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COVID-19 has in more than one way impacted the lives of millions in Bangladesh. The country recorded an impressive annual GDP growth rate of 7.9% in 2018; the highest in the country’s history and in South Asia for 2018 and has been delivering continuous growth over the last decade propelled by a growing middle-income population and a steady rise in per capita income. However, the vast majority of the population is still employed in the informal sector. As per Bangladesh Bureau of Statistics’ Labor Force Survey 2016, 86.2% of employees aged 15 or older belong to the informal sector, which also includes the farming sector.
Due to the pandemic, Bangladesh is predicted to lose 894,930 jobs along with USD 3.021 Billion of GDP growth. [1]
Metro cities such as Dhaka and Chittagong host the largest number of inward migrant workers and the country is yet to decentralize its economic activities beyond its major cities. Given the quarantine and lockdown in these cities, the working class has been hit the hardest with loss of jobs and earnings. In the first week of the quarantine alone, based on cellphone movement data by National Telecom Monitoring Centre (NTMC), it is estimated that 10 million people have left Dhaka city to return to their districts and majority of these people are from the working-class population.
According to ILO, globally about 25 million could become unemployed, along with a loss of workers’ income as much as USD 3.4 trillion as a consequence of COVID-19 pandemic. [2] The outbreak will be affecting economic, social and developmental aspects of mankind along with forming grave health conditions globally. As the countries are being locked down, the entire world economy is coming to a halt. With the outbreak, the questionable policies of the labor market have been brought under the spotlight. Majority of the piece rate workers, day laborers and informal traders are usually not subject to unemployment benefits, or paid sick leaves. [3]
In order to prevent the ongoing economic downturn from becoming a continued global recession, formative fiscal and monetary policies are essential. As the governments are unitedly working to flatten the curve of people infected by the COVID-19, crucial measures such as income support, wage subsidies and temporary layoff grants are needed to be implemented for piece workers, self-employed people and part-time or temporary workers who may not qualify for unemployment benefits or health insurance, which are being provided by developed nations across the world. In Bangladesh, the situation is not as easy as there’s rarely any unemployment benefits for the labor market.
During previous crises such as the floods of 1988,1998 and 2007, the government took several initiatives to support the bottom of the pyramid population and similar measures in supporting the working class should be taken in a post pandemic economy. The International labour organization has set some standards for policy formation to be adopted by representatives of governments, workers’ and employers’ organizations in order to achieve a sustained and equitable recovery.
Policy responses should focus on two immediate goals – health protection measures and economic support on both the demand and supply-side. For Bangladesh this means supporting the medical industry with proper equipment, infrastructure and sufficient funding to prop up the healthcare system. Within the government, the Ministry of Health and Family Welfare (MOHFW) is responsible for health and population policies. It implements health service programs through the Directorate General of Health Services (DGHS) and the Directorate General of Family Planning (DGFP).
Building confidence through trust and dialogue is crucial in making policy measures effective. Creating transparency and leveraging industry forums would be key to ensuring industry support needs are met. Currently, the government is working with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to ensure RMG industry receives facilitative support as the livelihood of 3.5 million workers depend on the industry growth being stagnant.
Protect workers in the workplace to minimize the direct effects of the coronavirus, in line with WHO recommendations and guidance. The government is yet to give directives to the major manufacturing industries about stopping work in fear of an economic recession, but have guided them to follow proper medical and safety standards in order to remain functional. However, no monitoring plan has been initiated as of yet.
India’s flagship insurance/assurance scheme, Ayushman Bharat has been launched by the government with the vision of universal healthcare, which is to include the 40 percent “missing middle” who are neither covered by private insurance nor by the government in order to cover expenses related to COVID-19. [4] The government currently has over 430 schemes that use direct benefits transfer (DBT), which is designed to target groups such as pensioners, bereaved and unemployed people.
The government of Bangladesh with the World Food Programme (WFP) had previously provided cash support as a precautionary measure with the UN, which had yielded favorable results. In 2015, the government provided BDT 4,500 taka (USD 53.42) to 25,000 people in Kurigram district via their mobile phones, under the WFP “forecast-based financing” project. [5] Those than received funding bought food, rented a boat, and took their belongings to a government shelter on a nearby island before the flood hit dangerous levels. Similar support systems can be developed in response to COVID-19 as cash given support would allow low-income workers to sustain through the lockdown.
Vietnam’s Ministry of Health confirmed a total case of 194 of COVID-19, as of March 30. Furthermore, the Ministry of labor, War Invalids and Social Affairs (MOLISA) has proposed the government to issue a USD 854 million bailout package in order to alleviate the impact of COVID-19. Subsequently, more than 10 Vietnamese are set to launch an initial package worth 285 trillion dong (US$12.3 billion) to support Vietnamese enterprises during the current coronavirus pandemic. [6] Additionally, Vietnam’s military is expanding quarantine facilities for up to 60,000 people as thousands of Vietnamese return home from virus hit countries. After a successful pilot and approval from the World Health Organization (WHO), Vietnam will be producing 10,000 COVID-19 test kits daily. Moreover, the country set to officially export 7,500 COVID-19 test kits to Ukraine and Finland. [7]
The Bangladeshi government needs to highlight the working class as the primary beneficiary of any reformative fiscal or monetary policies it proposes in the coming months. This can be done through supporting the employment generating industries or providing basic amenities needs of this working class.
