With Covid-19 hitting the poorest hardest, we must help them recover

On May 23, 2020, The Economist magazine ran a story about the impact of Covid-19 on the poor people, with a title that anyone would have thought impossible just a few months ago: "Covid-19 is undoing years of progress in curbing global poverty." Before the coronavirus crisis, the number of extremely poor people was falling globally. Now it is rising again, and fast. The reversal of past gains in poverty reduction caught most low-income countries in a dangerously unprepared situation.

In Bangladesh, the situation was no different. Just before the Covid-19 outbreak, the Bureau of Bangladesh Statistics (BBS) published a report suggesting that both headline poverty and extreme poverty fell in the country at the end of the 2018-19 fiscal year. But the optimism did not last long. In an August 2020 report, the BBS revealed that between July 2019 and June 2020, the national poverty rate rose by 9 percent (from 20.5 percent to 29.5 percent). Put differently, some 4.45 million more people were pushed into poverty within a year. Needless to say, the Covid-19 pandemic has accelerated poverty. 

Thus, it is natural to ask how the lives of poor Bangladeshis were affected by the coronavirus. To shed light on this question, the Power and Participation Research Centre (PPRC) and BRAC Institute of Governance and Development (BIGD) have conducted a two-round survey with the title "Livelihoods, coping, and support during Covid-19." They have done a commendable job of surveying thousands of low-income households to determine the virus's impact on income, employment, and consumption—three major indicators of vulnerability to multidimensional poverty. The survey also sheds light on coping strategies of households facing an elevated risk.

The survey was conducted on 5,471 households, who are largely considered the poorest since their per capita income ranged from below Tk 2,585 to Tk 3,872 after adjusting for 2020 prices. Between February and April of 2020, the per capita daily income of people living in urban slums declined from Tk 108 to Tk 27 (an 82 percent drop). The decline was relatively higher for households above the poverty line. The income recovered somewhat by June 2020, showing a 43 percent drop in daily income (from Tk 105 to Tk 60) between February and June. Interestingly, daily incomes of households below the poverty line and inhabitants living in the Chittagong Hill Tracks (CHT) have been relatively less affected by the Covid-19 pandemic. One possible explanation for this difference is that the incomes of these households are less correlated with the overall economic activity.

Life at the bottom is very Hobbesian, where people go from having an income to having no income almost overnight. A few days after the lockdown started in late March, those with jobs most vulnerable to coronavirus suffered the biggest income drops. The income of restaurant workers dropped by 99 percent, followed by bhangari workers (88 percent) and rickshaw pullers (84 percent). Farmers and RMG workers too suffered income losses, but they were relatively less severe. Alarmingly, the PPRC-BRAC survey shows that non-poor households are sliding down the poverty ladder too.

The depth of a crisis is best depicted by the rise of food poverty, when less income often means less food. Between February and June, per capita daily food expenditure declined from Tk 60 to Tk 45 for urban households (a 25 percent drop) and from Tk 52 to Tk 37 for rural households (a 29 percent drop). The rather less contraction in consumption expenditure than income is what the economists call "consumption smoothing," drawing down savings or borrowing money to cover income shortfalls. However, the relative resilience of consumption over income is no sign that all is well. The survey found that in June, between 10 and 15 percent of the extreme poor living in Dhaka's urban slums were eating less than three meals a day. Consumption of meat and milk fell sharply across all income groups, while thanks to the rise in fish production, consumption of fish combined with lentils has been the primary source of nutrition for a good chunk of the population. It is common knowledge that poor people around the world eat badly; the Covid-19 crisis has just heightened food insecurity among the poor.

In normal times, members of a household would work extra hours as a coping tool for lost income. But when restaurants are empty, waiters are unwanted, and foot traffic is down in response to virus infection, the demand for rickshaw pullers and street hawkers shrinks to its lowest level. Amid this chaos, the poorest section of society has been relying upon their savings, borrowing or buying groceries on credits, and most damagingly, cutting down on daily food intake. It is no surprise that, compared to personal coping mechanisms, supports from the social and institutional sources (e.g. help from friend/neighbour, NGO, or government) to attenuate the effect of adverse shocks on food expenditure were limited.

The daily lives of the working poor would be a lot easier had they not have to worry about non-food expenditures before things return to normal. The survey results show that the poor have to equally grapple with the costs of housing, doctors and medicines and utility, among other non-food expenditures. The severity of the chronic disease burden, especially in the CHT, is problematic and demands immediate attention.

Migration as a coping and adaptation mechanism responds to both push and pull factors. In the context of the Covid-19 outbreak, their positions have since been reversed. Between April and June, around 15 percent of households fled Dhaka for another district after losing their income (a push factor), which is one of the many ways to cope with shocks (a pull factor). We had seen what happened to tens of millions of migrant workers in neighbouring India when the Modi government imposed a strict and rather dramatic lockdown on March 24. Fortunately for the poor in Bangladesh, the lockdown here was implemented with less stringent rules. 

The survey also questioned respondents about their perception of the decision to withdraw the lockdown. Not surprisingly, over 70 percent of the 5,471 households have a favourable view of the government's decision to lift the coronavirus lockdown. Though it will take longer for life to return to normal, many have become pessimistic about the outlook of future income. The occupation disaggregation indicates that unskilled labourers, small business owners, housemaids, and unemployed workers were the most pessimistic about prospects for their own future.

Overall, the PPRC-BIGD study finds that the economy is still in a fragile recovery phase with symptoms typical of a crisis-struck economy: depressed income, high food insecurity, a large number of vulnerable informal workers, and a lot of new poor. The report makes some specific policy suggestions to restore livelihoods and hope for a life beyond the pandemic. 

The best antidote to poverty is a much faster economic growth. For growth to regain pre-crisis level and to continue, Bangladesh needs "the invisible hand of free markets and the visible hand of good governance" (in the words of Amartya Sen). With the right policies, the economy can recover surprisingly fast, but the poorest will need help.

Syed Basher is a professor of economics at East West University. Email: syed.basher@ewubd.edu