GROWTH, POVERTY & EMPLOYMENT. A.Z.M. Saleh

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1 GROWTH, POVERTY & EMPLOYMENT A.Z.M. Saleh

2 This report has been prepared as a chapter for a forthcoming book Growth or Contraction?: State of Bangladesh Economy and Development , edited by Rashed Al Mahmud Titumir to be published by Shrabon Prokashani, Dhaka in June 2012 Copyright: Unnayan Onneshan The content of this publication may be reproduced for non-commercial purposes with proper citation (please send output to the address mentioned below). Any other form of reproduction, storage in a retrieval system or transmission by any means for commercial purposes, requires permission from the Unnayan Onneshan. For orders and request please contact: Unnayan Onneshan House: 16/2, Indira Road, Farmgate, Dhaka-1205, Bangladesh. Tell: + (880-2) , ; Fax: + (880-2) info@unnayan.org; Web:

3 GROWTH, POVERTY & EMPLOYMENT A.Z.M. Saleh 1 INTRODUCTION The chapter explores the link between economic growth and poverty alleviation through employment generation. Relationship between economic growth and poverty reduction has gone through several analyses in the literature of development. Most of the premise of early theories of development was that fostered economic growth would drop down to the poor. Questions have been raised since then on the assumptions of the link between growth and poverty reduction. Therefore, several attempts 1 have been made to understand the mechanisms to benefit the poor from growth through employment generation. During 1980s renewed emphasis on economic growth has been witnessed. However, studies on growth contributing to poverty reduction were developed in 1990s. Most of the studies did not explicitly examine the employment nexus in the linkage between economic growth and poverty. There is a gap in literature linking economic growth and poverty reduction through proper employment. Therefore, an attempt at identifying possible elements of pro-poor economic growth in terms of output growth coupled with growth of employment and rising productivity is necessary. The chapter also emphasises on the incidence of poverty, its severity, household income and expenditure, income and expenditure, inequality in income and consumption expenditure, employment scenario and the future challenges that the economy of the country may have to face due to the IMF-MEFP. The prescriptions stated in the memorandum may dampen employment opportunity which may adversely affect the growth process and simultaneously slow down the rate of reduction in poverty. 2 THEORETICAL APPROACH: OUTPUT GROWTH, POVERTY AND EMPLOYMENT Conceptually, the link between growth, poverty and employment can be analysed at both macro and micro levels. The linkage between poverty in its income dimension and output growth at the macro level reflects on the average productivity of the employed work force. The same linkage between poverty and employment at the micro level functions through the type and low productivity of economic activities where the earning members of a household are engaged (Islam, 2004). Employment opportunities with rising productivity are generated with higher economic growth lead to sustained increase in productive capacity. In the process, marginalised 1 Kuznets (1955) hypothesis illustrated an inverted U shape of the relationship between economic growth and income inequality. One of the earlier studies to question the automaticity of the relationship between economic growth and benefits to the poor was Adelman and Morris (1973). Chenery, et al. (1974) had the influential contribution by focusing on the importance of redistribution alongside economic growth.

