The sixth episode of SANEM Shongzog, titled “Covid-19 and the Challenges of Labour Market in Bangladesh”, was held on July 18, 2020; at 11 am. The episode was hosted by Mr. Mahtab Uddin, Research Economist of SANEM, and Lecturer, Department of Economics, University of Dhaka. Dr. Sayema Haque Bidisha, Research Director of SANEM, and Professor, Department of Economics, University of Dhaka presented the keynote paper at the Shongzog. It was chaired by Professor Shamsul Alam, Member (Senior Secretary), General Economics Division, Bangladesh Planning Commission, Government of the People’s Republic of Bangladesh. Mr. Tuomo Poutiainen, Country Director of ILO Bangladesh was the special guest. As the distinguished panelists was present Dr. Ahsan H. Mansur, Executive Director, Policy Research Institute, Dr. Selim Raihan, Executive Director of SANEM and Professor, Department of Economics, University of Dhaka and Dr. Imran Matin, Executive Director, BIGD. Around 60 researchers, economists, academicians, development practitioners, journalists, and students joined the Shongzog.

In his welcome remarks, Mr. Mahtab Uddin explained the context of the webinar and highlighted the current dynamics revolving of the labour market in Bangladesh. He presented a brief assessment of the situation prevailing in the foreign labour market, the manufacturing sector, and the urban informal sector.

In his introductory remarks, Professor Shamsul Alam shed light on the policies undertaken by the government and discussed the issues related to employment generation in Bangladesh. He remarked that the 7^th Five Year Plan did not generate employment as expected.

In the keynote presentation by Dr. Sayema Haque Bidisha presented a detailed assessment of the current situation. She discussed the demand crisis at local and global level along with the resulting loss in income and employment. She explained the pre-COVID 19 challenges in labour market of Bangladesh and highlighted issues of mismatch of skill demand and skill supply, quality of education, low level of participation and quality of jobs of females, automation, 4^th Industrial Revolution, job destruction, decent job, workers safety, and informality.  Dr. Bidisha also identified the post-Covid 19 challenges. She said that the degree or depth of the crisis in employment and income depends on the length of crisis (both local and global) and initiatives are taken by the government. The challenges of employment against the backdrop of Covid-19 can broadly be related to major avenues such as fall in domestic demand, fall in global demand, the influx of labor supply due to returning migrants, restricted productive activities (lockdown effect) and slow pace of private investment. Dr. Bidisha also shed light on the post-Covid-19 implications on income and employment, such as temporary job loss/shut down of business until the economy revives, shrinking of businesses, reduction in profit/wages/salary, permanent job loss/ destruction of business at least for medium-term, change in job, increased production cost due to new normal production. She also mentioned other effects of reverse migration, loss in the capital base, fourth industrial revolution induced changes in technology in developed countries and implications on human capital development for household income. Discussing the projected gap in labour absorption, she indicated in her presentation that with higher growth, the gap in supply-demand reduces; while with depressed global growth and infection rate still being high, attaining 8.2% growth and desired private investment will be quite challenging. With lockdown and added stress from school closures and lesser access to childcare facilities, female labour force participation can fall further.

The key challenges of generating wage employment through stimulating private investment are domestic financing, global recession, and fall in export demand and business confidence, the presentation mentioned. On the other hand slow pace of domestic demand, destruction of capital base, access to finance (complex conditionality and high interest), informality and identification are obstacles to generating self-employment.

To tackle the challenges highlighted, the following recommendations were made by Dr. Bidisha:

• Relaxing conditionality and interest rate on loans of micro and small enterprises in particular.
• Channeling funds through microcredit agencies rather than the formal banking channels.
• Separate loan schemes for returning migrants, women entrepreneurs, youth, etc.
• Continuing youth start-up fund for this fiscal for urban youths.
• Tax rebate at different stages of production and import of raw materials of the SMEs
• Introducing self claimant mechanism and involving sector/area-specific representatives for identifying those in informal employment.
• Greater diversification of export by providing incentives to potential sectors for the absorption of workers, e.g. (leather, chemical, pharmaceutical, IT, nursing, robotics).
• A careful re-designing of incentives conditional on protecting the rights of the workers.
• Creating a separate fund for providing credit to those who might get laid off in coming months is worth considering
• In order to create employment opportunities for the returning (internal and external) migrants in rural areas, district wise employment poles need to be considered.
• For absorbing the returnees (both) agro-based industrialization and investment in non-crop activities should be encouraged.
• Online platforms for selling local level produces for urban dwellers should be promoted with the help of the local level NGOs.
• Local-level government representatives, NGOs, local youth can help to keep the supply chain of agricultural production operational while strengthening links with urban consumers.
• Keep a record of the unemployed (also employed) through an online database and maintain regular, reliable estimates of key indicators.
• Increase budgetary allocation in the social sector for education and skill development.
• Increase allocation in relevant projects to deal with skill mismatch- a collaboration between educational institutes and industry.
• To deal with the challenges of the 4th industrial revolution and automation special allocation is needed. e.g. projects with e-commerce, electronics, computer software, data handling, etc.
• For female employment, need to provide incentives to establish daycare centers at the workplace and to extend maternity and post-maternity leave for the private sector.
• Monitoring and evaluation of the incentive package, the budgetary allocation should be carried out.

Commenting on the research conducted by Dr. Bidisha, Dr. Bazlul Haque Khondker, remarked that there has been very little fiscal response from the government of Bangladesh to tackle the economic challenges of the pandemic. Other countries have initiated a much more aggressive fiscal response. He also pointed out that social protection issues related to the labour market needs to be in the discussion.

