RESEARCH on poverty in Bangladesh involves addressing four key questions: (1) What are the trends in poverty within the country, and do official statistics accurately reflect the situation? (2) How do various shocks, both economic and non-economic, impact poverty and vulnerability? (3) What are the underlying structural factors contributing to poverty? (4) What are the critical elements for sustainably addressing poverty?
According to the Bangladesh Bureau of Statistics, the headcount poverty rate, based on the cost of basic needs method, decreased from 80 per cent in the early 1970s to 18.7 per cent in 2022. From 2016 to 2022, the national poverty rate dropped from 24.2 per cent to 18.7 per cent, with both urban and rural areas seeing reductions. However, while official statistics present an optimistic view of poverty reduction, alternative surveys reveal a more complex reality. Surveys conducted by SANEM in 2018 and 2023, which tracked the same 10,000 households nationwide, indicate that the national poverty rate has declined more slowly than reported and urban poverty has actually increased. The Multidimensional Poverty Index, which assesses various household deprivations in health, education and living standards, supports these findings. The surveys also reveal a troubling trend of rising inequality and worsening food security, a critical aspect of poverty.
Vulnerability remains a significant concern for a large portion of Bangladesh鈥檚 population despite high economic growth, increased per capita income, strong export and remittance performance and microfinance initiatives. Vulnerable households, classified as non-poor but at risk of falling into poverty due to economic or natural shocks, face ongoing challenges. SANEM鈥檚 surveys reveal that the pandemic triggered a sharp rise in poverty rates, reversing some earlier progress. Climate change also poses a severe threat to development. Without action on climate change, Bangladesh鈥檚 headcount poverty rate would increase by 3.5 percentage points. Additionally, ongoing inflation exacerbates vulnerabilities. Coping mechanisms available to poor and vulnerable households are limited, and repeated shocks deplete these already scarce resources.
In-depth research on poverty in Bangladesh necessitates examining the structural factors contributing to it. The ownership structure is crucial, as unequal asset distribution can concentrate wealth among a few. The labour market also plays a significant role; limited access to well-paying jobs and the prevalence of low-wage work perpetuate poverty. Gender disparities exacerbate poverty, particularly for women, who often encounter barriers to equal rights and pay and are sometimes subjected to practices like child marriage, which can hinder educational and economic opportunities. Additionally, exclusion based on ethnicity, disability or social stigma can restrict access to resources and entrench poverty.
A notable feature of Bangladesh鈥檚 labour market is its informality, resulting in a lack of job security, benefits and legal protections for workers. Unemployment and underemployment remain persistent issues. The NEET (not in education, employment, or training) rates among the youth are alarming, indicating a generation at risk of being left behind. Female labour force participation remains low due to cultural norms and structural barriers. Workers often endure poor working conditions, low wages and minimal social security. Occupational rigidities, such as difficulties in transitioning between jobs or sectors, further worsen the situation. The lack of opportunities for productive and diversified employment traps workers in low-value, labour-intensive jobs with limited chances for advancement or skill development. This situation is often referred to as the 鈥榣ow pay, low productivity and low compliance鈥� cycle.
Bangladesh鈥檚 economic, social and institutional frameworks influence the pathways to poverty reduction. The economic framework involves the pattern of structural transformation in the economy. Despite significant progress over the past five decades, the lack of economic and export diversification hinders sustainable poverty and vulnerability reduction. The policy regime, tied to the structural transformation pattern, has been narrowly focused on supporting a few sectors. There is a need for productive economic and export diversification, backed by a comprehensive policy regime.
The social paradigm pertains to the pattern of social development. Over the past five decades, there have been significant improvements in health and education. Success in these areas came from low-cost solutions to reduce child and maternal mortality and increase school enrollment. However, with the changing demographic structure and the rising demand for high-skilled labour, the current and future outlooks are bleak. Low public spending on health and education, along with inefficiencies in these sectors, hinder the potential benefits of demographic dividends.
The institutional paradigm concerns the quality of institutions and the political economy of development. In Bangladesh, weak formal institutions, characterised by limited state capacity, a weak regulatory regime, prevalent corruption, crony capitalism and the dominance of informal institutions, severely restrict the ability to improve the capabilities of poor and vulnerable populations. For instance, the state鈥檚 limited capacity to mobilise tax revenue hampers its ability to invest significantly in health, education and social protection. Additionally, a high reliance on indirect taxes results in a regressive tax system that disproportionately impacts the poor.
We can identify three crucial aspects of sustainably addressing poverty in Bangladesh. First, there must be a meaningful resolution to the ownership issue. Efforts in the economic, social and institutional paradigms for poverty alleviation must ensure that both material ownership and the sense of ownership among poor and vulnerable people are strengthened. Second, the economic and social capabilities of poor and vulnerable households need to be improved through economic diversification, labour market reforms and investment in health and education. Third, the state must effectively redistribute resources from the rich to the poor through taxes and social expenditures.
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Md Habibul Haque is a lecturer in English at ZH Sikder University of Science and Technology.听