• Monday, Jul 04, 2022
  • Last Update : 04:24 pm

From economic losses to social costs

  • Published at 07:34 pm April 11th, 2020
What is the world’s priority now? Photo: BIGSTOCK

All that Covid-19 is doing to us, sometimes in ways we cannot count

Most countries around the world have completely shut down to contain the community transmission of Covid-19. Many of us are working from home. But the nature of many tasks/ jobs does not allow the luxury of being at the safety. 

People involved in the supply chain of daily necessary goods, health care, law enforcement, and aid works must continue working, and thus remain in risk. 

In this shutdown situation, even though safe from the apparent dangers of virus infection, the informal sector workers such as day labourers, rickshaw-pullers, hawkers, transportation workers, petty business owners, etc are in extreme vulnerability.

The situation is appalling, as they are completely out of work, which means they do not have earnings upon which they can survive on a daily basis. Salaried employees or businessmen would never be able to imagine the dire consequences of the shutdown on the lives of the people who are not on payrolls. 

According to the latest economic census of 2013, in Bangladesh of the 60.83 million employed population, more than 85% or 51.73 million are employed in the informal sector. Considering the financial losses, the government and many voluntary organizations are providing food aids so that the vulnerable groups could withstand the immediate shock of Covid-19. 

But this economic setback will surely take a toll on the poverty situation of Bangladesh. 

In addition to affecting the informal sectors, the Covid-19 pandemic will severely affect the two other pillars of our economy. Work order for our garment industries have dwindled. Since the outbreak, $3 billion worth of orders have been cancelled or put on hold.

Similarly, the income of the migrant workers abroad has plummeted. The Bangladesh Bank revealed a reduction of 12% in remittance inflow during March compared to February. These adverse effects will only increase with economic recession following the pandemic. Thus, millions of families of the garment workers and migrant workers will be facing an economic catastrophe. 

The current poverty reduction rate in Bangladesh stands at 1.2%. It has been continuously decreasing since FY2000-01, when the rate was 1.8%. This trend of declining poverty reduction rate will be aggravated due tothe  Covid-19 shutdown. 

Asian Development Bank has predicted that Bangladesh will lose upto 1.1% of its GDP if the crisis lasts for six months. This will have substantial impact on the poverty situation in Bangladesh. 

According to estimates of IFPRI, if an economy slows down by 1%, it will increase the number of poor people -- the number of food insecure people -- by 2%. Thus, there will be an additional 0.5 million poor people in Bangladesh in the post-Covid-19 scenario on top of 22 million people who currently live under the poverty line according to the World Bank. 

The economic fallouts will incur severe social costs by escalating extreme poverty, Violence Against Women (VAW), dowry, child marriage, child labour, and school dropouts. For instance: NGOs working at the frontlines are finding evidences that informal lending, mortgage, and advance sale of labour are surging up as an effect of the ongoing shutdown, which in the long run might force families into extreme poverty. There are other social consequences that we must look to keep in check. 

During the shutdown, VAW has spiked in every coronavirus affected country. Post-shutdown economic crisis of the households may intensify VAW in Bangladesh. During the shutdown, most of the physical and mental torture of women is prone to happening inside the home. 

Brac data on VAW shows, during March, 71% of the perpetrators are family members of the victims. In a debt-ridden context, violence might occur because of disagreements on decisions about selling of assets or for dowry. 

In China, according to reports of Bloomberg, divorce and destitution of women have risen amidst the pandemic. We must, therefore, be aware of the possible social costs that might ensue as we go ahead facing Covid-19.

Once the immediate threats of Covid-19 are over, the economic shock induced poverty might fuel the menaces of dowry, child marriage, and other associated social risks. We already have an alarming indication, Brac’s Community Empowerment Program (CEP) that tracks VAW identified dowry as the leading cause of VAW during March 26-31. 

Christopher Tomlinson in 2010 showed that the practice of dowry is intricately connected with the extreme poor groups. In arranging dowry, families generally take loans or sell household assets. The extreme poor groups also resort to informal creditors and force child labour.

There have always been links between extreme poverty, child marriage, and dropout from schools. Therefore, we might experience a comeback of the vicious circle of poverty.

How can we minimize the possible social costs that are looming ahead of us? As the Covid-19 is still emergent, one solution could be to financially help the most needy in a comprehensive manner. 

Rashed Titumir and Esther Duflo and Abhijit Banarjee in two recent op-eds suggested taking up a policy to provide basic income grants or bolder social transfers for the poor. In this regard, the government could use the database of National Identity Cards. This will also lessen the overhead cost, disorganization, and corruption in aid distribution typical of bygone post-disaster situations.  

The basic income, if ensured, will increase purchasing capacity of the poor, thus stimulating local businesses to recover from Covid-19 impediments. To provide the basic income of Tk15,420, the average household consumption expenditure as per the latest Household Income and Expenditure Survey, the government can raise funding from the Social Safety Net Programs and other unwarranted expenditures like purchasing cars for the UNOs as Rashed Titumir has pointed out. 

One may argue, the provision of something like the Universal Basic Income (UBI) will make people lazy; contrarily, I think, once the basic income is guaranteed people will be open to try new livelihood options and become entrepreneurs. 

Hence, new avenues of development will be generated. Nevertheless, emphasis on the basic income grant during this crisis is particularly important to keep running the economic activities of the informal sectors. This will work better than the trickle-down approach that guides public investments only into the formal sectors. 

The pandemic situation is an opportunity to experiment with something like the UBI system. The government should try out the UBI scheme to halt the social costs, otherwise the development progression of the post-Covid-19 Bangladesh will be in jeopardy.

Mohammad Tareq Hasan is an anthropologist and teaches at the University of Dhaka.

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