The income of low-paid workers, which declined substantially due to the Covid-19 lockdown, started to recover in May, thanks to the government's policy support through refinance schemes.
The findings were revealed in a report titled "Covid-19 Pandemic in Bangladesh: Policy Responses and its Impact", which was released by the Bangladesh Bank on Tuesday.
In the report, the central bank said the general wage rate index – which started to decline from 173.54 in March 2020, the month when the first Covid-19 case was detected – gradually improved and crossed the pre-pandemic level, reaching 184.68 in May.
The wage index of other sectors, including agriculture, industry, and service, improved to 185.11, 181.11, and 189.87 respectively in May from 173.47, 171.22, and 178.62 in March last year, according to the report.
"Most likely, refinance schemes for lower-income earning professionals, farmers, and small traders and facilitating low-interest loans to rural poor farmers, expatriate migrant workers and trained youth and unemployed youth announced by the government in April 2020 improved the situation slightly," the report said.
In response to the government initiative, the number of confirmed Covid-19 cases began to slow down in February this year.
But the government imposed the second lockdown on 5 April, which was extended to 14 July in several phases, due to the increased rate of confirmed cases and deaths amid the pandemic's second wave characterised by the Indian Delta variant.
In the report, the Bangladesh Bank did not comment on the second wave's impacts on the labour market.
It recommended the government provide further policy support for the economy amidst the ongoing crisis.
Moreover, with the previous experiences, regulators should identify their loopholes and be prepared to take timely measures with short-term, medium-term, and long-term plans to mitigate the impacts of Covid-19, said the report.
In another analysis of the labour market published in the January-March quarterly report, the Bangladesh Bank estimated that employment declined by 4.3% and the associated income loss decreased by 8.6% in the country in 2020.
If the size of the labour market of 6.4 lakh is calculated, the number of employment loss will be 55 lakh, including associated income loss, the report said.
It estimated working hour loss was 13% last year due to Covid-19 restrictions.
Two major economic sectors, including industry and services, experienced declines in 2020 in terms of working hours, employment, and labour income.
Working hours for industry and services sectors declined by 11.5% and 21.6% respectively in 2020. Labour income for industry and services sectors fell by 7.1% and 17.6% respectively.
The government, with the collaboration of the Bangladesh Bank, announced a series of stimulus packages and refinance schemes equivalent to Tk1.28 lakh crore, which is 4.59% of the GDP, to recover from the Covid-19 economic losses.
The stimulus packages are designed to help export-oriented industries, shipment credit, the agricultural sector, and low-income groups, including farmers as well as micro and small enterprises.