Growing crisis of wage stagnation and inflation

The economic landscape in Bangladesh is increasingly alarming, as the persistent gap between wage growth and inflation continues to erode the purchasing power of the working class.

This newspaper on Sunday reported that for over 34 months, monthly wage growth has lagged behind inflation, forcing workers to cut back on essential consumption. This trend is not merely a statistic but a profound crisis affecting millions of lives.

Recent data from the Bangladesh Bureau of Statistics (BBS) reveals that food inflation has outstripped wage growth since May 2022, culminating in a staggering 14.10 per cent in July 2024.

This gap of 6.17 percentage points is the highest in years, highlighting low-paid workers’ dire situation . With inflation rates hovering above 9 per cent for the past 21 months, the reality is grim: wages for low-paid skilled and unskilled labourers grew by a mere 8.07 per cent in October, while inflation reached 11.38 per cent.

The implications of this wage-inflation disparity are severe. A recent study by the Research and Policy Integration for Development (RAPID) indicates that an additional 7.9 million people have been pushed into poverty since 2022, bringing the total to 38.2 million.

The spectre of poverty looms larger, with millions more at risk of falling into destitution. This is not just an economic issue but a humanitarian crisis threatening social stability and long-term growth.

Economists like Dr Debapriya Bhattacharya and Rizwanul Islam have rightly pointed out that the labour class has not received a fair share of the economic gains in recent years.

Inflation is a regressive tax, disproportionately affecting the poor and middle classes. The decline in real wages exacerbates income inequality, creating a chasm between the rich and the working class.

While the government’s recent introduction of a minimum wage structure for 15 sectors is a step in the right direction, it is not enough. The discrepancies between reported inflation and the lived experiences of workers must be addressed to restore trust and ensure that economic development benefits all citizens.

As Bangladesh grapples with this critical issue, policymakers must act decisively. The time for half-measures has passed; the working class deserves a fair wage that reflects the true cost of living. Only then can we hope to build a more equitable and prosperous society.