4 people may be able to achieve higher productivity and increase their incomes in their existing occupations, or shift to new occupations involving higher level skills. 2.1 Linkage between Growth and Poverty Poverty is multidimensional and reflects the failures of human capabilities. Due to poverty, people fail to live a long and healthy life and a decent standard of living as well. The linkage lies in two channels. First, society uses growth-generated resources for providing services to poor people to enhance their capabilities. Second, growth of the economy ensures translating higher personal income of marginalised people and utilise their income to improve their capabilities. 2.2 Linkage between Economic Growth and Employment The growth of an economy does not automatically contribute to higher employment of a nation. Any growth rate can be associated with different degrees of shift in employment potential depending on the nature of the growth process. The degree of elasticity would depend on three features of the growth process. First is sectorial composition of output in which the growth of output is concentrated in the more labour-intensive sectors. Second is choice of technique in which more labour-intensive techniques are used, especially in the growing sectors. Third terms of trade in which the internal and external terms of trade improve for the labour-intensive sectors. 2.3 Linkage between Employment and Poverty Reduction In the labour force, the poor people can be divided into two groups: the unemployed poor and the working poor. The critical issue regarding the working poor is that why they are poor in spite of their employment. Two broad categories of proximate causes can be stated: underemployment and low returns to labour. In other words, the quantity and quality of employment determine whether employment would lead to poverty reduction or not. There are types of underemployment: open underemployment 2 and disguised underemployment 3. People who suffer from low returns to labour despite working fulltime and at high intensity are divided into three categories. First, people who work for very low wages due to competing with potential entrants the surplus labour syndrome. Second, people who work with less skill/ poor technology/ insufficient complementary factors the low productivity syndrome. Third, people who suffer from adverse terms of trade, either because of low product prices, or high input cost, or both the adverse terms of trade syndrome. 2 People who work less than full time and cannot earn enough to rise above the poverty line are open underemployed. 3 People who (the Nurkse-Lewis type surplus labour) work full time at low intensity, within an institutional framework that permits both work-sharing and income-sharing are disguised underemployed.

5 2.4 Linkage between Economic Growth, Employment and Poverty Reduction Economic growth contributes to higher employment and higher employment leads to the reduction in poverty based on three factors. Growth factor - expansion of production potential of the economy that is represented by an upward shift of the production possibility frontier. Elasticity factor- an upward shift of the production possibility frontier enhances the employment potential (improved quality and quantity of employment). Integratibility factor - poor people can take advantage of the greater scope for improving the quality and quantity of employment when growth occurs and the employment potential expands. Figure 1: Linkage between growth, employment and poverty High Economic Growth Increased Productive Productive Capacity Higher Expenditure on Health, Education and Skill Development Employment with Rising Productivity Higher Income of the Poor Source: Source: Adopted from ILO Employment and Poverty Discussion Paper 13 (2003) The conceptual framework outlined above for analysing the linkage between economic growth, employment and poverty reduction basically, follows a demand-supply approach. The variables that are expected to influence incomes of the poor from the demand side include employment intensity of growth, shifts in the employment structure towards higher productivity sectors, technology, creation of assets for the poor, etc. From the supply side, an important factor is the ability of the poor to integrate into the process of economic growth and get access to the jobs that are created. Levels of education and skills of the workforce are amongst the key variables that determine the ability of the poor to integrate into and benefit from the growth process.

6 3 INCIDENCE OF POVERTY AND TRENDS Discussion on determinants, trends and incidence of poverty in Bangladesh is based on the Household Income & Expenditure Survey (HIES) conducted at the household level by the Bangladesh Bureau of Statistics (BBS) since FY Poverty estimates, patterns and trends are determined by analysing data on household consumption expenditures and poverty lines are compared to separate the poor from the non-poor and estimate the extent of poverty. Poverty situation is better in the central region, moderate in north-eastern and south-eastern region while the rest - north-west and south-west, is most poverty prone (Figure 2). Bangladesh has made remarkable development in the fight against poverty during the last two decades. The incidence of poverty has come down to 31.5 percent in 2010 with respect to 56.6 percent in (Figure 7.1.3). The frequency of poverty has dropped down by 17.4 percent during 2000 to 2010, whereas it was only 7.7 percent in the last decade ( to 2010). However, decline in the aggregate poverty in the subsequent period was associated with decline in urban poverty (Zohir, 2011) Figure 2: Poverty map of Bangladesh (Division and Upazilla Level) Source: Adopted from Updating Poverty Maps of Bangladesh, Bangladesh Bureau of Statistics, 2012 The current government of Bangladesh has a commitment to reduce the rate of poverty to 25 percent by 2013 and 15 percent by According to head count rate (CBN) (using upper poverty line of latest available national statistics on poverty), the incidence of poverty in Bangladesh decreased to 31.5 percent in 2010 at the national level with an

