Trade unionism and minimum wages issue in apparel industry
August 10, 2010
Shahiduzzaman Khan
LABOUR and expatriate welfare minister Khandkar Mosharraf Hossain recently said trade unionism was never allowed to take root in Bangladesh due to the negative attitude of factory and mill owners. He said the restrictions on trade union activities are the main reason why unrest breaks out frequently in the apparel industry.
Power outages risk thousands of jobs in the manufacturing sectors
April 14, 2010
Unabated power shortage is risking thousands of jobs in small and medium sized manufacturing factories in Bangladesh as factory owners are forced to apply the manpower downsize option to make up their losses. Read more
Apparel workers’ wage board meets on April 15
April 9, 2010
The minimum wage board for about three million apparel workers of the country sits on April 15 to review the wages.
It has sent notices to all its members to attend, a board member told New Age. Read more
Life and times of female garment-factory workers
April 6, 2010
Tanvir Mokammel’s acclaimed documentary “Bostrobalikara: Garment Girls of Bangladesh,” has been invited to participate at the 2010 Nodo…………
A Mixed Outlook
March 25, 2010
When the global recession hit in September last year, there were dismal predictions for the Bangladesh economy. Exports would plummet and credit would dry up, feared experts. The readymade garments sector, Bangladesh’s biggest export earner, was expected to suffer most and drag the economy down with it. But as the financial markets crashed, jobs disappeared and growth took a nosedive in much of the world, it was clear Bangladesh had missed the script.
Although annual GDP growth dipped slightly compared to previous years, Bangladesh still managed to reach a healthy 5.9 percent in Financial Year 2009 (July 1, 2008 to June 30, 2009). Low level of integration with the world economy helped shield Bangladesh from the negative effects of the global downturn. Although consumers in the developed countries spent less, basic clothing items still sold well, and this helped the RMG sector weather the storm. Lower international food and oil prices, combined with a bumper rice crop, helped bring down inflation. The external current account recorded a large surplus of US$2.5 billion because of strong remittance inflows, double-digit export growth and a declining import bill.
Not only did widespread fears of a surge in unemployment and an increase in poverty and social disorder prove unfounded, by June 2009 Bangladesh was being mentioned in the same breath as a handful of other countries that had defied the recession. The country was not going great guns, but it had still done better than many other nations in coping with adversity.
Any celebrations, however, would be premature. Towards the final quarter of 2009, it was clear that the “recession-busting” Bangladeshi economy was experiencing a delayed downturn of its own. The second half of 2009 saw growth fading in exports and remittances. While total year-on-year exports grew by an average of 20 percent in the first part of Financial Year, 09, export performance dipped to a negative growth by December. Moreover, the overall export data masks the diverging performance of ready-made garment exports and the non-RMG exports — with the latter registering negative overall growth in FY09. Remittances also show a similar pattern, with growth falling from 30.9 percent in the first half of FY09 to 15.7 percent during the second half.
This tale of two halves highlights several areas of concern. According to Dr Zaid Bakht, Research Director at the Bangladesh Institute of Development Studies (BIDS), the investment climate is less than healthy, which does not augur well for sustained growth in 2010.
“The import of capital machineries and raw materials is very low,” says Dr Bakht. “This means investors are holding back from new investments. The government must move quickly to restore investor confidence or the economy will stumble.”
Experts believe concern about the volatile global economic and financial situation, and political uncertainty during the caretaker government’s tenure may have restrained export oriented industries from building capacity during FY09. But since the elections, other factors including policy issues and availability of gas and electricity are dampening the investment climate. Reduced import of capital goods and machineries may affect the ability of the export sectors to respond to a possible rise in external demand in the near future even as the global economic recovery gathers steam in 2010.
“Taking advantage of the global recovery that appears to be underway will be one of the challenges of 2010,” says Professor Mustafizur Rahman, Executive Director of Centre For Policy Dialogue (CPD). “But in order to do this, we need investments.”
The weak investment climate is reflected by surplus liquidity in the banks. According to Bangladesh Bank data, surplus funds stood at Tk. 33,995 crore at the end of September. Although this was down by about 800 crore since June, analysts suggest the decrease may be due to purchase of government bonds by the scheduled banks, rather than any surge in commercial lending.
“Borrowers are not taking loans, which means they are unsure about the viability of their investments,” says Dr Zaid Bakht. “Fear of a double-dip recession may be partly to blame. But the main reasons are internal. Having a good set of macro fundamentals would be key to restoring investor confidence in 2010. This would include achieving reasonable fiscal balances, realistic exchange rate, low interest rates, and social and political stability. There are major infrastructure issues, and the dismal situation in the power sector is probably the most critical.”
Hossain Khaled, managing director of Anwar Group and former president of Dhaka Chamber of Commerce and Industries (DCCI) argues that a sense of security must prevail if investment is to occur. “We have had instances of mobs burning down factories, and extortionists shooting at businessmen because they wouldn’t pay. It is the government’s job to provide security for entrepreneurs. But apart from physical security, we need guarantees that we will receive enough gas and electricity to run our factories.”
