The number of poor people in the country declined by 26% in 10 years, according to a World Bank assessment.
Bangladesh experienced a uniform and steady decline in poverty rates between 2000 and 2010. Poverty declined 1.8% annually between 2000 and 2005, and 1.7% annually between 2005-2010.
There was a continuous decline in the number of poor people - from nearly 63m in 2000, to 55m in 2005, and then 47m in 2010.
The Bangladesh Poverty Assessment shows that during the period 2000-2010 poverty reduction was closely linked to the growth in labour income and changes in demographics. Labour income, both formal and informal, was the dominant factor in higher incomes and lower poverty rates.
Parallel to this, fertility rates have been steadily dropping over the last several decades which have resulted in lower dependency ratios thereby increasing income per-capita and reducing poverty.
The potential to benefit from the demographic dividend will continue in the short to medium term. But to continue to reap the benefits from the demographic changes, Bangladesh will need policies that respond to the needs of the growing population of young adults.
Main Policy Implications
To ease the labour market pressures caused by the demographic transition, Bangladesh will need to focus more attention to the skills development of a rapidly expanding labour force, including policies aimed at enhancing opportunities for overseas migration. Similarly, given the trends in female education outcomes and low rates of female labour force participation, a focus on creating ‘female-friendly’ jobs, work environments and labour policies will also help to facilitate a higher level of female participation in the labour force.
Moreover, moving forward, sustained poverty reduction will necessitate coordinated multi-sectoral action. Investments to raise agricultural productivity and growth in the demand for salaried work in the manufacturing and service sectors are crucial for maintaining growth in labour income.
Bangladesh will also find itself at the cusp of an aging challenge in about 20 years. There is ample time to prepare, but Bangladesh will want to start the process of discussing programs and policies that can protect the elderly in a manner that is both fiscally sustainable and culturally appropriate.
The report suggests that, to be more effective, safety net programmes need to be: better timed to more adequately address short-term needs, better targeted ensure that benefits are primarily received by the poor, and better tailored to meet the specific needs of the poor. Consolidation of safety net programmes in Bangladesh along these three principles would improve efficiency and establish a solid foundation for increasing investments in safety net programmes with increased benefit levels.
Furthermore, safety nets have gradually shifted from food transfers to cash transfers in recognition of the fact that the latter are more cost effective. Linking this larger pool of cash allowances to human development outcomes could prove a powerful formula for increasing human capital and for attaining further poverty reduction in the future.
Particular emphasis needs to be placed on programmes that focus on: early childhood development in ways that integrate health and nutrition services, pre-school education, early stimulation and learning; and also programmes focused on building skills and improving the employability of poor youth.