7 annual average rate of decrease at 1.32 percent from If this trend of decline persists, the incidence of poverty might slide down to 27.5 percent and 17.0 percent by 2013 and 2021, which are higher by 2.5 and 2.0 percent respectively than those of the targets of the present government. To achieve the targets within the time limits (i.e. by 2013 and 2021), it is required to reduce the rate of poverty by 2.2 percent in 2013 and 1.5 percent in Figure 3: Incidence of poverty ( to 2010) Source: Author's calculation based on Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics, 2012 The incidence of poverty in rural areas has decreased from 58.7 percent in to 35.2 percent in 2010 with an annual average decrease rate of 1.24 percent. However, in urban areas, the incidence of poverty has decreased by 1.13 percent per annum from 42.7 percent in to 21.3 percent in Between 2000 and 2010, the incidence of poverty has reduced by 17.1 percent in rural areas and 13.9 percent in urban areas with respect to 6.4 and 7.5 percent respectively in rural and urban areas from to It is evident the incidence of poverty is higher in rural areas than that of the urban areas and the decreased rate of poverty is also higher in rural areas than that of the urban areas. The accelerated pace of rural-urban migration might be one possible reason (Titumir & Rahman, 2011). Lack of assets, limited economic opportunities, poor education and inadequate capabilities has resulted into rural poverty (IFAD, 2010). 4 HOUSEHOLD INCOME AND EXPENDITURE Monthly household income has risen in the country in the last two decades while the monthly household expenditure has witnessed a sharp rise mainly due to rise in their food expenditure over the years. The monthly household income at national level during the last 23 years (i.e. from to 2010) has increased from Tk. 2,865 in to Tk. 11,480 in 2010, while it has increased from Tk. 2,670 to Tk. 9,648 in rural areas and Tk. 4,224 to Tk. 16,477 in urban areas during the same period. At national level, the monthly household expenditure has mounted from Tk. 2,592 in to Tk. 11,200 in In rural areas, this expenditure has increased from Tk. 2,405 to Tk. 9,612 and it increased from Tk. 3,900 to Tk. 15,531 in urban areas during the same time interval (Figure 4).

8 During the period of to 2010, food expenditure has increased from Tk. 1,672 to Tk. 6,031 at the national level, Tk. 1,603 to Tk. 5,543 in rural areas and Tk. 2,159 to Tk. 7,362 in urban areas (Figure 4). Figure 4: Household monthly income, expenditure and food expenditure ( to 2010) Source: Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics, 2012 Between and 2010, the monthly household income has increased by percent at national level, while monthly household expenditure has climbed up by percent mainly due to the increase of food expenditure by percent. In decade wise comparison, the nature of monthly household income, expenditure and food expenditure has taken an intense drift between last two decades. Between and 2000, monthly household income, expenditure and food expenditure increased by , 88.5 and percent respectively. During 2000 to 2010, monthly household income increased by percent, expenditure by percent and food expenditure by percent. Figure 5: Growth rate of monthly household income, expenditure and food expenditure at national, rural and urban area ( to 2010) Source: Author's calculation based on Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics, 2012

9 It is an undeniable fact that monthly household income, expenditure and food expenditure have increased between and However, the pace of increase in food expenditure was much higher than that of income and expenditure between 2000 and During the period of to 2010, the monthly household income has increased with a growth rate of percent, percent and percent at national, rural and urban levels respectively. At the same time, the monthly household expenditure has risen with a growth rate of percent at national level, percent at rural level and percent at urban level while food expenditure has increased with a growth rate of percent, percent and percent at national, rural and urban areas respectively. Between and 2000, the growth rate of monthly household income was higher at 7.48 percent than that of the growth rate of monthly household expenditure and food expenditure at 6.60 and 2.82 percent respectively. However, during 2000 to 2010, the growth rate of food expenditure has exceeded the growth rate of both monthly household income and expenditure. During the same period (2000 to 2010), the growth rate of monthly household income, expenditure and food expenditure was 9.65, and percent respectively. Higher growth rate of monthly household expenditure than income may indicate that more people are suffering to manage their livelihood in the recent years mainly due to the soaring food price. The growth rate of monthly household income in rural areas has increased at a higher rate than that of urban areas, while expenditure in rural areas is lower than that of urban areas (Titumir & Rahman, 2011).

