Investors oppose trade unionism in EPZs

Investors fear that certain provisions of the country's labour law, if applied, may trigger strikes and lockouts in export processing zones (EPZs).

"We are of the view that it is not feasible to allow strikes and lockouts within the EPZs," chairman of the Bangladesh EPZ Investors' Association (BEPZIA) Kihak Sung said in a recent letter to the Prime Minister's Office.

He said labour rules and regulations are critical to decision making by a foreign firm to invest in the EPZs in Bangladesh.

"The existing regulatory regime with respect to labour has been receiving positive response from investors in the EPZs. To make major changes in these rules without consultations may lead to a significant negative reaction to investment in EPZs," Mr Sung said.

The BEPZIA reaction came as the government has moved to apply certain provisions of the labour law in the EPZs by way of allowing trade unionism as part of its effort to make the country's merchandising sector labour-friendly.

The government has opted for applying some sections of the labour law, which may allow trade unionism in the factories within the EPZs to get the generalised system of preferences (GSP) facilities restored by the US.

The government in August last formed a seven-member committee led by the Secretary to the Prime Minister's Office Molla Waheeduzzaman to make recommendations on which sections of the labour law could be made applicable in the EPZs.

The EPZs are being governed under the BEPZA Act 1980. These special economic zones have been kept out of the purview of the Employment of Labour (Standing Order) Act 1965, the Industrial Relations Ordinance-1969, and the Factories Act-1965 under Section 8 of General Clauses Act 1987.

The provisions of the Bangladesh Labour Law 2006, sources said, in most cases, are not applicable in the case of EPZs.

The workers in the EPZs are not allowed to form trade unions or resort to any kind of agitation to raise their demands.

The BEPZIA Chairman said the investors have accepted the wage premium with the understanding that there would be labour peace.

"One cannot expect the wage premium now earned by the zone workers to continue into a regime of open wage determination. Indeed one should expect over the next few years labour compensation in the zones to move toward that of the domestic tariff area."

Mr Sung said the factories in the zones are closely packed together. Disruption in one factory has an immediate impact on nearby factories. Workers will be distracted from their duties by shouting, possible sounds of shooting, and noise.

"If there are frequent major disruptions caused by strikes at one factory, it will seriously disrupt the zone. This amplification of the impact of a labour dispute will result in reduced exports," he said.

He said the banning of strikes in the EPZs under the existing law is an important guiding factor in the decision by existing investors to come to the zone.

"There is an implicit contract between the government and the investors that the investors will follow in good faith the regulations of the government. And the government will not change such regulations without consultation and agreement with the investors," Mr Sung said.