Job recovery gains momentum

People are increasingly returning to jobs they had lost to the coronavirus pandemic despite the persisting health risks and the wage growth failing to keep pace with the rebounding economy.

The number of unemployed people had risen by 10 times to 22.23 per cent in July as the impacts of the crisis battered the economy, from 2.3 per cent in March.

It came down to 4 per cent in September as people have started to take part in economic activities, according to a survey of the Bangladesh Bureau of Statistics (BBS) on the impacts of the pandemic on livelihood.

“The survey has proven that there is a dynamic labour market in Bangladesh, which is a positive sign. We are gradually recovering from the impacts of the Covid-19,” the statistical agency said in a report.

The gain in the job sector came after the government eased restrictions from June, ending the two-month-long countrywide lockdown although the deadly virus has not come under control yet.

The number of businesses returned to the pre-pandemic level of 17 per cent last month, recovering from July’s 10 per cent.

Similarly, 8 per cent of the workforce was engaged as day-labourers before the health crisis hit the country on March 8. It halved in July only to improve to 7.5 per cent in September.

Styled the Perception Survey on the Impacts of Livelihood, the BBS chose on a random basis 2,040 mobile phone numbers for the study. Of them, 989 or 48.48 per cent took part in the survey, which ran from September 13 through September 19.

The conversation with the participants lasted 8.31 minutes on an average. This was the first telephone interview-based survey in the history of the state-run statistical agency.

Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, said year-on-year wage growth in production and services exceeded the headline inflation rate in September.

In production, it even exceeded the food inflation. Nominal wage growth in construction fell short of both food and non-food inflations.

BBS data showed that incomes of more than 84 per cent of day labourers were adversely affected by the pandemic-induced economic disruptions. While their incomes recovered, they were still worse off as incomes in August were down by more than 20 per cent relative to March.

“This is not entirely consistent with 6.2 per cent nominal wage growth in services, where the vast majority of non-agricultural labourers work, and more than 4.5 per cent nominal wage growth in construction and production.”

The problem is likely to be in wage rather than the survey data,” Hussain said.

Speaking on the unemployment data, the economist said one still has to wonder what accounts for the ability of the average household to cope with declining incomes as reported in the survey when nominal wages have generally kept pace with the overall inflation and employment recovered so rapidly.

Public assistance can only partially explain this since 21.3 per cent of households reported receiving some form of assistance whereas 68.4 per cent reported being financially affected by the pandemic in April to July.

“Having said that, it should also be pointed out that it is not uncommon to find impressions from the rapid survey data not matching with the routinely collected price and wage data from all parts of the country.”

“The BBS must be commended for the effort and the reduced lag in reporting price and wage data,” Hussain said.

Rizwanul Islam, a former special adviser for employment sector at the International Labour Office, Geneva, said: “Rather than being complacent, we need to keep a close eye on the process of economic recovery and continue to adjust policies to ensure that it does not become jobless.”

The number of farm households was unaffected despite the crisis and was unchanged at 10 per cent in July, BBS data showed.

Some 63.42 per cent of households had to cut consumption of quality food during the April to July period. It was unchanged for 32.73 per cent households.

In order to survive, 8.89 per cent had to rely on the social safety nets, 6.52 per cent on open market sales by the government for basic products, 17.93 per cent on private borrowing and 43.11 per cent on handouts from relatives.

Some 46.22 per cent households wiped out savings and 11.26 per cent had either sold properties or kept them as mortgaged.

The wage growth in the agriculture sector fell to 6.6 per cent in March. It stood at 6.23 per cent in September, down from 6.53 per cent a year ago, BBS data showed.

The wage growth in the industrial sector was 5.26 per cent last month, down from 6.14 per cent in March this year and 6.37 per cent in September last year.

In the services sector, it fell to 6.52 per cent in March and recovered to 6.04 per cent in September. It is still lower than 6.71 per cent registered in September in 2019.

In June, Brac said 95 per cent of the people surveyed across the country suffered a loss of income due to the shutdown and social distancing measures enforced by the government in late March to contain the spread of the Covid-19.

Household income of 51 per cent of the respondents was reduced to zero, while 62 per cent of the low-income earners lost work opportunities. The pandemic left 28 per cent of the respondents economically inactive, it said.

In Bangladesh, labour markets are a key channel through which welfare is affected, as labour incomes comprise more than 80 per cent of household income for the poorest 40 per cent of households, according to the World Bank.

A large share of Bangladeshi workers is engaged in sectors directly impacted by the Covid-19. Compounded with pre-existing vulnerabilities and the absence of formal safety nets, households tend to manage income shocks with their own resources, it said last week.

“Going forward, the government’s Covid-19 response will remain a paramount priority, including testing, quarantining and treating patients and providing economic relief to the poor and vulnerable,” the WB said.