10 5 INEQUALITY IN INCOME AND CONSUMPTION EXPENDITURE The Gini co-efficient is the method to measure inequality. This widely used composite indicator reviews the extent of inequality in household income and expenditure. Gini coefficient can vary between 0 and 1. Inequality is severe while the value is equal or close to 1, whereas equal or near to zero symbolises to equality. Gini co-efficient of income has increased from in to in 2010 with the growth rate of 0.90 percent. However, Gini-coefficient of consumption has increased with a growth rate of 0.81 percent from in to in Income inequality (Ginicoefficient of income) increased to at rural and at urban level in 2000 than that of and in The scenario of income inequality in urban areas is improving after Gini co-efficient of income at urban areas has dropped down to while increased to at rural areas in Figure 6: Inequality in income and consumption expenditure Source: Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics, POPULATION UNDER POVERTY LINE The population living under the poverty line in the country is still increasing despite progress in reducing the overall incidence of poverty during the last two decades. Soaring food price and food inflation, climate change as well as the lack of balanced development throughout the country are attributed for such increase. With an annual average rate of 0.35 percent at national level, the population living below the poverty line in 2005 has increased to 56 million from 49.7 million in Continuation of the rate might witness the number of population living below the poverty line at 58.8 million by 2013 and 61.6 million by This number has decreased from 43.4 million to 41.2 million in rural areas during to 2005, with an average decrease rate of 0.12 percent per annum. Under the business as usual scenario, the population living below the poverty line in rural areas might decrease to 40.2 million and 39.3 million by 2013 and 2021 respectively. Whereas, the number of population under poverty line has increased from 6.3 million in to

11 14.8 million in 2005 in urban areas with the average increase rate of 0.47 percent per year. Continuation of the current rate may witness an increased population of 18.6 million and 22.4 million by 2013 and 2021 respectively living below the poverty line in urban areas (Figure 7). Figure 7: Current situation and future projection of population living below the poverty line Source: Author's calculation based on Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics, INFLATION AND POPULATION LIVING BELOW THE POVERTY LINE The rate of inflation, specially food inflation and poverty are positively correlated. Increase in food inflation drags down additional number of people under the poverty line (Saleh et al., 2011). The magrinalised people dedicate the largest share of their budget to food. Therefore, with the increase in food prices, they have the least ability to cut nonfood expenditure for compensating increased cost of food. Price hike of food commodities over the past few years have eroded the purchasing power of the marginalised section and let them go down under the poverty line. The mounting trend of general as well as food inflation has adverse impact on the food intake and behaviour sliding down more people into poverty. General and food inflation in 2000 were 2.79 and 2.68 percent (12-month average) respectively when 55.8 million people were living under poverty line (Figure 7.1.8). In 2005, food inflation has increased to 7.91 percent (12-month average) and general inflation to 6.48 percent when the total population living below the poverty line was 56 million. Under the business as usual scenario, this may indicate that 0.04 million people might be newly added to the total population living under the poverty line due to one percent increase in the food inflation. Hence, percent food inflation (March, 2012) indicates that more people have newly gone under poverty line.

12 Figure 8: Inflation and people living below the Poverty line Source: Household Income & Expenditure Survey ( , , 2000, 2005, 2010), Bangladesh Bureau of Statistics and Bangladesh Bank, 2012 A number of studies have assessed that price hike of food commodities has an adverse impact on the incidence of poverty in Bangladesh. The level of poverty has increased around three percent due to the increase in food prices from the rate of 40 percent in 2005 (World Bank, 2008). According to Center for Policy Dialogue (2008), higher inflation has dragged down 8.5 percent of additional households below the poverty line. Most of the studies have taken the Household Income Expenditure Survey of 2005 as the benchmark. The cumulative impact of high inflation (particularly the weighted inflationary impact of the price of rice) has resulted in significant income erosion of the marginalised people in Bangladesh. 8 EMPLOYMENT SCENARIO In , total civilian labour force was 36.1 million out of which 30.7 million was male and only 5.4 million was female. With a growth rate of 3.88 percent (from to 2010), the number of total civilian labour force in 2010 was projected at 57.1 million. The growth rate female labour force (14.20 percent) was seven times more than that of male labour force (2.06 percent). Out of total civilian labour force, 40.2 million was male and rest 16.9 million was female. A total of 34.8 million were employed and 1.4 million were unemployed in which increased to 54.5 million and 2.6 million of employed and unemployed population respectively in 2010 (BBS, 2011). If the current trend continues, employed population might increase to 64.6 million and unemployed to 3.3 million by 2015.

