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Creating conditions for sustainable growth

Helal Uddin Ahmed | Published: March 27, 2019 21:41:24


Bangladesh has been achieving sustained economic growth over the past three decades despite innumerable hurdles like over-population, repeated natural calamities, lack of good governance, institutional weaknesses including bureaucratic red tape, rampant corruption as well as weak infrastructure. Many economists, both local and foreign, have expressed amazement at this success story and even termed it as 'Bangladesh Miracle'! An economy is always related to the work output of its population, and therefore even miracles have their mundane and earthly explanations. In this case, 'Bangladesh Miracle' may be attributed to the infinite energy, optimism, resilience and hard-working nature of Bangladesh's workforce. Despite numerous constraints and adversities, the stamina and appetite for work shown by our working class have kept the economy moving in a consistent manner over the years.

This progress has been achieved in the backdrop of so many shortcomings in overall economic environment, as demonstrated by various studies conducted by global institutions. For example, Bangladesh has been ranked 176th out of 190 countries in the 'Ease of Doing Business Index' of the World Bank. Apart from our smaller South Asian neighbours like Nepal and Bhutan, even the war-ravaged Afghanistan is ahead of us in this yardstick. Similarly, in the Logistics Performance Index (LPI) of the World Bank, Bangladesh has been ranked a poor 100th out of 160 states. The criteria considered in LPI are: customs, infrastructure, ease of shipments, quality of logistic services, timeliness and tracking-cum-tracing. A facilitating investment climate is vital for attracting foreign investments in any country. But Bangladesh lags behind in this area compared to most countries in Asia due to weaknesses in various attributes that attract investors. 

Therefore, a significant reason why Bangladesh has been able to sustain its economic growth in spite of so many handicaps and adverse settings has been the comparative advantage of the cheapness of our labour force as an input of production. This view has been reinforced through a recent survey conducted by the Japan External Trade Organisation (JETRO) titled '2018 Survey on Business Conditions of Japanese Companies in Asia and Oceania' released last December. It shows that the wages and salaries of labourers, factory engineers and managers in the manufacturing and service sectors are minimal in Bangladesh compared to other countries in the region. JETRO has been conducting this survey since 1987, and this has been the 32nd survey in the series. The data for the survey was collected from  October 09 to November 09, 2018.

The JETRO survey made a comparison of monthly-cum-yearly wages and salaries of workers, engineers and managers in the manufacturing sector, as well as managers and workers in the service sector in 19 countries of the Asia-Oceania region. However, only the Japanese companies operating in these lands have been covered by the survey. According to its findings, the wages of workers in Bangladesh is the least among the 19 countries surveyed. A worker with 3 (three) years of experience gets only US$ 108 US dollar (approximately Tk 9000) on an average per month in Bangladesh. But this rate is US$ 162 in Myanmar, US$ 265 in India, US$ 187 in Pakistan, US$ 201 in Cambodia and US$ 227 in Vietnam.

Not only labourers, the salaries of engineers and managers are also less here. An engineer in the manufacturing sector of Bangladesh gets only US$ 287 (around TK 24,000) on an average per month. But the rate is as high as US$ 591 in India, US$ 492 in Pakistan, US$ 349 in Myanmar, US$ 439 in Vietnam and US$ 291 in Sri Lanka. As for managers in the manufacturing sector, a Bangladeshi manager gets US$ 793 on an average per month, whereas his counterpart in India gets US$ 1382, in Pakistan US$ 1235, in Vietnam US$ 931 and in Myanmar US$ 1016. Similar figures have also been shown in case of managers in the service sector, where average monthly salary in Bangladesh is only US$ 990. The corresponding figure for India is US$ 1674, for Pakistan US$ 1190, for Myanmar US$ 1028, for Vietnam US$ 1243 and for Cambodia US$ 1273.

The Japanese companies in the JETRO survey were asked about the grounds for the expansion of their businesses. In this instance, Bangladesh was placed at the top of the ladder due to ample availability of labour. Besides, Bangladesh was also liked for its high growth rate, exports expansion and liberal policies. The five major problems in Bangladesh identified by Japanese entrepreneurs were - difficulties faced in maintaining product quality, poor quality of personnel, delays in releasing commodities from customs, complexities and rising wages.

The JETRO survey also presented a comparative picture of production costs in different countries. It shows Bangladesh ahead in this area as well. A product that can be produced in Japan at a cost of TK 100 can be produced with Tk 51 in Bangladesh, TK 61 in Sri Lanka, TK 63 in Cambodia, TK 73 in Vietnam, TK 76 in Myanmar, TK 77 in India and TK 82 in Pakistan. Around 73 per cent Japanese companies operating in Bangladesh also said they intended to expand their businesses here, which is higher than other countries. 

It is however uncertain how long the current trend of high profit margins for entrepreneurs at the expense of cheap wages and salaries for the workers can be sustained in the long run. It also creates social inequality and political disequilibrium, which have adverse consequences for any nation. Besides, Bangladesh lacks many attributes based on which foreign investors prefer to come to a country. The labourers may be cheap because of their availability in large numbers. But quality personnel are in short supply compared to demand. When semi-skilled and unskilled workers apply for jobs in greater numbers, it has a pulling down effect on their wages and salaries. Apart from dearth in hard skills mainly due to inadequate education or training, many managers also lack in soft skills including presentation skill, conceptual depth and knowledge of foreign languages like English. Therefore, qualitative development of human resources and creation of conducive environment for investment by removing institutional-cum-infrastructural impediments have now become more urgent than ever before.

Dr. Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly.

hahmed1960@gmail.com

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