Assignment

On
Covid-19 and Its Impact on Employment - Bangladesh
Perspective

Course Code: HRM-612

Course Title: Strategic HRM

Submitted To
Farhad Hossain
Assistant Professor (HRM)
Department of Business Administration
Leading University

Submitted By
Bably Akther Chowdhury Moury
ID: 2011017013
Program: MBA
Semester: 4th-B
Department of Business Administration
Leading University

Date of Submission: September 10, 2020

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 TABLE OF CONTENT

Contents Page

Chapter 1: Introduction 1-2

1.1 Objective of the study 2

1.2 Methodology 2
1.3 Limitation 2

Chapter 2: Chapter 2: Bangladesh at work in the era of 3-8

COVID-19
2.1 Understanding Job Loss 3-4

2.2 Impact of Coronavirus on Livelihoods: Rural and Low-Income 5-6

Population of Bangladesh
2.3 Inactive Segments of the Value Chain 6-7

2.4 Educated but Unemployed 7-8

Chapter 3: Recommended Policies 9-14

Conclusion 15
References 16
 Chapter 1: Introduction

The Covid-19 pandemic has far spread to 208 countries and regions of the world, significantly
affecting the global economy. Since the virus has been growing exponentially, even the developed
countries have been unable to contain its spread. As a result, people are dying in the affected areas
at an alarming rate. We can’t even think how deadly the highly contagious disease will turn if it
spreads from a moderate to a strong category in India or Bangladesh. Bangladesh is the most
densely populated country in the world, however, to our concern, the healthcare facilities in the
country are too limited to serve its 160 million-plus population.

The increased unemployment and lack of access to basic necessities have created a subsection of
the poor named the “new poor”. These are people who have fallen back below the poverty line due
to income loss from COVID-19 related economic disruptions.

The unprecedented Covid-19 pandemic has caused disruptions to global trade, business, and
education. Bangladesh is equally affected by this contagion. The economic consequences of the
Covid-19 outbreak are tough to handle as the entire of the global supply chain has been interrupted
due to worldwide transportation shutdown. Till now, the Bangladesh readymade garments (RMG)
industry has received work order cancellations of nearly $3 billion. Around 2 million workers in
the industries will be affected by this. Around 4 million people are directly engaged with the RMG
sector e.g. backward linkage industries, accessories and packaging factories and transportation
sector.

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1.1 Objectives of the Study:

This study will mainly cover how covid-19 has impacted the employment from Bangladesh
perspective.

1.2 Methodology

This study is mainly based on secondary data. Secondary data and information have been gathered
from Internet browsing, Journals, Research paper etc.

1.3 Limitations of the Study

I have faced some problems during preparing my report:

 Lack of experience has acted as constraints in the way of meticulous exploration on the
topic.

 Lack of current information.

 Shortage of time for preparing the report in order.

 The study was conducted mostly on secondary data.

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 Chapter 2: Bangladesh at work in the era of COVID-19

As the COVID-19 pandemic continues to ravage the health and safety of the citizens of
Bangladesh, the economy plummets due to mandatory closure. Low income and/or labour-
intensive jobs, which represent most of the informal sector and a significant share of SMEs, have
been most affected. Many of these jobs are temporary and will come back as the economy opens.
However, some of the job losses will be more permanent. According to CRI estimates, the
“permanent” impact job loss estimates are 6 million, which would nearly double the
unemployment rate. It would affect approximately 24 million people.

The increased unemployment and lack of access to basic necessities have created a subsection of
the poor named the “new poor”. These are people who have fallen back below the poverty line due
to income loss from COVID-19 related economic disruptions. The estimated number of new poor
is 38 million – 27 million in rural areas and 11 million in urban areas. Therefore, this new poverty
rate is estimated at 22.6%. When the existing 18.9% poor is added to the new poor, the poverty
incidence jumps to 41.5%.

