Job creation and income growth

The issues of job creation and income growth for all segments of the society amid the recovering process of the economy rest primarily on the government– although the lion’s portion of jobs is created by the country’s private sector. Except for government servants, almost all strata of the population have been reeling either from jobs losses, or income erosion amid the pandemic. Agricultural labours, corporate jobholders, small traders, large industrialists—all are still in disarray. The pictures of unemployment, price pressures of essentials, and strain of negative income were partially unveiled on Monday in a study conducted by a think-tank organization. The study called for policy interventions by the government to fix the problem in the economy.

The study conducted by the Centre for Policy Dialogue (CPD) recommended that the government should take on more rural development projects for generating jobs and addressing vulnerabilities in the labour market. The study, carried out among 2,600 households in rural and urban areas from late January to early February this year, revealed that most of the respondents managed to find jobs after economic activities resumed, but they suffered income erosion. Providing a few more details, economist Mustafizur Rahman said, “More than 40 per cent of the employed population reported that their employment situation was worse compared to the pre-Covid-19 period. About 45 per cent of households had lower income compared to that period as well.”

First comes the pressing issue of reverting the income level to pre-Covid period, income growth, and then the issue of job creation for unemployed people and job seekers. For those who were rehired, their salaries cannot be increased overnight as employers are yet to get firm footings. In this particular area, countries like Bangladesh are not in a position to compensate those who are the victims of eroded income from an annual budget or allot fresh allocation as the government too suffers from lesser revenue earning than expected. In this connection, low-cost loans for the victims could be an option, while policy intervention to boost demand will have a positive outcome on local industrialists which will result in more market competition, more profit, and more salary expense.

According to the Bureau of Statistics, the national unemployment rate in the country is 4 per cent, while 14 per cent rate applies to educated youths. The farm economy keeps growing thanks to the daily food intake demand of the country’s huge population. As the costs of farm inputs and transportation have increased significantly due to the recent fuel price escalation, prices of agricultural produces also saw a hike, putting extra pressure on low-income groups.

While the economists called for development projects in rural areas for job creation and income generating opportunities, it is time for the government to look into the plight of educated youths in both rural and urban Bangladesh. Patronizing industrialists with policy support on both monetary and fiscal fronts is the key to getting rid of the grim situation of joblessness for educated youths. If demands for manufactured products are not increased, factory expansion will not take place. To increase the demand for all types of consumers, a pragmatic mechanism is needed so that enough liquid money is in the hands of people to buy and to spend more. Target vulnerable groups in this regard could be allocated cash incentives.

Good employers could be awarded by the government; businesses that did not cut jobs during the Covid-19 may be provided with tax incentives, and new ventures might be encouraged by offering ready infrastructure.

To create jobs, it is policies that are more required than extending cheap money. To augment the income growth of service holders and those involved in farm activities, boosting consumer demand is through policy interventions is of paramount importance.

For a faster economic recovery, the government needs to go deep into the problem. Only fixing the surface level deterrents to the economy will complicate the ailment further.