Urban poverty soars as cost of living rises: Sanem

Infographics: TBS

Urban poverty in Bangladesh in the last five years has increased significantly concerning both the cost of basic needs and multidimensional poverty, despite a decrease observed at the rural level and national level, reveals a research report by the South Asian Network on Economic Modeling (Sanem), jointly conducted with the Global Development Institute at the University of Manchester.

The report states that poverty has increased in urban areas due to the widespread presence of vulnerable people, the recent increase in commodity prices and the inadequacy of social security programs in cities, as well as the Covid-19 pandemic, followed by the Russia-Ukraine war and the global energy crisis.

Sanem on Tuesday (26 March) unveiled the findings of the study titled "Covid-19 Pandemic, Post-pandemic Challenges, and Poverty Dynamics in Bangladesh: Evidence from a Longitudinal Household Survey", conducted to assess the impact of the Covid-19 pandemic on poverty, inequality, employment, education, healthcare, food security and overall economy in Bangladesh.

The report recommended an increase in allocation for education, health and social security programmes and also modernisation of the tax collection system to increase the fiscal space.

According to the report, the poverty rate using the upper poverty line in the urban areas reached 18.7% in 2023 from 16.3% in 2018 while the rate reduced to 21.6% in the last year in rural areas from 24.5% in 2018. The rural multidimensional poverty rate has fallen from 30.4% to 27.6%, while in the urban area, it has increased from 16.8% in 2018 to 18% in 2023, it finds.

The research mentioned that the 20.7% poverty rate in the country using the upper poverty line in the last year is significantly higher than the 18.7% poverty rate identified by the Household Income Expenditure Survey of the BBS in 2022.

Poverty rate higher than BBS

The Sanem study finds a poverty rate of 21.6% in rural areas and 18.7% in urban areas for 2023 significantly higher than the BBS-identified poverty rate of 20.5% in rural areas and 14.7% in urban areas.

Using the lower poverty line, the incidence of extreme poverty is estimated at 7.9% at the national level, 8.9% in rural areas, and 5.4% in urban areas, according to the Sanem research. The BBS found a 5.6% poverty rate at the national level 6.5% in rural areas and 3.8% in rural areas.

Along with a rising poverty rate, the study also finds rising inequality in the country, the impact of the Covid-19 on cost of living, education, health, employment, trend of migration, food security and some other socio-economic indicators.

"In response to the price hike, 70% of the households changed their food habits, 35% reduced non-food expenditure, 28% resorted to borrowing, and 17% depleted savings, amongst others," Sanem said in a press release. Such a large cut down on food consumption habits puts households at risk of food insecurity, it said.

The Sanem study also shows that the food insecurity experience scale worsened between April and November last year for poor and non-poor households across all regions.

Moderate food insecurity has increased by five percentage points from 25% in April to 30% in November last year while severe food insecurity has increased by three percentage points from 4% to 7% of the poor population, the study finds.

Urban poor more food insecure

The poor in the urban areas are more food insecure than rural areas, reveals the report. It shows 29% of the rural poor households and 32% of the urban poor households were categorised as moderately food insecure in November last year.

In both rural and urban areas, severe food insecurity was found to be 7% among poor households, the study finds.

Against the rising poverty and inequality in the country, only 37% of the households received at least one social safety net program in 2023 compared to 27% in 2018, according to the study.

TCB family card programme reached the highest number of households at 15.63%, followed by old age allowance at 8.9%, widow/deserted/destitute women allowances at 4.98%, allowances for the financially insolvent disabled at 3.34, and Food Friendly Programme at 3.17%.

"The Covid-19 pandemic has greatly impacted the educational sector, leading to great learning loss due to the education institutions' prolonged closure," said Sanem. Online class facilities generated inequality during the pandemic in education among children of different socio-economic classes, it said.

From the poorest 20% of the households — only 8% participated in online or distance learning programmes, while the rate was 40.3% in the case of the richest 20% of the households.

Lack of online class activities, devices, and unavailability of an internet connection were the most reported reasons for not participating in online classes, according to the research.

The report also mentioned that 96.8% of males and 93.2% of females in rural areas faced a reduction in wages and salaries between March 2020 and December 2020. "A similar situation was observed in the urban counterparts, while the income was at the lowest for both genders and areas.

About 54% of the males and 44% of the females lost their jobs during the pandemic, according to the report. Most of these workers remained unemployed for longer than 3-4 months, it mentioned.

The research urged the government to roll out social security programmes across the nation as stipulated in the National Social Security Strategy highlighting the urban poor and new poor households.

The report also recommended an increase in budgetary allocation for education, health and human resource development.

Sanem also urged the government to increase the tax net and restructure the existing tax frame to meet the need for financing education and social security programmes.