Currently, the policymakers have planned to implement a combination of fiscal and monetary
stimulus – collectively amounting to more than Tk 1 trillion (3.7% of GDP). However, a jobless
recovery might put the progress of the past decade at risk, especially in the context of a country
with a high youth population. More sector-specific stimulus and a smart budget is required to
create low skill low-income jobs, which is very critical for inclusive growth.

2.1 Understanding Job Loss

In the context of Bangladesh, the pandemic has created two kinds of employment loss:
“temporary” lockdown-induced jobs and “permanent” impact jobs. Estimates from various sources
put the immediate temporary job loss figure (for 2 months of lockdown) between 12 to 17 million.
This job figure is estimated from the shutdown of major 4 sectors: 7 million MSME services, 5
million transport (including rickshaw pullers and CNG drivers), 3 million in construction and 3
million manufacturing (including MSME manufacturing) jobs. A survey report by LightCastle
Consulting Firm estimates an additional 10 million people have lost livelihood in the agriculture
sector. In that case, the figure would edge up to somewhere around 25 million.

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Many of the job loss limited to the period of Government imposed restrictions (approximately 2
months) are temporary. Majority of Rickshaw pullers, CNG drivers and bus operators will
gradually ease into work as the country restarts the economy. Some day labourers will find
immediate work in the agriculture sector as the harvesting season peaks and as the construction
industry starts to open. Employment has also started to pick up in in the garments sector as the
factories start to reopen.

Recently, garment workers coming back to Dhaka amid the government-imposed shutdown and
the risk of getting infected only revealed that due to disparity in wealth distribution these people
are unable to stay at homes without work for their survival, thus, they are concerned much more
about their job rather than Covid-19.

The higher growth and increased per capita income have benefitted a small group of rich people
much more than the much greater number of poor people. Now its the time for the government to
think about this crucial issue and chalk out a long-term plan to minimise the disparity between the
rich and the poor.

However, the unavoidable decline in trade and output means that many of the layoffs are
permanent. These jobs will be the main factor in determining the impact of the COVID-19
pandemic on livelihood. A telephone phone-based survey undertaken by Bangladesh Health Watch
and BRAC University shows that as much as 47% of RMG workers (which will be around 2.3
million) might lose their jobs due to widespread cancellation of export orders and uncertainty about
future export prospects.

2.1.1 Estimates from various sources of “permanent” impactful job loss

Source: Unemployed Individuals impacted

(million) financially (million)
World Bank 7 28
ADB 4 16
PRI 12 58
CRI 6 24
CPD – 56
PPRC/BIGD – 70
News interviews – 50

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2.2 Impact of Coronavirus on Livelihoods: Rural and Low-Income Population
of Bangladesh

It was confirmed by the rural households that there has been a consistent decrease in income across
all the regions and the nation-wide monthly average income of the rural lower-income population
came out to be BDT 10,320, BDT 7,234, and BDT 4,325 for February, March, and April
respectively. Amongst the eight divisions, the lower-income group from Dhaka, Rangpur, and
Barisal experienced the sharpest fall in income of 64%, 53%, and 44% respectively for the month
of April compared to March. The Daily Transport workers, i.e. Rickshaw pullers, Van, and Truck
drivers faced the sharpest drop of 84.78% in April compared to March because the lockdown
decreased movement of people.

Additionally, although the government confirmed that transport carrying daily necessities and
agricultural products will be operating regularly, in real terms, the movement of transportation
significantly reduced and resulted in job losses for many. Other professions experiencing the
hardest hit of at least a 65% reduction in income for the same time period are vegetable farming

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and daily agricultural labor. The agricultural laborers mentioned that summer is the prime time for
their income generation and a majority of their income comes from the Boro rice harvesting every
year but this year they encountered a huge slump in their income. Because these day laborers could
not even go to their respected destination of rice harvesting due to the nation-wide lockdown and
social distancing regulations. As the majority of the respondents in the study were involved in
agriculture and the coronavirus pandemic has shaken the entire value chain, this type of slump in
income was quite expected. Due to this consistent shortfall in income, more than half (54.72%) of
the rural workers and farmers mentioned that they were out of cash savings and this will be
exacerbated in the long run if the current inactive segments of different value chains are not
rejuvenated. Currently, for the shorter run what they need for survival is cash grants, free foods,
free medicines, low-cost loans, etc.

