Employment and Social Protection in Bangladesh: An Analysis with a South Asian Perspective

1. Employment and Social Protection in Bangladesh: An Analysis with a South Asian Perspective Rizwanul Islam E-mail: rizwanul.islam49@gmail.com

2. Contents • The « development failure » and the nature of labour markets in South Asia • Definition and modalities of social protection • Social protection in Bangladesh • Social protection in South Asia: a comparative perspective • Financing and affordability • Other issues and questions

3. The « development failure » and the nature of labour markets in South Asia • Development failure despite moderate to high rate of economic growth • Slow rate of structural transformation of the labour market and persistence of surplus labour • Predominance of the informal segment of the economy and the labour market

4. The « development failure » and the nature of labour markets in South Asia (contd.) • Open unemployment • increased in Bangladesh, India, Nepal and Pakistand • Declined in Sri Lanka (after mid-1990s) • Underemployment • Difficult to provide a clear picture • But no doubt about its persistence at high levels

5. Labour Market: Open Unemployment Rate (% of labour force)

6. Labour Market: Employment in Agriculture (mill)

7. Labour Market: Informal Sector Employment

8. Structure of Labour Market (contd.) • The share of regular wage employment has increased in India and Pakistan • But in India, the share of self-employment increased at a faster rate than wage employment • The share of own-account workers increased in Bangladesh and Sri Lanka

9. The Challenge of Social Protection • The major challenge: • High proportion of employment in the informaleconomy • Difficulty of covering the informaleconomywithconventionalmeasures of social protection • High incidence of poverty • Vulnerability to crises and shocks of various types • Goingbeyondrisk and vulnerability: basic services (e.g., education, health) for enhancingcapabilities

10. Definition and Modalities of Social Protection • Protection against multi-dimensional deprivation (e.g., old age, ill health, unemployment, etc.) • ILO’s Philadelphia Declaration • Emphasis on basic income and medical care • ILO Recommendation No. 67 (1944) and No. 69 (1944) • ILO Convention No. 102 (1952) • Nine areas for social insurance

11. Definition and Modalities of Social Protection (contd.) • ILO C102 (1952): Nine areas for social insurance • Medical care • Sickness benefits • Unemployment benefits • Old age • Employment injury • Family size • Maternity • Invalidity • Widowhood

12. Definition and Modalities of Social Protection (contd.): • ILO’s World Labour Report 2000 • Social insurance (contributory) • Social assistance (tax-financed, for those with low incomes) • Public schemes • Private non-statutory schemes • Employment guarantee as a form of unemployment insurance

13. Definition and Modalities of Social Protection: (contd.) • Asian Development Bank • Definition encompasses population at large, not only workers • Five kinds of activities • Labour market policies and programmes • Social insurance programmes • Social assistance • Micro and area-based schemes • Child protection

14. Definition and Modalities of Social Protection (contd.) • Emergence of a broad-based notion of social protection • Core measures of social security (social insurance) • Social assistance: unconditional transfer (mostly tax financed) • Conditional transfer (labour market and other development programmes) • Complementary development interventions (e.g., micro credit)

15. Social Protection in Bangladesh • Pension: • 1.2 million governmentemployeeseligible for pension afterthey retire at 57 years • 1.7 million aged over 65 yearsgetoldageallowanceintroduced in 1998 • Taxfinanced social assistance scheme • Targets the poorest 20 people in eachward • Meanstested,recipientsselected by the community • Administered by the government (Min of Social Welfare) • Costs about 0.03% of the GDP

16. Social Protection in Bangladesh (contd.) • Conditionaltransfers of cash and food: • Food for education (FFE) introduced in 1993 • FFE replaced by cash for education programme in 2002 • Condition: schoolenrolment and attendance • Femalesecondarystipend programme • Condition: attendanceatsecondaryschools and delayedmarriage • Vulnerable group development programme • Food transfers to destitute rural women • Condition: participation in skilldevelopment programme

