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Published: 12:48 AM, 28 June 2020

Retention and creation of new job

https://dailyasianage.com/news/233652/retention-and-creation-of-new-job M S Siddiqui According to the United Nations (UN), due to the coronavirus may leave up to 25 million or more people out of jobs across the world. The International Labour Organization (ILO) said- more than one in six young people have stopped working since the onset of the COVID-19 pandemic while, those who remain employed have seen their working hours cut by 23 percent. ILO Country Director in Bangladesh Tuomo Poutiainen said some sectors of the population such as women, youth, older workers, migrants and self-employed persons are disproportionately affected by the COVID-19 pandemic. The Asian Development Bank estimate that the number of jobless people due to the pandemic could rise to 1.4 million. About 35 percent are now living in poverty, according to a recent study of the Centre for Policy Dialogue. Opportunities of job in informal and many formal sectors are shrinking in home and abroad. It has been estimated that around 20 lakh Bangladeshi migrants will face possible deportation after the Covid-19 pandemic from among the 1 crore Bangladeshis in the global job market. In the meantime, More than 6,66,000 expatriate workers returned to Bangladesh between January and mid-March. Most of them would return from middle eastern countries and naturally became unemployed. About 87 percent of the migrant workers who returned to Bangladesh due to coronavirus pandemic lockdown have no source of income at this moment, according to a survey by Brac. BRAC, Data Sense and Unnayan Shamannay conducted a survey last May on 962 people in 25 districts and found at least one individual from 34.8 percent of the families has lost jobs. The local City Bank, one of the most profitable banks in the country, announced a 10 percent pay cut for its employees from June 2020 in the wake of massive losses. It has also suspended extra bonuses to its employees. Many other private banks also are preparing to cut down salary costs, which stands in stark contrast to the finance minister's optimistic calculation about private investment. In the proposed budget, the finance minister talked about generating one crore new jobs at Economic Zones (EZs). The Finance Minister announced that the government set a target to take the private sector investment to 25.3 percent of GDP in the next fiscal year from 12.7 percent in the revised budget of the current fiscal year. Achieving the investment target is uncertain when Banks are struggling with huge business stimulus financing program. The finance minister in his budget speech mentioned the government-announced stimulus package of Tk20,000 crore for the SME sector alongside his announcement of some duty measures favouring the light engineering sector - an SME sector declared the product of the year. Proposed budget has nothing-extraordinary package for generating employment although the government claims that creating new jobs will be its fourth priority in the next fiscal year.

The major job-creating sector is SMEs. SMEs hit hard by coronavirus and lac of small manufacturers and traders are out of business and by this lost their small capital and thrown out of supply chain and business credit. PM earlier declare an ambitious package of financial support to business of Tk Tk 72,750 crore for different business sectors including Tk 20,000 crore as working capital loan at low interest rate of 9 percent of which 4 percent will be paid by the concerned industries and businesses, while the government will subsidize the remaining 5 percent. Another package is of Tk3,000 crore for small professional, marginal businessman etc at interest of 9 percent. Of the 9 per cent interest, the government would provide 5 per cent a subsidy and 4 per cent would be paid by the borrower. The challenge is the loan package is the loans offered based on bank-client relationship and at the risk of banks for management and default. This made the SME stimulus loan unpopular among banks. The SMEs are mostly work in informal sector and have small connection or no relationship with banks. It means these amounts are in true sense available for few SMEs having relationship with the banks. According to the government data, over 78 lakh small and medium enterprises are contributing to one fourth of the GDP. The National SME Policy 2019 has focused on enhancing the contribution of this sector to 32 percent by 2024, which will boost employment. The government has some strategic ways, like over 100 clusters across the country, to reach the goal. But, the possibility for the SMEs and informal micro businesses to rebound after the Covid-19 pandemic without meaningful support remains the question. FM declare that a fund of Tk2,000 crore for low-cost loan support to the SMEs has been created to be disbursed through Palli Sanchay Bank, Probashi Kallyan Bank, Karmasangsthan Bank and Palli Karma-Sahayak Foundation (PKSF). Another fund of Tk100 crore proposed under 'Rural Social Services Programme' is not sufficient to make a vibrant rural economy. The private investment figure of current year has shown at a bare 12.7 percent of GDP and that just doubles to 25.3 percent next. FM believes to the contrary of everybody that private credit will grow by 16.7 percent, almost double of what it is today, during this time of depression. But, the credit flow to the private sector hit its lowest growth at 8 percent in the last two months - March and April. The reported statistics says, private investment increased only 2.39 percent in the last four fiscal years. Prof Mustafizur Rahman, distinguished fellow of the CPD, said private sector credit growth has been projected to double at a time when the banking sector is under pressure of high bank borrowing and implementation of stimulus packages. Amid this situation, private sector credit growth will be in pressure. If the government cannot achieve the private investment target, employment generation will fizzle. However, allocation of Tk 3,000 crore to promote farming mechanisation and reducing custom duty on importing parts of agriculture machinery would reduce the price of farming equipment and generate employment, Prof Mustafiz said. This investment in agricultural sector will hopefully create some small businesses related to agriculture machinery will grow in the rural areas and generate employment.USA has offered the portion of the disbursed sum as grants, which is being spent on employee retention - paying wages. That helped a large number of American working families continue their jobs.

Bangladesh may allocate some fund in the next budget to distribute grants to SMEs particularly to informal SMEs in order to retain the employments to reduce Burdon of more unemployment at this critical situation. The is a good news that Recently, the World Bank has proposed $300 million to the Bangladesh Bank as support for forming a credit guarantee scheme to speed up lending by banks in high-risk sectors, especially to SMEs, during the pandemic. Government may consider introducing Risk/Credit guarantee schemes, where governments share potential losses in case of default. This is a proven tools globally to address this challenge. Government should start negotiation with the destination countries, to stop forced return of the expatriate workers during the time of COVID-19; and through the diplomatic initiatives, visa and work permit of the returnees should be extended for them who are unable to fly back to workplace because of the travel restriction. The writer is a legal economist Email:mssiddiqui2035@gmail.com