As the source of income for the majority of the rural workers and farmers were affected, they were
asked the state the type of support they required. Here, most of the rural workers and farmers
(45%) mentioned that they required free food and medicines as survival was at a stake for many
of them, 31% of the rural workers and farmers mentioned that they required cash grants and 14%
of the rural workers and farmers who were comparatively at a better situation required low-interest
loans as preparation for restarting work as soon as the situation gets better.

2.3 Inactive Segments of the Value Chain

With the entire country under lockdown along with certain social distancing regulations,
maintaining a plain sailing value chain, especially for a labor-intensive agriculture sector, is quite
challenging. Thus, the major food value chains are tethering on the edge of a major catastrophe,
which is also evident from the study. Rural farmers who were involved in different segments of
the agricultural value chain mentioned that the major reason behind the value chain disruptions
was lower consumer demand (78%), and lack of transportation (41%).

Conversations with a number of rural workers and farmers revealed the reasons behind the value
chain distortions in different industries of the agricultural sector, such as poultry, fisheries, dairy,
and crops and vegetables. The sales in the poultry industry dropped as the consumers are restricted
due to the lockdown. There has been a striking slump in demand for meat and eggs, as a result,
hatcheries are being forced to sell the hatched eggs at a throwaway price.

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Though immediately after the lockdown the dairy industry faced an increased demand, in recent
times the demand has decreased in all levels, local mills, direct consumers, etc. The prices of liquid
raw milk dropped from BDT 36-52/litre to BDT 20-28/litre. The rural people who are involved in
the production of perishable products are in severe loss because of the dearth of storing facilities.

Paddy and vegetable farmers are in jeopardy because of the pandemic. Boro, which is the highest-
produced paddy in Bangladesh, might face a significant slump in Boro harvesting due to the high
scarcity of farm laborers as the farm laborer distribution across the country is highly unequal.
Though the rural paddy farmers mentioned that there has been an increase in the prices of paddy
compared to the previous month, this does not mean that this has ameliorated the lives of the
farmers. The increased prices might not have covered higher production costs that have attributed
by the scarcity of laborers. Farmers producing summer vegetables are at greater risk as the prices
of perishable vegetables plunged deeply. This dip in prices has led to farmers cutting their losses
by selling products before they are spoiled. Thus, most of them are unable to even regain their
investments in this scenario.

The COVID-19 induced lockdown struck all parts of the agricultural value chain because of social
distancing, breakdown in logistics and storage facilities, scarcity of laborers, etc. And all these
distortions have resulted in shaken production, price distortions, and uncertain living conditions of
the rural lower-income people.

2.4 Educated but Unemployed

Such people are not normally regarded as poor as per the poverty line, but they have fallen into
poverty due to the ongoing critical period. Families of educated unemployed youths have now
fallen below the poverty line due to the stagnant economy amid the coronavirus crisis. Yet, they
are not getting government aid.

The uncertainty over when these educated unemployed people will get jobs does not seem to be
going away very soon. Because of the coronavirus, the job market in Bangladesh, as in other
countries globally, is likely to shrink further over fears of an imminent global recession. It will not
return to normal until the economy of Bangladesh returns to its previous state. And there is no
certainty as to when that will happen. Economists say that families of educated unemployed people

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are not normally poor as per the poverty line. However, due to the current critical period, they have
fallen into poverty. The government is providing incentive assistance of Tk30,000 crore to big
businesses even though they are not poor at all. For the same reason, financial assistance also
applies to those families who are educated unemployed and at risk of loss of livelihood and
starvation. Because of an unprecedented situation, different countries in the world have come out
of the traditional trend and launched various social programmes. Countries like the United States,
the United Kingdom, China and India have extended support to people of all classes.

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 Chapter 3: Recommended Policies

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. These jobless people are not included in most of the social safety net programmes. Also,
the existing social safety net programmes are unable to address these growing challenges.

