Business

Do we know how many lost livelihoods during shutdown?

People from low income families wait in queues for relief in Dhaka’s Kamalapur recently. Star file photo

All over the world, jobs are being lost on a massive scale for measures adopted to fight the health crisis caused by coronavirus, and Bangladesh is no exception.

But do we know how many people have lost their livelihoods during the period of shutdown that the country is going through?

In the absence of any official data on this, how can policymakers do something about it -- even if there is willingness?

When a journalist asked me if I have an estimate, it made me think, and the following is the outcome.

In making my guesstimate of the numbers who have lost their jobs during the shutdown, I start from the observation that much of the urban (including the peri-urban) economic activities have come to a standstill.

I then look at numbers engaged as day labourers, e.g., in construction, informal service, transport, food, etc. as well as the numbers in petty self-employment in retail trade, food service, repairs, etc. I assume that those people have lost their source of livelihoods during the shutdown.

I also assume that those engaged in organised manufacturing will be able to go back to their existing jobs and lay-offs will be limited to about 10 per cent of their workforce.

I use data from the government's labour force survey (LFS) of 2016-17 and make projections of people engaged as day labourers outside agriculture and in urban petty self-employment.

Based on the above assumptions and projections, my estimate is that about one crore people may have been without jobs during the period of shutdown. This is in addition to the nearly 30 lakh who were already unemployed.

So, we are talking about 1.3 crore who are without jobs at the moment. That is nearly one in five of Bangladesh's total labour force.

With the source of livelihood gone, how does one help them stave off hunger during this critical period? The government has announced, in several instalments, measures for coping with the adverse effects of the shutdown on the economy.

Those measures seem to be quite comprehensive and, at least, include measures to help the poor.

But are the needy getting help right away? Not sure. Why do I say so?

Take the formal sector first. A large part of the package for this segment is in the form of credit, albeit at low interest rates.

And the key questions here are the efficiency and speed with which the money will be disbursed. One example is the component for export-oriented industries to cover workers' wages for three months.

Given the conditions for the release of funds from this pot (for example, workers need to have bank accounts), it is difficult to say how long it might take for money to reach the hands of the workers.

In the meantime, there are reports of a lay-off of workers. I wonder whether there is any way of knowing when the first taka from this fund has reached any worker.

In a situation where there is no hard data on the number of workers employed by an industry, fulfilling other conditions for the release of funds to meet their wages may not be easy.

A similar comment can be made about the funds allocated for loans to the micro and small enterprise segment.

How many such enterprises, especially those at the very small end of the spectrum (e.g., the self-employed or the tiny units with a few salaried workers), will even be able to submit an application meeting all the stipulated conditions is anybody's guess.

As for free food distribution and open market sales, the problems of implementation are no less serious.

On one hand, there is the issue of making the food grains available to the poor without compromising on the health requirements.

Although there were suggestions (including by myself) for arranging delivery of the relief to the doorsteps of the needy, media reports and images show either violation of the basic standards or people having to wait long hours for a bit of handout.

Also, there is the issue of the coverage of such schemes and whether all the needy are being covered.

While the standard approach in anti-poverty programmes is to use poverty mapping for targeting, one needs to understand that the present situation has created a large number of "new poor" who may not be confined to the so-called poverty-prone upazilas.

A much wider and more inclusive approach is needed.  

We also hear that "committees" have been formed to prepare "lists" of possible beneficiaries, and "cards" are going to be given. But one wonders when some actual help will reach the hands of the needy.

It seems that the authorities were caught unprepared. And much time is being lost in getting necessary preparatory work done.

One suggestion that came from outside the government (including from myself) was to provide cash transfer to at least that segment who may not be reachable through food assistance.

This group consists of not only the poor but also those who may have been just above the poverty line but may have fallen off the cliff because of the current crisis.

With a little innovation (e.g., the use of mobile finance) and effort, such a transfer could be made to get money quickly in the hands of those who are facing a precarious situation.

A back of the envelope calculation shows the following: (i) Taking into account the daily labourers and a part of those in the formal and informal sectors who are employed on a precarious basis, I estimated 2 crores to be in desperate need of cash at the moment.

If we assume that half the garment workers may have returned to work already, the above number would be 1.8 crores.

