This article originally appeared in The Harvard Kennedy School Review on April 28th 2020: https://issuu.com/harvardkennedyschoolreview/docs/2020_edition
One warm afternoon in the historic Chawkbazar neighborhood of old Dhaka in Bangladesh, Shawkat, a 55-years-old rickshaw driver, was resting on the side of a road after hours of pulling his rickshaw in the day’s insufferable heat. On the other side of the road, a ten-year-old girl was standing with a toddler in her arm, begging passersby for money. Shawkat, irritated at this scene, explained that he would never send his children to the streets. “A poor person’s life cycle consists of working hard, burning yourself out, and investing in your children,” he stated. He doesn’t plan to stop pulling the rickshaw, despite its physical strain, until he secures a stable future for his children. For him, this is the only way he can support his family and pull them out of poverty.
Bangladesh has been praised over the past decades for its progress in alleviating poverty. Many economists believe that this poverty reduction has been driven primarily by a rapid structural transformation, associated with a movement of labor from agriculture to manufacturing jobs, specifically in the garment industry. This structural transition has led to annual GDP growth of 6.5% over the past decade, higher than all other countries in South Asia, except India.[1] Other experts point to targeted anti-poverty interventions such as poverty graduation programs, which provide the poorest with capital, assets, and/or training, and have been shown to lead to higher income and consumption levels.[2] There has been comparatively less attention, however, given to the regulatory reforms that would be needed to support individuals such as Shawkat, who are fighting to lift themselves out of poverty.
In Bangladesh, and around the world, many families resort to informal work, such as pulling a rickshaw, to earn an income and provide for their families. In November 2019, the Dhaka Transport Co-ordination Authority reported between 600,000 and 1 million rickshaws operating on the streets of Dhaka.[3] According to some estimates, more than 60 percent of the global workforce, representing two billion people, are employed in the informal economy.[4] Most of these workers constitute the working poor, who are trying to make ends meet in harsh conditions with little legal protection. Governments can thus accelerate their efforts to alleviate poverty by creating a regulatory framework that supports, protects, and rewards informal workers in their attempts to improve their own livelihoods. Such an effort would create a more inclusive economic system, and could improve the welfare of millions of poor families around the world.
Poverty, Informality and Marginalization in Bangladesh
In Dhaka, Bangladesh, the streets are overflowing with cycle rickshaws, whose drivers rely on this work to support themselves and their families. Around 400,000 low income migrants arrive annually from rural areas to Dhaka[5], and rickshaw driving provides them with relatively easy access to the urban labor market. “I know it [driving a rickshaw] is a very hard job, but considering that I am a poor person with no education, it’s good that I can at least do this job to earn some money,” said Azim with a resigned smile. He has been pulling a rickshaw for 15 years, and mainly uses his earnings to educate his son.
Despite its benefit to hundreds of thousands of Bangladeshis, rickshaw pullers are not covered by Bangladesh’s labor law. Only around 80,000 of the rickshaws in Dhaka are licensed, and no new licenses have been granted since 1986. Furthermore, rickshaw fares are only regulated in the elite area of Dhaka; the lack of price regulation in the rest of Dhaka means that rickshaw pullers are often underpaid for their efforts, or cheated by customers. They also have little legal recourse in case of an accident. “We’re the weakest on the streets,” said Choburj, a 26-year-old rickshaw puller. “If a car or a motorcycle hits a rickshaw, we can’t do anything about it. We just have to accept this.”
Most rickshaw drivers do not participate in government elections, as they feel excluded by public programs and policies. Pullers wish the government would give poor communities more support, “but, the government is busy with rich people problems,” stated Afsar, who has been driving a rickshaw for more than 15 years. “For example, the government was very responsive to student movements that occurred when a child was hit by a car last month. However, if it was 10 rickshaw drivers that died in an accident, the government wouldn’t have reacted.”