The Ebola outbreak in West Africa in between 2013-2016 has left a resource-poor country with a large low-income population similar to Bangladesh, Guinea, Liberia and Sierra Leone were the three major hotspots of contamination and resulted in thousands of death. Due to this, Sierra Leone is in a well-experienced position to deal COVID-19 pandemic. The country’s eastern region was the first to be affected by Ebola in 2014 causing more than 4,000 deaths in the country. According to the Disaster Emergency Committee, food shortages in a time of aggressive quarantines were affecting social order and 4 November 2014, media reported that thousands had violated quarantine in search of food in the town of Kenema.
During the Ebola outbreak, Sierra Leone implemented a “less touching” policy, [8] which limited the frequency of physical contact between people. [9] The policy was implemented through ensuring community wide sign posting and PSAs (public service announcements). At present, the health officials are applying this policy in order to prevent the COVID-19 pandemic. They are also adapting targeted quarantining by selecting and subsequently quarantining individuals who are at high risk for an infection without testing the person for the presence of the virus. Back in 2014, there was a massive effort to train volunteers and health workers, sponsored by United States Agency for International Development (USAID) to implement contact tracking and surveillance. According to WHO reports, 25,926 contacts from Guinea, 35,183 from Liberia and 104,454 from Sierra Leone were listed as of 23 November 2014. [10] As the epidemic worsened, most schools were shut down and UNICEF and other NGO partners build strict hygiene protocols, that were implemented post quarantine. They taught thousands of teachers and administrators to work out hygiene guidelines. Installing hand-washing stations and distributing millions of bars of soap and chlorine and plans for taking the temperature of children and staff at the school gate were established in order to stop the spread to children. Local health workers were one of the group than was most affected during the outbreak due to lack of protective gear and awareness of this new disease.
In Bangladesh, reducing spread of misinformation and calming social tension through proper advocacy would be crucial in ensuring quarantine and social distancing is maintained strictly. The first case of Ebola in Sierra Leone resulted from a ‘tribal healer’ who was treating Ebola patients and ignoring precautions, subsequently contracting the virus herself. Bangladesh needs to prioritize rural families as the main starting point of messaging Covid-19 interventions before moving on to urban areas. Training health workers and ensuring their protection should also given the utmost precedence to prevent the spread of the virus.
In response to floods of unprecedented nature, Bangladesh government placed a request to the Asian Development Bank (ADB) for rehabilitation assistance and formulated a project named ‘The Flood Damage Rehabilitation Project’ in the year 1998. The total cost of the project was estimated to be at USD 130 million, of which, USD 104 million was to be financed by ADB and the rest USD 26 million equivalent of the Government’s counterpart funds. [11] Majority of this funding was directed towards building infrastructure and creating employment for those in need. Similarly, the rehabilitation plans and budgeting post coronavirus economy will need to be directed towards the development and employment generation activities.
In 2002, aiming at ensuring poverty reduction exclusively targeting the country’s ultra-poor women, the government of Bangladesh undertook Vulnerable Group Development (VGD) Programme with the assistance of the World Food Programmed (WFP). Since the food price crisis in 2008, Bangladesh government has sharpened up its food distribution mechanisms. A system is in place set by the government where they would be storing procured gains and would release staples in a calculated manner in order to bring prices down, and ensure the accessibility to the poor. [12] Access to food would become an increasing challenge with the spread of the virus and post quarantine, industries will require transformative policies to bring them up again
Following the 2015 Earthquake in Nepal, the government of Bangladesh established a National Emergency Operation Centre (NEOC) in order to effectively respond to disastrous situations, of the unanticipated events. In 2017, 22 districts of Bangladesh were affected by flooding because of monsoon rains and rain waters from the Indian states in the north of the country. In response, Bangladesh Government had allocated USD 0.15 million and 3,607 MT of rice to the flood affected area. [13]
As of 2017, Bangladesh has not experienced any “monga” (cyclical phenomenon of poverty and hunger) since 2008 owing to the successful implementation of massive social safety-net programmes (SSNPs) including Test Relief (TR), Food for Work (FFW), Works for Taka (Kabita), Vulnerable Group Development (VGD), Vulnerable Group Feeding (VGF), employment generations, providing shelters among other various assistance and allowances. These initiatives serve as a strong blueprint for developing a post COVID-19 support system for the working class and given that Bangladesh is in a much better economic situation compared to a couple of years ago, the country is much more equipped to tackle hunger and poverty challenges.
Two basic amenities for surviving -food and money – will be the most challenging needs to address and should be the main priority when formulating policies and interventions in a post COVID-19 economy. In order to tackle potential challenges involving the crucial population segment it is imperative for the government and relevant stakeholder bodies to follow a few major directives:
In the end, given the widespread historic evidence from similar pandemics, what is only easy to predict is the uncertainty of the situations to come. In times such as this, it is imperative that the government and development sector are taking proactive measures instead of reactive ones in order to tackle the challenges head-on. Economic implications of a post COVID-19 world are currently hard to gauge according to most reporting bodies. However, from a health perspective, it is indubitably necessary to prioritize health and awareness of low income communities in order to stop the spread and ensure social stability in the coming months.
Authors: Rageeb Kibria, Principal Business Consultant and Dipa Sultana, Business Analyst, LightCastle Partners
The LightCastle team has been analyzing the macro and industry level picture and possible impacts wrought about by the Covid-19 crisis. Over the following days, we’ll be covering the major sectors shedding light on the possible short and long term ramifications of the global pandemic. Read all the articles in the series.
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