Bangladesh: Promoting More Effective Social Protection and Labor Initiatives

October 7, 2016


Challenges – A need for economic and demographic transformation

Approximately 47 million Bangladeshis live in poverty or around the poverty line. At the same time, Bangladesh has been experiencing economic and demographic changes that could transform it into a middle-income country by 2021.

Social protection and labor, or SPL, programs and policies that address these two different, yet related realities have evolved in recent years to meet persistent and new needs. But such efforts require changes that can improve their efficacy and impact.

The Government of Bangladesh has allocated significant resources – an average of up to $4 billion annually (or 2 percent of gross domestic product, or GDP) – to implement a large number of social safety net, or SSN, initiatives. SSN includes, among other services, civil service pensions, allowances for vulnerable groups, public works, education and health care.

But existing SSN efforts are hampered by fragmentation, poor targeting, inefficiency, and leakage. Allocation of resources across 140 programs under 20 ministries reduces the impact of programs and gives rise to duplication in program objectives and beneficiaries.  Poor targeting means only a third of eligible Bangladeshis participated in least one social assistance program in 2010. Of those program participants, almost 60 percent recipients were non-poor. Also, a large share of resources allocated for SSN programs – whether cash or food – do not reach beneficiaries, and programs aimed at children under five years and at the elderly and people with disabilities in many cases are limited.

The majority of SSNs address the rural poor. But large and fast-growing numbers of Bangladeshis are moving every year from rural to urban areas, and the country’s social security system must therefore align itself to cater to a growing urban population.

The Government of Bangladesh has enacted a National Social Security Strategy in 2015 to create a social protection system that is inclusive, better mitigates lifecycle risks and prioritizes the poorest and most vulnerable. 

More effective targeting of those truly in need could potentially reduce the poverty rate by 1.5 percentage points, and a shift toward cash-based transfers can improve the efficiency of difficult-to-administer and costly food-security programs. Also, automated administrative systems and electronic payments (via secure cash cards or mobile phones) can promote more transparency and reduce leakage.

Further, the government must invest in skills and education for youth and link them to productive employment through domestic job creation and overseas migration, especially in the Middle East and Southeast Asia. 

The country also needs to do more to protect the elderly in a fiscally sustainable manner. This will require providing the working-age population with incentives and opportunities to save for retirement and insure against risks.

" I hope the duration and coverage of the program can be expanded where there are more mothers like me who are poor and vulnerable. My children are now happier because they are healthier and it is all due to the knowledge I gained from participating in the nutrition sessions offered by the Shombhob pilot program.  "


A beneficiary of Shombhob, Lalmonirhat pilot of the Income Support Program for the Poorest


Solutions – Modernization and greater effectiveness

The World Bank supports systems development – from the central national program level to the local levels – as well as analytical and pilot activities that inform policy dialogue.

For example, the Safety Net Systems for the Poorest program, to which the Bank has committed $500 million since 2013, improves the equity, efficiency and transparency of major SSN programs through improved targeting, more efficient administration and strengthened governance measures.  Similarly, a proposed Cash Transfer Modernization project will also help with integration and modernization of business processes that can improved SSN delivery.

Also, with Bank funding of $300 million since 2014, the Income Support Program for the Poorest develops integrated approaches to address the challenges of poverty, nutrition and early childhood development. 

The SPL team is collaborating with other Bank teams to find solutions to issues of labor market informality, develop analytics to investigate informal sector workers’ and employers’ labor market incentives and behaviors, and pilot a skills-training mechanism for migrant workers.

It is also preparing to help the Government of Bangladesh establish a comprehensive old-age support system that builds on the Old Age Allowances for the poor elderly, a voluntary pension program applicable for workers beyond the formal sector.  

Results – Wider, more effective safety nets for poor

 Safety Net Systems for the Poorest, expected results:

  • 18 million poor people will benefit from more effective safety net programs.
     Electronic administrative systems for major safety net programs will be available and widely used.
  •  A National Household Database to better target the poorest households.

Income Support Program for the Poorest, expected results by 2020:

  • 600,000 of poor mothers will receive cash transfers.
  • 2.7 million poor people across 43 upazilas, or sub-districts, in northern Bangladesh will benefit.
    Local level government will have greater capacity to deliver safety net programs.

18 million
poor people will benefit from more effective safety net programs.