17. Social Protection in Bangladesh (contd.) • Conditional cash and foodtransfers: • Employment programmes • Food for works (began in 1976, run by WFP), • Rural maintenance programme (began in 1976, run by CARE) • Rural infrastructure development programme (replaced FFW in 2002) • 100-dayemployment programme (introduced in 2008 in the wake of the foodpricecrisis) • Employment programme for the hard corepoor (replaced the 100-dayemployment programme)

18. Social Protection in Bangladesh (contd.) • Twoapproaches to employment programmes: • Employmentbasedsafety nets • Labour intensive infrastructure for development • Ambivalence about the objective of employment programmes • Prerequisites for safety net programmes to graduateintodevelopment programmes • Planning and implementation of schemes • Allocation of resourcesbetween labour and materials

19. Social Protection in Bangladesh (contd.) • Complementary development interventions through micro credit • Mostly NGO driven, although there are many government programmes also • Some 18 million borrowers • Positive impact • Minimises consumption fluctuations • Contributes to empowerment of women • Contributes to children’s education • Provides health services • Promotes skill development

20. Social Protection in Bangladesh (contd.) • Criticisms against micro credit programmes • Inability to pull borrowers out of the cycle of credit • Bypassing the hard core poor • A point to note: • Micro credit programmes are « promotional » rather than « Protective »

21. Social Protection in Bangladesh (contd.) • Complementary development interventions aimed at the hard core poor • BRAC: Challenging the Frontiers of Poverty Reduction (targeting the ultra poor) • Transfer of income generating assets • Daily stipend (Tk 300 p.m.) until income is generated • Health and education support • Training and social development linked to micro credit • Water and sanitation • Development of supportive community networks (via Village Poverty Reduction Committees)

22. Social Protection in Bangladesh (contd.) • Complementary development internventions for the hard core poor (contd.) • PKSF Programme Initiative for Monga Eradication • Cash for work schemes during the lean season • Emergency credit • Consumption loans • Specially designed flexible credit support • Building skills and coping capacity

23. Social Protection: A South Asian Perspective • Old age pensions exist in some form in most S. Asian countries (but cover a small % of the population) • Apart from formal pensions, old age assistance is also being introduced (small coverage) • Conditional transfers through employment programmmes: • India has taken the lead through the NREGP • Bangladesh has rich experience • These experiences could be combined to draw lessons

24. Social Protection: A South Asian Perspective (contd.) • Conditional transfers for education: • Bangladesh has good experience • Nearly full attendance among beneficiaries • Promoted 9-17 percentage point rise in school enrolment ) from a base of 55%) • Significant rise in female enrolment • Social protection for the informal economy • India leads the way by enacting Social Security for Unorganized workers in Dec 2008

25. Social Protection: A South Asian Perspective (contd.) • India: Act on Social Security for the Unorganized Workers • Would cover 340 million workers • Areas of protection would include: • Life • Health • Diasbility • Old age (with contributions from workers) • Employment injury • Maternity • The Act in India demonstrates that social protection for the informal economy is not impossible

26. Financing and Affordability(cost of basic social protection as % of GDP)(Figures within parentheses represent cost without health care)

27. Other Issues and Questions • Issues relating to transfers through employment programmes • Target groups versus universal • Guaranteed or not (legislation)? • Gender • Finance (government budget or donor?) • Design and implementation of schemes • Institutions (government vs elected local bodies) • Participation • Impact • Employment and income • Creation of infrastructure and assets • Production • Sustainability

28. Other Issues and Questions (contd.) • Protective vs promotional measures • Can promotional measures provide real protection? • Conditional vs unconditional transfers • Limitations of conditional transfers • Social safety net vs social protection

29. Other Issues and Questions: Social Protection during Economic Crisis • Absence of « automatic stabilizers » • What has happened to allocation for employment programmes? • Allocation under India’s NREGP increased 2.5% which is much lower than the rate of inflation • Bangladesh has a programme for the hard core poor • Can that meet the needs of retrenched workers? • Health: allocation in India has declined

30. Concluding Remarks • Positive: Some awareness and progress • But a lot more needs to be done • Especially for those in the informal segments of the economy • And for those hit by the consequences of economic crisis and other shocks (e.g., natural calamities, food price crisis)