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A concerning rise in income inequality
Although Bangladesh has experienced exceptional economic growth in recent years, the growth has, unfortunately, bypassed the majority of the population while higher-income groups have been its main beneficiaries. According to the Household Income and Expenditure Survey (HIES) 2022, published by the Bangladesh Bureau of Statistics (BBS), the rich-poor gap in terms of income distribution has been widening in the country. The report indicated that 30.04 percent of the income generated in Bangladesh is concentrated within the top five percent of households. This proportion was found to be 27.82 percent in the 2016 HIES. Furthermore, the top 10 percent of the wealthiest households in Bangladesh hold 40.92 percent of total income, compared to 38.09 percent in 2016. Concurrently, despite a relative decline in the poverty rate, the income share for the bottom 50 percent of households decreased to 19.05 percent in 2022 from 20.23 percent in 2016.
Income inequality and poverty are directly interrelated—the rise in income inequality reduces growth, which in turn deepens poverty. The economic growth we have experienced recently has failed to create an adequate number of jobs. According to the BBS’ Labour Force Survey , the number of unemployed individuals in Bangladesh increased to 25.9 lakh in the first quarter of 2023, from 23.2 lakh in the last quarter of 2022. This has added to rising inequality and resulted in slow progress of poverty reduction.
While it may sound unpleasant, the fact remains, money and politics have become deeply intertwined over the last few decades. For example, while millions of people in the country lost their sources of income and became jobless during the pandemic, businessmen and politicians have grown richer than ever before. The affidavits submitted to the Election Commission by candidates contesting in the 12th parliamentary election prove this. The number of candidates with movable or liquid assets of at least Tk 1 crore has increased from 274 in the 2008 election to 571 this time around. Moreover, a staggering 18 candidates possess movable/liquid assets worth over Tk 100 crore, with some even holding between Tk 200 crore and Tk 300 crore in liquid assets.
Inflation is generally believed to cause income inequality. In recent times, prices of daily essentials (including eggs, chicken, onions, potatoes, sugar, and oil) have consistently increased in Bangladesh, despite the global trend of decreasing prices. People from low-income groups are struggling to make ends meet, with many unable to afford two square meals a day. Apart from the low-income group, many middle-class individuals also queue up in front of the Trading Corporation of Bangladesh’s Open Market Sale trucks to buy goods at subsidised prices, which proves that people have their backs against the wall.
Experts say that the soaring food inflation in the country is linked to flawed government policies, poor market management, and the profit-seeking businessmen involved in syndicates. Moreover, the control of essential commodity imports by a few large businesses has resulted in a market monopoly. As a consequence, poor and low-income people have been going through immense financial hardships, as their income has not increased at the same rate as the rising prices of essential commodities, forcing them to cut down on their consumption.
The primary factors which deprive poor and vulnerable people of their most elementary rights—and which lead to greater income inequality—are unequal access to education and employment opportunities, low-wage jobs, unchecked corruption and systemic irregularities (such as those enabling the various scams in the banking sector), tax evasion, money laundering, and so on.
In Bangladesh, another pervasive factor that contributes to income inequality is people’s lack of access to credit. While banks funnel loans worth thousands of crores of taka (by violating banking rules and procedures) to influential and politically connected businessmen, many small businesses and poor farmers/sharecroppers usually have no access to credit due to lack of collateral such as land and buildings. Even if they manage to secure small loans, the poor are put under constant pressure for repayment.
Winnie Byanyima, executive director of UNAIDS, said in a lecture, “The widening gap between rich and poor… are signs that much of what we have been doing, especially in terms of models of economic growth, has been wrong.” Therefore, our policymakers must end the culture of disproportionately rewarding those at the top and refocus their efforts on serving the entire population equitably. The key objective should be to ensure inclusive growth. Priority should be given to issues of social protection, good governance, and policies of redistribution of wealth—moving money from those with too much of it to those with too little—through the tax and benefit system, as well as spending the revenue in sectors and areas such as free/subsidised healthcare, housing, and education/skill development schemes for low-income groups so that they can access jobs that are more productive and rewarding.