Recovery of jobs, income hinges on small ventures
The government’s response to maintain the livelihoods of jobless new poor was very limited and its support to protect jobs was insignificant
More than 5 crore workers had been left with no work because of the closure of their workplaces during the pandemic-led shutdown in March-May last year. They had a very difficult time making ends meet. Later, many of them lost jobs. The shutdown also impacted the employment of formal sectors to some extent.
The actual number of job losses and people turning new poor varies in research of several organisations because of differences in sample size and methodology.
But it is true that Covid-19 has reversed the country's steady trend of poverty alleviation and destroyed the last several decades' achievements in this field.
The government's response to maintain the livelihoods of jobless new poor was very limited and its support to protect jobs was insignificant.
Food support and other grant activities got less success because of irregularities in both selecting beneficiaries and distribution. The cash aid amounting to Tk2,500 for each of 50 lakh poor families failed to reach its full target because of anomalies in the process of selecting beneficiaries.
Because of insufficient support from the government, many poor people withdrew their savings to run families and many of them borrowed money.
The resilience of the poor has fallen down to near zero and they are incapable to bear further income losses in any new crisis.
The jobs had almost recovered despite some income losses prior to the second wave of the Covid-19. We have observed that the second wave that started in March pushed many poor families into deep trouble. Considering these issues, the significance of social safety net programmes has increased manifolds ahead of the upcoming budget for FY22.
We have found no social security programme targeting the labour market and the government should consider it strongly.
The government should introduce unemployment benefits for some days to help maintain the livelihood of the families of jobless people. A short-term employment benefit also would help protect the jobs.
Covid-19 also pushed a large number of people to return to villages from cities. But, the rural economy has no capacity to absorb all returnees. The rural economy is now under pressure with huge surplus labour.
The scale of the expansion of agriculture is limited. The sector even releases some labourers every year. Productivity in the agriculture sector is increasing with the support of mechanisation, which has reduced the demand for labourers.
The size of the nonfarm rural economy is not so large to accommodate a huge number of people returned from cities and abroad.
Lockdown and tough restrictions hamper the livelihood of poor people, and the economy of Bangladesh is unable to afford the long-term suspension of economic activities. We have to continue production in all sectors of the economy. But it would not be wise to open the economic activities blindly without any protocol.
We have passed more than one year with the pandemic but has not found health-related strong protocols to maintain economic activities. The protocols should be area specific. The government should deal with Covid-19 hotspots in the country.
The government introduced some stimulus packages to protect the economy, while some of them were to protect employment. The readymade garment sector utilised its package successfully but the implementation of the packages in other sectors was not that great.
We have come to know from the study of the Sanem that around 22% of firms got support from the stimulus packages. But cottage, micro, small and medium enterprises lag behind in getting stimulus support, where employment is being generated the most. The recovery of employment and the labour market depends on the recovery of small ventures.
The government should give a high priority to support CMSMEs in the next budget. It should redesign and expand social safety net programmes, and allocations should be increased.
Several ministries and divisions failed to execute programmes in the current fiscal year. The government should identify and solve these problems. Problems in disbursing loans from stimulus packages also need to be identified. New allocation without solving these problems would not come to work. The government should reform and increase institutional capacity.
We have found some new challenges to emerge following the LDC graduation. Our export market will face new difficulties when the graduation will come into effect. Some programmes are required to increase labour productivity to maintain competitiveness of the export sector.
Increasing allocation and spending capacity in the health and education sectors will boost human capital and productivity. Sufficient reforms are needed in the two sectors to protect lives and boost production.
Dr Selim Raihan
Executive Director, Sanem
