After series of discussions with all the stakeholders of the industry, the wage board (formed by the Ministry of Labour and Employment in January), on September 13, raised the minimum monthly wage of readymade garment (RMG) workers by around 51 percent to Tk 8,000 from the existing Tk 5,300 which will come into effect from December. The owners’ representatives initially convinced the board members to fix the minimum monthly wage at Tk 7,000. But at a meeting with them Prime Minister Sheikh Hasina asked the owners’ representatives to hike it by Tk 1,000. Then all the board members including owners’ representatives agreed to the PM’s proposal. This salary structure includes Tk 4,100 as basic wage, Tk 2,050 as house rent, Tk 600 as medical allowance, Tk 350 as conveyance allowance and Tk 900 as food expenditure. The minimum wage is fixed for the workers of entry level (seventh grade). The wage of the workers in six other grades will also be increased accordingly. Since the formation of the wage board, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders and workers’ representatives placed their arguments and bargained with each other to secure their community interests. But finally when the board has made their announcement, it has created dissatisfaction among the ordinary RMG workers. Different trade union leaders, labour rights groups and economists have opined that this minimum wage is not enough to meet the essential living costs of the workers. They have claimed that the stipulated house rent, food expenditure, medical allowance and transportation cost are not acceptable as it doesn’t match reality. Besides, the meagre basic salary of the proposed wage will lower some of the crucial benefits of the workers like pension after retirement, festival bonus as well as the overtime payment. Such observations are nothing new from the part of local labour leaders and international labour organisations. Whenever the government adjusted minimum wage of the RMG workers in the past, they came up with similar statements. But the question is why does it happen every time? Why the wage structure reformed by the wage board cannot satisfy the RMG workers in Bangladesh? This week ‘morning tea’ has tried to find out the answers of these questions.
Death of 1134 workers and injuries of 2500 workers as the consequence of nightmarish collapse of Rana Plaza on April 24, 2013, opened the eyes of the mass people about how a section of RMG factory owners did their business without maintaining proper workplace safety and how the concerned government officials overlooked their irregularities. Since then in the last five years things have improved a lot. A huge effort has been put into making the garment factories safer in Bangladesh. The Ministry of Labour and Employment has amended the labour law keeping the provision of forming trade union with minimum conditions, ensuring maternal leave and increasing the amount of compensation in case of any accident. But when it comes to their initiative to adjust the salary structure, they cannot satisfy the RMG workers. Currently the minimum wage for RMG workers is $155 in China, $140 in Cambodia, $116 in India, $107 in Vietnam, $104 in Indonesia, and $95 in Bangladesh! That means even after the latest revision of the pay structure Bangladesh is paying the lowest amount of wage per month to its workers despite being the world’s second highest exporter of RMG products! But the government hardly scrutinises the reasons why RMG factory owners are reluctant to pay a moderate amount of salary to their workers let alone monitor their activities and the situation of the workers.
Though the garment factory owners have worked a lot on the compliance issue in the face of massive pressure from home and abroad, still most of them haven’t changed their old attitude of oppressing the workers while determining their salary. For example, the RMG factory owners initially proposed the minimum wage of workers only Tk 6,360, increasing only Tk 1,060 or 20 percent after five years! They even didn’t want to continue the exiting seven-grade wage structure and thus they proposed for a five-grade wage structure! Apparently, they were in favour of abolishing the grade-1 and grade-2! The owners also didn’t want to face any legal binding on annual increment or festival bonus! They intended for creating a situation where a worker will cease to enjoy the legal right to increment and bonus which will fall within the sphere of discretionary power of factory owners! The unfortunate fact is that most of the readymade garment factory owners don’t own their workers. There are allegations that they keep same workers in same position over a long period of time. When workers claim promotion, they terminate them indiscriminately. Though the RMG sector needs experienced and expert workers but they only prefer to reduce their expense. Most of these owners barely focus on developing mid-level management to run their factories. Recruiting their relatives and inexperienced employees they ultimately ruin their own fate.
Voracious attitude of the garment factory owners often results in the violation of workers’ rights. The factories are now subject to 15 per cent corporate tax against 35 per cent for most of the sectors. And the 1.0 per cent tax at source is considered as the final settlement which provides a huge tax benefit to the factory owners. But before beginning the recent negotiation with the wage board they set a precondition so that the government gives them more tax waivers or cash incentives to cope with an increase in wages for workers! They also suggested adjusting the salaries in line with inflation instead of forming a wage board in every five years! RMG factory owners frequently claim that the cost of doing business is very high in Bangladesh and due to the increasing competitiveness they are struggling to survive. Moreover they don’t admit that their competitors are paying acceptable salary to their workers while they are also facing similar problems in their respective countries in doing their business. They question the production capacity of the workers of our country. But production capacity doesn’t depend only on the workers’ efficiency, rather it largely increases and decreases based on the facilities an employer can provide to his/her employees. Another sad truth is that BGMEA or any other authority has no control over our internal unhealthy competition among the manufacturers. Most of our factory owners are inefficient in bargaining to ensure a good price for their products! After seeing the opportunity of a probable orders they together start offering lowest possible price to the buyers. Consequently when they cannot make sure a fair price, they concentrate on cutting production cost which ultimately becomes a reason for low wage of their workers.
One of the essential responsibilities of international labour rights groups is to remain vocal to establish the rights of the workers. That is why when they speak about the low wage of the RMG workers in Bangladesh, it sounds reasonable. But when the international buyers are seen talking about the rights of the readymade garment workers, then it makes no sense as they are still paying the traditional low prices for the products and making irrational profit. A shirt which costs between $3 and $5 to be produced is sold between $25 and $30! The same is true in the case of high-end value added products, which is 30 per cent of the total volume of garment items exported in a year from Bangladesh. The global posh brands pay between $8 and $12 to the local manufacturers for purchasing a piece of value added high-end shirt and the retailers sell the same shirt at $100 and sometimes even at $150! For such a huge gap, the manufacturers and economists blame the faulty global supply chain, which needs a review. When a $5-shirt made in Bangladesh is sold at $25 at different posh stores of many developed countries, where exactly does the rest of the money ($20) go? The current business model forces factory owners to squeeze their workers as much as they can because they have to produce the shirt at $5. As a result, owners of some global brands and retailers, who sell basic garment items made in Bangladesh, have been named the richest persons in the world.
The low price of garment products will continue until our readymade garment owners say ‘no’ to it. The retailers are getting the products at lower prices because they are supplying those at that price. That is why there is no alternative of collective bargaining. Until our RMG factory owners can ensure a fair price of their products, they will not be able to pay a moderate wage to their workers. Besides, they have to come out of their traditional attitude towards their employees. They should develop a better relationship with their workers and facilitate them properly. The export earnings of the garment sector that boosts our national economy is not only the contribution of the RMG factory owners, rather the combined efforts of the owners and workers have made it possible. The government has to address this. Thus they need to set up a more effective way of monitoring the RMG factories. They have to understand the plights of the workers and ensure an acceptable wage for them so that they can lead a standard and dignified life.