13 Figure 9: Current situation and future projection of labour force, employed and unemployed population Source: Author's calculation based on Labour Force Survey ( , , and ), Monitoring of Employment Survey (2009), Bangladesh Bureau of Statistics, 2012 Educational stipend and other initiatives taken by the GoB to improve the condition of female education, have not only increased the rate of enrolment and primary education of female child but also created opportunities before them to enter into the employment market (Rahman, 2005). In , male labour force constituted percent (29.9 million) against percent (4.9 million) of their female counterparts. Female employed population in 2010 increased to percent (15.9) of the total employed population of 54.5 million. Business as usual scenario suggests that percent (28.6 million) of total employed population and percent (1.3 million) to total unemployed population might be female. Figure 10: Current situation and future projection of labour force, employed and unemployed population (gender wise) Source: Author's calculation based on Labour Force Survey ( , , and ), Monitoring of Employment Survey (2009), Bangladesh Bureau of Statistics, 2012

14 8.1 Sectorial Labour Participation Most of the labour force use to be employed in agriculture sector in early years of Bangladesh. That is gradually shifting towards manufacturing and service sector. Labour participation in agricultural sector in was percent of the total labor force against 48.1 and 47 percent in and 2010 respectively. This indicates the employment opportunity has been shrunk in this sector. The emerging manufacturing sector, i.e. Ready Made Garment (RMG), managed to create employment opportunity in the recent decade. Moreover, labour participation in overall service sector is also increasing gradually because of investment in service sector. Figure 11: Sectorial labour participation ( and 2010) Source: Labour Force Survey ( , , and ), Monitoring of Employment Survey (2009), Bangladesh Bureau of Statistics, BUDGETARY ALLOCATION IN POVERTY REDUCTION With the broader perspective of alleviating poverty and achieving the targets of Millennium Development Goals (MDGs), the governments has been allocating around percent of its national budget as poverty budget in each fiscal year. In FY , Tk. 86,891 crore has been allocated as poverty budget that is percent more than that of the poverty budget of Tk. 73,680 crore of FY Poverty budget of the current fiscal year (FY ) is percent of the national budget and 9.66 percent of Gross Domestic Product (GDP). The government allocated percent in FY , percent in FY , percent in FY , percent in FY and percent in FY of total budget outlay.

15 Figure 12: Budgetary allocation in poverty allocation Source: Author's calculation based on Ministry of Finance, Finance Division, GoB, GROWTH, POVERTY AND EMPLOYMENT The basic concept is that the incidence of poverty declines with the rise in economic growth. In case of Bangladesh, it seems to be true. In , while the country witnessed a GDP growth rate of 4.6 percent, incidence of poverty was 50.1 percent. GDP growth rate in 2000 was 5.94 percent; while incidence of poverty reduced to 48.9 which further reduced to 40 percent in 2005 (growth rate of GDP in 2005 was 5.96 percent). If the current trend persists, incidence of poverty might decrease to percent against the GDP growth rate of 6.98 percent by The incidence of poverty might reduce further to percent by 2015 while GDP growth rate might witness at 7.3 percent. Figure 13: GDP growth and incidence of poverty Source: Author's calculation based on Household Income & Expenditure Survey ( , , 2000, 2005 and 2010), Bangladesh Bureau of Statistics and Bangladesh Bank, 2012

