Stimulus reached 8% of employed: Study

The Tk113,117-crore stimulus package announced by the government to mitigate covid-induced economic shocks has covered 8% of the country's employed, while full implementation of the package should have yielded 12% coverage.

The agriculture and the small and medium enterprise (SME) sectors have received the least coverage.

The findings were outlined in a report generated by the Centre for Policy Dialogue (CPD).

The CPD and Oxfam Bangladesh disseminated the findings of the study at a virtual dialogue held on Thursday, with support from the Citizen's Platform for SDGs, Bangladesh.

Towfiqul Islam Khan, senior research fellow at the CPD, presented the keynote paper entitled "Employment Implications of Stimulus Packages: Challenges for Recovery" at the event.

He said the stimulus had reached 2.7 lakh employees in the agriculture sector, falling 71.88% short of its capacity to benefit 9.6 lakh people.

Some 46.50 lakh employees in large industries and the service sector have received the stimulus - 15.30 lakh lower than the targeted 61.8 lakh. Meanwhile, the stimulus could have generated employment for 1.30 lakh people in the SME sector under its coverage, achieving only 30% of the target to benefit 4.40 lakh people.

Islam Khan said that the Citizen's Platform for SDGs had indicated that Covid-19 had placed 1.3 crore jobs – 20% of domestic labour – at risk, adding that according to CPD estimates, the poverty rate could climb to 35%, compared to 24.3% in 2016.

"The $12 billion stimulus announced by the Bangladesh government is the fourth highest among nine countries in the region, followed by India, Vietnam and Pakistan. The figure is 3.7% of the country's GDP, which is the third from the bottom, preceded by 2.9 percent in Maldives and 1.3 percent in Sri-Lanka," he added.

He further said that per capita allocation from the stimulus package in Bangladesh was $75, placing the country in the 23rd position among 31 countries, while the country ranked 22nd in terms of stimulus size compared to the GDP.

Professor Mustafizur Rahman, distinguished fellow of the CPD, said the stimulus size was lower than what was required, which is why many eligible people have not been covered.

He also spoke about administrative constraints arising from distribution of the package via banking channels. He further argued that slower disbursement of stimulus leads to a slower rate of job recovery, he argued.

Dr Debapriya Bhattacharya, convener of the Citizen's Platform for SDGs said, foreign donors mobilised about $4 billion as aid, but how the money had contributed to employment generation was still unclear.

He underscored the need for more discussions about the size, structure, mode of distribution and implementation of the stimulus.

"The relevant government agencies have failed to ensure a smooth distribution of the stimulus due to structural constraints in both voluntary and involuntary cases. There were reported instances of corruption in crisis management during the Covid-19 period and more than 100 government employees were removed over graft allegations," he said.

The public at large and many eligible people had no idea whatsoever about the package, though they had every right to be informed about package recipients and how much money each had received.

He suggested that the government enhance the size of the stimulus package to reach out to the marginalised sections of society. "Different people are facing different types of difficulties. A more disaggregated approach is needed to extend the benefits of the stimulus."

Dr Debapriya identified wage-based employment as a mechanism to meet future economic challenges, and laid emphasis on boosting private investment, which has been stagnant for several years.

He also cast doubts on the Bangladesh Bureau of Statistics' (BBS) claim of 4-5% unemployment rate.  He added that one in every three youths aged up to 28 years is now unemployed, while among educated youths in the country, the rate of unemployment is around 50%.

Dr Debapriya maintained that employment and earnings are the main tools to eliminate poverty. In order to to successfully address the inevitable challenges that will arise after the country's graduation from the list of Least Developed Countries (LDCs), the initiatives undertaken to alleviate poverty should be specifically tailored to employment.

"It seems that all of humanity is going through a Third World War-type scenario in fighting the coronavirus, but any fight is helpless without a vaccine," said KM Abdus Salam, secretary to the Ministry of Labour and Employment.

He said the private sector has about 42-43% stake in achieving SDGs by 2030, while the public-private partnership model is expected to contribute 5%.  Both the government and people out of government have key roles to play to mitigate the Covid-19-induced crisis.

The Secretary also said the government is preparing itself for the second wave of Covid-19.

Referring to the government's "no mask no service" policy, he urged non-state actors to build awareness against Covid-19 in their own way.

Dr Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS) said most garment and textile factories have not allowed middle-aged workers to resume work since they reopened after the general holidays.

Some companies are running with fewer workers. Some eligible workers have been kept on a waiting list, while labourers who have been brought back are pushed to do more.

Razequzzaman Ratan, president of the Socialist Labour Front, said that risks to the informal sector, which contributes about half of the GDP, are incrementally increasing.

He said a crisis management committee has been constituted specifically for the informal sector, but no initiatives have been implemented to mitigate the risks.

"The nation's farmers are not getting proper prices for their produce. Optimal prices for agricultural products could reduce the dependency on the readymade garment sector," he added.

According to Kamran T Rahman, president of the Bangladesh Employers' Federation (BEF), Covid-19 has weighed heavily on domestic demand, which has also led to a significant drop in the number of working hours.

The government has taken initiatives to help 4 million workers engaged in export-oriented factories but has undertaken no significant measures for laborers engaged in fulfilling domestic demand.

Dr Fahmida Khatun, executive director of the CPD, said Covid-19 has had a significant impact on employment, especially in the informal sector. Small and medium enterprises are also under pressure.

"The government did declare the stimulus package, but not all businesspeople have been reached. When compared to the larger industry players, entrepreneurs in the small, micro, cottage and medium enterprise sector have not been able to benefit much from the package. The success in reaching out to small industry employees has also been comparatively low," she said.