Published: 12:53 AM, 03 July 2026
Economists Observe Budget Includes Nothing Remarkable for Workers
The Bangladesh government's newly announced national budget for the 2026-2027 fiscal year has drawn a restrained and largely critical response from leading economists, including prominent voices from the Center for Policy Dialogue (CPD), who argue that the fiscal plan offers no substantial or transformative measures for workers. While the government has emphasized macroeconomic stability, investment promotion, and long-term growth, analysts say the budget fails to address persistent challenges faced by wage earners, including inflationary pressure, low real income growth, and inadequate social protection.
Among the most notable reactions came from distinguished economists Dr. Debapriya Bhattacharya and Dr. Fahmida Khatun, both affiliated with the Center for Policy Dialogue (CPD), who described the budget as broadly continuationary in nature rather than reform-oriented. According to their assessments, the fiscal framework does not introduce meaningful structural adjustments that could improve the welfare of workers in either the formal or informal sectors.
Workers See Little Relief in Cost-of-Living Pressures
A central criticism from economists is that the budget does not adequately respond to rising living costs, which continue to erode real wages. Over the past year, inflation in essential goods such as rice, edible oil, transportation, and housing has significantly increased the cost burden on households. While nominal income levels have seen marginal adjustments in some sectors, analysts argue that these are insufficient to match inflationary trends.
Dr. Debapriya Bhattacharya noted in his assessment that the disconnect between wage growth and inflation remains one of the most pressing structural weaknesses in the economy. He observed that without targeted wage policy interventions or stronger enforcement of minimum wage standards, workers will continue to experience declining purchasing power.
Similarly, Dr. Fahmida Khatun emphasized that inflation has become a “silent tax” on low- and middle-income households, disproportionately affecting those who rely on fixed wages or daily earnings. She suggested that the budget could have introduced more robust compensation mechanisms, such as indexed wage adjustments or expanded subsidies for essential goods.
Employment Generation Lacks Clear Direction
Economists have also raised concerns about the budget’s employment strategy, which is largely centered on broad sectoral growth ambitions without detailed implementation frameworks. Infrastructure development, manufacturing expansion, and digital transformation are frequently cited as job-creation drivers, but critics argue that the budget lacks measurable targets or sector-specific employment projections.
According to analysts at CPD, the absence of a clear employment roadmap is particularly troubling given the country’s growing labor force. Each year, hundreds of thousands of new job seekers enter the market, yet formal employment opportunities remain limited. Many are pushed into informal work arrangements that provide minimal job security or social protection.
Dr. Debapriya Bhattacharya pointed out that while investment-led growth is important, it does not automatically translate into decent employment unless accompanied by deliberate labor market policies. Without such measures, he warned, economic growth risks becoming “jobless growth,” where output increases but employment quality stagnates.
Youth Unemployment and Skill Mismatch Persist
Another area of concern highlighted by economists is the ongoing mismatch between education outcomes and labor market demands. Despite rising levels of educational attainment, many graduates struggle to find employment aligned with their skills. This has led to growing frustration among young people, many of whom are forced into low-wage or informal jobs.
Dr. Fahmida Khatun noted that the education system continues to produce graduates who are not adequately prepared for the evolving demands of the digital and industrial economy. She argued that the budget does not sufficiently address the need for stronger vocational training, reskilling programs, or industry-academia linkages.
As a result, youth unemployment remains a structural challenge that the budget fails to resolve in any meaningful way. Economists warn that prolonged underemployment among young workers could have long-term implications for productivity and social stability.
Wage Stagnation and Inequality Concerns
Wage stagnation is another issue that dominates economist critiques. In several key sectors, including manufacturing and services, wages have not kept pace with productivity gains or rising living costs. Labor unions have repeatedly called for stronger wage-setting mechanisms, but the budget does not introduce significant reforms in this area.
Experts from CPD argue that without stronger institutional frameworks for wage adjustments, workers will continue to bear the brunt of economic adjustments during inflationary periods. Dr. Debapriya Bhattacharya has previously emphasized that equitable growth requires not only expansion in GDP but also fair distribution of income gains across all segments of society.
Income inequality remains a related concern. Economists argue that the benefits of growth continue to be skewed toward higher-income groups and capital owners, while wage earners receive relatively limited gains. This imbalance, they say, risks undermining social cohesion and long-term economic sustainability.
Social Protection Measures Seen as Inadequate
Although the budget includes allocations for social safety net programs, economists say these initiatives remain limited in both scope and effectiveness. Many programs are narrowly targeted and fail to cover large segments of informal workers, who constitute a significant portion of the labor force.
Dr. Fahmida Khatun highlighted that while social protection spending has increased in nominal terms, its real impact is diluted by inflation and administrative inefficiencies. She argued that a more comprehensive and inclusive social protection framework is needed, particularly one that extends coverage to informal sector workers who often lack access to healthcare, unemployment insurance, and retirement benefits.
CPD analysts also point out that existing social safety net programs often suffer from fragmentation, with overlapping schemes that do not effectively reach the most vulnerable populations.
Tax Structure and Burden on Workers
Taxation policy has also come under scrutiny. Economists argue that the current structure relies heavily on indirect taxes, which disproportionately affect lower-income households. Value-added taxes on essential goods and services are particularly criticized for increasing the financial burden on workers.
Dr. Debapriya Bhattacharya has previously advocated for a more progressive tax system that places greater responsibility on higher-income groups and wealth holders. He argues that reliance on consumption taxes effectively shifts the burden onto ordinary citizens, exacerbating inequality.
Dr. Fahmida Khatun similarly noted that tax relief measures in the budget are too modest to significantly alter disposable income levels for most workers. She suggested that a more balanced fiscal approach would involve both broadening the tax base and improving tax equity.
Government Defends Fiscal Strategy
Government officials, however, maintain that the budget is designed to ensure macroeconomic stability while supporting long-term development goals. They argue that aggressive wage increases or large-scale expansion of subsidies could destabilize fiscal balances and fuel inflation.
According to finance ministry representatives, investments in infrastructure, energy, and digital connectivity will ultimately benefit workers by stimulating job creation and improving productivity. They describe the budget as a “balanced and forward-looking” plan that prioritizes sustainable growth over short-term populist measures.
Persistent Gap Between Policy and Reality
Despite these assurances, economists and labor observers continue to highlight a disconnect between policy intentions and lived realities. Many workers report that rising prices and stagnant wages leave them struggling to meet basic needs, regardless of macroeconomic indicators suggesting growth.
Field-level observations in urban industrial zones reveal widespread frustration among wage earners, particularly in sectors such as garments, construction, and transport. Workers frequently report that annual budget announcements do not translate into tangible improvements in their monthly income or working conditions.
Outlook: Calls for Structural Reform
Looking ahead, economists from CPD and other institutions argue that incremental adjustments are no longer sufficient. They recommend a more comprehensive reform agenda that includes stronger wage policies, expanded social protection, improved labor market governance, and a more progressive tax system.
Dr. Debapriya Bhattacharya and Dr. Fahmida Khatun both stress that without addressing structural inequalities in the labor market, economic growth risks becoming increasingly uneven and socially unsustainable.
As implementation of the budget begins, attention will focus on whether the government introduces mid-year corrections or supplementary policies to address emerging concerns. For now, however, the consensus among leading economists remains that the budget offers little that is remarkable for workers, and that deeper reforms are still urgently needed.
Nasir Uddin Shah is Chief Reporter
at The Asian Age.
