More private investment can reduce inequality

There are different types of inequality. Apart from inequality of wealth and income, there are inequality of healthcare, education, life expectancy etc.

Inequality of income overshadows them all. In a capitalist society, inequality of income and wealth always remain a central problem. 

In Bangladesh, income inequality has increased persistently. It has been reflected in the household income expenditure surveys conducted every five year. The ratio between top 10 percent and the bottom 40 percent of the population in terms of wealth now stands at 2.83 (estimated in 2016). Furthermore, the Gini coefficient is .48, which is very close to reaching .50 – the danger area. In five years, when we make the new calculation, we may find it has hit the red mark.

So, why is it that inequality is growing here unabated? 

The main reason is we don't have an inclusive economic growth. The people who live in rural areas, the laborers – all remain outside the formal sector. They constitute a huge informal sector, where the basic rights are denied.

85 percent of our labor force remain in the informal sector. 

Those who are in the formal sector, especially the industrial workers, do not have their increase of wage balanced with the growth of productivity, resulting in a denial of just share of their contribution to economy. 

To get rid of the situation, we need to increase private sector investment in formal sector, so that its size grows and it attracts workers from informal sector. 

We need to have good governance to ensure that the money which is supposed to be invested is not siphoned away.

M M Akash, Professor, Department of Economics, University of Dhaka