With job losses and salary cuts, and a price hike in essentials, 77% of the population is hurting. The remaining 23%, the ultra-rich, the rich, and the upper-middle class, remains quite unscathed by the pandemic, said speakers.
If a family's spending for essentials such as rice, oil, and sugar increases by Tk1,000, the impact is bound to be felt not only in food consumption but also in other expenses, they said at a webinar on Sunday, organised by the Consumers Association of Bangladesh (CAB).
Razequzzaman Ratan, central committee leader of Samajtantrik Sramik Front, presented the keynote paper at the programme titled "consumer rights in the face of rising prices of goods and services."
First, price hikes force people to trim their spending on food. Then they try to adjust and survive by putting a hold on non-food spending, including health and education, Razequzzaman Ratan said in his keynote.
He said the cut in spending results in a weaker domestic market as people's purchasing power dictates how strong the market will be.
Referring to the labour force survey, the keynote said the number of working people in Bangladesh is around 6.82 crore on whom the entire country's population of 17 crore depend for food and other expenses.
As said in the keynote, "Of the workforce, people who belong to the low-income bracket spend as much as 62% of income on food alone. With a fall in income and multiple hikes in commodity prices, the pandemic has appeared as a double whammy for them."
The programme also noted that no wages were adjusted in 32 sectors since 2013, though they are supposed to be adjusted every five years in a total of 43 sectors.
CAB President Ghulam Rahman said an unbearable situation surfaces if commodity prices go up and incomes go down. Most people in the country are now facing this situation prompted by the Covid-19 pandemic.
He said the government has rolled out some stimulus packages and incentives, but employment is not growing. If new jobs are not generated, consumption will not increase. If consumption does not increase, production will plummet.
He said low production will drive up commodity prices, and that will ultimately put a fresh squeeze on consumers. Ghulam Rahman urged the government to immediately intervene and break the vicious cycle.
Dhaka University economics teacher Prof MM Akash said demand for domestic products would decline if the poor and middle class do not have cash.
"This will hurt manufacturers, and people who work in these sectors will lose their jobs. Even if our growth and exports increase, plummeting demand in the domestic market will put a big pressure on the economy," he noted.
The event registered that 77% of the population, or 13 crore poor and middle-class people, are the primary customers in the local market. If they each buy footwear worth Tk1,000 in a year, they together create a shoe market worth Tk13,000 crore.
Professor Shamsul Alam, Energy advisor to CAB — a non-government voluntary organisation dedicated to the protection and promotion of consumers' rights — said people's spending on commodities and services increased by 6.88% in the pandemic.
The speakers also said the annual demand for food is estimated at 3 crore tons where daily consumption amounts to 80,000 tons. This includes 30,000 tons of rice that farmers grow for their own consumption.
The remaining 50,000 tons is sold in the market. If the price of rice goes up Tk10 per kg, then consumers have to spend Tk50 crore more per day, they calculated.
The discussants demanded introducing food rations for the new poor, and insisted a right to food act be formulated.