16 In Bangladesh, with the growth in GDP, both the rate of employment and unemployment is on the rise. In , total civilian labour force was 36.1 million out of which 34.8 million was employed and 1.4 million was unemployed. With a growth rate of 3.88 percent (from to 2010), the number of total civilian labour force in 2010 was projected at 57.1 million, while 54.5 million was employed and unemployed population increased to 2.6 million. If the current trend continues, employed population might increase to 60.9 million and 64.6 million by 2013 and 2015 respectively and unemployed population to 3.1 and 3.3 million respectively by Figure 14: GDP Growth and Employment Source: Author's calculation based on Labour Force Survey ( , and ), Bangladesh Bureau of Statistics & Bangladesh Bank, CHALLENGES YET TO BE FACED Although the government has taken several initiatives for alleviating poverty, employment and sustainable economic growth, a number of problems are yet to be faced in the upcoming fiscal years. In recent fiscal years, the government has been facing fiscal deficit fuelled by higher inflationary pressure, lower investment, declined aid and borrowing from both domestic and international sources. The recent IMF-MEFP factor might stand the economy before three main challenges stated on the macroeconomic part of the book. If the three challenges are negotiated, several other challenges may come before the economy while it is destined to consolidate fiscal policy, sustainable GDP growth and rein in inflation. The further problems that the government might have to face due to the IMF-MEFP measures in reducing poverty by employment generation for sustaining economic growth in the upcoming fiscal years are as follows: 11.1 Higher Inflationary Pressure There exists a negative association between the inflation rate and the unemployment rate according to the articulation of A.W. Philips. It shows that if inflation is low, unemployment rate is high and if inflation is high, unemployment rate should be low.

17 This relationship is known as The Philips Curve. Later Samuelson and Solow also supported that the policymakers face a trade-off between inflation and unemployment and the Philips curve illustrates that trade-off. However, statistics of Bangladesh in recent years depict a different picture from the findings of Philips. Table 1: Inflation and unemployment rate Surveys Inflation in corresponding years (percent) Unemployment rate (percent) Average inflation (5 years) LFS, LFS, LFS, LFS, LFS, MES, Source: Labour Force Survey ( , , and ), Monitoring of Employment Survey (2009), Bangladesh Bureau of Statistics and Bangladesh Bank 2012 In Bangladesh, rate of unemployment is increasing along with increasing rate of inflation from FY and thus the relationship between inflation and unemployment has become positive. Thus, the economy of Bangladesh is heading towards a three-way trap; high inflation is creating income erosion and increasing unemployment rate is preventing access of general people to income source which in turn might slow down the pace of eradicating poverty Squeeze in Productive Capacity The neo-liberal paradigm reduces the capacity of state through liberalisation, deregulation and privatisation, assuming that the market will deliver the results. This further assumes that a part of the population will plunge into the poverty and they will be addressed through social safety nets. The failing of the paradigm is the failing to take cognizance of the endemic market failures and the need for the state to intervene with strategies, policies and incentives to enhance the productive capacity to ensure full employment, particularly addressing the disguised unemployment. When people do not have work, they do not make any money; thus, high unemployment leads to high levels of poverty Shortfalls in Social Spending Social expenditure in education, health and housing has a bearing on the poverty. Given the magnitude of poverty, the allocation in these sectors is not adequate yet. Moreover, the social spending scenario has witnessed a worsened picture in the current fiscal year. For instance, ADP allocation in education has come down to one-third that of the allocation in FY Shortfall in all social spending might gross into squeezed social safety net programmes, which in turn slow down the pace of poverty alleviation in the country.

