%, according to the Bangladesh Bureau of Statistics (BBS), keeping low-income earners in stress and building wage pressure.
The headline inflation marked a steady but slow decline since it crossed 9% in August. The latest data of the national statistical agency put it at 8.71%, with people in villages paying higher than those in cities for both food and non-food items.
General inflation rose 3.35 percentage points in six months from February to August peak, while it declined only 0.81 percentage points in the next four months.
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Another BBS data released yesterday showed that wage growth in December was much lower than the inflation rate. The figures justify the call for raising wages as an economic think tank revealed that an average worker at the apparel industry, which led the record-breaking monthly export in December, earns less than half the amount needed in a month for a decent living.
A platform of apparel workers is asking for Tk22,000 a month as minimum wage since they are losing what they currently earn – a meagre Tk8,000 a month – to inflation.
Economists, entrepreneurs and labour leaders too called for easing the inflationary pressure on the low-income groups in industrial areas by introducing government food support.
According to the BBS, the overall inflation dropped to 8.71% in December after four consecutive months of decline following a decade high of 9.52% in August 2022. Despite the fall in recent months, the average inflation for the past year rose significantly to 7.70% – the highest annual average in the past 11 years.
According to the report released on Monday by the statistics bureau, wages in December saw a 7.03% growth, up from 6.98% in November. However, despite a nominal wage increase of 0.05 percentage points in December, the wage growth rate is still 1.68 percentage points lower than the inflation rate.
The BBS data also showed that food inflation fell to 8.14% in December, a drop of 0.23 percentage points from November. Non-food inflation spiralled by 3.7 percentage points to 9.96% in December, compared to 6.26% in January last year.
Inflation in rural areas stood at 8.86% in December, slightly lower than the 8.94% in November. Urban inflation in that month declined by 0.27 percentage points, and stood at 8.43%.
Not red-hot, but still flashes in red
Despite the slight easing of price rise in recent months, economists believe inflation is still above the danger level, given the 12-month average and wage growth. They have called for special support for wage earners to help them combat inflation, as their income gain has risen at a lower rate than the rising commodity prices.
Dr Mustafa K Mujery, former director general of the Bangladesh Institute of Development Studies (BIDS), said the recent decrease in inflation is due mostly to the fall in food and vegetable prices. But rising prices of non-food items show no sign of cooling off anytime soon.
He pointed out that the point-to-point inflation in January last year was 5.86%, and it has since increased by about 3 percentage points, causing the government and the Bangladesh Bank to fail in meeting their inflationary targets.
To combat high inflation, Mujery recommends strong policy measures from the government, including market monitoring, food support for the poor, as well as long-term initiatives to increase productivity and stabilise the market through wage increases.
Nazma Akter, founder and executive director of labour rights organisation Awaj Foundation, suggested that the government introduce food programmes for apparel workers in industrial zones.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), believes that stabilising the exchange rate and increasing supply and market monitoring could also help curb inflation.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said they have approached the government about introducing food rationing for workers in industrial zones.
He told The Business Standard that there is an obligation to announce a new wage board for RMG workers by December 2023, and the initiative will be taken at least six months in advance to allow for discussion with both workers and owners.
He added that the industry is currently operating at lower orders than capacity and prices are being squeezed due to the global inflationary pinch caused by the ongoing Russia-Ukraine war.
Apparel workers for at least Tk22,000 a month
The Bangladesh Garments Workers Unity Council is calling for a minimum monthly salary hike for garment workers to Tk22,000 (of which, 65% will have to be the basic pay) from the current Tk8,000.
The demand comes in response to rising prices of daily essentials, cost of living, and house rent, according to the unity council Chairman Md Towhidur Rahman.
He said the council plans to submit a charter of demands, including the salary hike and other benefits, as well as the formation of a new wage board, to the labour ministry. If the demands are not met by 20 January, the council Secretary General Salauddin Shapon warns that they will take to the streets in all industrial zones.
According to a recent report by the South Asian Network on Economic Modeling (Sanem), the country's readymade garment industry workers earn less than half what they need to fulfil their basic needs such as food, housing and healthcare.
The report found that in the April-June quarter of 2022, the average worker earned Tk9,984 per month, while the minimum amount needed for a decent standard of living (known as the "living wage") ranged from Tk19,200 to Tk26,000 depending on location.
This means there is a gap of 51%-60% between actual income and the minimum required to meet basic needs. To make up for this deficit, many workers turn to overtime and excess hours, with a typical worker reporting a median of 290 work hours in June 2022.
The report is based on ongoing research on the living conditions of garment workers in Bangladesh, which involves surveying around 1,300 workers in five industrial areas every week.
The findings reveal that many workers live in cramped and poorly-maintained housing with limited access to basic services and utilities.
