It is time to show some restraint now and save our energy for the future. The exit strategy from the lockdown is very important. We want to exit lockdown after reducing the health risks. In that case, we have to think sector-wise. For example, the agriculture sector is almost normal. Then we can think about small sectors, like a workplace where only 10 people work and is more manageable than a factory of a thousand people. Secondly, we have to find what will be beneficial for us in the long run. And how we would be able to manage health precautions for the general people is also a question.
It has been almost three months since the first Covid-19 infection was detected in Bangladesh. Thousands have since tested positive and more than 781 have died. Besides the ever-increasing infection rate, people are curious about the country's social security and how the security of livelihoods can during the pandemic. How prepared is our system for such battles?
Senior Research Fellow of the Bangladesh Institute of Development Studies (BIDS) Dr Monzur Hossain, Dhaka University's Professor of Economics Dr Sayema Haque Bidisha and Associate Professor of Economics Dr Atonu Rabbani discuss all these issues in the fifth session of The Business Standard videoconference on the ongoing Covid-19 situation.
Opened by The Business Standard Executive Editor Sharier Khan, former lead economist of the World Bank's Dhaka office Dr Zahid Hussain moderated the discussion.
Sharier Khan: Dr Zahid Hussain will lead our video conference today. We will discuss the topic of enhancing social security and the security of livelihood. Today we have former lead economist of the World Bank's Dhaka office Zahid Hussain, senior research fellow of BIDS Dr Monzur Hossain, professor of economics at the University of Dhaka Dr Sayema Haque Bidisha, and Dr Atonu Rabbani who is an associate professor of economics of the same university.
I am now requesting Zahid bhai to start the dialogue.
Dr Zahid Hussain: Thank you Sharier. Also thanks to The Business Standard for continuing this videoconference series. Today our focus is on the social security sector. I want to begin the discussion by presenting some points on the topic.
We discuss the issue of social security every year before and after the budget. And we have some conventional challenges concerning this sector. This is a special year because of the Covid-19 crisis. I think a new challenge has been added into the social security sector because of the crisis. I want to present my hypothesis to you.
In a country like ours, the problem of flattening the curve should be considered at the same level as the social security sector. There is a complementarity between social protection and social distancing. I am mentioning social distancing in a broader sense here, including lockdown. Social distancing will not be effective if social protection does not stand by it. You know about the challenges in our social security sector, like not having enough funding – many think that it is under-funded – and the fund that is showed in the budget also lacks transparency. There are problems in targeting here. Both the inclusion errors and exclusion errors are problematic. And thirdly, different organisations and ministries are involved in the implementation process. Their division of labour is sometimes overlapping and there is a continuous territorial quarrel among them. And we see a failure of co-ordination because of this. There is also bureaucratic red tape and political pressure.
We also face many problems in last mile delivery challenges. And in the present circumstances, these problems have taken a different dimension.
I want to begin our discussion with Dr Sayema Haque Bidisha. You have given some analyses recently. Coronavirus has brought forth the distinction between poor and non-poor and if the social security sector is only designed considering the poor, it becomes very hard to get some advantage from it in the time of crisis. You have provided some analyses based on BBS (Bangladesh Bureau of Statistics) data on the questions, such as vulnerability of the poor, depth of the vulnerability, and how we will distinguish the poor from the vulnerable. And we have found some simulation results in your writings. I request you to present the information that you have found from your analyses on the number of poor in our country, their vulnerability and how coronavirus has impacted these. Then we will discuss the steps that we should take to tackle the crisis.
Dr Sayema Haque Bidisha: There is a deep relationship between our social security sector and social distancing, as Zahid bhai said. According to the household survey of 2016, the percentage of our upper poverty line is 24.3 percent, which was found to be 20 percent in 2019. So, we tried to figure out the people who would be reduced to new poor because of coronavirus. Because primarily, we found that around 85 percent of our labour force is in the informal sector and they are in a risky zone. Another thing is that many people can go beyond and above the poverty line during normal times too. Updating the poverty line in the present situation, we found that the number could be around 40 percent, i.e., the number could be doubled.
