Unemployment Benefit : Bane Or Boon?

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-Rezaul Hoque ]




Generally, election manifestoes are not that much attractive. This election turns out to be different. More or less all the parties touched the issue of social security programs in their manifestoes. It is a good sign that they are waking up to the grave social concerns.


Though they did not promise moon to the left-outs, but introduced some propositions that sound practical. A new addition to our existing social security program is the promise for unemployment benefits. A bit late but a welcoming step.

One party promised to provide unemployment benefits for the first two years.Another party promised benefits plus dissolution of age limit for government jobs. Ruling party promised to offer job to one unemployed youth of every family.

All the major parties seem agree to offer some kind of benefits to the unemployed. This will increase the expenditures on social security.


First take a look at the spending on social security over the years. I dipped into the statistics on social security programs as reported by Bangladesh Economic Survey. In its second term, the expenditures on social security have grown by manifolds.In 2014-2015, our social security expenditures were Tk 30,751.11 crore. A year later, it grew to Tk 37,546 crore. Now in the current fiscal year government allocated Tk 54,205.89  crore(proposed) for spending on social security.
Largest part of the social security programs is attributed to various cash benefits programs, followed by food security measures.

Of the social security programs, cash benefits given to various groups have risen significantly over the years. Among others, beneficiary target groups include widows, aged people, physically challenged people, freedom fighters and poor mother on maternity leave.

In 2013-2014, government spent Tk 9,666.25 crore behind various cash benefit programs.In 2014-2015, it increased to Tk 12,667.28. In 2015-2016, government doled out Tk 16, 485.83 crore to various vulnerable and left-out groups. Spending on social security programs  further increased and became Tk 19,594.16 crore. In 2017-2018, government allocated Tk 30,854.64 crore in cash benefit programs.

If the parties really keep their words, then the unemployment benefit scheme will further broaden government's cash benefit programs. Unlike other cash benefits, government can easily cover the spending on unemployment benefit scheme. I will spell it out a bit later. Before that let us have a look at the breakdown of the cash benefit scheme.

In 2017-2018, government planned to provide Tk 500 per month to 3.5 million aged people, resulting in Tk 2,100 crore. It also planned to provide Tk 500 per month to 1.265 million widows, costing it Tk Tk 759 crore. It allocated Tk 360 crore as maternity benefits to poor mothers. Tk 120 crore for lactating working mother. Tk 3,200 crore for freedom fighters. The list continues with minuscule allocation to many groups. To make the discussion brief, I prefer not to highlight them here.

At the individual level, the sum is meager and may not be enough to alleviate the sufferings of the target group. However, this is a statement that the country does care about the the vulnerable groups and

recognize their role in nation building.        

Cash benefits to the unemployed can be viewed as boosting consumption. By providing cash benefits to a section of active population, government is broadening the purchasing power of a group. It also contributes to increase the consumer class. Given the ability of our government, the benefit it will provide to the unemployed will be meager. Say it will be Tk 500 per month. To an unemployed, it is just a pocket money. My own observation is that only 3 or 4 million unemployed will comply for this benefit scheme. Now for 4 million unemployed people if the government doles out Tk 6,000 per annum it will cost the government Tk 2,400 crore.

But as I have said by spending this amount the government will notch up gains in boosting consumption and reducing vulnerability of certain section of the society.

And the best part of this program is that it can recuperate the spending by slashing part of their earnings or imposing duties on their existing consumption.

Those who will comply for this social security program should have a social security number. For the moment, let us think  national id number is the social security number. In a bank account, the monthly benefit, in our case it is Tk 500, may be provided against this number.
Spending can be recovered in a short span of time. Supplementary duty on mobile call rate can be viewed as a potential source for its funding. For instance, off peak call hours can be aimed to impose this duty. Government can also slap further duties on tobacco items to finance the spending.

But the biggest source of revenues could be this very target group. When they get a job,government can deduct part of their monthly income till the benefit fully get covered. Or they can pay back the whole amount at a convenient time.

Another potential source of funding could be unused fund of annual development projects. Government takes numerous development projects throughout the year. In reality, it implements very few of them. In addition, many of these projects are designed to cater to the demand of political stalwarts. They have little significance to lives and livelihoods of local people. In plain words, these are waste of taxpayers' money. Part of the development fund could be diverted to finance the unemployment cash benefit scheme.



So this annual Tk 2,400 crore , Tk 6,000 per annum for one unemployed person, does not appear to be a spending instead an incentive to boost domestic consumption. Moreover, the money spend here will return to government's coffer.

In broader perspective, the new social security program for the unemployed is more than a social security spending. It will have tremendous impact on local economy, ranging from an increase in consumption to improve the businesses of SMEs.The best part of it is that our ailing banks will give a sigh of relief when this Tk 2,400 crore will be injected into the banking sector.

It is indeed a good move by our political parties that they have pledged to address the growing unemployment problem through social security programs. The amount may be meager, but it will definitely have a lasting impact on  economy and people. And the new spending will not be an extra burden to the government if  it is financed by resources drawing from the target group for whom it is meant.