Need to identify issues that constrain RMG industry

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Shahiduzzaman Khan The country's readymade garment (RMG) sector is otherwise giving a disconcerting signal. Troubled by labour unrest for the last few consecutive days, the sector is apparently heading towards an uncertain future. Moreover, global clothing retailers have warned of grave impacts if the unrest continues and production remains halted for long. Bangladesh is already passing through a restive political phase for the last one year. Now, the analysts say, if the labour unrest flares up throughout the country and continues for long, the international buyers will not come up with new orders. On the contrary, orders will go to other countries if the unrest prolongs. And there are a good number of countries waiting in the wings, looking for opportunities to take over the Bangladesh's RMG markets in the overseas. The depreciation of currencies of some emerging economies including that of India in the immediate neighbourhood and the continuous labour unrest in Bangladesh will erode competitiveness of the latter's RMG export items in the global market. The biggest setback for the country will be the loss of its image and that too, at a time when western customers have slowly been regaining confidence after the Tazreen Fashions fire and the Rana Plaza building collapse, they said. The recent spate of violent agitation by workers in most of the garments hubs to press home their demand for pay-hike, has, once again, borne out the fact that the employer-employee relations in the country's RMG sector remain mired in intense mutual recrimination and trust deficit. This is the most unfortunate aspect of things about an industrial sector that continues to be a cornerstone of the Bangladesh economy. So far, negotiations between the garments owners and the workers' representatives have failed to resolve the disputes over the minimum wages. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is reportedly eager to raise the minimum wage by Tk 600, increasing it to Tk 3600 from its current level of Tk 3000. But the workers are demanding Tk 8000 plus as their minimum wages. Not to mention that not only the RMG workers but also many human rights activists are not happy at all with what BGMEA has reportedly offered. But it is also a fact, any irrational wage structure - too high in nature - is likely to impact the competitiveness of the industry and trigger inflation. The owners said that they would not be able to pay wages and festival allowances to workers if the unrest in the sector over wage-increase continued. They said the fresh unrest and acts of vandalism in the apparel sector have created new fears and the situation will hinder its sustained future growth. The owners further said that some vested interest groups were creating instability when the government had set up a wage board to decide the minimum wage for apparel workers. They alleged that national and international quarters were hatching a conspiracy against the Bangladesh apparel sector at a time when the country is otherwise set to emerge as the second largest exporter of apparel items to the global market. Local and international media are also involved in the conspiracy. Some local and international media, through their coverage of developments in the sector, are inducing, intentionally or not, unrest through publishing confusing information, they alleged. Many quarters were, encouraging workers to take to the streets and create a chaos that would ultimately hinder the export business. According to reports, country's labour minister said that he did not believe the workers' demand for increase in pay had anything to do with the present crisis and that some quarters from outside were stoking trouble in the export-oriented factories. The workers are just becoming victims of a conspiracy, so, as reported by the media, the minister commented. In fact, the phenomenal success of Bangladesh's apparel industry has made its competing RMG-exporting countries in the region and beyond it, quite jealous. However, it needs to be pointed out that the strongest weapon to foil such conspiracies, if there are any, is maintenance of healthy industrial relations, which, ironically, remain largely absent in the RMG sector. Given the steep and continuing increase in the cost of living and, thus, raging inflation, the demand for a pay-hike should be considered as legitimate, be it in the RMG industry or in other formal and informal sectors. Hence, the minister's conclusion that the present unrest in the RMG sector does not have anything to do with the demand for increase in pay, does not hold water. The minimum wage in the Bangladesh apparel sector is the lowest in the world. In comparison with many of its sectors, e.g. construction and timber (Tk 9,982), tannery (Tk 8,750), and oil mill and vegetable products (Tk 7,420), the RMG sector in the country fares quite poorly. As pointed out by different quarters, the minimum wage in the apparel sector, which happens to be the major foreign exchange earner, has never been commensurate with the cost of living. A recent study pointed out that the minimum wages for RMG workers have remained static since November 2010 whereas their cost of living has increased, at least, 2.5 times in the meantime. Moreover, not only poor wages, many such issues as non-payment of arrears, overtime bills and festival allowances in time, have often triggered strong discontent among the workers. There are reasons to believe that the apparel workers have apparently given up their hope of getting redressal from the government and the factory owners. As such, they are frequently taking to the streets and resorting to violence and acts of vandalism. The 'uncompromising' attitude of the factory owners as well as some so-called union leaders could only add fuel to the fire. All these could have far-reaching consequences for the apparel sector and the economy. Under such circumstances, it is critically important to address the 'genuine' grievances of the workers, in terms of not only wages but also in creating good working conditions. Decent wages for workers and compliance with the same by all RMG factories will definitely tame labour unrest, on the one hand, and make the apparel sector viable, on the other. This is also imperative for the different actors in the sector to hold dialogues among themselves with the purpose of identifying the main issues that constrain the industry and reaching agreement on initiatives that need to be taken in order to help improve the sector's competitiveness. szkhan@dhaka.net