We found that around 9 percent people are being added with the number of food poverty. And in terms of vulnerability, we saw that the number increased to 30 to 35 percent from 20 percent. There could be a debate on numbers or methodology among us, but one thing is clear – a big number of people involved in different risky jobs and living in different economically risky areas of the country, such as the haors, the hill tracts etc., are coming down to the poverty line. The main problem is identifying these new poor. Because we have not found any substantial effort to add the people who were living below the poverty line in the national database of the national social security programme. But the people who have come down below the poverty line recently, they could be lifted back to their position later after three months or six months – the time frame is debatable – but they are definitely poor now. So, we have to find a way to identify them. One way could be the continuation of the digitalisation of the national social security programme to identify the new poor.
Secondly, we can take some region-based programmes to identify the informal sector labourers. It could be done based on different sectors and also based on self-claim. I think this identification process is very important and we must minimise the exclusion error. There has been a lack of transparency in the social security programme for many years. It cannot be changed very soon. But the thing that we have to do is to include the people – those 40 percent or 35 percent, whatever the number is – into the social security programme, even if it is temporary.
Dr Zahid Hussain: I have a clarification question for you. You said that the number of poor has been almost doubled, including vulnerable people in the haor areas, in the hill tracts, etc. My question is, what is the number of people living in the urban areas in comparison to the rural areas among this new poor?
Dr Sayema Haque Bidisha: The number of people coming down below the poverty line is high. We see that the rural people, especially those who live in the slum areas, are sometimes excluded in the social security programmes. As a result, many of them who pull rickshaws or work as house maids are going to villages. And they are often excluded from the lists of social security programmes both in the villages and in the cities. That is why it is very important to identify them. If I specify a little more, there are certain types of occupations. We find that around 17 percent of the new poor come from the agriculture sector. A large number of those are day labourers who are around 14 percent. Workers of big industries like garments, craft and service workers like tailors and electricians are also among the new poor.
Dr Zahid Hussain: Thank you Bidisha. I will come back to you later. Now I will go to Dr Monzur.
Bidisha said that the number of informal sector workers who have come down below the poverty line are very large and they are both from the urban and rural areas. There is also a transition here. Those who came to the city are returning to the villages.
Dr Monzur you have conducted a lot of research on small and medium enterprises (SMEs). Here, there are two challenges: How the SMEs are being affected, but I do not want to go to this topic now – what I want to know is on the perspective of social security programmes, what is the condition of the people who are dependent on this sector? What are your assessments about this?
Dr Monzur Hossain: Thank you Zahid bhai. I want to see the situation from a different perspective as the whole scenario is different from the pre-Covid-19 crisis. If we discuss by focusing on the budget, then I have doubt about whether we should call it social protection or not. Those who were under social protection were few in number and the amount they were given was also very little. Now this group has become broader as many people from the SMEs who have lost their jobs have been included here. So, it will not be right to see this only from the perspective of social protection. In the current situation, not only the poor, but also the middle and lower-middle class people are also facing problems. They have become jobless and the income sources have been shrunk.
Recently, Professor Osmani has written a report for the Planning Commission where he said the problem is entitlement support. So, we have to go with this broader term. Dr Bidisha said that the number of people under the poverty line has doubled, which is around 40 percent or more. But there are 10-20 percent more people who are also in a vulnerable situation. So, currently around 60 percent of the population is eligible for this entitlement support and need help if we want to continue lockdown or social distancing for more days.
