The Centre for Policy Dialogue (CPD) has recommended increasing the minimum wages of workers in all industries to ensure at least their ability to afford basic foods as double-digit commodity price hikes are compelling them to seriously compromise their standard of living.
The Minimum Wage Board should consider increasing the minimum wages and the private sector corporations should consider at least a special increment, says CPD Research Director Khondaker Golam Moazzem.
CPD made the recommendations while presenting its proposal for the national budget of FY2023-24 at a press conference, titled “Weathering the Storm, Containing the Risks,” at its office in Dhaka’s Dhanmondi on Monday.
It said that although consumer goods prices are declining in the global market, they are continuing to rise in Bangladesh due to the weakness in the market mechanism.
That is why inflation is now the main risk for the country and food expenses went up over 25 per cent in the past year, it added.
CPD calculated that in February 2019, the average monthly food expense for a household of four individuals in Dhaka city was Tk 15,705 for a regular diet, including meat and fish. However, without meat and fish, the amount for the compromised diet was Tk 4,712 at the same time.
After five years, the amounts increased by 44.31 per cent to Tk 22,664 and 51.33 per cent to Tk 7,131, respectively, in February 2023.
Meanwhile, the price hike was 25.11 per cent for a regular diet and 25.37 per cent for a compromised diet in February 2023, compared to the same month of 2022.
Fahmida Khatun, executive director of the local think-tank, said the cost of living has increased rapidly as a result of these price increases, causing immense suffering to low-income and fixed-income households.
CPD also showed that apart from imported goods, the prices of domestically produced goods are much higher in Bangladesh than in the international market.
In this case, the prices of sugar, soybean oil and beef were analysed by CPD researchers.
In January this year, the price of beef in the international market was below Tk 500 per kg, but in Bangladesh, it was above Tk 700.
While the price of white sugar was less than Tk 60 per kg in the global market, it is being sold at over Tk 120 in Bangladesh. The price of soybean oil per litre was below Tk 100 in the international market, but here, it was more than Tk 150 in January.
Moazzem said although the Russia-Ukraine war is blamed for the inflation in Bangladesh, that is no longer the cause. “Product prices are increasing due to internal weakness. No mechanism is working in the market. The influences of large players have increased in the market.”
What can be done?
In this context, CPD made several recommendations, including increasing the tax-free income threshold for individuals and spreading the government’s social safety net programmes.
The tax-free income threshold for personal income should be raised to Tk 3.50 lakh given the added pressure of the rising food inflation and income erosion induced by the Covid-19 pandemic, it said.
The next slab for personal income tax, which is 5 per cent for an additional Tk 1 lakh, should be increased to Tk 3 lakh to provide a cushion for the people of the middle-income group, it added.
The volume of essential commodities sold through the open market system should be increased and the government should set higher targets for food grains procurement and food distribution programmes. To this end, adequate resources should be allocated to the FY24 budget.
Furthermore, the distribution of these commodities must be managed efficiently and without corruption so that only the eligible can obtain the essential items at lower prices, the research organisation recommended.
It also urged to strengthen the Competition Commission’s role to ensure fair competition in the market and required skilled professionals should be hired to this end, particularly to monitor markets for essential commodities regularly.
The commission should create a database, monitor the operations of prominent market players regularly, investigate market control and manipulation (if any), and take appropriate actions. An adequate budget should be earmarked for the commission to perform these duties.
CPD also suggested that the government should continue providing stimulus to small and medium enterprises to help them survive the difficult times. The government should also extend the scope of direct cash/kind assistance programmes for low-income population groups.