The government has failed to appreciate the importance of pulling a rickshaw in the informal economy, and the economic opportunities it provides. They have banned rickshaws on major roads, and the Dhaka Transport Coordination Authority recently revealed intentions to remove all rickshaws from the streets in the next two years.[6] Such plans would disrupt the means of subsistence for millions of Bangladeshis, and hurt Bangladesh’s efforts to alleviate extreme poverty.
Regulatory Framework for the Informal Economy
Governments need to acknowledge the vast number of individuals that depend on informal work to earn their livelihoods, and invest in designing, implementing and enforcing regulations that protect and support these workers in their efforts to exit poverty. In the case of rickshaw driving, this could include: 1) issuing licenses to ensure pullers receive legal and monetary support in the case of accidents, 2) setting price regulations which protect pullers’ earnings, 3) regulating the terms between rickshaw owners and the drivers, and 4) establishing a grievance redress mechanism or strengthening unions to enable drivers to share concerns and complaints.
Other countries have successfully followed similar approaches to support informal workers. Mexico regularized shoe shiners on the streets of Mexico City and provided them with the legal right to work in public spaces with a valid permit. Accordingly, when shoe shiners were being evicted from the streets, they were able to legally reclaim public spaces to work in.[7] Furthermore, in Liberia, a street vendor union was established to improve communication between street vendors and the municipal corporation, which led to a diminishment of police harassment.[8] A regulatory framework should reduce the obstacles and uncertainties facing the livelihoods of informal workers, which would in turn enhance their economic productivity and make economic growth more inclusive.
When Shawkat began pulling a rickshaw 20 years ago, he dreamed of saving enough money to send his children to school. Through his strenuous labor, he was able to achieve this vision. “While I can’t read or write, my children now can. They are much brighter than I am,” he said with a smile. It is pulling a rickshaw that permitted Shawkat to provide a better life for his children. Supporting the informal economy, rather than suppressing it, could help millions of people like Shawkat escape poverty and earn a living through decent and dignified work.
[1] The World Bank, Bangladesh Development Update: Tertiary Education and Job Skills, October, 2019.
[2] The Economist, “Graduating from destitution”, August 1st, 2015, https://www.economist.com/finance-and-economics/2015/08/01/graduating-from-destitution.
[3] The Economist, “Bangladesh’s biggest city plans to ban cycle rickshaws”, November 7th, 2019, https://www.economist.com/asia/2019/11/07/bangladeshs-biggest-city-plans-to-ban-cycle-rickshaws.
[4] WIEGO, WIEGO Annual Report 2018-2019, October, 2019, https://www.wiego.org/sites/default/files/publications/file/WIEGO_Annual_Report_2019.pdf
[5] Tim Mcdonnell, « Climate change creates a new migration crisis for Bangladesh”, National Geographic, January 24th, 2019, https://www.nationalgeographic.com/environment/2019/01/climate-change-drives-migration-crisis-in-bangladesh-from-dhaka-sundabans/
[6] The Economist, “Bangladesh’s biggest city plans to ban cycle rickshaws”, November 7th, 2019, https://www.economist.com/asia/2019/11/07/bangladeshs-biggest-city-plans-to-ban-cycle-rickshaws.
[7] Carlin Carr, “Shoe shiners in Mexico City have worked in Glorieta de Insurgentes Square for decades to earn their livelihoods. When they were unceremoniously evicted by the municipality under the guise of modernization, they decided to fight back”, WIEGO Blogs, May 28th, 2019, https://www.wiego.org/blog/evicted-how-mexico-city%E2%80%99s-shoe-shiners-fought-displacement-and-challenged-%E2%80%9Cfuture%E2%80%9D-cities
[8] Sarah Orleans Reed and Mike Bird, “Liberia’s Street Vendors Pioneer New Approach with City Officials”, WIEGO Blogs, January 29th, 2019, https://www.wiego.org/blog/liberia%E2%80%99s-street-vendors-pioneer-new-approach-city-officials