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SANEM survey: Population below poverty line doubled, extreme poor trebled in 2020

The South Asian Network on Economic Modeling (SANEM) on Saturday said the percentage of the population living below the poverty line (upper poverty line) has nearly doubled from 21.6% in 2018 to 42% in 2020, while the percentage of extreme poor (lower poverty line) trebled from 9.4% in 2018 to 28.5% in 2020.

Executive Director of SANEM Dr Selim Raihan disclosed the survey results at the 10th episode of SANEM Shongzog on “COVID-19 Fallout on Poverty and Livelihoods in Bangladesh: Results from SANEM’s Nationwide Survey (Nov-Dec 2020).”

The poverty rate has increased in both urban and rural areas in Bangladesh. The percentage of the population below the poverty line in rural areas was 45.3%, while the number was 35.4% in urban areas.

The percentage of extreme poor in rural areas was 33.2%, while in urban areas it was 19%.

“We conducted the nationwide household survey from 2 November to 17 December 2020 to unravel the COVID-19 pandemic’s impact on three broad indicators, namely Poverty, Inequality, and Employment (PIE),” the Professor of Economics Department at Dhaka University also said.

Compared to 2018, the average per capita household expenditure in 2020 has decreased by 45%, 29% and 17% in extreme poor (people below LPL, or lower poverty line), moderate poor (people in between the LPL and UPL, or upper poverty line) and vulnerably poor (people between UPL and 1.25 times UPL) households, respectively. At the same time, it has increased by 6% in non-poor and non-vulnerable households.

For this analysis, households have been classified as “old-poor” and “new-poor” depending on whether they were already poor prior to the pandemic or whether they have fallen below the poverty line as a result of the pandemic.

In households classified as poor prior to the pandemic, 37% of household heads are self-employed, 20.5% are wage-employed, and 39.5% are day labourers.

On the other hand, in households that have fallen into poverty as a result of the pandemic, 42.3% household heads are self-employed, 23.9% are wage-employed, and 30.2% are day labourers. Among households classified as “old-poor”, 43.4% rely on agriculture, 5.2% on the industry, 46.5% on service, 0.3% on government allowances, and 3% on remittance source of income.

Besides, among new-poor households, 36.6% rely on agriculture, 6.4% on the industry, 51.2% on service, 0.4% on government allowances and 3.2% on remittances as their primary source of income.

To understand the impact on inequality, the study team constructed consumption expenditure Gini and some other measures of inequality. The Gini coefficient has increased from 0.32 in 2016 to 0.31 in 2018 and 0.33 in 2020.

The ratio of income share between richest 5% and poorest 20% households increased from 2.05 in February 2020 to 2.45 in November 2020. Similarly, the ratio of expenditure share in richest 5% households to that in poorest 20% households increased from 1.34 in 2018 to 2.15 in 2020.

This is because, the expenditure share of the richest 5% households increased by 1.02% whereas that of the poorest 20% declined by 3.13%. However, since most ultra-rich households were not included in the survey, the real impact on inequality might be much larger than expected.

Average per capita education expenditure has fallen for all households between 2018 and 2020, with the decline being the sharpest for extremely poor households (58%).

On the other hand, average per capita health expenditure has increased for all households, with the increase being the greatest for moderately poor (97%) and non-poor (104%) households.

This study also attempted to assess the inequality in access to online (TV, Internet etc.) education for students: the findings suggest that 19% students from rural regions and 27% students from urban regions participated in some form of online/TV learning. Among the students who took part in online/TV education, 15% belonged to poor households, whereas 26% belonged to non-poor households.

The respondents mentioned the unavailability of online classes (49.1%), no access to technological devices (6.1%), insufficient access to devices (5.3%), insufficient access to internet connection (5.4%), inability to bear the cost of internet connection (6.5%) as the most common reasons behind not being able to participate in online/TV learning.

The study also highlighted a paradox in remittance earnings: although remittance inflows at the macro-level had increased, at the household level, the amount of money received from migrant members had decreased. 82.1% households claimed that they received less remittance from abroad while 64% claimed that they received less remittance from within the country compared to what they received before the pandemic.

A possible explanation for this paradox is that a substantial amount of remittance was received through informal channels prior to the pandemic. Since these channels had been blocked, households received less money compared to before.

Dr Raihan said SANEM, in collaboration with the General Economic Division (GED) of Planning Commission, conducted a nationwide survey covering 10,500 households in 2018. For the present survey, SANEM approached the same set of households and could successfully conduct telephone interviews with 5577 households from 500 Primary Sampling Units (PSUs) distributed across 64 districts.

“The survey questionnaire contained questions related to income, employment, education, expenditure, remittances, experiences with COVID-19 aid and social protection programmes. We updated the poverty line incomes (both lower and upper poverty line) based on the 2018 Household Survey conducted by SANEM and adjusting it for adequate inflation,” he added.

Dr Raihan highlighted five key suggestions—management of the COVID-19 crisis, increasing social safety net coverage including direct cash transfer to the poor, price stability of essential products, reduction of corruption, and creating employment opportunities.

Chairman of the Economics Department Professor Dr Mahbubul Mokaddem, economist Dr Zahid Hussain and Executive Director of Centre for Policy Dialogue Dr Fahmida Khatun also spoke there.

Source: United News of Bangladesh