Economic Reporter :
Wages have reportedly gone up year-on-year by 6.11% in December, according to the Bangladesh Bureau of Statistics (BBS).
This is up from October’s 5.97% and November’s 6.02%.
But experts say that this is overshadowed by the ever-increasing inflation rates. “Inflation in December was 6.50%, while wage growth was 6.11%; this means that even though wages have risen, inflation has risen more than that,” said Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office. On the other hand, there is talk of GDP growth, with which per capita income has gone up, but now the question is where is this growth going, he asked. “Even if the BBS data is correct, there is no benefit to the increase in overall wages because it is going to be cancelled out by inflation,” Hussain added. The country’s overall inflation, which has been steadily rising in the current fiscal year, rose to 5.98% in November, up from 5.70% in October. According to the latest published data from the BBS, rural areas logged 6.20% inflation in November, up from October’s 5.81%. November’s food and non-food inflation breakdown in rural areas is 5.90% and 6.78%, respectively.
On the other hand, urban inflation rose to 5.59% from 5.50% in October — food and non-food inflation rates were 4.37% and 6.99%, respectively.
The inflation rate in June (the last month of the previous financial year) was 5.64% which decreased to 5.36% in the following month. But since then, inflation has been rising steadily. In August, September, October and November the rates were 5.54%, 5.59%, 5.70% and 5.98% respectively.
“If we look at sector-wise data, we will see that wages in the industrial sector have increased by 8.15%, while that is agriculture has risen by 6.25%. Now, the biggest subsector of the industrial sector is garments, but there we have about 4 million employees,” Zahid Hussain said.
But the total labour force has about 60 million people, which means that the income of a small part of the total labour force has increased. “Which is good news, but it [wage growth] is 4.3% in the construction sector and only 2.7% in the fisheries sector. This is really worrying because here we also have a large part of the labour force,” Hussain further said. According to Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), the wage rate index, which was supposed to benefit GDP growth, does not indicate that it will be beneficial. Even if it increases a little bit, the way inflation has risen, this rising income is not supposed to cover the deficit, he said.
“There are two things: first, if we calculate our original GDP growth, it was 5.47%. But compared to that, the wage growth is zero. So, it is not clear how much GDP growth has benefitted people in terms of income.