It is also true that the fiscal space of the government is not conducive for expanding the social
safety net programmes. However, 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.

Now, if we look at the management of Covid-19 crisis, this primarily involves three aspects:
management of health hazard, management of the economic crisis, and management of social crisis
(poverty and job-loss). We are observing major institutional challenges in all these three aspects.

Lack of coordination in the crisis management (failure in lockdown measure is an example),

corruption, clientelism, problem in targeting, problem in priorities, and weak state capacity all are
visible in managing these three crises. There is a need for improvement in these areas.

In addition to continued cash transfers to the poor, this paper provides five key points for
policymakers. The centerpiece of our proposed recovery strategy is immediate job creation,
keeping in mind possible future stimulus packages and preparation for the FY2020-21 budget.

1. Provide additional incentives to labour-intensive subsectors in which Bangladesh

could fill domestic demand and export excess supply:
 Agriculture: According to the New York Times, a global food crisis is looming
and the number of people facing acute hunger might double to 265 million by the
end of this year. The PM has already predicted a global food shortage. As a result,
a substantial portion of the stimulus package has already been targeted to ensure
domestic food security. The global shortage might be an opportunity for
Bangladesh to meet its domestic demand and increase its share of global exports in
agriculture. More targeted stimulus should be considered for this sector,

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 encouraging the production of essentials such as lentils, potatoes, wheat, and rice
along with fish and poultry. The Government has already secured rice supply
through the purchase program of the Ministry of Food. This program should be
extended to other essential products to ensure food safety. If storage or logistics are
problems for the government, then the farmers may temporarily store it themselves
or can aim to sell off the product to the market. Excess produce can be exported to
ease the global food shortage. The employment intensity of the Agriculture sector
(every 1% increase in the share of GDP contributes to 3% increase in the share of
employment) also provides the much-needed livelihood for the low-income
working population.
 Trade, Transportation and Logistics: The Open Market Sale (OMS) scheme
should include a countrywide expansion to more essential produce along with rice
for the next six months, at the least. Transparent sourcing, health safety of the
supply chain and a more accountable distribution system will be critical to the
success of this program.
Produce, Fast Moving Consumer Goods (FMCG) and Healthcare are among the
major industries facing prominent logistical challenges, particularly in local
markets. E-commerce has stepped in to meet the increasing consumer demand for
daily supplies in urban areas. However, logistics support in rural areas continues to
be a challenge. Roadways and railways are relatively less affected by the COVID-
19 impact on the logistics sector when compared with airways and waterways.
The primary concern faced by the road transport segment is ensuring the health
safety of the drivers and operators as well as security of their infrastructure. The
private sector is continuously tracking the current situation and is coming up with
new strategies to ensure continued supply.
The Government should cut domestic oil consumer-prices consistent with the
falling global prices, provide tax incentives to logistics companies to expand their
network to rural areas, and partner with the transportation sector to provide health
safety to the infrastructure and the drivers operating on it. The prices of diesel
should be particularly cut-down because it will provide relief to the irrigation and
bussing-trucking services.

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 Food processing: The advantages of the Agriculture sector will spill over to the
Food Processing industry as Bangladesh looks to move up the value chain. The
latter sector currently accounts for 1.7% of GDP and employs about 2.2% of the
total workforce, of which 70% are low skilled labour. The potential global food
crisis provides an opportunity to scale

