• Monday, Sep 27, 2021
  • Last Update : 09:46 am

Report: Covid-19 hits Bangladesh's service sector the hardest

  • Published at 06:37 pm July 6th, 2021
Migrant workers at Shahjalal International Airport in Dhaka
File photo: Migrant workers at Shahjalal International Airport in Dhaka Mehedi Hasan/Dhaka Tribune

1.12 million lost their jobs last year

Although all three major sectors of the labour market— agriculture, services, and industry—were severely disrupted by the pandemic last year, the service sector seems to have hit the hardest.

According to the quarterly report of the Bangladesh Bank, 1.12 million people were unemployed in the service sector, 781,000 people were unemployed in the agriculture sector, and 695,000 people were unemployed in the industrial sector in 2020.

There was also an estimated 66.6 million drop in the labour force— 22.3 million, 12.2 million, and 26.1 million, respectively, in agriculture, services, and the industrial sector.

Out of the three, the service sector accounted for around a 60% drop caused by loss of employment and income for a large number of people in the workforce.

The income of those employed in the service sector also decreased by 17.6%.

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This was mostly caused by the 66-day general holiday to curb the spread of Covid-19, as well as the subsequent failure in making a turnaround, according to experts.

The service sector, which entails transport, tourism, hotels, motels, restaurants, housing, and construction, has been directly affected by the lockdown, which has resulted in a higher number of unemployed and a reduction in income, explained Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD).

Apart from the service sector, overseas employment was also largely affected in 2020 and 2021, until February, due to the ongoing pandemic, according to the central bank’s quarterly report. 

“Although policy support was very effective to revive the employment generation across different sectors, further study is needed to assess the impact of the implementation of stimulus packages targeted for retention of labor markets in a way to ensure an even recovery across the sectors, areas, and gender in near future,” the report concluded. 

Mohammad Anik, whose family business consists of sending workers to Saudi Arabia, told Dhaka Tribune that border shutdowns caused demand for Bangladeshi workers to drastically fall in the Middle Eastern country.

Gunjan Dallakoti, small and medium enterprise (SME) development specialist of the International Labour Organization (ILO), told Dhaka Tribune that this also caused a stalemate where there was almost no migration of employment in overseas countries, while a huge number of overseas workers also returned to Bangladesh.

According to the ILO's SME specialist, most migrant workers are employed in the tourism and hospitality sector that was badly hit because of borders shutting down and economies going into lockdown.

With economic activities slowing down in the overseas markets especially the Middle East, there was a huge reverse migration. Additionally, psychological fear in migrant workers with associated uncertainties regarding lack of social protection measures added to the problem, said Dallakoti.

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The overseas workers take loans or informal credit to fly to other destinations. When they came back, they were stuck, he added.

Shah Poran, a migrant worker who came back from Qatar in January 2019 and was set to return in January 2020, got stuck in Dhaka, as borders closed down.

“I was one of the lucky ones who was able to land a job as a driver because my license had not expired. Many of my friends who came back got stuck and have not been able to get jobs. Even if they did, it did not pay them like the ones abroad,” Poran told Dhaka Tribune. 

He was earning Tk30,000 a month, working as a driver for a private company amid the lockdown.

Agriculture affected, but not as much

In the agriculture sector, although 7.81 lakh people were left unemployed, the income of those employed in this sector has not decreased, rather increased 1.2% despite working hours decreasing by 3.8%.

According to Prof Mustafizur Rahman, this was mostly caused by people migrating from the city centres to rural areas facing unemployment and getting involved in agriculture. 

But for individuals who have shifted from the service sector to the agriculture sector, their income compensation is low compared to their previous status, he added.

As per the report, total stimulus packages of Tk18,580 crore were provided as agricultural subsidies for seeds, fertilizer, innovation, mechanization, and irrigation which helped the labour market in the sector to be activated during the Covid-19 period. 

Additionally, agriculture subsidy for FY20 was increased for ensuring food security, and a refinance scheme was created for the working capital for the agriculture sector, to activate the agricultural labour force. 

Furthermore, according to the BB report, although policy supports were very effective to revive the employment generation across different sectors, a further study is needed to assess the impact of the implementation of stimulus packages targeted for retention of labour markets in a way to ensure an even recovery across the sectors, areas, and gender in near future.  

The government’s stimulus package has mostly focused on the productive sector, while a large part of the service sector is informal, and does not fall under any government database, said Prof Rahman

According to the Labour Force Survey (2017), 85% of people are employed in the informal sector in Bangladesh. The number was 87% in 2010. 

The report also showed male workers in the industry and services sector were hit hard with the compound annual growth rate (CAGR) for the female labour force standing at 4.4%, while it was 2.8% for the male in urban areas during the years between 1999-2000 and 2020. 

In the case of rural areas, the CAGR for the female labour force was 4.8%, while it was only 0.8% for the male during the periods including the Covid-hit year of 2020.

According to BB, this was mostly because female entrepreneurs- a large number of which reside under the CMSME sector- can easily avail loans from the stimulus packages.

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