Rising Income Inequality in Bangladesh

Inequality is the main concern in the recent era.The issues of growing income

inequality and unequal distribution of wealth between the rich and the poor have

lately gained traction across the west. Oxfam's yearly inequality report serves as

the most damning indictment of this rise in disparity. The report estimates that 82

percent of the entire global wealth created last year went straight into the pockets

of the richest one percent of the world's population. The poorest 50 percent, on the

other hand, received zero percent of that wealth.

Rising economic inequality through the distribution of income, consumption,

wealth or assets is a major challenge. There is considerable concern in Bangladesh

about the growing income inequality. Available household level information

suggests that the distribution of income is much more unequal than the distribution

of consumption. Income inequality as measured by the Gini coefficient for the

distribution of income has risen substantially during the last four decades or so.

Social democrats or socialists on the left aisle of the political spectrum blame

inequality as the primary source of many social discontents that exist in western

societies. Liberals, however, attribute these resentments to a widespread distaste

for pluralism, multiculturalism, migration, globalisation, etc. The debate over what

influenced people most to hate the existing political system is far from over, but
across the subcontinent, including Bangladesh, the debate has hardly any presence

at all.

Income Inequality Impacts on Sociaty:

Statistics (BBS) found that the income share of the poorest five percent of our

population was 0.23 percent of overall income, a sharp fall from 2010 when it was

0.78 percent. In The latest Household Income and Expenditure Survey released by

Bangladesh Bureau of contrast, the richest 5 percent's share of income grew to

27.89 percent, up from 24.61 percent in 2010. This basically means that the bottom

five percent's share of national income has decreased, whereas the richest five

percent's has increased.

GINI INDEX FOR INCOME :

GINI coefficient or GINI index has been used to measure the income inequality

and it has risen significantly last few decades throughout the world. The value of

GINI coefficient varies from 0 to 1, 0 meaning there is no inequality (perfect

equality) and 1 indicates perfect inequality where income is highly skewed to an

individual (posses all the income). The values of GINI coefficient was higher to

urban areas from 2000 to 2016 compared to rural areas, which indicates that

income inequality higher in an urban area than rural areas. The data shows that
income equality has been rising in Bangladesh over the period.

In the last Dhaka mayoral election, two contestants, both business tycoons, refused

to include their expensive cars in their wealth statements. They argued that these

cars belonged to their companies, which, however, happened to be owned by none

other than themselves.

They pretend that their "personal" wealth and that of their companies are somehow

different, even though it's pretty clear that both are more or less the same thing. For

all their wealth, it's hard to find too many wealthy businessmen in the list of the top

taxpayers. The tricky part here is that many among the super-rich base their

business on massive loans taken from banks. When you show your working capital

coming from loans, you are more likely to be exempted from paying taxes. In

addition, taxing the rich is one of the least priorities of our major political parties.

Raising minimum wage or living wage is a popular and important issue in the west,

but no major parties—not even the opposition—in Bangladesh would voice in

favour of increasing the wage of garment workers. No one, after all, wants to

disturb their donors.

Far from taxing the richest, successive governments rather succumb to the business

community's demands to reduce the existing taxes in the name of providing

"incentives". When labourers take to the streets to demand a wage increase, the

government on behalf of industry leaders, deploy forces to crush their voices.

According to a study by the Finance Ministry, 45-65 percent of the assets in our

economy are not taxed. As the super-rich have ample ways to evade their dues, a

large portion of the government's revenue comes from indirect taxation such as

value added taxes (VAT), which is applicable to all people regardless of their
income. Those who are poor spend a large proportion of their income, whereas the

rich spend a very small portion of theirs.

Changes in Sociaty:

The rise of the gini-coefficient, a measure of income inequality, in Bangladesh

over the years indicates that the income inequality is worsening. Income inequality

and poverty are directly interrelated, as such even small changes in income

distribution can have a profound effect on poverty. The general public is now

better informed and aware of the issue than before.

It is now widely believed that the pandemic is contributing to further widening of

income inequality and increased levels of poverty in Bangladesh. The benefits of

growth do no look like shared in any form or shape by the poor and very low

wage earners like RMG workers even in this distressing time. According to the

Bangladesh Institute of Development Studies 16.4 million have joined as new poor

in the country due to Covid-19.It is also a widely accepted view that all the growth

of GDP - all the increases in national income, have accrued to the wealthiest 5 per

cent of the population in Bangladesh, the remaining 95 per cent of the population

hardly benefitted at all, in many cases their share has been shrinking. By 2015, the

richest 5 per cent of the population were 121 times richer than the poorest 5 per

cent. Now the Covid-19 pandemic is likely to further widen that gap.

How to address inequality:

Our country was supposed to be a progressive country. Our founding fathers

included "socialism" in addition to democracy as one of our founding pillars in the

constitution. The major problem involved is to regard growing inequality as an

issue. Policies should be adopted insuch a way that income of the lower 90 per cent

of the households increases at faster rate than the rate of increase of income of the

top 10% of the households. Some steps should be taken as redistribution of

income and wealth in favour of the poor where possible such as safety net

programs. It has to be supported by strong political commitment and leadership.

“Nevertheless, the growing income inequality is of major concern to the

Government. The SFYP will seek to address the income inequality problem

through a range of measures including creating better access to high productivity,

high income jobs; improving farm productivity and incomes; sharpening the focus

on equity aspects of public spending on education, health, family planning;

nutrition and water supply; reducing the regional disparity of growth; and

improving the access of the poor to means of production (fertilizer, seeds, water,

electricity and rural roads); and by improving the access of the poor to institutional

finance.”