The socio-economic interdependence
Sunday, 29 March 2009
Mahmudur Rahman
For laymen such as this scribe, the haste with which western governments acted to prop up the financial sector after their management bungled up badly was difficult to fathom. After all, shouldn't investments and such have proper provisions allocated to protect against freefalls? However, as the days passed and it became obvious this was not the case it became clearer that no matter how critical they might be governments cannot allow the financial sector to plunge to collapse. After all it was peoples' money that was at stake and at the end, the government who is supposed to protect such investments.
On the back of this came a sharp series of layoffs as the spill-on effect rolled in. This in turn led to a drop in consumer spending beyond essentials. It was this 'spending beyond' that had most of the developing world lining up to offer their exports and luxury item manufacturers to churn out products in growing numbers.
More difficult to comprehend was the way governments then concentrated on propping up car manufacturers, especially in the west. Again as the days passed it emerged that if the largest employer in the market goes into the red, job losses kick in and there emerges social unrest.
Commerce Minister Faruq Khan has zeroed into this factor recently by stating outright that the implication of the global meltdown could lead to social unrest in Bangladesh. The two key areas are obviously overseas employment and the ready-made garments industry. If as seems to be the case overseas employers start to not renew or recruit anew labour two streams of people are affected. One group that has been abroad will start to come home and look for work. The other group aspiring to greener pastures will simply get stuck and also look for work. Combine the two groups and you exacerbate the already delicate situation with regards to new employment in Bangladesh.
The readymade garments (RMG) sector has indicated that it is unlikely to meet its own projected target of exports. Hampered with buyers jacking down prices and a loss of markets the largest employer in Bangladesh may well have to let go of people unless new markets are found. The plus point is that the RMG sector largely caters to the mid- and bottom-section of apparel at export destinations. Any loss of employment could well have serious implications given that what has been seen when any garments worker meets with an accident or even a mere rumour to this effect does the rounds.
The effect on the rest of society cannot be counted on but the growing numbers of able-bodied persons begging at traffic intersections is not a good sign at all. (The writer is a former Head of Corporate and Regulatory Affairs, British American Tobacco, Bangladesh and former Chief Executive Officer of Bangladesh Cricket Board. He may be reached at e-mail: mahmudrahman@gmail.com).
For laymen such as this scribe, the haste with which western governments acted to prop up the financial sector after their management bungled up badly was difficult to fathom. After all, shouldn't investments and such have proper provisions allocated to protect against freefalls? However, as the days passed and it became obvious this was not the case it became clearer that no matter how critical they might be governments cannot allow the financial sector to plunge to collapse. After all it was peoples' money that was at stake and at the end, the government who is supposed to protect such investments.
On the back of this came a sharp series of layoffs as the spill-on effect rolled in. This in turn led to a drop in consumer spending beyond essentials. It was this 'spending beyond' that had most of the developing world lining up to offer their exports and luxury item manufacturers to churn out products in growing numbers.
More difficult to comprehend was the way governments then concentrated on propping up car manufacturers, especially in the west. Again as the days passed it emerged that if the largest employer in the market goes into the red, job losses kick in and there emerges social unrest.
Commerce Minister Faruq Khan has zeroed into this factor recently by stating outright that the implication of the global meltdown could lead to social unrest in Bangladesh. The two key areas are obviously overseas employment and the ready-made garments industry. If as seems to be the case overseas employers start to not renew or recruit anew labour two streams of people are affected. One group that has been abroad will start to come home and look for work. The other group aspiring to greener pastures will simply get stuck and also look for work. Combine the two groups and you exacerbate the already delicate situation with regards to new employment in Bangladesh.
The readymade garments (RMG) sector has indicated that it is unlikely to meet its own projected target of exports. Hampered with buyers jacking down prices and a loss of markets the largest employer in Bangladesh may well have to let go of people unless new markets are found. The plus point is that the RMG sector largely caters to the mid- and bottom-section of apparel at export destinations. Any loss of employment could well have serious implications given that what has been seen when any garments worker meets with an accident or even a mere rumour to this effect does the rounds.
The effect on the rest of society cannot be counted on but the growing numbers of able-bodied persons begging at traffic intersections is not a good sign at all. (The writer is a former Head of Corporate and Regulatory Affairs, British American Tobacco, Bangladesh and former Chief Executive Officer of Bangladesh Cricket Board. He may be reached at e-mail: mahmudrahman@gmail.com).