Wages Rising in Bangladesh, But Food Security Challenges Remain

One of the most populous countries in the developing world, Bangladesh has made impressive strides in recent years in both food self-sufficiency and poverty reduction. Since 1990, Bangladesh's Global Hunger Index score has fallen from 37.9 to 24.0, meaning a fall from extremely alarming levels of hunger. And from 2000 - 2010, the incidence of poverty in the country declined from 49 percent to 32 percent. Still, much remains to be done to ensure that the country continues its upward climb. New research from IFPRI looks at the two sides of Bangladesh's poverty and food security coin.

The recent IFPRI Discussion Paper Rising Wages in Bangladesh finds that the increase in the country's real wages has accelerated since the late 2000s. This acceleration suggests that Bangladesh has reached what is known in the economics field as the Lewis turning point -- the point in time at which workers in a country begin to gain greater wage bargaining power.

The authors argue that the increasing availability of higher wage non-farm jobs, particularly for women in the garment industry, is largely responsible for pushing Bangladesh over this tipping point and driving the country's impressive recent poverty reduction. As labor costs have risen in countries traditionally involved in the global manufacturing sector, such as China and India, Bangladesh has stepped in to fill the void in low-cost labor. The garment sector in Bangladesh employs more than 3 million workers, many of them women who left family farms to find work in urban garment factories. As surplus laborers left rural areas for urban opportunities, the terms of trade in rural labor markets has slowly begun to shift in favor of the remaining workers. At the same time, the authors find that urban workers continue to send remittances back to their families in rural areas. This combination of increased non-farm job opportunities that offer higher wages and increased remittances sent back to rural areas has been instrumental in Bangladesh's recent rise in real wages, both in urban and rural areas.

While the news regarding falling poverty rates in Bangladesh is clearly good, another IFPRI study cautions that the food security situation in Bangladesh still faces significant challenges. This study, unveiled at a workshop in January, is based on a massive 6,500 household survey and finds that Bangladesh continues to be plagued by low agricultural productivity and malnutrition. Productive agricultural land area is limited in Bangladesh, meaning that future productivity growth depends on increasing yields on land already being farmed; however, few farmers (only 9 percent) have utilized extension services to help increase their productivity in recent years. Populations in rural areas, in particular, also face severe malnutrition, with a daunting 90 percent of rural Bangladeshis not receiving an adequate supply of vitamin A.

The results of this household survey make quite clear that while Bangladesh is making impressive strides, much remains to be done to ensure that its population is both economically stable and nutritionally secure. The adoption of new agricultural technologies and innovations should be encouraged to improve agricultural yields, farmers' access to extension services and credit should be increased to enable them to make these adaptations, and education and training should be emphasized to improve the skills and productivity of both on- and off-farm laborers.