(ii) Using the 2016 poverty line (Tk 2,268 per person) and that each worker has to support a family of 4.06 (2016 survey), the total amount needed for a month would be Tk 9,208.

If one adjusts it for price increases during 2016-19, one would get an amount of more than Tk 10,000.

So, I would suggest a one-time cash transfer of Tk 10,000 per family. (iii) Depending on whether the number of target beneficiaries is taken to be 1.8 or 2 crores, the total amount needed to provide such one-time cash transfer would be between Tk 18,000 and Tk 20,000 crore, which is less than 0.80 per cent of Bangladesh's GDP.

This should be in the realm of feasibility of the government's budget.

Coming to the credit line, especially the one meant for the micro and small enterprises, the paperwork and conditions required should be kept as simple as possible.

There could be massive publicity (e.g., through electronic and print media) on how the necessary paperwork could be completed.

Furthermore, support could be provided by setting up cells in public sector banks and encouraging private banks to help micro-enterprises in this respect.

A mechanism could be developed to involve educated young people for assisting prospective applicants. The government's Youth National Service Programme could be mobilised for such support.

Before concluding this article, let me get back to the data issue. The last year for which LFS was conducted is 2016-17. And I don't know when the next survey will be carried out.

Whenever it is done, the results will reflect the situation at the time of the survey -- not what is prevailing now.

On the other hand, if there was a system of carrying out LFS every quarter every year, we could have had a picture of the situation in 2020 and compared it with that of the earlier years.

That would have enabled us to have a more accurate picture of the real impact of the present crisis on people's livelihoods.

My suggestion, therefore, would be to have a plan for carrying out LFS every year -- and preferably, quarterly every year.

That will enable our policymakers to monitor what is happening in the labour market on a more regular basis and adopt policies accordingly.

Likewise, other surveys, e.g., the one on manufacturing industries should also be carried out more frequently and results published quickly after the surveys are carried out.

Without good and up-to-date data, policymaking is bound to remain imperfect.

 

The author is a former special adviser to the Employment Sector of the International Labour Office, Geneva

Comments

Do we know how many lost livelihoods during shutdown?

People from low income families wait in queues for relief in Dhaka’s Kamalapur recently. Star file photo

All over the world, jobs are being lost on a massive scale for measures adopted to fight the health crisis caused by coronavirus, and Bangladesh is no exception.

But do we know how many people have lost their livelihoods during the period of shutdown that the country is going through?

In the absence of any official data on this, how can policymakers do something about it -- even if there is willingness?

When a journalist asked me if I have an estimate, it made me think, and the following is the outcome.

In making my guesstimate of the numbers who have lost their jobs during the shutdown, I start from the observation that much of the urban (including the peri-urban) economic activities have come to a standstill.

I then look at numbers engaged as day labourers, e.g., in construction, informal service, transport, food, etc. as well as the numbers in petty self-employment in retail trade, food service, repairs, etc. I assume that those people have lost their source of livelihoods during the shutdown.

I also assume that those engaged in organised manufacturing will be able to go back to their existing jobs and lay-offs will be limited to about 10 per cent of their workforce.

I use data from the government's labour force survey (LFS) of 2016-17 and make projections of people engaged as day labourers outside agriculture and in urban petty self-employment.

Based on the above assumptions and projections, my estimate is that about one crore people may have been without jobs during the period of shutdown. This is in addition to the nearly 30 lakh who were already unemployed.

So, we are talking about 1.3 crore who are without jobs at the moment. That is nearly one in five of Bangladesh's total labour force.

With the source of livelihood gone, how does one help them stave off hunger during this critical period? The government has announced, in several instalments, measures for coping with the adverse effects of the shutdown on the economy.

Those measures seem to be quite comprehensive and, at least, include measures to help the poor.

But are the needy getting help right away? Not sure. Why do I say so?

Take the formal sector first. A large part of the package for this segment is in the form of credit, albeit at low interest rates.

And the key questions here are the efficiency and speed with which the money will be disbursed. One example is the component for export-oriented industries to cover workers' wages for three months.

Given the conditions for the release of funds from this pot (for example, workers need to have bank accounts), it is difficult to say how long it might take for money to reach the hands of the workers.