Now, from June 1, we are going to lift lockdowns to return to the normal times. And if that is implemented, then we will go back to social protection again. But my fear is what the condition will be after reopening, and the situation could force us back into another lockdown. The government tried to give cash incentives of Tk2,500 to 50 lakh families each, but that could not be implemented properly because of weakness in the delivery system. Dr Bidisha talked about digitalisation, but I do not think that it is the panacea of all problems. We learned that the list that was created for this cash incentive was done by the political people of different localities. So, there were anomalies in this process. And the amount was also very low.
I think a broader plan could be done for this budget. Many have proposed 2-3 percent of the GDP, and that is around 20 percent of the budget, which is not realistic. So, if you can make a plan based on the people living below and slightly above the poverty line and make a list, that can be helpful amid social distancing.
Dr Zahid Hussain: Thank you Monzur. Now I will go to Atonu.
Atonu you have worked on the labour market, social protection system and database. Dr Monzur made a point that we have vulnerabilities in the formal sector also. So, we have to come out of conventional wisdom of social protection and we need to make a broad entitlement support. How we will reach and to whom with what problem, that is a problem. Bidisha also hinted about that. Dr Monzur said that digitalisation is not the panacea and there are far greater problems. You can begin with your opinion about these problems.
Dr Atonu Rabbani: You raised the issue of social protection and social distancing at the beginning of the discussion. I want to start from there. We know about the objective of social protection, that there is a target of vulnerable people and the number of those could be increased. But if we start the story from the opposite side, i.e., if want to maintain social distancing properly, there would be a role of the social safety net. People are becoming poor, that is why we are supporting them from social safety net – this is a very "conservative" or more "traditional way" of thinking. In the last 24 hours, the highest number of people have been infected from the virus in our country. The number is more than 2,500. The lockdown is going to be lifted on June 1 and the number of infections is rising in this rate. I do not think lifting the lockdown in this situation is an economic decision. Maybe it is a more political decision. Maybe we will never know. The point I want to make is that if we want to use social protection to address the current situation, the epidemiological crisis that we are in right now, in that perspective, the discussion of formal or informal sector will become fussy. Take the instance of the workers of the RMG sector. If they all start to work in their factories from June 1, then they will become more vulnerable because there is a great risk of infection there and that could affect the macroeconomy. Even the situation can lead to the closure of factories. If around 40 or even 20 percent workers of a factory get infected, that could create panic and even social upheaval.
What I want to say is that there is a chance of different perspective of discussing the issue of social safety net. It does not matter whether we will call it social safety net or broader entitlement. Name does not mean anything. The matter is how we will open up the formal sector or how we will provide support to them. We could also propose shifting for the factories, that a factory cannot go in operation at more than 50 percent.
Regarding social safety net, I would say what we call targeting is some eligibility criteria and there are some criteria for inclusion and some for exclusion. The project that I worked for was on old age allowance and these old people are vulnerable amid the pandemic, so I think I have some authority to say something here. If the criteria are given to us who are here right now, we are well educated people, we would make the targeting in different ways. The government has a policy and their intention is good. Forget about new poor or old poor or formal-informal divisions, there is a huge gap here. Or we could go to a universal method that everyone will be eligible for support, maybe there will be some inclusion errors, but ultimately it will not do much harm to our goal.
Dr Zahid Hussain: We have taken a decision of reopening on a large scale, banking hours are being increased, public transportation is starting, etc. We are talking about vulnerability here, and how to manage vulnerability. Atonu has added a new dimension in the discussion. We thought that the formal sector has some protection, but Atonu showed that if a factory of 1,000 workers reopens, it will risk health. So here we have to consider the vulnerability of virus and vulnerability of livelihood. Now my question to you is: What is your assessment of the situation? Atonu said implicitly that perhaps we will never know the reasons behind the reopening. But they are saying that the reason behind this is to restart the wheel of the economy for the sake of livelihoods.
But at the moment, the decision of reopening has come when we are in a position where infection may increase at a higher rate. Now, in this situation, will the vulnerability increase or decrease because of the reopening? Both the vulnerability of virus and of the livelihood? What do you think?
