Reforms, inequality and governance: Addressing the voices of the unheard

Identifying the need for reforms requires a systematic and inclusive approach. One method is for experts to analyse the current situation, as highlighted by the publication of a white paper identifying issues such as corruption. It is equally important to recognise the necessary reforms by considering the target audience's needs. For instance, engaging with stakeholders who drive the economy—such as businesses, banks, and financial institutions—is crucial in economic reform. However, a significant gap exists in listening to small and medium enterprises (SMEs). While leaders of prominent business organisations, like FBCCI and BGMEA, can easily access policymakers, smaller players remain disorganised and voiceless, requiring government initiatives to bridge this gap. The current interim government has also fallen short in engaging with the business community. Reforms must be driven by experts, but those on the ground must be consulted. In reality, small businesses and the informal sector are often left out of such consultations.

The informal sector, contributing significantly to GDP, is undervalued by policymakers, who view it as weak and in need of formalisation. This reflects a lack of understanding, as informality does not equate to fragility. Recognising the economic importance of the informal sector is essential for inclusive reform.

The promotion of self-employment and entrepreneurship, while commendable, needs to align with the realities of the job market. Overemphasis on entrepreneurship without creating enough employment opportunities can lead to workforce shortages in critical industries like garment manufacturing. 

The informal sector, contributing significantly to GDP, is undervalued by policymakers who fail to see its resilience

A balanced approach is needed, encouraging entrepreneurial spirit while ensuring adequate job creation.

Access to quality education and healthcare remains a critical area of disparity, contributing to inequality in the job market. Substandard education, especially in many institutions, fails to prepare students for employment, despite significant investments by poor families. Quality education should not remain a luxury for a privileged few but must be made accessible to all. The vast number of students under the National University particularly need attention to improve their quality of education.

Youth unemployment is another pressing issue, with over 40% of young people not engaged in education, employment, or training (NEET). Encouraging entrepreneurship alone cannot address this; robust job creation and support for workforce-absorbing industries are necessary. The IT sector and freelancing have immense potential but suffer from inadequate infrastructure and regulatory and policy support, hindering their growth.

The state's role in addressing inequality and facilitating economic activity cannot be overstated. Social safety nets must be expanded, and taxation reforms should aim to redistribute wealth equitably. Yet, in practice, honest taxpayers and entrepreneurs often face harassment, while evaders benefit from exemptions and waivers, as was seen during the immediate past regime.

The concept of inequality is multidimensional and varies across different social strata. It manifests in how the state treats certain sections of society compared to others. There is often a disparity not only in attention but also in effective implementation. For instance, while we may instruct the construction of buildings, there is little focus on ensuring these facilities provide quality education or quality healthcare. 

As a result, buildings are erected, contractors profit handsomely, and some individuals are rewarded with promotions or prestigious positions such as vice-chancellor, but the core issues remain unresolved.

A particularly inhumane attitude exists towards those engaged in small businesses on the pavements. These individuals serve a significant portion of consumers and play an essential role in the economy and production chain. Yet, the informal nature of their work is often viewed as theft or illegal activity. If solutions are sought, they can be found. For example, Bangkok has a well-organised footpath economy. 

In our cities, we have ample streets. In Dhanmondi, where I reside, children often play on the empty roads in the evening as if they are using a playground. What harm would it do to allow shops on pavements for a designated period each day? Similarly, designated areas for evening or holiday markets, as existed in the past, could provide vendors with spaces to sell their goods and meet the needs of consumers. With a proper attitude, solutions can be implemented. Additionally, enhancing economic activities in other cities and towns could significantly reduce the pressure on Dhaka. This issue highlights regional disparity—between Dhaka and the rest of the country—which reflects a deeply flawed development philosophy and practice.

Addressing inequality requires multifaceted interventions. One key measure is the expansion and strengthening of social safety nets. If we analyse state incentives, we can identify who has benefited for years and who has been excluded. Small and medium entrepreneurs, for example, often receive no support. Tax reform could be an effective tool for redistributing wealth, but the reality in our country is far from ideal. Honest citizens and entrepreneurs often face undue scrutiny and harassment from the state, while those who exploit loopholes encounter little resistance. In fact, they often find more opportunities open to them.

When discussing tax reform, it is crucial to focus on reforming the National Board of Revenue (NBR) to eliminate harassment, which is severely impacting the private sector. Tax evasion is widespread, but it is the responsibility of the authorities to address it. However, what have we observed over the past 15 years? Those who diligently pay taxes are subjected to lectures and pressure, while tax evaders enjoy undue benefits, including exemptions and waivers. Individuals involved in money laundering have even received favourable treatment from the government or authorities.

Reforms are undoubtedly necessary, but what is even more crucial is a fundamental shift in mindset. Those in charge of state affairs often retain a feudal mindset, acting as if they know everything without listening to the public. When they do listen, it is usually the influential and powerful who have access to them, leaving the voices of ordinary citizens unheard.

Dr Hossain Zillur Rahman, Executive Chairman, Power and Participation Research Centre (PPRC). Illustration: TBS

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.