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We need a better urban social protection system
SARAH AMENA KHAN
COVID-19 has forced Bangladesh to take a hard look at its urban poverty situation and fragmented social protection system. Urban areas were already emerging as the new frontier of poverty even before the pandemic. And the knock-on effects on unemployment, income and food insecurity have already been widely documented. While Bangladesh focused on countering the pandemic’s impacts, especially in low-income urban communities, measures were often temporary and difficult to administer. Now, the challenges are becoming apparent even as the economy recovers, and the country navigates towards the post-Covid recovery phase.
Among the key issues, general inflation (point-to-point) has notably risen to 6.17 percent in February 2022 compared to 5.32 percent a year back. Non-food inflation drove the general trend over recent months with price hikes for transport, clothing, furniture, and furnishings.These hikes are partly linked to costlier imports of energy and essential commodities driven by Covid-induced surges in global prices and freight costs. Domestic price adjustments for fuel, gas, and transport together with weak market monitoring of essential commodity prices also added to the problems. Global uncertainty owing to the ongoing Ukraine-Russia crisis, resurgence of Covid in China, and other developments are also impacting global trade and supply chains. This may further affect inflationary trends in Bangladesh. Overall, inflation will likely continue to rise, as per the Bangladesh Bank.
Households on low, fixed incomes—especially the poorest urban households already hurt by Covid-19—are likely facing tighter budget constraints. Lower middle-income households may also be facing food insecurity. Considering these, Bangladesh cannot afford to lose focus on social protection (including urban social protection) especially in the upcoming national budget. Open Market Sales (OMS) schemes in urban areas must be continued and expanded as part of ongoing government efforts.
Beyond these immediate concerns, Bangladesh needs to invest in a shock-responsive urban social protection system that can respond to the country’s climate crisis. Bangladesh has already been experiencing rapid urbanisation with economic growth. At the same time, more frequent and intense climate-induced disasters are displacing rural populations towards urban settings such as Dhaka. One in every seven people is likely to be displaced by climate change by 2050, studies estimate. But major cities such Dhaka and Chattogram may also become less hospitable. According to a 2018 World Bank study on internal climate migration in South Asia, these are highly vulnerable to sea level rise, storm surge impacts and heavy flooding. Covid-19 has already exposed faultlines in Bangladesh’s urban social protection system. This underscores why investments need to be made now and include cities beyond Dhaka and Chattogram.
Bangladesh already has the blueprint to transition towards such a system—the long-term National Social Security Strategy and action plan. This includes expanding coverage of social assistance and introducing social insurance programmes in urban areas. Some forms of social assistance programmes for children, the elderly and persons with disabilities are already envisioned as part of ongoing reforms. However, simply extending or duplicating rural social assistance programmes will not respond well to the distinct vulnerabilities of those in urban areas. They face higher living costs, multiple aspects of deprivation, and more precarious employment.
Social protection reforms that focus on employment policies and on social insurance are also key priorities alongside social safety nets, as emphasised in Bangladesh’s 8th Five Year Plan. As noted earlier, the pandemic disproportionately hurt vulnerable urban households. Working adults from such households are likely to be self-employed, informally employed, or belong to unprotected, low-income formal sectors. They need support to protect their incomes and jobs especially during a crisis. Here, gendered needs of women require serious attention.
Bangladesh plans to introduce social insurance schemes (e.g., unemployment insurance schemes) for both formal and informal workers as part of a pilot National Social Insurance System under the National Social Security Strategy. However, the benefits are more likely to accrue to formally employed workers who can afford to contribute towards investing in their own security compared to those who are working in the informal economy. Given the new realities and by drawing on international experience, Bangladesh can explore how to introduce and expand affordable social insurance schemes to all working adults that will reduce their insecurity.
Here, partnerships will be key to designing and implementing such urban-specific, shock-responsive programmes, especially during emergencies. Bangladesh can leverage established partnerships between the Local Government Division and development actors working on urban poverty. For example, UNDP’s Livelihoods Improvement of Urban Poor Communities Project (LIUPCP) is among the biggest urban poverty reduction initiatives in the country. Similarly, the role of non-government organisations (NGOs) can be pivotal in piloting small-scale programmes to draw insights into what works for vulnerable urban households. Partnerships with actors in Bangladesh’s insurance sector may also be crucial moving forward.
Given the new realities and by drawing on international experience, Bangladesh can explore how to introduce and expand affordable social insurance schemes to all working adults that will reduce their insecurity.