Dr Sayema Haque Bidisha: What I observe is that the rate of infection is not decreasing. I think we must consult with the epidemiologists first at this moment before taking any decision about reopening. We are economists who are discussing here. But only an epidemiologist can tell about the risks of reopening everything right now. In economics, there is a tendency to value human life in different way. I feel uncomfortable talking about this because valuing human life in economic terms is not my cup of tea. What I personally think is that if we can take some strict measures for a short term, it will help us in the long run. Right now, the curve is rising here and if it starts to rise in an alarming rate, it will be very hard for us to control it. We do not want to fall in a situation where trade returns to normal in other countries but the virus still rules here. In that case, many of our orders will be awarded to other countries and we will lose many opportunities to revive economically. My suggestion is that now it is time to show some restraint and save our energy for the future. The exit strategy from the lockdown is very important. We want to exit lockdown after reducing the health risks. In that case, we have to think sector-wise. For example, the agriculture sector is almost normal and open right now. Then we can think about small sectors like a workplace where only 10 people work is more manageable than a factory of a thousand people. I think the consultation of the doctors, virologists are most important at this moment.
Secondly, we have to find what will be beneficial for us in the long run. And how we would be able to manage health precautions for the general people is also a question. So, I think it will be better for us to take the decisions slowly.
Dr Zahid Hussain: There is scope for reconsideration of the tactics that we have taken so far. There is also a matter of valuation of human life, and you said that it is not "my cup of tea." By "my", I mean the field of economics and I totally agree with you. I want to propose a stronger word to provoke Dr Monzur and Atonu. I consider it as vulgar economics to think that lockdown measures are not applicable at the same level in the poor countries as in the rich countries. I will start with Dr Monzur.
Dr Monzur Hossain: I think it is a very tough question. From the beginning, the issue of life versus livelihood has been associated with the lockdown measures for Covid-19. But I think there is no trade between these two. From the beginning, we did not utter the word lockdown officially and that is how we missed the train. And the way we implemented the protective measures in the last three months is very questionable.
In the beginning, epidemiologists suggested a lockdown of 49 days or 78 days. And that was the proposition for a strict lockdown. If we could maintain that strictly for 30 days, it would help prevent the spread of coronavirus. Now when the infection rate is increasing, we are opening everything up. But now we are going for a wider reopening. I think we could open up sector-wise or zone-wise gradually. It is not right at the moment to open everything simultaneously. At the same time, we do not know where this will end. If the infection rate increases at a higher rate, probably we have to go back to a shutdown again. And then the risk of livelihood loss will remain the same. And by this time, we could not sort out the process how we would provide social safety programmes. If we are to take some tough decisions in the future, what the situation will be I cannot guess at this moment. So, we are going through a trial and error basis where there were scopes of fine tuning. Probably we would be forced to do that in the future. Now we have to wait for a vaccine or something like that to go to a permanent solution of the crisis. So, we have to protect both lives and livelihoods.
Dr Zahid Hussain: What Dr Monzur said is that we may get back to square one or the initial stage. I want to include Sharier Khan here if he has any view.
Sharier Khan: Here, I want to echo Dr Bidisha. We have opened up the lockdown to save the economy. But how will we be benefitted if we all get infected with the virus after the move? Because the economy will not sustain at that time too. We earlier assumed that May would be the peak time for the virus in Bangladesh. But now we realise from the present context that the peak is yet to come. The curve may go up even in June.
Meanwhile, scientists are saying that the coronavirus will stay even if we invent the vaccine. Overall, I feel that our sacrifice in the form of working hours and productivity is turning valueless. The shutdown or general holidays we were in are not yielding any returns to us. Because virologists tell us that the real number of cases is actually 10 times higher than what we now see in Bangladesh.
Dr Zahid Hussain: Dr Atonu Rabbani, we are discussing vulnerability. How do you see it?
