Rising inflation eats up wage gains
Wages have ticked up in Bangladesh in recent months, but rising inflation, fueled by internal and external factors, has eroded the gains for the workers in various sectors.
Wages grew 6.11 per cent year-on-year in December, according to the Wage Rate Index of the Bangladesh Bureau of Statistics (BBS). This is up from October's 5.97 per cent and November's 6.02 per cent.
But the positive growth is not providing much relief to the wage employees as inflation has been on the rise for several months, hitting household budgets.
General inflation rose to a 14-month high of 6.05 per cent in December last year, with non-food inflation reaching 7 per cent, a six-year high, and food-inflation to 5.46 per cent, the highest in six months.
"Overall, nominal wages have barely kept pace with headline inflation. There is no growth in real wages after accounting for inflation," said Zahid Hussain, a former lead economist of the World Bank Bangladesh.
"So, the only way workers were benefiting from the recovery is through growth in employment on which we have no nationally representative data."
The wage rate in almost all sectors is gradually picking up.
In the agriculture sector, where a vast majority of the workforce is employed, the growth stood at 6.24 per cent in December. The increase was 5.72 per cent in the industrial sector and 6.25 per cent in the service sector.
Mohammad Jashim, a restaurant worker in the capital's Farmgate area, says his salary has increased to Tk 14,000 in December last year, up from Tk 12,000 in 2019.
However, the same restaurant has cut the number of employees to 10 from 14 in the pre-pandemic period.
"The employment situation can't be determined by the wage rate data; only the status of currently employed people can be understood," said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.
"The real purchasing power has remained stagnant since the inflation rate and the wage growth rate are almost the same."
Prof Rahman says inflation in the rice and edible oil and the transport cost has been in the double-digit, hitting the low-income groups.
"So, they are suffering more."
The wage growth in the fishery, one of the agriculture's sub-sectors where a large number of workforce is involved, saw a paltry increase of 2.68 per cent in December, down from 5.67 per cent in December 2020.
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