The ruling Awami League’s research wing the Centre for Research and Information (CRI) has showed the ways of creating jobs quickly in Bangladesh to turn the tide of the pandemic loss.
It estimates that the new number of unemployed in Bangladesh, due to the COVID-19 job loss, stands at a doubling 6 million, which is 10 percent of the labour force.
“But there is nothing to be worried. They are mostly low-skilled jobs. So if we focus rightly they will get back (the job),” Imran Ahmed, who did the exercise on behalf of the CRI, told Bangladesh Post on Tuesday.
He is the Deputy Executive Director at Shakti Foundation and a former research fellow at the McKinsey Global Institute. Syed Mafiz Kamal, a senior analyst at the CRI, helped him in the paper.
With the next fiscal year budget around the corner, he said, they believe job creation and inclusive growth must be the “centrepiece” of the recovery strategy.
“A jobless recovery might put the progress of the past decade at risk. In addition, the demographic dividend that we have been enjoying might quickly turn into demographic liability. The risk of broadening the inequality gap is more than ever before,” he said.
“As health safety concerns and social distancing define the future of work, policymakers must take into account a working population that is young, lesser skilled and has limited safety net.”
They made five suggestions for immediate -- one-year -- recovery.
“We tried to show what we need to do now, right now” Imran Ahmed said.
Five job-creation suggestions
1. Providing additional incentives to labour-intensive sub-sectors in which Bangladesh could fill domestic demand and export excess supply where applicable. The agriculture sector, including livestock and fishery sub-sectors, stands out as the largest contributor at 41% of total employment but contributes only 13.7% to the GDP. In addition, there is an opportunity to export produce if domestic demand is met, CRI said.
Other relevant high employment generating sectors include RMG, medical goods and equipment manufacturing, food processing, transport and logistics, retail trade, construction, pharmaceuticals and healthcare.
2. Resumption of the labour-intensive infrastructure projects at the earliest convenience: Relevant ministry budgets such as LGRD and Road & Transportation funding should be increased appropriately to fast-track the labour-intensive public infrastructure projects such as Padma Multipurpose Bridge project, the Dhaka Metrorail project, Karnaphuli Underwater Tunnel project and Dhaka Elevated Expressway project to name a few. Local government bodies should be pressured to expedite urban and rural infrastructure projects, including road repair and street light installations.
3. Providing immediate access to finance for informal sector MSMEs which do not have access to banks: Government can leverage PKSF along with banks and channel additional funds to refinance lost businesses through partner MFIs to their existing SME clients. According to the Light Castle Partners survey, more than half (52%) of the MSMEs have shut down due to the COVID-19 crisis.
Their survey further suggests that nearly 64% of the MSMEs have either laid off all their staff and/or will lay off more than half of their staff within the next 3 months. A conservative estimate would put the job loss number in this sector to approximately 4 million.
While Tk 20,000 crore working capital stimulus has been provided for the MSME sector, the distribution will be largely done through the banks (and some limited financial institutions), which most informal sector MSMEs do not have access to, CRI observed.
The informal sector MSMEs mostly take collateral loans from micro-finance institutions (MFIs) and are in dire need of working capital to restart their businesses.
While BDT 3,000 crore has already been allocated to MFIs through commercial banks in the existing stimulus package, the demand is significantly higher for collateral free loans.
Through MFI partners of PKSF, the government can consider additional stimulus for informal sector MSMEs focusing on:
- Informal sector MSMEs such as restaurants, local grocery stores, local fruit shops, welding shops and cottage industries
- Informal transportation sector including Rickshaw pullers/CNG-electric rickshaw owners and goods-carriers
- Livestock and fishery. For instance, Eid-ul-Adha is around the corner and there is a huge local demand for cow fattening related activities
4. Refocusing the skills development programmes to train healthcare workers and upskill returning remittance workers: The existing budget on skills development should be reallocated to produce more health technicians, nurses, and other healthcare professionals. The objective is to meet local demand as well as export these skills abroad as borders open in the coming years.
The demand for trained caregivers is already at a peak in developed economies due to their aging population, and this demand will only increase as the world recovers from the pandemic.
Returning migrant workers and laid-off garments workers might be prioritised to be re-skilled in these categories. These workers are unlikely be able to go back to their work countries soon.
Creating an environment for them to use their skills locally might be a time-befitting step. The government has already committed to provide loans to the returnee migrant workers to pursue viable income activities. The subsidised loans along with upskilling training programs and technical support will help establish new MSMEs locally, according to the CRI brief.
5. Fast-tracking the ‘Amar Gram, Amar Shohor’ initiative to promote localised economic activity and job creation: With the new normal of social distancing and precautionary lifestyles, the ‘Amar Gram, Amar Shohor’ initiative provides a great opportunity to decentralise services and promote more local activities.
Pushing the decentralisation agenda can be an underlying target of the stimulus. It should heavily prioritise online and digital sectors, especially in rural areas. This is a great opportunity to digitize services, as well as boost employment and revenue from the sectors.
“As part of the agenda, farm mechanisation can be effectively enhanced. This will have a multiplier effect in the localised economy. In this regard, incentives for agricultural machinery expansion (such as harvesters) and other technical support can be provided from the stimulus allocations - a year-long cash incentive can be provided to them,” according to the CRI.
Not to opt for V-shaped recovery
Imran Ahmed said they are currently working with leading policy experts on a more concrete set of recommendations for the policymakers as additional stimulus packages are being announced.
“We plan to publish those recommendations in the coming weeks,” he said.
“Countries such as Vietnam and New Zealand have already announced that they are not opting for an immediate “V” shaped recovery; their policymakers are prioritising on employment generation and inclusive growth. We believe a similar approach should be taken for Bangladesh.”
CRI as a not-for-profit policy research organisation aims to create a platform for public discussion on important matters of national policy in Bangladesh.
Analysing key challenges facing the nation, CRI explores through people-centred debate the political ideas and the policy reforms that will define progressive politics and policies in a new, digital Bangladesh.
With a focus on youth engagement and democratised debate, CRI aims to bring politics closer to the people.