An improvement in power generation would probably top the New Year’s wish list of any businessman in Bangladesh. Power shortages are the most serious and immediate of the infrastructure constraints, with damaging impact on productivity and investment. Hossain Khaled believes it is a lack of initiative rather than a lack of resources that is holding back the power sector.
“We have gas and coal,” says Khaled. “We must take immediate steps to explore and utilise our resources in the best manner possible. There are also various options we can explore to overhaul or replace aging power stations. But delay in taking decisions is costing us.”
“The country has a shortage of 1300MW to 1500MW power,” explains Prof Mustafizur Rahman. “To ease the problem, the power plants that are near completion, including rental ones, must be brought on-stream at once. Tender process for future plants must be rapid and transparent.”
A broad swathe of economists and energy experts believe that Bangladesh’s long-term energy policy must rely on rapid and efficient extraction of domestic coal reserves. Five good quality coal deposits, with proven reserves of more than 2.5bn MT have been discovered in Bangladesh.
“National Coal Policy needs to be finalised as soon as possible,” says Prof Mustafiz. “There is a debate going on about the local environmental and social effects of mining, but we should have an open dialogue about this as soon as possible. Coal can be extracted in a responsible way by ensuring the local inhabitants are taken care of. This is vital for sustainable development of the country.”
Experts have also called for speeding up gas exploration in offshore blocks while maintaining transparency. “If there is a lack of transparency then there is bound to be opposition,” says Dr Bakht. “The government must also actively resolve maritime boundary disputes with India and Myanmar to facilitate exploration.”
Following a slew of dismal data, economists are growing increasingly concerned about the sustainability of GDP growth in the years ahead. According to a report by the World Bank, if the energy situation stagnates or deteriorates and global recovery falters then export growth cannot be sustained at FY09 levels and real investment growth could decline further. On this trajectory, GDP growth would be unlikely to reach even 5.5 per cent, let alone the 6+ growth that Bangladesh has seen through much of the decade.
Ironically, the economy is turning sluggish at a time when most of the developed countries are exiting recession. Coupled with strong demand in countries like China and India, this recovery could drive up prices of commodities in 2010, warn experts.
“One challenge for 2010 would be containing inflation, and ensuring food security,” says Prof Mustafizur Rahman. “The Aman crop has not been that good, and now we must look to the Boro. The government must be vigilant about the risk of spiralling prices.”
According to data from the Bangladesh Bureau of Statistics, inflation rose by 46% on a point-to-point basis and stood at about 6.71 percent in October. Rising food prices were to blame, say market watchers. The salary of government employees was raised recently, and this could also feed into the inflation scenario.
“It is vital for the government to stimulate job creation at this stage,” says Dr. Bakht. “For this the investment climate must be boosted, and the government must also implement the Annual Development Programme (ADP) quickly and transparently.”
One of the few consistently bright spots for the economy has been robust remittance inflow. But Bangladesh cannot take remittance for granted. Not only has the international trade of capital, goods and services slowed down during the recession, but so has the international movement of people.
“The number of people going abroad for work has almost halved,” says Prof Mustafiz, “and this is something the government must look at very carefully. There is no scope for complacency here.”
The CPD executive director believes the government must take a number of urgent steps in 2010 to handle the macroeconomic situation. “The economic stimulus package must be spent wisely, and make sure credit is available and affordable. Decisions must be taken quickly regarding the power sector, and in a transparent manner. The health of the RMG sector must be ensured, but we must also diversify our exports. Our exporters are facing challenges because some of our competitors have made exports cheaper by devaluing currency. Provided adequate steps are taken, there is room for cautious optimism going into 2010.”
“The government has spoken of some ambitious infrastructure projects,” asserts Hossain Khaled, “and these need to be implemented quickly to stimulate the economy — the Dhaka Chittagong highway, the Deep Sea Port, new EPZs. Let 2010 – 2020 be the decade of implementation as we move towards 50 years of our independence.”
The present government came to power on a platform of affordable food prices, and stable jobs. The honeymoon period is almost over and 2010 will be the time to start delivering. Addressing the weaknesses of the investment climate, complemented by appropriate policy reforms and good governance, should therefore be of top concern to enhance the economy’s productivity and long-term growth, and contribute to eventual poverty reduction. The road ahead contains challenges that will test the government’s resolve. Unfortunately, most of the heartache will be felt by Bangladesh’s poor as they continue the perpetual struggle to put two square meals on the table.
Episode one of the global recession may have been a phantom menace as far as Bangladesh is concerned. If there is an episode two, it may not be. The economy, for better or for worse, will take centre stage in 2010.
Sourch: http://www.thedailystar.net
Garment workers demand minimum pay hike to Tk 5,000
February 9, 2010
Bangladesh Garment Workers Unity Council yesterday announced a 90-day programme to press a series of demands, including a raise in minimum wage to Tk 5,000 from the existing Tk 1,662.50 per month.
The two other major demands by the platform of garment workers are amendments to Bangladesh labour law and reversing the move to introduce industrial police.
