Job loss for Covid much severer than what was estimated in budget

TBS Infograph

Finance Minister AHM Mustafa Kamal in his FY21 budget speech estimated that the pandemic might jeopardise only 14 lakh jobs in Bangladesh, although, by the time, more than five crore people in the country's informal sector were feared to have lost jobs.

Around four months into the budget announcement, the Bangladesh Bureau of Statistics revealed that the number of pandemic-induced job losses during the 66-day countrywide shutdown last year – was 2.43 crore. Before that, several research organisations predicted that more than 2 crore people would lose jobs under Covid-19 impact and 3 crore people would become "new poor".

The government had formulated the budget with the anticipation that the pandemic situation would return to normal by September 2020 and there would not be any retrenchment of workers in the private sector because of stimulus packages given to it. 

In FY21, Tk2,000 crore was allocated to distribute loans toward creating employment for youths and the rural poor and to rehabilitate returnee expatriates hit hard by the Covid-19 pandemic.

This time as well, the finance minister is likely to tread a similar path – nothing extra in the upcoming budget for FY22 to create employment, according to officials at the finance ministry.

The government and private research firms do not have any data on how many people are losing jobs anew during the ongoing lockdown. In this backdrop, the finance minister is going to announce the next fiscal year's budget on 3 June.

Probashi Kallyan Bank, Karmasangsthan Bank, Palli Sanchay Bank and the Palli Karma Sahayak Foundation (PKSF) got Tk500 crore each from a revolving fund to lend to jobless youths and returnee expatriates. The Palli Sanchay Bank could not disburse 100% of its funds.

Karmasangsthan Bank is also giving loans for employment generation from another Tk1,200 crore fund.

Besides, in the middle of the current fiscal year, the government also allocated a Tk1,500 crore fund to disburse microcredits among marginal people for employment through eight NGOs. But only Tk530 crore has so far been released.

Apart from this, jobs for more than four lakh people were supposed to be ensured in infrastructure development projects around the year, but it did not happen as only less than half of the Annual Development Programme was implemented in 10 months of the current fiscal year.

During this time, hiring in the public sector also came to a standstill.

Fahim Mashroor, chief executive officer of bdjobs.com, told The Business Standard that job postings on its platform recovered to the pre-pandemic level in the last quarter of 2020, with the pandemic situation having come under control. The number of job adverts again came down to half after the second wave.

The same is true of government jobs. With a fall in Covid-19 infections, the recruitment process in government jobs had resumed. Recruitment tests for various vacancies, including the 41st BCS preliminary examination, had begun. But all have been suspended again in the second wave.

As a result, the number of jobs that are created in the public and private sectors every year did not happen.

According to various research institutes, most people who lost jobs during the countrywide shutdown last year returned to work although at lower wages. Many of them again lost jobs during the ongoing lockdown enforced on 5 May to deal with an alarming spike in infections. Many people along with their families are leaving Dhaka.

Economists and businessmen say about 20 lakh young people enter the job market every year. Of them, 12-13 lakh get employed in the public and private sectors. And, 5-7 lakh people go abroad for work.

The usual opportunities for employment have hit a snag in the pandemic year. The number of returnee migrants is increasing alongside a reduction in new employment opportunities abroad.

The amount of investment that comes in normal times from private and foreign sources have dried up.  As a result, new employment opportunities have not been created in sectors other than e-commerce.

The Eighth Five-Year-Plan targeted 14.3 lakh domestic and 5.8 lakh foreign jobs in the current fiscal year, which is impossible to attain against the backdrop of the current situation, said Shamsul Alam, member, the General Economics Division of the Planning Commission.

He told TBS that the target of creating 20.1 lakh jobs at home and abroad was estimated with a 7.4% GDP growth. But employment generation would not be close to that since the growth in investment and production in the private sector would be less this year.

Referring to their research findings, Executive Director of the South Asian Network on Economic Modelling (Sanem) Dr Selim Raihan said the reality is that a large section of the population engaged in the informal sector had lost their jobs and slipped into poverty. Although the government provided stimulus support to protect employment, the current budget did not have any measures for new job creation.

Dr Selim Raihan said although incentives were given as staff salary to retain jobs in the readymade garment sector, not all apparel makers got the facility. Besides, some factories laid off their employees in spite of getting the incentive.

He suggested allocating more in the next budget with specific priority on job creation.

Centre for Policy Dialogue (CPD) Research Director Dr Khondaker Golam Moazzem said the private sector plays a crucial role in job creation.

He commented that employment generation was affected severely since the pandemic dealt a severe blow to the private sector, especially the labour-intensive small enterprises.

The CPD research director noted that export earnings, private sector credit flow, term loan disbursement, and foreign direct investment (FDI) data have also clearly demonstrated the weak state of private-sector jobs.

