Why we need to look after the middle class
In the last four months, the Covid-19 situation has hit the economic activities of Bangladesh hard. Although in the beginning, attempts were made for complete lockdown -- the government now has decided to allow shops to stay open till 7pm.
But shop-keepers of daily necessities reckon that their sales were higher during the few hours of lockdown than now. There is also widespread frustration among shop-owners as sales have not been satisfactory; many are not opening shops properly.
It is becoming impossible for shop-keepers to pay employee salaries and the shop rent. Some traders are firing employees -- where there were five employees earlier, two or three people are now in the job.
For the well-being of the poor, the government has taken various relief programs into consideration. With the previous program of selling rice at Tk10, the government is now providing other relief assistance which has helped many to survive.
An official of the Prime Minister’s Office said that as of July 2, around 211,017 metric tons of rice, around Tk95,73,82,284 cash money, and Tk26,14,00,000 as aid for baby food has been allocated.
The bulk of this has already been distributed in a manner that either one or two packages go to the homes of an estimated 100 million people.
The middle class in dire straits
Teachers, general shop-keepers, and private employees constitute the middle class in our society. They are the lifeblood of our economy and are now leaving the city due to the economic hardships posed by the Covid-19 pandemic.
The middle-class people usually come from villages to cities -- they survive in the city by earning. They try to send their children to good schools in the city. Now they are worried about their children’s education -- since the education provided in the village-schools is in a dilapidated condition.
Earlier, many village-district level school students would get a place in the merit list but now that’s not the case. The infrastructure of village schools has improved but the condition of education is dilapidated because now unqualified people are engaged in the teaching profession in rural areas.
The government officials, posted at district and sub-district areas, do not send their children to study in those schools. Their families live in the city and their children go to city schools.
So, the officials do not consider it necessary to monitor what is taught in village schools.The middle class people are moving to the village or sending their families there as their income source has become uncertain. Jobs are gone, careers are in doubt, but rent should be paid -- most landlords of Dhaka city are not waiving the rent.
House rent is high in this city. It is more than the capitals of many countries in the world. There are no rules or policies regarding rent that are being followed. It is true, some laws have been enacted, and it has been said to protect the interests of the tenants, but all of it is just on paper.
This anomaly of house rent has been going on for ages. There has never been an initiative to establish house rent rules and regulations, not yet anyway.
The city corporation sleeps
Dhaka City Corporation did not take responsibility or hear out tenant complaints but they kept the tenants in charge of collecting taxes from the landlords. House rent has made the middle class most unprepared. The lion’s share of one’s monthly income goes behind their house rent.
The media has also been silent. On the contrary, I have read stories of landlords who have lost their tenants and fallen into the “sea of sorrow.” Even today, I have not heard anyone talk about both parties’ problems that can be solved by reducing the rent.
Governments in many countries are giving cash assistance to the corona-affected people. Excluding developed countries, I can give the example of Greece -- a country with a weak economy in Europe. To address the corona situation, the country has reduced home rents and shop rents by 40%. Bus and train fares have been reduced by 20%. Electric, gas, water, municipal taxes have been reduced by 20%.
VAT on food has been reduced from 13% to 6%. Oil prices have dropped by 30%. Unemployment allowance during the epidemic is running from 800 euros to 534 euros. There is a 1% interest rate loan assistance for business people. Last but not least, the media has already received 30 million euros in aid.
Far from reducing our expenses, bus fares have increased, and Dhaka WASA is increasing the price of water from next September. The prices of market products have gone up, the suffering with incorrect electricity bills has increased. Added to that is the purchase of Covid-19 prevention masks, sanitizers, and medical expenses. The direct victims of all this are the middle class.
In spite of that, the government should have reduced the house and shop rent by 40% from the current rate during the Covid-19 period till further orders. The government should reduce its tax for house owners, in the same way, extending the deadline without penalty if they have a bank loan against their home.
Otherwise, the way the middle class is fleeing from cities, one day the middle class will stand at almost zero. If we want to keep the economy strong -- cash incentives for businessmen and industrialists and helping the poor class are just not enough. We have to think about the middle class as well.
It should be remembered that the middle class is the lifeblood of the economy. About 25% of the population of this country is the middle class. They are huge in number but disorganized. They have no organization so there is no one to speak for them.
The middle class keeps their small savings in banks, post offices, and the interest they get from there helps them live if it is added to their household expenses. Now the middle class’ profits have been slashed in order to reduce the interest on the loans for the rich.
It seems that all the thoughts of the government are for the upper class and for the government employees. There is no one and nothing left for the middle class.
The nation will suffer irreparable loss
The economic stagnation due to Covid-19 has led to slowness in the pace of people’s lives. If middle-class people are not looked after, they will become obsolete.
The macroeconomy says people’s ability to spend will shrink further. This will further highlight the financial weakness of various businesses and one company after another will go bankrupt. It will weaken the organizational base of the economy.
Pouring mountains of money into financial incentives does not seem to be a big solution to our problems. It is not possible to give continuous incentives in such a way. So now, we will go through the horrors of corona for a much longer time.
With this in mind, if the government does not restructure the financial plan, chaos will consume everything.
Anis Alamgir is a journalist and columnist. He can be reached at [email protected]