At a press conference at Dhaka Reporters Unity, Towhidur Rahman, president of Bangladesh Poshak Shilpa Sramik Federation, said workers can hardly purchase enough food with the salary they get now.
“So, it is our demand to increase the minimum pay to Tk 5,000 a month.”
Meanwhile, Ikteder Ahmed, chairman of Minimum Wages Board, convenes its first meeting today to review minimum pay for garment workers.
“I have already informed all the members of the board to attend the meeting,” he told The Daily Star. The Minimum Wages Board for garment workers was formed in 2006.
Nazma Akter, a member of the board, said the prices of basic commodities almost doubled from 2006.
“So, it is a must to review the minimum wages of garment workers for their survival.”
Top global retailers plea for RMG workers’ wage hike
February 9, 2010
Top global retailers, including the world’s biggest Wal-Mart and Europe’s largest H&M, according to a report published in the FE, have written a letter to the Bangladesh Prime Minister requesting her to take ‘swift’ measures to increase the minimum wage of nearly two million readymade garment (RMG) workers. The retailers have also urged the highest authority of the government to treat the issue as a ‘high priority’ because of, what they have stated, the wage of the RMG workers has now dipped well below the poverty line. They have found a link between the recurrent unrest in the RMG factories and the poor rate of wage that the workers are paid and urged the government to create a sort of permanent arrangement to make an annual review of the RMG workers’ wage.
There is no denying that labour wage in Bangladesh, particularly for those working in the export-oriented RMG sector is very low compared to that in other global competitors. A survey conducted on the global garment industries by a US-based consultancy firm recently has found that Bangladesh RMG workers get only one-third of the average wage their counterparts receive in other South Asian major apparel exporting countries. In 2006, for the first time, a minimum monthly wage of Tk. 1662.50 was fixed for an entry-level worker in the RMG sector. Last year, a nominal hike in the wage was put into effect. Still the daily income of a entry-level worker is less than a dollar a day, meaning that he or she, despite being employed in an export-oriented industry, does not have enough money to sustain a living. Their income situation would turn even worse if the recent UN baseline for poverty estimate is taken into consideration. Under the new UN estimate, any individual having a daily income below $1.5 is considered below the poverty line.
The RMG workers are seriously aggrieved by their low wage, no doubt. But most acts of vandalism in the RMG sector in recent years have happened mainly because of irregular payment of monthly wage, overtime bills and festival bonus by a section of RMG factory owners and poor management and workers relations. There is, however, a conspiracy theory. But conspirators, if there is any, actually exploit the growing resentment among the RMG workers over low wage and maltreatment by their supervisors at the factory level. Studies have found that the average productivity of the RMG workers in Bangladesh is lower than that of any other competing countries in South Asia, China, the Philippines and Vietnam. There could be a link between the low productivity and the low wage of the RMG workers in Bangladesh. In such a situation, RMG owners have to spend more money on workers’ wage to encourage the latter to raise their productivity level.
The retailers who have written to the PM calling for raking measure to effect a hike in the wage of RMG workers in Bangladesh are major players in the international apparel market. The government cannot ignore their concern because together they buy more than 40 per cent of the country’s total annual RMG exports. These companies have made it clear that they consider the workers’ unrest as a risk, which could damage Bangladesh’s reputation as a reliable sourcing market. Everybody would appreciate the points raised by the group of major buyers. But one cannot, however, ignore the problems being faced by the RMG factory owners who have suffered losses, in terms of value of their products and volume of exports, because of the ongoing global recession. The retailers are, reportedly, paying less than before for goods they are buying from Bangladesh. So, they will also have to make their contributions to the efforts for facilitating hikes in the wage of RMG workers in Bangladesh by paying a little more for the products they are procuring from here.
Industrialists urged to create skilled manpower
February 9, 2010
Jute and Textile Minister Abdul Latif Siddiquee has urged industrialists to create more skilled manpower for the garment sector.
He was speaking at the inauguration session of the four-day exhibition of textile and garments machinery at Bangabandhu International Conference Centre in the city Tuesday, reports bdnews24.com.
Siddiquee said Bangladesh not only had to import machinery for the garment sector but also foreign technicians to operate them.
“I think we should create skilled manpower.”
Mr Siddiquee said, “Work towards creating the man behind the machine. You will have to come forward to create skilled manpower.”
“If we can do so, the money spent on foreigners will remain in the country,” the minister said. Industries Minister Dilip Barua said, “The precondition of local and foreign investment is political stability. The government is determined to maintain the stability.”
16,100 Bangladeshi workers in Maldives to be regularised
December 3, 2009
The Maldives government is going to permit 16,100 undocumented Bangladeshi workers to stay and work there, Expatriates’ Welfare and Overseas Employment Minister Khandaker Mosharraf Hossain said on his return from the country yesterday.
NRBs’ thrust on strengthening economic ties
November 12, 2009
Non-resident Banglad-eshis (NRBs) living in Japan believe Bangladesh has a very good potential to enhance the economic ties between the two countries in respect of business and manpower export.