Muhid Hasan :
The monthly wage growth for workers in Bangladesh has remained below the inflation rate for the 29th consecutive month.
This indicates that many people are reducing consumption to cope with increased financial distress.
Since 2021, wage growth in Bangladesh has been slowly climbing, but it has stayed well below the inflation rate for almost two and a half years.
According to the Bangladesh Bureau of Statistics (BBS), the wage growth of low and unskilled workers was 7.74 percent, while the Consumer Price Index (CPI), commonly known as overall inflation, rose 9.73 percent in the recently concluded financial year of 2023–24. This highlights a gap of 1.99 percentage points.
Similarly, in FY23, the CPI surged to a 12-year high of 9.02 percent, whereas the wage growth rate stood at just 7.02 percent.
This disparity indicates that low-income individuals, including the working population, are compelled to consume less food than necessary and reduce their cost of living by decreasing their demand.
Likewise, average wage growth for workers in this sub-sector fell to 7.70 percent in FY2024, compared to 9.28 percent in FY2023.
This trend underscores the ongoing struggle of workers to keep up with the rising cost of living as their wages fail to match the pace of inflation.
In June, data from the Bangladesh Bureau of Statistics (BBS) revealed that the Wage Rate Index (WRI) was 7.95 percent, while inflation soared to 9.72 percent, eating into the real wages of labourers.
This disparity highlights the ongoing financial struggle for many workers as their wages fail to keep pace with rising costs.
The wages of workers in the agriculture sector grew by 8.33 percent in June, compared to 7.42 percent and 8.50 percent for those in the industry and service sectors, respectively, according to the WRI data from BBS.
The average monthly wage rate of low-paid skilled and unskilled labourers is estimated based on 63 occupations, including 17 from the agriculture sector, 30 from the industry sector, and 16 from the service sector.
Despite the slight growth in wages, eye-watering inflation has persisted over the last 16 months, consistently remaining above nine percent.
Economist and executive director of the Policy Research Institute, Ahsan H. Mansur, said, ‘Inflation acts like a tax, affecting everyone, rich and poor alike.
Higher inflation means that poor and middle-class families struggle to increase their incomes sufficiently to support their households.
Over the past two years of high inflation, people’s purchasing power has significantly decreased, affecting all aspects of their lives, he added.
Regarding the widening gap between the inflation rate and wage growth, Rizwanul Islam, an economist and former special adviser for employment at the International Labour Office in Geneva, emphasised that the decline in real wages is a significant factor contributing to rising income inequality.
Rizwanul stated, “The real wages of workers in the country have actually declined over time. The distress caused by rising prices is affecting not only the poor but also lower middle-income groups.”