The cost-of-living crisis prolongs for wage workers
The cost-of-living crisis in Bangladesh appears to have caused more trouble for daily workers as their wage growth has been lower than the inflation rate for more than two years.
The wage growth has gone up over the years, but it remained below the inflation rate for the 26th consecutive month in March, figures from the Bangladesh Bureau of Statistics (BBS) showed.
This means like many others, wage workers are in a precarious situation, which has compelled low-income households to cut back on their consumption amid falling real incomes and the rising cost of living.
In March, the wage growth of low and unskilled workers was 7.80 percent while the Consumer Price Index (CPI) rose 9.81 percent, according to the state-run statistical agency, highlighting a gap of 2.01 percentage points.
The Wage Rate Index of the BBS takes into account the wages of informal sector workers in 44 occupations in the agriculture, industry and service sectors who receive payments on a daily basis.
Talking to The Daily Star yesterday, Bashir Talukder, a construction worker in Patuakhali, said his six-member family was finding it difficult to survive with his limited income.
He works for a daily wage of Tk 750, which, Talukder says, is not adequate to pay for the basic expenses of the family. Therefore, he has been forced to engage his 14-year-old son at the construction site. The son earns Tk 600 per day.
"It is tough for me to buy an adequate amount of rice, vegetables, fish, pulses and salt with the money I earn," he said, adding that his family could not afford meat even once a year.
"If we don't find work for a day, we have to dip into whatever small savings we can manage to make."
Bachchu Kazi, a fishing worker in the Kuakata area of the southern district, says there was no extra joy in his five-member family during Eid-ul-Fitr owing to the lower incomes.
"The price of essentials has gone up sharply. Therefore, if you buy one thing, you will have to sacrifice the other."
The low-income groups in Bangladesh have been under constant pressure since May 2022 as external factors such as the Russia-Ukraine war and the sharp fall in the value of the local currency, inadequate policy interventions and poor market management at home have kept inflation at an elevated level.
The CPI surged to a 12-year high of 9.02 percent in the previous financial year. The trend has continued in the first nine months of the current financial year, with the International Monetary Fund projecting that Bangladesh's inflation will stay above 9.3 percent in the year that ends in June.
"Amid higher inflation, people are just fighting a losing battle," said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, a think-tank.
He says in a high inflation environment, the purchasing power of low-income people remains limited.
"Since people's purchasing power is continuously eroding, their coping capacity is shrinking and they are struggling to make ends meet."
"They have reduced their consumption and have failed to ensure a healthy diet for family members and used up their savings."
Around 5 lakh people in Bangladesh likely fell into extreme poverty between 2022-23 and 2023-2024 due to the erosion of the purchasing power, said the World Bank in a report recently.
"No one really thinks about poor people like us," said Bachchu Kazi.
Mujeri, also a former chief economist of the Bangladesh Bank, said currently, there is no possibility for the inflation to cool down.
Higher inflation has a long-term negative impact on health and education. So, the government should emphasise the issue in the upcoming budget.
"The government must extend social safety net measures in terms of both quantity and quality," the economist said.