Wealthiest 10pc holds 41pc income in Bangladesh

Income disparity in the country has reached new heights, with the rich witnessing a significant surge in their earnings. The top 10 per cent of the population now holds a substantial 41 per cent share of the nation's total income, while the poorest 10 per cent claims a mere 1.31 per cent.

It appears that income disparity between the rich and the poor has increased over the last 50 years as the income of the rich has increased significantly. This figure has emerged in the final report of the Bangladesh Bureau of Statistics (BBS) Household Income and Expenditure Survey 2022.

In the last ten years, the nation has experienced a notable surge in both economic growth and income disparity. This is evident from the latest Gini Coefficient Index, which stands at 0.499 points. Notably, countries surpassing a Gini coefficient of 0.500 points are classified as having high levels of disparity. Bangladesh now finds itself perilously close to this threshold.

The Gini coefficient is a widely utilised measure for assessing income inequality within a country. It was developed by the Italian statistician Corrado Gini in 1912. This method provides a quantitative measure of inequality, where a value of zero represents perfect income equality, indicating state of equilibrium. On the other hand, a Gini index of 1 signifies extreme disparity, with all income concentrated in the hands of a single individual. As the Gini index rises between these two extremes, it reflects a greater level of income disparity. This discrimination in Bangladesh is increasing day by day.

The per capita income in the country is around USD 3000. In 2015, Bangladesh achieved the significant milestone of being promoted from a low-income country to a lower-middle-income country. According to the United Nations, it is expected to graduate from the least developed countries (LDCs) to fully developing countries after 2026. However, despite the growing economy, there is a persisting imbalance in the distribution of income and wealth. This has led to the emergence of an extreme rich class, consisting of individuals who have amassed substantial wealth through both legal and illegal means.

Zahid Hussain, former chief economist of World Bank's Dhaka office, spoke to Prothom Alo about why inequality is going up. He said, the income of labourers working in the city has not increased much. Owners of land or assets are reaping the benefits of economic growth. Employment in the industrial sector has declined over the past six years. But during this period the highest growth occurred in the industrial sector.

Along with employment, wages are expected to increase, but it didn't happen, he elaborated.

He further noted that, this growth increased the income of the owners. Although they defaulted on the loan, they were exempted. Only the industrial owners got the tax benefits. Owners have generally benefited from government facilities. But the labourers received nothing. They have not benefited from growth. This stark disparity contributed to increased inequality.

As he said, many labourers lost their jobs in the cities due to Covid and moved to the villages. There they joined the low-wage agricultural sector. That also increased the inequality.

Only richest saw income growth

Household income and expenditure survey was conducted for the first time in 1973-74 fiscal in Bangladesh. According to the results of that survey, the richest 10 per cent of the country possessed 28.4 per cent of the country's total income at that time. The situation did not change much in the next 15 years. According to the fourth Household Income and Expenditure Survey of the fiscal 1988-89, the income of the richest 10 per cent rose slightly to 31 per cent of total income, and by 2010 it had further increased to about 36 per cent.

Subsequently, there has been a rapid increase in the income share of the wealthiest class of the country. For instance, in 2016, the top 10 per cent of the wealthy class possessed 38 per cent of the total income. This figure has now escalated to 40.92 per cent. Notably, within this group, the richest 5 per cent alone now holds nearly 30 per cent of the entire national income.

On the other hand, after independence, the share of the income of these poor people in the total income of the country was better than it is now. In 1973-74, the poorest 10 per cent had 2.80 per cent of the country's total income. In the next 10-12 years this share increased slightly. After that, the situation gradually fell. Now it has halved compared to that time. According to the latest Household Income and Expenditure Survey of 2022, the income of the poorest 10 per cent of people has decreased to 1.31 per cent of the total income. However, in 2016 it further decreased to 1 per cent.

The recent survey reveals that the wealthiest 30 per cent of the population receives approximately two-thirds of the country's total income. The remaining 70 per cent of the population shares the remaining portion of the income.

Planning minister MA Mannan told Prothom Alo, "At this stage of development, there is a slight increase in disparity, which has become a significant and underlying concern. Our approach to address this issue involves generating wealth, with the aim of subsequently ensuring that its benefits are shared by all individuals, irrespective of their economic status. This includes elevating the income of the impoverished, ultimately reducing inequality and alleviating poverty. We are actively advancing with this strategy."

Country nearing to high disparity

In the financial year 1973-74, the Gini coefficient of Bangladesh was only 0.36. In the fiscal 1988-89, it slightly increased to 0.37. This means that if poverty was high in the country at the time, income inequality was relatively tolerable. Inequality has increased the most in the last decade and a half. In 2010, the Gini coefficient index was 0.458. In 2016, it increased to 0.483 points. In the last year 2022, it increased to 0.499. A country is considered highly unequal if it reaches 0.500 decimal points. Bangladesh is now on the verge of becoming a country of high inequality.

According to economists, South Africa is identified as the country with the highest level of inequality. This is evident from its Gini coefficient index, which stands at 0.65. In contrast, Scandinavian countries such as Sweden and Denmark are recognised as leading nations in terms of having the lowest levels of income inequality. Their Gini coefficient index is approximately 0.30. Furthermore, countries like India, Vietnam, and Indonesia fall within the range of 0.40 to 0.45 on the Gini index, signifying a moderate level of inequality in these nations.