18 11.4 Declining Public Expenditure Public expenditure is on a downward trend in the current fiscal year. Due to increased subsidy in power sector, other sectors might witness shortfall in public expenditure. Moreover, subsidy in other sectors, i.e. agriculture sector, has declined due to enormous subsidy in power. The economy is on the risk of high fiscal deficit mainly because of power subsidy. If subsidy in the respective sector reduces suddenly, there would be another chaos. Power subsidy need to reduced but after having permanent power generation or supply assurance Reduction in Remittance Usages Remittance plays a pivotal role in building a healthy foreign exchange reserve that is utilised for import payments. Downturn in the flow of remittance would minimise the scope for importing capital machineries for industrial development that would create employment opportunities. Employment generation would help to develop the livelihood status of those people and bring them upwards from living below the poverty line Inadequate Infrastructure Supply Adequate infrastructure supply would ensure industrial productivity in the country which is related to labour participation. That means employment generation can be ensured, if the government can guarantee infrastructure supply to the investors which would employ people and improve the poverty scenario of the country. Currently, although the government has taken initiatives to purchase power from rental and quick rental power plants, proper infrastructure supply, power and gas, is far behind the demand of the day. Therefore, scope for investment has squeezed, lagging behind employment generation which would hinder the process of alleviating poverty and would decline the growth of GDP. 12 RECOMMENDATIONS AND CONCLUSIONS Alleviating poverty and ensuring proper employment (full employment) while maintaining economic growth is the prime challenge before the government not only because of their promises made in the election manifesto but also for achieving the targets of several international and universal goals. Achieving a reduction in poverty and inequality is a fundamental challenge in the country without which the human development, economic and employment goals of the government may be hindered. Despite considerable trust on poverty alleviation in all planned documents since the independence of Bangladesh, a significant number of people are still living below the poverty line. The rate of employed population is increasing but they are compelled to go for multiple and informal employment just to maintain their livelihood while the nation is facing higher inflationary pressure. In case of poverty reduction, the basic problem of poverty lies in its concept that poverty is manifestation of social property relationship. Poverty reduction or increase depends upon the social property relations, rather than the neo-liberal enunciation that an increase in the size of the things-basket reduces poverty. The things-basket may accelerate the reduction of poverty up to a point; however it is reproduced due to social property

19 relationship through institutions, structures, power, and reality and composition of the state (Titumir and Rahman, 2011). The government is currently facing fiscal deficit mainly fuelled by subsidy in power sector. Public expenditure has reduced in the current fiscal year. Moreover, due to government borrowing (both domestic and international), investment scenario has taken a halt. The aid reimbursement is not adequate. However, recent IMF-MEFP measures might exert too much pressure on the economy that it would be very difficult to maintain fiscal consolidation, sustain pace of GDP growth and rein in inflation. All these might have adverse impacts on employment scenario, safety net programmes and decline the rate of reduction in the incidence of poverty. REFERENCES Adelman, I. and Morris, C.T Economic Growth and Social Equity in Developing Countries. Stanford, UK: Stanford University Press. Bangladesh Bank. 2012, Major Economic Indicators. Dhaka, Bangladesh: Bangladesh Bank. Bangladesh Bureau of Statistics (BBS). 1998, Household Expenditure Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2002, Report of the Labour Force Survey Bangladesh Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2003, Report of the Household Income & Expenditure Survey, Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2004, Report on Labour Force Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2007, Report of the Household Income & Expenditure Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2008, Report on Labour Force Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2009, Report on Monitoring of Employment Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Bangladesh Bureau of Statistics (BBS). 2009, Updating Poverty Maps of Bangladesh. Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Available at: psofbangladesh.pdf [Accessed 7 April 2012]