Dr. Ahsan H. Mansur pointed out that deficiency of data is a major challenge to research on labour market of Bangladesh. He said that currently, the country is facing three challenges: containment of the COVID-19 disease itself, issues of unemployment and livelihood, and supporting the recovery of the economy. As the economy has opened up, there has been a slow upward movement; however, it seems a sub-optimal point will be reached in this way. This depends on the response from the government and the private sector. Dr. Mansur expressed his concern about investment and said that the private sector is not going to invest unless the situation gets better. While there should be an investment in the public sector, there is the issue of resources. In that regard, he discussed the problems in revenue collection.

Explaining the necessity of a focused recovery strategy, Dr. Mansur said that attracting the investments deflecting from China should be a part of Bangladesh’s recovery and post-recovery strategy. Discussing the stimulus packages, he said while stimulus packages for big business are being disbursed quickly, there has been a delay in disbursing the stimulus packages for SMEs, which needs to be addressed as soon as possible.

Dr. Imran Matin, brought to attention the movement of labour in the ICT based market and said that collection of data on labour market should also take this into account. He discussed in detail the perception of the people regarding the pandemic and its effect on the economy. As the future outlook perceived by most of the people is uncertain, it is going to affect business confidence and labour dynamics. He said the uncertainty is not just about income but also about infection. The interdependence of this perception and real economic trends is critical. Dr. Matin also discussed the necessity of designing policy instruments with a focus on the incentives the instruments are expected to generate.

Dr. Matin also proposed an ecosystem, comprising of state entities and non-state actors, which would act as a platform for data collection and analysis.

Employment generation has been a problem for the past decade while employment elasticity of growth has been declining and remained low, said Dr. Selim Raihan. He also said that in the short to mid-term, the future looks bleak and the depressing effects on employment and wages may continue. Government policy response related to the current labour market challenges has been weak and inadequate. One major challenge is the lack of information and lack of up to date data on the labour market. The existing social safety net programmes are unable to address these growing challenges. He recommended that under the current crisis, the government should go for an enlarged deficit budget to spend high on social safety net programmes in general and labour market-related programmes in particular.

Dr. Raihan made the following recommendations:

(1). The government should form a Labour and Employment Commission which will assess the current unprecedented situation and suggest necessary measures. The BBS should be entrusted to collect data and information on the current situation

(2) Introduce new social safety net programmes targeting the labour market. In this context, the employment guarantee scheme for the next six months for vulnerable people can be seriously considered. The modalities can be sorted out.

(3)  The revival of economic activities is a must, which is closely linked to the management of the on-going health and economic crisis. High priority should be attached to solve the institutional challenges in the health sector and the implementation of the stimulus packages.

Dr. Raihan also reiterated SANEM’s proposal of involving microfinance organizations in disbursing the stimulus packages for the SMEs. He shared with the audience the findings of SANEM’s joint survey with Microfinance Opportunities, which highlights the plights of the garments workers of Bangladesh. He also informed the audience of the preliminary findings of SANEM and Asia Foundation’s joint ongoing survey on business confidence which indicates the overall bleak situation of jobs and employment.

In the speech of the Special Guest, Mr. Tuomo Poutiainen put emphasis on public employment programs. He also said that stimulus should not only be for business and liquidity but also should have a focus on jobs and employment. Mr. Poutiainen highlighted the need to invest in MSMEs especially in relation to the rural economy. He further discussed the necessity for decentralization and assisting the local supply chain. It is important to put emphasis on SMEs and self-employment so that it can activate the labour market and boost the economy.

Mr. Poutiainen agreed with the rest of the panelists on the creation of an information system on labour market, which will have regularity and will be actionable. He said such a system can be linked with job matching and job placing. He agreed with Dr. Raihan’s proposal on the formation of a Labour and Employment Commission. He further shed light on job strategy, employment policy, and the necessity of investment in human capital.

In response to a question in the questions and answer session, Dr. Bidisha said that the government should reconsider the time frame of the civil service examination. She also said that educational institutions should collaborate with the UGC and the Ministry of Education to rethink the curriculum and the length of semesters. Providing loans for education should also be considered. Dr. Bidisha also mentioned the austerity measures proposed by SANEM which recommends cutting salaries and stipends of top-level government and non-government officials.

In response to another question, Dr. Mansur discussed the issue of inter-sectoral employment. He said that such inter-sectoral transitions are most often not preferred by the individuals and therefore policies should focus on retaining the individuals’ original jobs. He also said that disbursement of loans for SMEs must be hurried and bureaucratic complexities should be undone in that regard.

In the Chair’s speech, Professor Shamsul Alam recommended incorporation of sector-based perspectives and relation with growth elasticity in similar future research endeavors. He said that many things are depending on the overall situation of the spread of the infection. He said that the prices of some products produced by MSMEs are relatively high and while the MSMEs bear 4.5% of their interest rate, the other 5.5% is provided by the government. So, it raised the question of why interest rate should be reduced further. He said access is more important than the interest rate.

Professor Alam said that it should be remembered that labour productivity has increased both in rural and urban areas. While enrollment in TVET education was 1% in 2009, it has now risen to more than 16% in 2018-19. Structural changes have also taken place in the composition of employment. Monitoring and evaluation of the stimulus package are also necessary, he agreed.

In his concluding remarks, Dr. Selim Raihan thanked all for their cooperation in facilitating the Shongzog.  SANEM Shongzog aims to foster meaningful academic discussions on domestic and global socio-economic issues.