 RMG: this sector continues to be one of the largest contributors to GDP in

Bangladesh. In the post COVID-19 universe where safety is paramount, the sector
should be incentivised to get into medical safety goods market. Manufacture of
products such as masks, glovers and PPEs are quintessential due to increasing
global demand and heightened uncertainty in the backdrop of a looming global
recession. According to market insights firms VynZ Research, the PPE market
alone is set to expand from $55 billion in pre-COVID-19 time to $90 billion in the
next 4 years. Technical knowledge and training can be requested from international
NGOs such as IOM, UNDP and WHO to quickly get up to speed on international
standards and regulations. Beximco Group, one of the largest local conglomerates,
has already set an example by 6.5 million PPE gowns to the United States.[18]
 Other healthcare products: products such as low-cost ventilators and
hygiene/cleaning products can also be produced by light manufacturing industries
if properly incentivised.
 Pharmaceuticals: This rapidly growing sector should be provided access to low-
cost capital to further expand and diversify the production of essential medicine. In
2018, the country’s domestic pharmaceutical market size stood at Tk 205 billion
with 15.6% compound annual growth rate (CAGR) for the last five years.[19]
Eskayef Pharmaceuticals Ltd, also known as SKF, became the first pharmaceutical
company in the world to produce Remdesivir, a drug which is recognised as very
effective for the treatment of coronavirus.[20]
 The Healthcare Services sector must also be given priority in next fiscal year’s
budget in order to better handle the ongoing health crises. Government health
spending is one of the lowest in Asia and the pandemic has exposed the need for
further development of healthcare facilities, particularly in rural

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 areas. Recommendation of Center for Policy Dialogue’s (CPD) and other leading
researchers of increasing Government health expenditure from 0.9% to 2% of GDP
in next year’s budget is in line with that of other Asian countries.
 Construction: Nearly 1 in 15 employed work in the construction industry. Many
more are employed locally in the production of building products. Both
construction and building product manufacturing sectors provide jobs for people
with varying levels of skill, including unskilled day labourers. Most concrete and
steel reinforcement, bricks, building boards, doors and tiles are made locally. A
substantial portion of domestic electrical and plumbing products, including sinks,
pipes and electrical cables are also made locally. The Government should consider
providing a stimulus package to the construction sector that targets sourcing from
local suppliers and hires certain percentage of day labourers. The Government can
set DFS salary payment to day labourers as a condition for stimulus receipt to
ensure transparency; a strategy that has worked successfully in the RMG sector.

2. Resume the labour-intensive infrastructure projects at the earliest convenience:

Relevant ministry budgets such as LGRD and Road & Transportation funding should be
increased appropriately to fast track the labour-intensive public infrastructure projects such
as Padma Multipurpose Bridge project; the Dhaka Metrorail project; Karnaphuli
Underwater Tunnel project and Dhaka Elevated Expressway project to name a few. Local
government bodies should be pressured to expedite urban and rural infrastructure projects
including road repair and street light installations.

3. Provide immediate access to finance for MSMEs: According to the LightCastle Partners
survey, more than half (52%) of the MSMEs (micro, small and medium enterprises) have
shut down due to the COVID-19 crisis.[21] Their survey further suggests that nearly 64%
of the MSMEs have either laid-off all their staff and/or will lay off more than half of their
staff within the next 3 months. A conservative estimate would put the job loss number in
this sector to approximately 4 million. While Tk 200 billion working capital stimulus has
been provided for the MSME sector, the distribution will be largely done through the banks

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 (and some limited financial institutions), which most informal sector MSMEs don’t have
access to. The informal sector MSMEs mostly take collateral loans from Micro Finance
Institutions (MFIs) and are in dire need of working capital to restart their businesses. While
Tk 30 billion has already been allocated to MFIs through commercial banks in the existing
stimulus package, the demand is significantly higher for collateral-free loans. Through MFI
partners of Palli Karma Sahayak Foundation (PKSF), the Government can consider
additional stimulus for informal sector MSMEs focusing on:

 Informal sector MSMEs such as restaurants, local grocery stores, local fruit shops,
welding shops and cottage industries
 Informal transportation sector including Rickshaw pullers/CNG-electric rickshaw
owners and goods-carriers
 Livestock and fishery. For instance, Eid Ul Adha is around the corner and there is a
huge local demand for cow fattening related activities

In order to relaunch informal sector businesses, the stimulus should promote the use of
Digital Financial Services, both Mobile Financial Service (MFS) and Agent Banking,
along with traditional banking. Loan provision risks should be shared by the government
so that the MFIs are encouraged to distribute the funds to the fields as quickly as possible.
The Microcredit Regulatory Authority (MRA) should also relax the reserve fund criteria
for the MFIs at least for the next two years to provide more liquidity to the entrepreneurs.

