Interview

Rural economy will face added pressure: Sayema Haque

Sayema Haque
Sayema Haque

Sayema Haque Bidisha is a professor of economics at Dhaka University, with a PhD in labour economics from Nottingham University in the UK. In an interview with Prothom Alo, she speaks about people losing employment during the coronavirus pandemic, their return to the villages, and the state of the labour market.

According to Bangladesh Institute of Development Studies (BIDS), 13 percent of the people have lost their employment due to the coronavirus pandemic. Professor of economics at Dhaka University, Sayema Haque, said that their research also showed that people had lost, and are still losing, their employment. The process continues. It may be 13 percent now, but if the coronavirus situation doesn’t improve, it might get worse, she said.

“In our country, 85 percent of the employment is in the informal sector,” Sayema Haque pointed out, adding that their research indicated that hotel, restaurant and tailor shop employees, construction and agricultural workers as well as domestic help had lost a major means of earning. Many of them had sunk below the poverty line.

Responding to a question on what could be done to identify and assist these people who were suddenly plunged into poverty, the economist replied that the first thing was to immediately identify them and draw up a list. It would be difficult to do this in the conventional way and so a method would have to be devised so that these people without work would come forward on their own accord to be enlisted.

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A hotline could be set up for the purpose and the government’s ICT division could assist in this regard. National ID cards would be used to verify information. Various organisations like the shop owners association or the labour organisations could be approached for assistance in this connection. Then NGOs who work with such people, can also be involved in this task. The list may not be fully accurate, but it can be as near accurate as possible.

How do things look about these people, who have lost their means of income, regaining employment in the days to come?

Sayema Haque said that the private sector had been hit hard and it did not seem likely that they would be getting loans either. That means there would be no speedy solutions. There was a crisis of demand in the local market. She explained that there were certain businesses like beauty salons and restaurants that may not be essential, but had a demand during normal circumstances. Large numbers of low-income people were employed in such sectors. Many of them had lost their jobs. And unless things returned to normal, the demand for these services would not arise.

Then again, she continued, global recession would deal a blow to exports. That would mean workers being laid off in the export sector. If orders don’t come in, businesses would shut down. The environment was not conducive to risking investment in new ventures. It did not seem that there would be any improvement in the situation in the near future.

Many children, who attended school in the cities, were going to the villages with their families. The rural schools were not of the same standard. This would have a negative impact on education. There would be more school dropouts, particularly among girls. Child marriage might increase. The young boys and girls going back to the villages would face social dilemmas. It would affect their mental health.

Commenting further in the depth of the impact the COVID-19 pandemic was having on employment, economist Sayema Haque said that most companies had started working from home. Three persons were doing the work of five and that meant the possibility of two persons losing their jobs.

Coronavirus would lead labour-intensive industries towards automation. That would put pressure on employment. She said that the use of machinery has already started in agriculture and COVID-19 would accelerate this. That is why it was important to focus on increasing workers’ skills. And there was also need to address the skill mismatch which existed in educational institutions and industrial organisations.

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Commenting on the impact on rural economy, Sayema Haque said people were now returning to the villages, after losing work in the cities. Returning to the village meant saving on their house rent and other daily expenditures. There were the safety net programmes in the villages too. Returning to the villages seemed the best option at the moment.

Some of these persons, back in the villages, may want to get involved in agriculture and that would mean an increase in agricultural labour. This, in turn, could lead to a decrease in wages. Again, remittance from migrants was an important part of the rural economy. In all likelihood, this too would drop. That mean productive work in rural economy would decrease. So the influx of people returning to the villages from the cities could put pressure on the rural economy.

As for the social impact, the DU professor felt this would be felt significantly on education. Many children, who were attending school in the cities, were going to the villages with their families. The rural schools were not of the same standard. This would have a negative impact on education. There would be more school dropouts, particularly among girls. Child marriage might increase. The young boys and girls going back to the villages would face social dilemmas. It would affect their mental health.

Would there be no positive impact of this return to the villages? Sayema Haque responded that circumstances were forcing the people to return to the villages. It would be positive if we could make the villages an attractive alternative. That would call for developing education, infrastructure, recreation and other facilities in the villages. With the districts at the centre, if rural-based employment could be generated, many would be eager to stay in the villages. Decentralisation was an important factor in this regard.

She elaborated, many may not be eager to be directly involved in agricultural labour, but initiative could be taken to generate agriculture-based industries, marketing, supplies and other technological work. Rural investment and loan facilities must be put in place.

In the meantime, migrant workers are being forced to return. Many of them may not be able to go overseas again. A large chunk of them will return to the villages. Faced with this observation, Sayema Haque said that indeed, many of these migrants are sending back their savings home and are returning for good. Oil prices are plummeting and global recession was setting in. That will have a negative impact on remittances. The government can arrange low-interest loans so that those who want to return to the villages and get involved in agriculture, can use their savings along with and these loans to set up farms or any similar ventures.

It is possible to arrange the funds by curbing the ADP and the government’s operational costs. The training programmes and bonuses of government officials can also be cut down.

Concerning the government’s initiatives to address the overall predicament of the economy, the economist pointed out that the government had declared a Tk 200 billion (Tk 20,000 crore) stimulus package for small and medium enterprises. It was important to ensure they could access this easily. Stimulus must be available on very easy terms and at absolutely low interest rates. This was particularly important for small enterprises. She said various sectors outside of the banking sector would have to be involved in this because the banks may not see such financial management as profitable.

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There were many creative measures that could be taken, Sayema Haque elaborated, such as decreasing rent of the outlets in the shopping malls, cutting electricity bills, reducing duty and taxes in various stages of marketing, and so on. This will relieve businesspersons of the pressure. Startup capital can be arranged for young entrepreneurs.

There is talk about providing cash assistance to those who have become poor and unemployed. There is talk about stimulus packages and loans for micro, small, medium and all sorts of businesses and entrepreneurs. Can the government afford all this?

The main focus should now be on health facilities, food security and employment. This requires funds. Where will this come from? The projects which are not very important can be halted for the moment. It is possible to arrange the funds by curbing the ADP and the government’s operational costs. The training programmes and bonuses of government officials can also be cut down. The government’s stimulus packages can be reviewed quarterly to identify problems in implementation so these can be resolved. The government alone cannot do everything. Help may be taken from NGOs, development partner countries and donors agencies.

About how to bring about coordination in all the tasks to be undertaken and all the players to be involved, she suggested an inter-ministerial committee be formed. And, she added, the private sector, NGOs, researchers and the civil society should be brought into the process. These are special circumstances calling for special initiatives, outside of the conventional system.