In the meantime, there are reports of a lay-off of workers. I wonder whether there is any way of knowing when the first taka from this fund has reached any worker.

In a situation where there is no hard data on the number of workers employed by an industry, fulfilling other conditions for the release of funds to meet their wages may not be easy.

A similar comment can be made about the funds allocated for loans to the micro and small enterprise segment.

How many such enterprises, especially those at the very small end of the spectrum (e.g., the self-employed or the tiny units with a few salaried workers), will even be able to submit an application meeting all the stipulated conditions is anybody's guess.

As for free food distribution and open market sales, the problems of implementation are no less serious.

On one hand, there is the issue of making the food grains available to the poor without compromising on the health requirements.

Although there were suggestions (including by myself) for arranging delivery of the relief to the doorsteps of the needy, media reports and images show either violation of the basic standards or people having to wait long hours for a bit of handout.

Also, there is the issue of the coverage of such schemes and whether all the needy are being covered.

While the standard approach in anti-poverty programmes is to use poverty mapping for targeting, one needs to understand that the present situation has created a large number of "new poor" who may not be confined to the so-called poverty-prone upazilas.

A much wider and more inclusive approach is needed.  

We also hear that "committees" have been formed to prepare "lists" of possible beneficiaries, and "cards" are going to be given. But one wonders when some actual help will reach the hands of the needy.

It seems that the authorities were caught unprepared. And much time is being lost in getting necessary preparatory work done.

One suggestion that came from outside the government (including from myself) was to provide cash transfer to at least that segment who may not be reachable through food assistance.

This group consists of not only the poor but also those who may have been just above the poverty line but may have fallen off the cliff because of the current crisis.

With a little innovation (e.g., the use of mobile finance) and effort, such a transfer could be made to get money quickly in the hands of those who are facing a precarious situation.

A back of the envelope calculation shows the following: (i) Taking into account the daily labourers and a part of those in the formal and informal sectors who are employed on a precarious basis, I estimated 2 crores to be in desperate need of cash at the moment.

If we assume that half the garment workers may have returned to work already, the above number would be 1.8 crores.

(ii) Using the 2016 poverty line (Tk 2,268 per person) and that each worker has to support a family of 4.06 (2016 survey), the total amount needed for a month would be Tk 9,208.

If one adjusts it for price increases during 2016-19, one would get an amount of more than Tk 10,000.

So, I would suggest a one-time cash transfer of Tk 10,000 per family. (iii) Depending on whether the number of target beneficiaries is taken to be 1.8 or 2 crores, the total amount needed to provide such one-time cash transfer would be between Tk 18,000 and Tk 20,000 crore, which is less than 0.80 per cent of Bangladesh's GDP.

This should be in the realm of feasibility of the government's budget.

Coming to the credit line, especially the one meant for the micro and small enterprises, the paperwork and conditions required should be kept as simple as possible.

There could be massive publicity (e.g., through electronic and print media) on how the necessary paperwork could be completed.

Furthermore, support could be provided by setting up cells in public sector banks and encouraging private banks to help micro-enterprises in this respect.

A mechanism could be developed to involve educated young people for assisting prospective applicants. The government's Youth National Service Programme could be mobilised for such support.

Before concluding this article, let me get back to the data issue. The last year for which LFS was conducted is 2016-17. And I don't know when the next survey will be carried out.

Whenever it is done, the results will reflect the situation at the time of the survey -- not what is prevailing now.

On the other hand, if there was a system of carrying out LFS every quarter every year, we could have had a picture of the situation in 2020 and compared it with that of the earlier years.

That would have enabled us to have a more accurate picture of the real impact of the present crisis on people's livelihoods.

My suggestion, therefore, would be to have a plan for carrying out LFS every year -- and preferably, quarterly every year.

That will enable our policymakers to monitor what is happening in the labour market on a more regular basis and adopt policies accordingly.

Likewise, other surveys, e.g., the one on manufacturing industries should also be carried out more frequently and results published quickly after the surveys are carried out.

Without good and up-to-date data, policymaking is bound to remain imperfect.

 

The author is a former special adviser to the Employment Sector of the International Labour Office, Geneva

Comments