4. Refocus the skills development programs to train healthcare workers and upskill
returning remittance workers: The existing budget for skills development should be
reallocated to produce more health technicians, nurses, and other healthcare professionals.
The objective is to meet local demand as well as export these skills abroad as borders open
in the coming years (a 2-year frame may be created). The demand for trained caregivers is
already at a peak in developed economies due to their ageing population, and this demand
will only increase as the world recovers from the pandemic. Returning migrant workers
and laid-off garments workers might be prioritised to be reskilled in these categories.

Additionally, training programs and technical support can be offered to the 30,000 migrant
workers who have returned in the past couple of months, with significantly more expected

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 to return in the coming months. These workers are unlikely be able to go back to their work
countries soon. Creating an environment for them to use their skills locally

As the future of work gets redefined in the Covid-19 era, technology will play a major role
in not only redefining the workplace but also to bring transparency and accountability to
the existing work cultures. The Government should continue to use the adoption of
technology as a condition to accessing stimulus packages to ensure proper distribution of
funds.

5. Fast track the ‘Amar Gram, Amar Shohor’ initiative to promote localised economic
activity and job creation. : With the new normal of social distancing and precautionary
lifestyles, the ‘Amar Gram, Amar Shohor’ initiative provides a great opportunity to
decentralise services and promote more local activities. Pushing the decentralisation
agenda can be an underlying target of the stimulus. It should heavily prioritise online and
digital sectors, especially in rural areas. This is a great opportunity to digitise services, as
well as boost employment and revenue from the sectors. As part of the agenda, farm
mechanisation can be effectively enhanced. This will have a multiplier effect in the
localised economy. In this regard, incentives for agricultural machinery expansion (such
as harvesters) and other technical support can be provided from the stimulus allocations. A
year-long cash incentive can be provided. Free wi-fi has been provided in the village in
line with the “Digital Bangladesh” initiatives by the Government. Finally, drinking water
and library facilities have been arranged for the villagers. Doarpara is now not only
generating sustainable employment and entrepreneurship opportunities but also providing
its residents with the benefits of the city while living in a village.

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 Conclusion

As the COVID-19 pandemic continues to ravage the health and safety of the citizens of
Bangladesh, the economy plummets due to mandatory closure. Low income and/or labor-
intensive jobs, which represent most of the informal sector and a significant share of SMEs, have
been most affected. Many of these jobs are temporary and will come back as the economy opens.
However, some of the job losses will be more permanent. According to CRI estimates, the
“permanent” impact job loss estimates are 6 million, which would nearly double the
unemployment rate. It would affect approximately 24 million people.

The increased unemployment and lack of access to basic necessities have created a subsection of
the poor named the “new poor”. These are people who have fallen back below the poverty line due
to income loss from COVID-19 related economic disruptions. The estimated number of new poor
is 38 million – 27 million in rural areas and 11 million in urban areas. Therefore, this new poverty
rate is estimated at 22.6%. When the existing 18.9% poor is added to the new poor, the poverty
incidence jumps to 41.5%.

Currently, the policymakers have planned to implement a combination of fiscal and monetary
stimulus – collectively amounting to more than Tk 1 trillion (3.7% of GDP). However, a jobless
recovery might put the progress of the past decade at risk, especially in the context of a country
with a high youth population. More sector-specific stimulus and a smart budget is required to
create low skill low-income jobs, which is very critical for inclusive growth.

15
References

 https://opinion.bdnews24.com/2020/06/04/bangladesh-at-work-job-creation-and-
inclusive-growth-in-the-era-of-covid-19/
 https://tbsnews.net/coronavirus-chronicle/covid-19-bangladesh/how-are-educated-
unemployed-doing-83047
 https://www.lightcastlebd.com/insights/2020/05/12/impact-of-coronavirus-on-
livelihoods-rural-and-low-income-population-of-bangladesh-2
 https://thefinancialexpress.com.bd/views/views/covid-19-and-employment-
challenges-1595172556

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