20 Bangladesh Bureau of Statistics (BBS). 2011, Preliminary Report on Household Income & Expenditure Survey Dhaka, Bangladesh: Bangladesh Bureau of Statistics. Centre for Policy Dialogue (CPD) Bangladesh Economy in FY : An Interim Review of Macroeconomic Performance. A Report prepared by the Centre for Policy Dialogue (CPD) under the Independent Review of Bangladesh s Development (IRBD) Programme June, 2008, Dhaka, Bangladesh: Centre for Policy Dialogue. Chenery, H., Ahluwalia, M.S., Bell, C.L.G., Duly, J.H. and Jolly, R Redistribution International Fund for Agricultural Development (IFAD), Rural Poverty Report, Rome, Italy: International Fund for Agricultural Development. Islam, R. 2004, The Nexus of Economic Growth, Employment and Poverty Reduction: An Empirical Analysis. Issues in Employment and Poverty Discussion Paper 14. Geneva, Switzerland: International Labour Organisation. Available at: ed_emp/documents/publication/wcms_ pdf [Accessed 10 March 2012] Kuznets, S Economic Growth and Income Inequality. American Economic Review, vol. 45. Ministry of Finance. 2012, Budget in Brief Dhaka, Bangladesh: Finance Division, Ministry of Finance, Government of Bangladesh. Ministry of Finance. 2012, Budget in Brief Dhaka, Bangladesh: Finance Division, Ministry of Finance, Government of Bangladesh. Ministry of Finance. 2012, Budget in Brief Dhaka, Bangladesh: Finance Division, Ministry of Finance, Government of Bangladesh. Ministry of Finance. 2012, Budget in Brief Dhaka, Bangladesh: Finance Division, Ministry of Finance, Government of Bangladesh. Ministry of Finance. 2012, Budget in Brief Dhaka, Bangladesh: Finance Division, Ministry of Finance, Government of Bangladesh. Ocampo, J. A. and Sundaram, J. K. (eds.) 2007, Towards Full and Decent Employment. Hyderabad, India: Orient Longman Private Limited. Rahman, R. I. 2005, The dynamics of the labour market and employment in Bangladesh: A focus on gender dimensions. Employment Strategy Papers, Geneva, Switzerland: International Labour Organisation. Available at: ication/wcms_ pdf [Accessed 10 March 2012]

21 Rayan, K. and Zabir, S. M. 2011, Inflation, Unemployment and Growth Trajectory. Bangladesh Economic Update, October 2010, Vol. 1, No. 4. Dhaka, Bangladesh: Unnayan Onneshan. Available at: [Accessed 11 April 2012] Saleh, A. Z. M., Basak, J. K., Rahman, K. M. M. and Laboni, F. R. 2011, Food Prices, Food Security and the Marginalised. Bangladesh Economic Update, June 2011, Vol. 2, No. 5. Dhaka, Bangladesh: Unnayan Onneshan. Available at: [Accessed 15 April 2012] Selim, R. 2006, Employment-poverty linkages and pro-poor growth: A synthesis paper based on country studies of Bangladesh, Bolivia and Ethiopia. Issues in Employment and Poverty Discussion Paper 23. Geneva, Switzerland: International Labour Organisation. Available at: ed_emp/documents/publication/wcms_ pdf [Accessed 10 March 2012] Titumir, R. A. M. and Rahman, K. M. M. 2011, Poverty and Inequality in Bangladesh. Dhaka, Bangladesh: Unnayan Onneshan. Available at: [Accessed 5 April 2012] Torm, N. 2003, The Nexus of Economic Growth, Employment and Poverty during Economic Transition: An Analysis of Armenia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan. Issues in Employment and Poverty Discussion Paper 13. Geneva, Switzerland: International Labour Organisation. Available at: s_ pdf [Accessed 10 March 2012] World Bank (WB). 2008, Poverty Assessment for Bangladesh: Creating Opportunities and Bridging the East-West Divide, Country Dashboard: Bangladesh. Washington DC, USA: The World Bank Group, Available at: _ /Rendered/PDF/443210ESW0P09910Box P UBLIC1.pdf [Accessed 29 March 2012] World Bank (WB). 2012, Poverty & Equity, Country Dashboard: Bangladesh. Washington DC, USA: The World Bank Group, Available at: [Accessed 27 March 2012] Zohir, S. 2011, Regional Differences in Poverty Levels and Trends in Bangladesh: Are we asking the right questions? Dhaka: Economic Research Group. Available at:

22 [Accessed 12 April 2012] Appendix C Table: Poverty trend International Standard National Standard People living on less than USD 1.25 a day People living below national poverty line Year Millions of Poor Poverty Headcount Ratio (%) Millions of Poor Poverty Headcount Ratio (%) Source: Poverty & Equity Data, The World Bank, 2012 Mathematical Equation P l r P b ( 1 1 y ( p p ry l b ) 1 ) Where, P = Value of the launch year; l P b = Value of the base year; y = Number of years between launch year and base year; r = Growth rate. Then, a projection using this method could be computed as: P P ( 1 rz ) t l Where, P = Value of the target year; t P l = Value of the launch year; z = Number of years between target year and launch year; r = Growth

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