The country’s renowned tapestry of progress, once hailed as a “miracle” by the ousted government and others, is now showing signs of wear and tear. Bangladesh is treading a delicate path on the edge of economic fragility. On a personal level, the situation is grim. According to the World Bank’s Macro Poverty Outlook, extreme poverty in Bangladesh is projected to increase from 7.7 percent to 9.3 percent by 2025, forcing an additional 3 million citizens below the poverty line in just one year, a distressing forecast.
A report titled the State of the Real Economy, conducted by the Power and Participation Research Centre (PPRC) and commissioned by the Ministry of Finance, unveils the heavy burden of debt on the impoverished. The poorest 40 percent of households owe double their savings on average. Nearly 38 percent of workers are underemployed, highlighting the precarious economic conditions faced by the laboring class, who made significant sacrifices, including lives lost, during the mass protests in July-August of the previous year, all in pursuit of a brighter future.
The latest Labour Force Survey by the Bangladesh Bureau of Statistics (BBS) paints a challenging picture for the youth, who were at the forefront of the aforementioned protests. Youth unemployment has been steadily rising since 2016-17, with 1.3 million unemployed individuals aged 15-24, followed by 916,000 in the 25-34 age group and 379,000 in the 35 and older category in 2024. Graduates face a particularly dire situation, with 900,000 unemployed in 2024. One in three graduates struggles to find employment. Women workers continue to face discouraging prospects, representing 33.10 percent of the employed population, while men make up 66.90 percent. Dhaka Division has the highest number of unemployed individuals, with 687,000 people seeking work. However, the accuracy of these statistics may be limited by the definitions used.
This accumulation of evidence underscores a harsh reality – the current social protection system, comprised of fragmented targeted programs, is fundamentally flawed.
The inefficiency of the current model is not anecdotal; its core structure perpetuates exclusion and squanders valuable resources. One of the most alarming failures is the exclusion error, where the intended beneficiaries are left out. Shockingly, only 15.3 percent of eligible households receive the widow allowance, and the Fair Price Card program, essential for food security, reaches a mere 5.3 percent, leaving 94.7 percent behind. Millions of the neediest individuals are overlooked due to flawed targeting methods, depriving them of essential support when they need it most.
Inclusion errors are equally problematic, as benefits often reach those who do not require assistance. For instance, a considerable portion of Fair Price Card holders are not in poverty, diverting scarce resources and diminishing efficiency and credibility.
Consequently, inequality is widening in Bangladesh, with the Gini coefficient escalating from 0.334 in 2022 to 0.436 in 2025, placing the country among the most unequal societies. Instead of bridging the gap, targeted programs are exacerbating it. A recent National Conference on Social Protection highlighted the necessity of transitioning towards a universal protection system.
Advocating for universal, life-cycle social protection is imperative, rooted in the belief that social protection is a fundamental right of citizenship, not an act of charity.
A universal life-cycle system offers assistance at every vulnerable stage. This approach could encompass various pillars, such as universal child benefits to ensure adequate nutrition for all children, especially since two out of three children under five in Bangladesh face food poverty. Additionally, universal education stipends could prevent dropouts, given that around 41 percent of the population aged 5-24 are not in school.
Efficient universal healthcare requires a digital health card, an integrated referral platform, and a digital logistics system to reduce waste and inefficiency. Schemes like unemployment insurance and maternity benefits could provide a safety net for unemployed youth and workers in informal sectors. Lastly, a universal pension is essential to uphold dignity for the rapidly aging population of 15 million people aged 60 and above.
While concerns about the cost of universality are common, the current system’s shortcomings carry a much higher price tag, especially in the present circumstances.
The government has allocated Tk 116,731 crore to social protection in the fiscal year 2025-26. The primary issue lies in the inefficacy of the budget allocation, rather than its size. To address this, reallocating resources wasted on targeting errors and implementing progressive fiscal measures is crucial.
Establishing a robust Digital Public Infrastructure (DPI) utilizing the national ID (NID) as a foundation for a unique identity system, integrated with a payment interface, can create efficient delivery mechanisms. Learning from global examples like India’s Aadhaar platform could be beneficial.
Additionally, consolidation at the national level