The Covid-19 pandemic and the subsequent countrywide shutdown that followed had adversely affected informal workers the most in Bangladesh, as well as in South Asia, the World Bank said on Thursday.
Their latest South Asia Economic Focus forecasted a sharper than expected economic slump across the Subcontinent, with regional growth expected to contract by 7.7% in 2020, after topping 6% annually in the past five years.
Three-quarters of all workers in South Asia depend on informal employment, especially in hospitality, retail trade, and transport—sectors most affected by containment measures, the study stated.
While the poor faced rising food prices and suffered severely, the pandemic dealt a further blow to many informal workers in the middle of the income distribution who experienced sharp drops in earnings.
Few informal workers are covered by social insurance, have savings or access to finance.
The report urged governments to design universal social protection as well as policies that support greater productivity, skills development, and human capital.
In that effort, securing international and domestic financing will help governments fund crucial programs to speed up recovery.
The global economic downturn will affect Bangladesh’s economy. However, the policies that the government has undertaken to mitigate the impacts are in the right direction, said Mercy Tembon, World Bank country director for Bangladesh and Bhutan.
For a resilient recovery, the government needs to continue to safeguard its fiscal and debt positions, build financial sector health, protect the poor and vulnerable and create a conducive environment for private sector development and job creation, she added.
“The collapse of South Asian economies during Covid-19 has been more brutal than anticipated, worst of all for small businesses and informal workers who suffer sudden job losses and vanishing wages,” said Hartwig Schafer, World Bank Vice President for the South Asia Region.
Immediate relief has dulled the impacts of the pandemic, but governments need to address the deep-seated vulnerabilities of their informal sectors through smart policies and allocate their scarce resources wisely, he added.
“Covid-19 will profoundly transform South Asia for years to come and leave lasting scars in its economies. But there is a silver lining toward resilient recovery: the pandemic could spur innovations that improve South Asia’s future participation in global value chains, as its comparative advantage in tech services and niche tourism will likely be in higher demand as the global economy becomes more digital,” said Hans Timmer, World Bank chief economist for the South Asia Region.