"Some jobs are also created by the government through direct recruitment and implementation of the infrastructural development projects. But it is disappointing that even half of the ADP could not be carried out in the first ten months of the fiscal year due to the stalled mega-projects. Moreover, public recruitments also got stuck due to the pandemic crisis," he added.

What was in the budget, how's the execution?

The finance minister prepared the last budget speech by putting job creation at the top of his four priorities. He promised to set up new district-level technical training centres to modernise businesses and investment, and to increase efficiency to boost employment in the industrial sector.

"Rural infrastructure development will provide employment to more than four lakh people and also generate more jobs for others," the minister said in his budget speech.

Finance Minister Mustafa Kamal kept aside Tk290 crore for the technical training centres in 23 districts. But the allocation was trimmed to Tk60 crore in the revised ADP as the execution failed to pick up the pace. With an estimated cost of Tk3,691 crore, the training centre project, which was taken up in 2018, has so far been able to spend only Tk178 crore.

In the next budget, the project gets a Tk160 crore allocation. The training centre project is on the priority list of the government's skill development and job creation scheme.

With a total cost of more than Tk5,900 crore, another development project across the country outside the city corporation areas could spend only Tk71 crore against the annual allocation of Tk200 crore. The spending is only 35% of the allocation.

Similarly, other infrastructure development works, and employment and skill development projects in rural Bangladesh are witnessing heavy-footed progress.

Economist Dr Zahid Hussain thinks job creation did not get much importance even though the budget claimed to emphasise employment generation.

"There will not be much employment generation unless the pandemic subsides. So, the health sector should get the highest priority. Technology and technical skills will play a big role in the future of competition. So, the education sector also demands priority," he noted.

Besides, he advocated investments for ensuring compliance with health guidelines and bringing workers under the mass inoculation campaign.

The economist said these most important health issues are not among the top three ADP recipients.

Overseas employment dull too

Only 2.17 lakh Bangladeshis migrated last year, while the figure in 2019 was more than 7 lakh. Not a single worker could go abroad in April-June last year.

In July, the overseas labour market started to reopen and only 16 Bangladeshi workers went abroad.

In the first eight months of the current fiscal year, 1.21 lakh workers left for overseas jobs. After about 50,000 migration in February, the second wave of the pandemic hit the country stopping the labour outflow.

Shamim Ahmed Chowdhury Noman, secretary general of the Bangladesh Association of International Recruiting Agencies (Baira), said several lakh people could not go abroad last year despite being ready. The second wave of the pandemic in the country has started to worsen the situation that had started to improve earlier this year.

Noman said Saudi Arabia – the major overseas labour market for Bangladesh – has imposed a 14-day quarantine on entry, while airfares are rising too. This costs an additional Tk1.5 lakh per worker, and job seekers will have to bear it.

He also commented that there will not be any good news for expatriates before a credible mass vaccination at home.

'No special job creation measure in upcoming budget'

Neither the government nor the private research firms have the exact information about how many people have lost their jobs during the pandemic. The finance minister will be announcing the next budget on 3 June without any specific job loss data in hand.

So the new budget is not likely to have any special measure to create employment, said finance ministry officials who are privy to the budget.

The officials said the upcoming budget will have an allocation of Tk2,000 crore for job creation like FY21.

Besides, the unspent allocation of Tk970 crore meant for micro-credit distribution by eight institutions will be added to the new budget in employment spending.

The ministry officials said most of the government announced stimulus packages amounting to around Tk1.15 lakh crore for three years. The size of the stimulus funds will increase if the appetite for credit grows. On top of this, the time for the fund will also get an extension if the pandemic lingers.

But the new budget is less likely to have any new incentive. If required, the government will provide cash aid for the unemployed similar to the one in the current fiscal year.

According to the latest labour force survey, 27 lakh people were unemployed in the country before the pandemic. In September last year, the BBS said the unemployment rate during the 66-day countrywide shutdown had increased ten times – which means the number of unemployed surged to 2.70 crore.

People who did not lose their jobs last year, however, had to reduce their spending as their income had shrunk.

The bureau, however, said other workers except day labourers managed jobs by September 2020.

The Bangladesh Institute of Labour Studies, a non-government labour organisation, estimated that 1.11 crore to 2.05 crore people became unemployed in the country in the first wave of the pandemic.

According to the CPD, more than 61% of the total population was unemployed at some point during last year's shutdown. They had been unemployed for an average of three months and could find work after six months of joblessness.

A joint study by the Brac Institute of Governance and Development and the Power and Participation Research Centre found that 17% of people, who had jobs before the pandemic, were unemployed in June 2020. The two institutes claimed that the unemployment figure dropped to 8% in March this year.