Wage growth below inflation for 14th month

Although wage growth in Bangladesh has been slowly climbing since July last year, it has still remained below inflation for the 14th month consecutively, according to the Bangladesh Bureau of Statistics (BBS).

This trend indicates a worsening poverty situation as many people are being compelled to cut consumption amid falling real income and the rising cost of living.

In March this year, wages of low and unskilled workers grew 7.18 per cent, which was 2.15 percentage points below the inflation rate of 9.33 per cent that month, shows the Wage Rate Index (WRI) of the BBS.

In February, wages of workers across 44 occupations in agriculture, industry and services grew 7.11 per cent against a consumer price hike of 8.78 per cent.

But on Tuesday, Planning Minister MA Mannan officially announced that inflation and wage rates were up by 55 and seven basis points respectively.

"The rise in the wage rate might give a little relief to people from the inflation," he said.

However, Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre, said the clearly marginal increase in real wages will not give any relief to poor or low-income people.

"Many people are having to adjust their household expenses at the cost of nutrition, health and education as inflation is higher than their income growth," he added.

Professor Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), said peoples' real income has been falling consistently as wage growth remains below inflation.

"This means the real income of people is being eroded, especially for those who have no other source of income and only depend on their wages," he added.

Raihan then said if a commodity cost about Tk 100 a year ago, then that same item would cost Tk 150 or Tk 160 at present.

As growth in the wage rate has remained below inflation for a long stretch, it has led to the erosion of real income among lower-income groups.

"So, the slight increase in wage growth does not give any happiness as it is still below the inflation rate," the executive director of Sanem added.

Sanem recently conducted a survey on lower-income groups with a sample of 1,600 households across eight divisions, where they found more than 96 per cent of the people reduced their meat consumption in the last six months.

"In our survey, we found that the income of households remained unchanged from September to February but the food expenditure increased drastically," Raihan said.

Raihan, also a professor of economics at the University of Dhaka, went on to say the country should emphasise on policy making to address vulnerable people who depend on their wages.

Under this circumstance, the government should expand the coverage and allocations of social protection schemes to prevent people from falling into deeper impoverishment.

For example, coverage of the Trading Corporation of Bangladesh and Open Market Sales programmes are still low.

As a result, people have to stand in queues all day to get just a small amount of the basic commodities they need, he said.

With this backdrop, Raihan suggested that coverage should be increased as soon as possible.

The BBS collects data to measure the movement of nominal and real wages of low paid skilled and unskilled labour in different segments through the WRI.

The March WRI data shows that workers in industry, construction and production, were the victims of high inflation as their income growth fell compared to the previous month.