Little done for SMEs, job loss | The Daily Star
12:00 AM, June 04, 2021 / LAST MODIFIED: 03:26 AM, June 04, 2021

Little done for SMEs, job loss

Economists, businesses call for new stimulus

The budget has not proposed any direct cash support to revive the cottage, micro, small and medium enterprises (CMSMEs) sector, where millions of workers lost jobs, though the government proposed some short tax-relief measures.

Rather, Finance Minister AHM Mustafa Kamal emphasised proper implementation of the previous stimulus packages of more than Tk 1.24 lakh crore for them.

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Economists and businesses said the previous stimulus packages have not come to much use of the CMSMEs and informal sectors that were affected the most during the pandemic beginning early last year.

During a survey by Bangladesh Bureau of Statistics in September last year, it was found that 22.39 per cent of the respondents were unemployed.

Adding 30 lakh who were already unemployed before the pandemic, it can be concluded that about 1.35 crore people, which is about one-fifth of the labour force, became unemployed last year, said Rizwanul Islam, a development economist and former adviser to International Labour Organization (ILO).

Most of the job cuts were in the CMSME sector. Also, about four lakh Bangladeshi migrants returned home, having lost jobs abroad last year.

A nationally representative survey on 3,348 households by the South Asian Network on Economic Modeling (Sanem) conducted between January and February this year found that about 49 per cent of the pandemic-hit internal migrants lost jobs or faced non-payment and decrease of salary during the March-December period last year.

About 37.3 per cent of self-employed and 34.2 per cent of waged people have not been able to recover their income till February this year because of Covid-19 fallouts.

On the other hand, the number of overseas jobs experienced a decline to only 2.17 lakh last year, which was well above 7 lakh annually in the previous years.

In January and February, some 85,000 Bangladeshis went abroad but with the rise in coronavirus infections, most countries suspended flight operations and labour recruitment.

Economists said about 2.50 to 3 crore people became new poor from the fallouts of the Covid-19 and that jobs creation should be the number one priority in the coming fiscal year.

"Having liquid funds, especially during the crisis time, is very important to the owners of the CMSMEs for the revival of their business units and to retain the jobs of millions," said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD).

The tax cut measures will help businesses buy or import raw materials but the direct cash support or stimulus fund will help the CMSME owners revive businesses and retain and create jobs, he said.

So, the government should allocate at least Tk 30,000 crore additional stimulus funds for the CMSMEs, Moazzem said. Of the total Tk 50,000 crore, some 30 per cent should be meant for the new entrepreneurs, he said.

So far, the government allocated Tk 23,000 crore as stimulus for the CMSMEs, of which some 72 per cent was disbursed as some 15 per cent of more than one crore CMSMEs have been closed and some 50 per cent are struggling to survive, according to the SME owners.

Rizwanul Islam said one widely recognised means of addressing the unemployment situation in the face of economic crisis was to increase public investment in infrastructure.

"Priority should be for small-scale schemes that can be identified, designed and implemented quickly, thus creating jobs," said Islam.

Mustafizur Rahman, a distinguished fellow of the CPD, said a lot of people switched from services and manufacturing sectors to farm sectors and saw incomes go down. There has also not been decent wage recovery so far, he said.

He said the government generally subsidises export-oriented industries, but this was the time import-substitute industries should get subsidies. He added that domestic sectors' contribution to the GDP was 84 per cent.

"Overall, business environment should be improved, financially and institutionally, for all," Rahman said.

Selim Raihan, a professor at the economics department of the University of Dhaka, said job recovery began late last year with infections coming down, but joblessness again picked up when authorities enforced lockdowns since early March this year.

Raihan, also executive director of Sanem, suggested speeding up the mega infrastructure projects that could help create jobs and prioritising at least five special economic zones to draw foreign investors at the earliest.

Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies, suggested incentives for the CMSMEs through NGOs for efficient handling of money.

She also recommended incentives, technical support and tax rebates and lowering of internet cost for the e-commerce sector to flourish, instead of imposing taxes.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), demanded a special low-cost fund of Tk 1,000 crore for the CMSMEs in the apparel sector.

A portion of the fund can be used to reopen the closed factories while another portion can help pay back the loans of owners of factories that had to close, who are unwilling to run their units anymore, he said.

Ali Zaman, president of the SME Owners Association of Bangladesh, demanded a second stimulus support for the CMSMEs, reasoning that without it, the sector's recovery was not possible.

He also demanded effective implementation of the first stimulus package and strict enforcement of the competition law for the survival of the CMSMEs.

According to Masudur Rahman, chairperson of the SME Foundation, of the total employment in the manufacturing sector, some 90 per cent was created in the CMSMEs and 80 per cent in the services sector.

"We will have to link the informal sectors with the formal sectors for a better economy and employment generation through meeting the demand for the fund," he said.

Tasneem Siddiqui, chair of the Refugee and Migratory Movements Research Unit of the University of Dhaka, said ensuring good governance and promoting market-based skills were the most important factors for promoting the overseas jobs sector.

"For long, we advocated for creating more nurses, caregivers and medical technologists for whom there is high demand all over the world, but there have been little initiatives," she said, calling for improving skills and teaching languages required in the developed countries.

Siddiqui suggested that vaccinating the migrants at this moment could help find them overseas jobs. 

 

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