Dr Atonu Rabbani: We know that the situation in the country is not better as we have growing number of infections. Nor do we know the exact scenario of community transmission. Let's assume that the virus is spreading from humans to humans. Given the situation, however, maybe we have to open the economy. What should we do then? How much shall we be able to avoid transmission?
More importantly, we should have developed an enriched data and information infrastructure by these three months of lockdown so that we could determine what our situation would be when we would slowly open the economy. Data and information infrastructure should include testing and contact tracing, and ensuring a fact where people would not be stigmatised to reveal information about their infections, etc.
For example, we are talking about social safety net. If we reveal the information about our infection, it will be a public good. Should we, then, incentivise the issue in a component of the social safety net so that people become attracted to taking the test and, based on the test result, we will decide our policies: How we will open up our economy or whether we will strengthen the lockdown.
Now, we should focus on how a more data-driven comprehensive infrastructure can be developed in the next two months with the participation of statisticians, biologists, economists and clinicians, etc. If we do not know what will happen if we open up the economy, it will be kind of like flying blindly.
Sharier Khan: I have a question to you all. What will be our strategy in the future as our country has limitations and it runs in this fashion?
Dr Zahid Hussain: Dr Bidisha has already given a hint on it. I endorse her point about a risk-based approach or zoning system that the WHO recommends.
Dr Monzur Hossain: Dr Zahid, I also agree with you. If we want to proceed in this way, everyone should have separate plans. We should ensure maintaining social distancing as much as possible. We can promote work from home or if we want our staff to come to office, there should be adequate safety measures. Alongside that, zoning system would be a much better option in this case.
We are now badly feeling the necessity of decentralisation. Our economy is centred in Dhaka. I think the transmission would have been limited had only Dhaka been locked down much earlier. So, there should have been a thinking of decentralisation before opening up the economy.
Dr Atonu Rabbani: I have some suggestions here. We should increase the number of tests and do it randomly. Contact tracing is very important too. And the last point, which is very difficult actually, is group distancing based on ages among the family members.
Dr Zahid Hussain: Now, I want to move to the last question. There is a big debate as to how we will deliver support to the target people. The debate is a much old one though. It is cash versus non-cash support. Cash-based intervention has been prioritised the most in those countries that have made specific interventions to address the vulnerability after the coronavirus outbreak. But in the context of the subcontinent, specifically Bangladesh and India, food-based support is preferred as the immediate response.
Now, what I want to know from you is which support should we prioritise – cash or food – in case of our interventions based on the following criteria: speed of response, limiting infection risks while delivering it, and the mileage the support can cover? And the final question is why do we prefer food support in this subcontinent.
Dr Monzur Hossain: I want to begin from your final question about preference for food support. I think it has come from the concept of lockdown. If you would strictly enforce the lockdown, people would have no means to go out to buy food. As we were in a so-called lockdown in the past three months, food preference was highly felt. Now as we have relaxed the lockdown, I think, cash support should get the priority.
Dr Zahid Hussain: Dr Monzur, I have a question here. As per your argument, everything was closed during the lockdown but it was not that no one could go out.
Dr Monzur Hossain: No, no, I did not mean that. I meant the most vulnerable group who had to go out for both food and livelihood. So, they could not maintain the lockdown. My point is, we did not assess whether they could be kept indoors with food supply alone. So, if I want to maintain a strict lockdown, there is no alternative to giving food support to them.
However, there will still be a feeling of need among the vulnerable group even though we have opened up the economy. In this case, cash support will be important. But that too will be difficult as, for example, most of the MSME industries have little access to the banking system. As a result, although the government has announced a Tk20,000-crore credit package for them, they will not get it. Ultimately, we are pushing them towards more debt even though our target was to relieve them of it. So, we need a well-articulated credit package so that all those in the MSME sector can be covered.
