People’s activities have recovered, not earnings
People are still far away from the “old normal” in terms of income though their activities have begun to recover
The countrywide shutdown was relaxed in the first week of May even with no sign of improvement on the coronavirus situation. And it is being said that the country's economic recovery from Covid-19 shocks has begun since then. A large portion of people have rejoined their works.
However, the real picture is a bit different. People are still far away from the "old normal" in terms of income though their activities have begun to recover.
So, we can term it a kind of "fragile" recovery initiative even if economic activities restarted.
The government's measures to increase people's incomes have failed to bring any positive results. In April, we estimated the poverty rate to be at 42 percent, taking the newly poor into account, with a significant decline in people's earnings after the enforcement of the shutdown.
In July, our survey shows the poverty rate dropped by 1 percent with the reopening of economic activities, meaning that only a few could come out of the poverty line.
Brac Institute of Governance and Development (BIGD) and Power and Participation Research Centre (PPRC) have conducted a joint survey on the post-recovery after economic activities reopened with the end of the shutdown.
We work with four indexes – activity recovery, earning recovery, food expenditure recovery and food intake recovery.
If we look at activity recovery, we can see that 30 percent of people in urban areas were active in work in April after the coronavirus made inroads. The number slowly rose to 83 percent by the end of June. In other words, only 17 percent of people have not been able to return to their work yet.
The same scenario prevails in the case of villages. There 50 percent of people were engaged in work in April. It increased to 84 percent in June. A good number still remains out of work here too. However, the recovery rate is reasonable.
Now comes the big question: Are people's earnings recovering even after they joined work?
People's earnings are not the same as they used to get during normal times despite activity recovery.
The graph of earning recovery is quite low as per our research. In urban areas, per capita income was Tk108 before the coronavirus hit. But with the start of the recovery, it could rise to Tk66 as of June.
On the other hand, a person with a daily per capita income of Tk96 in rural areas can now earn up to Tk53. Our income recovery has not been up to expectations.
If we look at food expenditure recovery, we see a similar picture. People have joined work but cannot shop like the pre-pandemic time.
They are not buying fruits. In fact, they are not buying anything except daily essentials. Per capita food expenditure in urban areas was Tk60 which could improve to Tk45 in June.
On the other hand, a man in rural areas used to spend Tk52 a day on food. In June, their per capita food expenditure is Tk37, meaning that people's expense on food has fallen by 30 percent.
The picture of food intake recovery is similar. Before the Covid-19 hit, 99 percent of urban areas could eat three meals a day. At the end of June, the figure stood at 88 percent. In other words, 12 percent of people still cannot have three meals a day.
People returned to work in May and June, but the income sector remained weak. As a result, people cannot spend as per their needs. Rural people's income is weaker than that of urban areas.
Now, all that needs to be done for income recovery is to consider the informal sector – the main force of the economy –in economic discussions apart from keeping it under social security only.
Alongside, crop cultivation, health, skills and education of farmers should be taken into consideration with people returning to their native villages.
We have to work for the overall rural development. Emphasis should be laid on rural development in tandem with weather.
We have to focus on development that suits the climate of different parts of the country. Coronavirus could be the next driver of rural economic growth. So, skill and technology-dependent "smart" investment is required.
The author is the executive chairman of Power and Participation Research Centre (PPRC)
