Poverty rising instead of falling, middle class at risk

Although Bangladesh has shown success in reducing poverty over the past five decades, that progress has recently faltered. Poverty has started to rise again following the Covid-19 pandemic. For the past three years, high inflation has eroded people’s real income, pushing a large number of people below the poverty line.

At the same time, domestic and foreign investment has stagnated in recent years, leading to fewer new job opportunities. As a result, job seekers are struggling — a factor economists believe is contributing to the rise in poverty.

Abdus Salam, who works at a salon in Ashkona, Dhaka, lives in a small rented flat with his wife and two children. His monthly household expenses now total between Tk 25,000 and Tk 30,000. A year ago, the family could manage with Tk 20,000 to Tk 25,000 a month — just enough to scrape by. But with rising prices of essentials, it has become increasingly difficult for him to make ends meet.

So, Abdus Salam has decided to send his family back to their village home in Kushtia next month while he moves into a shared mess himself. His struggle to survive is getting harder. “For the past few months, I’ve been managing on loans,” he said. “Now I can’t keep up anymore. I have no choice but to send my wife and children back to the village.”

Like Abdus Salam, many low-income people are at risk of falling below the poverty line — and many already have. Even lower-middle and middle-class families are finding it hard to maintain their households.

Every year, the International Day for the Eradication of Poverty is observed worldwide on 17 October. This year, the day is being observed at a time when the World Bank and several local and international research institutions are reporting a rise in poverty rates in Bangladesh.

In 2016, the World Bank celebrated Bangladesh’s success in poverty reduction through a showcase program. The then-president of the World Bank, Jim Yong Kim, delivered a public lecture in Dhaka titled “Bangladesh in a World Free of Poverty.” But now, Bangladesh appears to be moving in the opposite direction.

According to the 2022 Household Income and Expenditure Survey (HIES) by the Bangladesh Bureau of Statistics (BBS), the poverty rate that year stood at 18.7 per cent. No new national survey has been conducted since then.

Recently, the Power and Participation Research Centre (PPRC) released a report titled “Economic Dynamics and Mood at Household Level in Mid-2025.” The study found that the current poverty rate in Bangladesh is 27.93 per cent, or nearly 28 per cent, based on research conducted in May 2025. Another 18 per cent of the population is at risk of falling into poverty at any time.

This means that over the past three years, the number of poor people has increased by 10 out of every 100. One in every four people in the country now lives in poverty. In comparison, the 2016 BBS survey estimated the poverty rate at around 24 per cent.

Similarly, the World Bank, in its latest report, stated that the poverty rate in Bangladesh was 20.5 per cent in the fiscal year 2023–24, rising to 21.2 per cent in 2024–25.

According to BBS standards, anyone unable to spend an average of Tk 3,822 per month on food and non-food items is considered below the upper poverty line. BBS also uses 119 indicators to measure poverty.

Former lead economist at the World Bank's Dhaka office Zahid Hussain said, “According to estimates by the World Bank, PPRC, SANEM, and other private organisations, poverty has increased since 2022. While the figures differ, all agree that poverty is on the rise. Even a minor shock pushes a large number of people below the poverty line. In Bangladesh, at least 100 million people are now at risk.”

He pointed to three main reasons for the rise in poverty: first, income has not increased at the same rate as the rise in prices, reducing living standards and pushing more people into poverty; second, job creation has not kept pace with demand and has even declined in some sectors — industrial employment, in particular, has not grown proportionately since 2016; and third, post-Covid, more people have moved into agricultural jobs during, which tend to offer low wages and have little impact on reducing poverty.

Rushidan Islam Rahman, former research director at the Bangladesh Institute of Development Studies (BIDS), told Prothom Alo that several recent studies have found evidence of rising poverty. The growing rate of educated unemployment has weakened the potential of education to reduce poverty, she said. Moreover, recent labour force surveys show that real wages in most professions have declined in recent years, including in jobs requiring higher education. So, the increase in poverty is not surprising.

After the independence, nearly half of the population in Bangladesh lived in extreme poverty during the 1973–74 fiscal year. The extreme poverty rate stood at 48 per cent, while 82.5 per cent of the total population lived below the general poverty line.

From the 1990s onward, successive governments implemented various poverty reduction programs, accelerating progress — especially after 2000. According to BBS data, the poverty rate was around 49 per cent in 2000. Over the next 22 years, it fell by more than half.

Despite the success in poverty reduction over the past five decades, the gap between rich and poor has continued to widen. According to BBS data, in 1973–74, the richest 10 per cent of people held about 28.5 per cent of the country’s total income, while the poorest 10 per cent held less than 3 per cent. As of 2022, the richest 10 per cent now control 41 per cent of total income, while the poorest 10 per cent receive only 1.31 per cent.

The Gini coefficient, a measure of inequality, now stands at 0.499. A value above 0.5 indicates high inequality — meaning Bangladesh is on the verge of becoming a highly unequal country.

The Gini coefficient measures income inequality in a country, where a score of 0 means perfect equality and 1 means one person controls all income. The closer the index gets to 1, the greater the inequality. In Bangladesh, this gap has continued to widen over time.

In recent years, the unemployment rate among educated people has remained high. According to BBS data, 13.5 per cent of university graduates are unemployed, while 7.13 per cent of higher secondary graduates are unemployed.

This means one in every five people with a higher secondary or university degree is jobless. There are now about 1.3 million educated unemployed people in the country, accounting for almost half of Bangladesh’s 2.62 million total unemployed — those who cannot find paid work even for one hour a week.

Those without formal education have the lowest unemployment rate — only about 1.25 per cent.

One example is Fahim Ibne Ahsan, who graduated from a private university in 2022. He has been unable to find a suitable job for two and a half years. He last worked at an event management firm but quit because of irregular salary payments. He has been unemployed for two months. “I want a job that suits my qualifications,” he said. “I’ve applied to several organizations, but I still depend on money sent by my family.”

Regarding this, Rushidan Islam Rahman said the high unemployment rate among educated people stems mainly from the lack of relevance in education and poor quality of learning. From the secondary level onward, curricula have not adapted to the needs of the modern job market.

Traditional rote learning continues, and flexible skills — essential for all kinds of work — are not being developed. The quality of education has declined at all levels, especially in higher education. As a result, there is a growing mismatch between employers’ demands and the qualifications of educated youth, she added.