‘Covid-19 may push 16.5 million people into poverty’

About 16.5 million people may slip below the poverty line in the country due to the ongoing Covid-19 epidemic.

Of them, 5 million may fall into extreme poverty, experts said at a webinar, styled "Impact of Covid-19 on poverty and unemployment in Bangladesh", organised by the Economic Development Research Organisation (Edro) on Saturday.

Meanwhile, a study by the South Asian Network on Economic Modeling (Sanem) has found that about 6-12 million people have lost their jobs in the wake of the coronavirus outbreak this year.

The employment loss has pushed another 20.39 percent of people in the country below the poverty line, with the upper poverty line climbing sharply to 40.89 percent, which was 20.50 percent in the beginning of the fiscal year, according to the study.

Experts have recommended that the government provide the poor people with food and medical support to prevent them from being in the poverty line as these two are essential for their survival at present.

Besides ensuring a proper distribution, the quantity of stimulus should be increased, they added. They also stressed generating wage employment through stimulating private investment and domestic financing.

Loss of employment due to the adverse impact of Covid-19 is about 63.26 percent to 131.26 percent of the last five years' achievement, finds the Sanem study.

According to the study, the public and private sectors in the country together could generate 9.5 million jobs, including overseas employment in the last five fiscal years, although the target was to create employment for 12.9 million people under the Seventh Five-year Plan.

The findings of the study were revealed at a webinar, styled "Covid-19 and the Challenges of Labour Market in Bangladesh", arranged by Sanem on Saturday.

Meanwhile, citing data from the Bangladesh Bureau of Statistics, Md Helal Ahmed Jony, a research associate of Edro, said most of the 51.7 million manpower of Bangladesh, engaged in the informal sector, were unemployed at present.

A recent study by Brac shows Covid-19 has reduced the income of 74 percent of families in the country and more than 1.4 million migrant workers have lost their jobs and returned home. 34.8 percent of the families surveyed lost at least one job, he mentioned.

Compared to April 2019, exports fell 84 percent in April 2020. From mid-March to April 2020, 1,116 factories were closed. As a result, about 2.2 million workers had lost their jobs, he said.

According to the Policy Research Institute, at least 15 million people have been added to the list of job losses in Bangladesh. If there were four members per family on average, 60 million people were at risk of poverty, he added.

Dr Sayema Haque Bidisha, research director of Sanem and professor of economics at Dhaka University, presented the keynote paper at the webinar organized by Sanem. She said the degree or depth of a crisis in employment and income depended on the length of the crisis and initiatives taken by the government to overcome it. 

Symptoms like a fall in domestic and global demand, influx of labour supply due to the home return of migrant workers, restricted productive activities and a slowdown in private investment are pushing the job market towards unbeatable challenges.

Dr Bidisha, in her paper, also mentioned that about 25 income shocks caused by Covid-19 had led to a 20.39 percent rise in poverty rate at the national level, while the rate was 21.57 percent and 17.26 percent in urban centres and rural areas respectively.

The poverty rate among agriculture dependent families has increased to 49.48 percent from 26.34 percent, while it has increased to 59.02 percent from 34.59 among day labourers.

The paper also outlined four scenarios of the Covid-19 impact in the job market. Under the most flexible scenario, 6.01 million people have lost their jobs, while the figure climbs to 12.47 million under the tough scenario.

The paper stressed generating wage employment through stimulating private investment and domestic financing.

Dr Bidisha recommended that conditionality and interest rate on loans be relaxed for micro and small enterprises under the government's stimulus package, and that the funds be channeled through microcredit agencies.

She also asked for separate loan schemes for returning migrants, women entrepreneurs and young people and continuing youth start-up fund.

She made several recommendations over taxation, diversification of exports, re-designing of incentives conditional on protecting the rights of the workers and keeping records of the unemployed through an online database.

Professor Dr Shamsul Alam presided over the webinar. Labour productivity had increased, he said, adding that while enrollment in Technical and Vocational Education and Training (TVET) was 1 percent in 2009, it had now risen to more than 16 percent.

Some people are performing more task, which leads to higher wages and income but it is reducing the rate of recruitment.

Sanem Executive Director Dr Selim Raihan said the government should operate employment guarantee schemes for the next six months for vulnerable people and introduce new social safety net programmes targeting the new jobless people.

He suggested formulating a labour and employment commission to assess the current unprecedented situation and suggest necessary measures. The Bangladesh Bureau of Statistics should be entrusted with the task of collecting data on the situation, he added.

International Labour Organisation (ILO) Country Director Tuomo Poutiainen recommended emphasising public and private sector collaboration on labour market programmes.

He also said operating an employment guarantee scheme was possible and might be linked with the stimulus package.

"Stimulus should not only be for business and liquidity but also should have a focus on jobs and employment," he said.

Dr Ahsan H Mansur, executive director of the Policy Research Institute, said temporary unemployment would disappear, and most of the people would get back their jobs once the coronavirus outbreak normalised.

Controlling the disease and ensuring government support to accelerate economic recovery were the main challenges, he said.

BRAC Institute of Governance and Development Executive Director Imran Matin said the outlook by most of the parties was uncertain, not only about income but also about infection, which would affect business confidence and labour dynamics.

Speaking at the Edro webinar, Dr Asadul Islam, professor and director of the Centre for Development Economics and Sustainability of Monash University, Australia, said instead of providing free Covid-19 tests and stimulus packages to the poor, the government had moved towards the recovery stage first by giving a stimulus package for the RMG sector.

The government is charging Tk200 for every test and consequently poor people do not come for testing.

Dr Khandaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said Covid-19 pandemic had disrupted the business supply chain, especially the service sector.

He said companies' existing capacity had to be utilised fully before further investments. "It is most important that you have to return to the normal level of business although it depends on the consumers' minds as to how soon they will return."

Dr Mokhtarul Wadud, a faculty member of Deakin University, Australia, said the lockdown did not work properly because people could not be fed. As a result, a big portion of people had gone out of home in search of food.

He said the government should solve the innate problems of management and must ensure stimulus packages for the people.

Md Tanjil Hossain, an associate professor at Jatiya Kabi Kazi Nazrul Islam University, chaired the webinar, while Md Helal Ahmed Jony was the keynote speaker.