A large chunk of youths have lost their jobs due to the Covid-induced economic slowdown, they say
The government’s stimulus packages to fight the economic fallout of Covid-19 have reached just 8 per cent of total employment of the country, says a study report.
Under 19 stimulus packages, the government has offered Tk 113,117 crore to combat the economic crisis caused by the pandemic. However, the full package is yet to be disbursed.
Were the packages fully implemented, it would have reached 12 per cent of total employment, found the study titled ‘Employment Implications of Stimulus Packages: Challenges for Recovery’ conducted by the Centre for Policy Dialogue (CPD) in association with Oxfam.
“Our analysis indicates that stimulus packages in Bangladesh had only limited employment impact and much lower compared to most other countries in the region,” said Towfiqul Islam Khan, a senior research fellow of CPD, while presenting the findings of the study.
The packages were able to reach only a small share of the total employment.
Among 31 Asian countries, Bangladesh’s stimulus package ranked 22 in terms percentage of GDP. Bangladesh’s stimulus packages amounted to 3.7 per cent of GDP.
The stimulus package offered for the agriculture sector reached 2.7 lakh people against a probable target of restoring 9.6 lakh jobs.
“The relative inexperience of lenders and process complexities may have led to lower disbursement of the Tk 5,000 crore stimulus package for agriculture.”
The country’s commercial banks, except for Bangladesh Krishi Bank, have relatively less experience in providing agriculture loans, he added.
The stimulus package for the small- and medium-sized enterprises (SME) reached 1.3 lakh people employed in the sector. If the packages were fully disbursed, it would have been possible it could reach 4.4 lakh people.
Slow implementation of stimulus packages for smaller firms and the agriculture sector has not produced the expected results in view of employment protection and creation, Khan said.
Meanwhile, the think-tank also found that Bangladesh Bank’s latest policy stance with regards to the stimulus package for the SMEs appears to be contradictory in case of deadline extension versus the collateral requirement.
The SMEs had a general lack of awareness as regards to the stimulus packages and their technical capacity is also low.
Besides, the lenders followed a cautious approach while disbursing the stimulus to smaller entrepreneurs and packages gave inadequate attention to marginalised and vulnerable employment sectors.
The CPD suggested an extension of the deadline for the execution of the stimulus package for SMEs to November 30, which would be very helpful for the sector.
On the other hand, the package for the large industries and services sector reached 46.5 lakh jobs. It could have been 61.8 lakh.
The large industries were better prepared to receive the stimulus packages given their more organised nature and enhanced technical capacity, Khan said.
More than half (56 per cent) of the stimulus packages had no mention of employment generation or protection in their aims or objectives, while only one out of nine packages had guidelines for payroll protection of workers.
Overall, the designs of the stimulus packages lack incentives for employers to sustain employment. Along with giving attention to resumption of livelihoods, safety net programmes should have also focused on the recovery of employment, Khan said.
Half of the government notices had extended some attention the marginalised sectors and population or areas, it said.
“The safety net measures were also very limited, which is perhaps a result of limited resources in terms of financial and food stock,” Khan said.
Allocation for employment specific safety net programmes need to be enhanced to support the coping strategies of the marginalised groups at the household level and more concentrated efforts will be required to fully implement the stimulus packages for the smaller entrepreneurs, he added.
Since the employment scenario should be a critical metric to assess the level of recovery from the current crisis, the government should be ready to deliver further policy support to the economy, it recommended.
Learning from this experience, future stimulus packages and safety net measures need to be more employment sensitive, it added.
The findings were revealed at a virtual dialogue held on Thursday with support of the Citizen's Platform for SDGs, Bangladesh.