Wage rate ticking up
Workers in Bangladesh remain making do with lower wages compared to the pre-pandemic level as the ongoing monetary growth has not translated into higher incomes for them in a significant way.
Wages grew 6.03 % year-on-year in October this season, in line with the Wage Rate Index of the Bangladesh Bureau of Statistics (BBS). This is up from September's 5.95 per cent and August's 5.91 %.
However, October's rate was less than the pre-pandemic degree of 6.51 % in February and 35 basis points below than in the same month this past year.
In the agriculture sector, in which a vast majority of the workforce is utilized, wage growth stood at 6.24 % in October. It had been 6.65 per cent in February this season and 6.5 % in October last year.
Industrial sector personnel saw the slowest increase among the three broad sectors: it was up 5.51 per cent, down from 6.51 % in February and 6.08 per cent in October in 2019.
This reflects that the country's commercial sector continues to be struggling to overcome the impacts of the crisis regarding sales drop.
Regardless of the reopening of the economy since June, the services sector, which makes up about more than 50 % of the gross domestic product, has not received the momentum as the deadly flu is still triggering significant infections and killing persons albeit at less rate.
Workers in the sectors saw their wages rise by 6.05 % in October, down from 6.53 per cent in February and 6.43 per cent in October last year.
"People's real income has truly gone down due to higher inflation," said Zaid Bakht, a former research director of the Bangladesh Institute of Development Studies.
Inflation rose to 6.44 % in October, the best in at least five years, driven by a sharp increase in the price of foods, data from the state-run BBS showed on Wednesday. Within the industrial sector, the wage growth in the construction sub-sector slowed to 4.53 % from 4.80 per cent in February.
Similarly, it was 7.25 per cent in the manufacturing sector, down from 8.46 per cent in February this year and 8.32 per cent in October last year.
"There has been no demand for employees in the informal sector as well," said Bakht, the chairman of Agrani Bank. Of the full total workforce in Bangladesh, 85 per cent operate in the informal economy.
Many families in Dhaka city have stopped employing housemaids since the pandemic hit the united states in March in order to avoid catching the virus.
One of these is Manjurul Karim, who lives in the city's Azimpur area. "I can't take the chance as both we am diabetic," said the 55-year-old private sector employee.
Selim Raihan, a professor of economics at the Dhaka University, said the wage rate growth has declined from the pre-Covid period. However, there is inflationary pressure.
"Subsequently, the nominal wages are failing to catch up and our real wage is falling. This implies, the true purchasing power of the persons is falling."
Citing a survey of the South Asian Network on Economic Modeling (Sanem), where he is the executive director, Prof Raihan said the study of 502 manufacturing and service sector organizations showed that there has not been much improvement in the wage.
The wage rate growth was the cheapest in Sylhet Division at 5.7 %. It was 5.76 % in Dhaka, 5.87 % in Chattogram, 6.2 % in Rajshahi, 6.07 % in Khulna, 6.09 per cent in Barishal and 6.95 % in Rangpur, BBS data showed.
The wage growth slowed to a five-year low in the just-concluded fiscal year driven by the income loss in the manufacturing and services sectors in the fourth quarter of FY2019-20.
General wage grew 6.35 per cent in FY2019-20, which was 6.4 per cent a year earlier, based on the Wage Rate Index. This is the cheapest wage growth since fiscal 2015-16.