Besides, the coverage of social safety net should be widened. We have to come out of the traditional view in doing so for the next one year at least. The people who are vulnerable or have lost incomes, should be given the financial support in order to retain the economy. So, we should begin distributing the stimulus package to the extent we have already declared.
Dr Zahid Hussain: Dr Atonu Rabbani, do you completely agree with the argument posed by Dr Monzur? What is your stance on the debate of cash versus food support?
Dr Atonu Rabbani: There is a scope to think deeply about it. I think the cash support is a bit biased. Let me explain. Generally, food support is a good idea. If we can maintain a proper supply chain in case of the food support, as Dr Monzur has said, we will have a control over social isolation or distancing. However, there is one assumption – we have that institutional capacity to maintain that chain.
Meanwhile, cash support also has an advantage, that is we can directly reach it to the target group provided they have mobile wallets. However, the more the distribution system is competitive, the better the service will be.
Dr Zahid Hussain: Dr Bidisha, we want to conclude with your view.
Dr Sayema Haque Bidisha: I have nothing to disagree with the two analysts. I want to add to their views. I think cash support has two important benefits – the multiplier effect or where the money is being spent, and the issue of choice. Depending on our own social context, we have to think which type of support we shall give to which people. We should transfer cash to those who can access that through mobile financial services. But we also saw that there were leakages during cash transfer. Nevertheless, we should prefer that mode of support which has fewer leakages.
Dr Zahid Hussain: Yes, the issue of leakage and pilferage are a part of greater governance. Dr Monzur said about programme designing and implementation by involving all actors, apart from the government agencies, and taking advice from the researchers. I would like to know if you have anything to add to that, Dr Monzur.
Dr Monzur Hossain: Maybe we do not have the time or scope to fine tune the pilferage or leakage during the pandemic. Even then, if we can deliver the support to the optimum level possible, that will be more important. Three months have elapsed, yet we have not been able to do that in its true sense. Still, we have time. What I think is very much important is enough allocation. All the stimulus packages already declared should be holistic and aligned with the upcoming budget. I think the budget should allocate 20 percent for this sector.
Dr Atonu Rabbani: In the next one year, there is little possibility of an effective vaccine. So, we should be mentally prepared for that. Bangladesh should participate in the trials of the vaccinations internationally because the countries, which would be involved in it, will get preferential treatment when vaccine will be distributed. In this regard, we should be farsighted.
I agree with Dr Monzur that, yes, we have missed many things already. Still, we have many opportunities left.
Dr Sayema Haque Bidisha: First, I would say that we have not yet seen an effective implementation of the national social safety net. The second point is identification of the target group. I agree with Dr Monzur. He referred to different data with the BBS or non-government organisations with which we can easily identify the target people. Only then, we can easily estimate which type of support – cash or kind – will be most effectively reached to which group of people. Our social safety net has a very unclear idea about the urban poor, floating people or the internally migrated ones. If we can increase our social safety net to around 4.5-5 percent of the GDP, more families will be benefited from it.
Dr Zahid Hussain: Thank you all. I want to draw a conclusion echoing Dr Bidisha. Yes, it is necessary to increase the allocation for the social safety net. We should broaden its concept amid the present context to prevent the vulnerability. The economy has been opened as an alternative means because we have not that capacity to continue aid for a long term. But that too opens up much scope for the vulnerability to burgeon. So, our approach should be more scientific.
Here, Dr Atonu said we should mark the areas based on testing and contact tracing while Dr Bidisha mentioned about a risk-based approach. And Dr Monzur specially focused on the problems of our micro, small and medium industries.
From the cash versus food debate, what I understand from your discussion is that there is no scope of food fundamentalism or cash fundamentalism and it should be based on the need.
I convey my gratitude to you all. You have given a lot of time here. Thanks to Sharier, thanks to The Business Standard.
Sharier Khan: We are grateful to you all. Thanks for your in-depth and off-beat discussion. You have spoken from the economic point of view. Thank you all again.