According to the online database of worldometer, until December 20, 2020, more than 77 million people in 220 countries and territories have been taken ill by the severe acute respiratory syndrome coronavirus-2 (SARS-CoV-2) or Covid-19. By that time, the Covid-19 induced death toll had reached more than 1.7 million globally.
The International Labour Organisation (ILO) estimates that due to Covid-19 induced lockdown, the participation of the global working force in the first quarter of 2020 declined by 4.5 per cent which is equivalent to 130 million full-time jobs. In a report, Asian Development Bank (ADB) projected that the Covid-19 induced global loss will range between $6.1 to $9.1 trillion compared to a no-Covid-19 baseline, which is equivalent to 7.1 per cent to 10.5 per cent of the global GDP. The International Monetary Fund (IMF) warned that due to the Covid-19 induced lockdown and resource reallocation to the health sector to save lives, the global GDP could be reduced by 4.9 per cent in 2020 compared to the previous year. The Economic Commission for Latin America and the Caribbean (ECLAC) and ILO projected that due to the Covid-19 pandemic, the economy of the Latin American and Caribbean region will shrink by 5.3 per cent and the unemployment rate will increase from 3.5 per cent to 11.5 per cent, equivalent to more than 11.5 million new unemployed persons.
In Bangladesh, on March 23, 2020, in the wake of three deaths and 25 infections of Covid-19, the government imposed a nationwide holiday and lockdown initially from March 26 to April 4, 2020, and later extending the general holiday to April 11, and then to April 30, 2020. Finally, the government extended the general holiday and airport and road lockdown until May 30, 2020. Until April 17, 2020, out of 64 districts of Bangladesh, 38 districts were completely under lockdown and 17 were under partial lockdown. Currently, although educational institutes of Bangladesh are still closed, the country is not following any strict lockdown policy in any region. As of December 20, 2020, Bangladesh had a total of 500,713 confirmed Covid-19 cases, with 437,527 recovered and 7,280 deaths. This short article examined the economic loss of Bangladesh due to Covid-19 induced lockdown and suggested the minimum compensation package for the food vulnerable group.
To make the assessment simple, I have considered only the daily wage-based workers in Bangladesh, as lockdown impacts their income and consumption most brutally than any other groups. According to the Bangladesh Bureau of Statistics, in 2016/17 the labour market of Bangladesh consisted of 60.8 million actively employed workers, in which 24.7 million (40.6 per cent) workers were working in the farm, and 36.1 million (59.4 per cent) in nonfarm sector. Furthermore, in 2016-17, 44.4 per cent workers in the rural areas, and 18.5 per cent workers in the urban areas were paid on daily basis. As most of the workers in the rural areas of Bangladesh are mainly engaged in farming, we assume that out of 24.7 million workers in the farm sector, 44.7 per cent of them, or 10.9 million were paid on daily basis. Similarly, as in the urban areas most of the workers are engaged in nonfarm sector, we assume that out of 36.1 million workers in the nonfarm sector, 18.5 per cent of them, or 6.7 million, were paid on daily basis. We estimated that the daily wage rate of the workers in the farm sector was BDT 272.2/day and for nonfarm worker was BDT 361.5/day.
Now, under the assumption of a lockdown situation in the entire country, a complete lockdown with no-one allowed to work, the economic loss in one day is estimated at BDT 5389.03 million or approximately US$ 64.2 million-- only considering the wage loss of the daily wage-based workers in Bangladesh. This is calculated as the multiplication of the total daily wage-based workers in the farm and nonfarm sectors and their daily wage rates. By relaxing the assumption, if 50 per cent of the daily wage workers are not allowed to work and the rest are, the economic loss/day would be BDT 2694.5 million or US$ 32.1 million. Now the question arises-- what should be the compensation package to ensure minimum food security of the daily wage-based food vulnerable households in Bangladesh?
Our analysis indicates that the daily household level food expenditure for a daily wage-based farm household is in between BDT150-153, and for a daily wage-based nonfarm household, it is in between BDT169-171. Our estimation shows that on average a daily wage-based farm household in the farm sector spend 34 per cent of their daily wage income on food, and it is 41 per cent for a daily wage-based nonfarm household in Bangladesh. Using the findings, we suggested at least BDT 85 or US $1 a common minimum support/day to ensure minimum food security of the daily wage-based farm and nonfarm households in Bangladesh.
In addition to providing direct support, government also should strictly monitor the price of rice and other necessary food items during the pandemic time. It is observed that during epidemics like HIV/AIDS and Ebola in Africa, food prices in affected countries increased significantly, with severe impacts on food security, especially for vulnerable populations including women, children and marginal people. As increased food prices can disproportionately affect vulnerable groups, such as marginal households and women, direct food support by proving rice and other necessary items to the marginal groups can be instrumental to ensuring their minimum food security.
Since 2000, Bangladesh has continued to achieve commendable economic progress. After independence in 1971, the per capita GDP of Bangladesh was $133.6, which increased to $418.1 in 2000, and $ 1856 in 2019. In 2019, Bangladesh ranked 83rd out of 113 countries on the Global Food Security Index, whereas it ranked 102nd out of 119 countries in 2006. The Covid-19 induced turmoil, however, could substantially undermine the economic achievement of Bangladesh by affecting trade and disrupting the agricultural value chain. In order to minimise economic damage in the wake of the probable second wave of Covid-19, the government should adopt all the necessary and pragmatic steps, particularly to protect the marginal and vulnerable groups of the country. Last but not the least, it is also imperative to take necessary steps against government failure in the form of leakage in distributing compensation packages.
Dr Khondoker Abdul Mottaleb is an Agricultural Economist at the International
Maize and Wheat Improvement
Center (CIMMYT), Mexico.