The gathering storm over Bangladesh RMG

For Bangladesh’s flagship export, the Ready Made Garment (RMG) sector, the journey forward has been anything but along a primrose path. It has faced hurdles of one kind or another at various times during its storied progress, both arising from domestic and external factors. The most recent example of the latter case has been the question of Generalised System of Preference (GSP) from European Union (EU) countries after the graduation of Bangladesh from the Least Developed Country (LDC) status. The withdrawal of duty-free status on all exports by America can also be mentioned in the context of this source, though RMG from Bangladesh has not enjoyed that benefit so far. The former has been resolved to the satisfaction of Bangladesh exporters but the non-availability of duty-free status from America continues.
Among problems of domestic origin destabilising the RMG sector from time to time are labour unrest over wages and other work- related issues like right to form trade unions. Its latest manifestation was the two-week long agitation for wage hikes by RMG workers since October 23 this year. Though this recurring problem has been settled for the time being its possible fall out appears to be alarming. Before discussing that ominous development a brief recapitulation of the events leading to the gathering of storm clouds over the horizon of RMG is in order.
The recent labour unrest in RMG sector arose over demands of garment workers for a minimum wage of Tk 23,000 per month. In response, the owners of RMG factories offered Tk 10,400 only. During the two-week-long agitation by workers, four workers were killed in police firing while hundreds were injured. Moreover cases implicating thousands have been filed and a hundred arrested and jailed on charges of alleged violence, according to newspaper reports. Some factories were closed by their owners on the ground of disturbance. All these made headline news in print media and there was due coverage of the same in television channels. There was some attempt at ascribing the workers’ demand to provocations by opposition political parties now engaged in protest movement of their own. This was a disingenuous ploy to smear the movement of RMG workers for increase of wages on the part of parties interested in undermining the workers’ genuine demand.
The workers’ movement ended with the declaration of Tk 12,500 as the minimum wage at entry point. No explanation is available for fixing the minimum wage at the rate declared. It may be mentioned that minimum wages were fixed at Tk 1,662 in 2006, Tk 3,000 in 2010, Tk 5,300 in 2013 and Tk 8,000 in 2018. On no occasion the rationale for fixing the minimum wage was explained by authorities. It is trite and commonsense to state that a wage should be consistent with cost of living so that it can be said to be a,’ living wage’. The prices of essentials and rents have skyrocketed since Covid pandemic with no let up in the upward rise, causing headline inflation to be over 9 per cent during the past one year. An average worker has to pay for his/ her food items, transport and rent. There are occasional expenses incurred by workers for medical treatment during illness. Most of them have to support a family, too. All these have to be factored in while fixing monthly minimum wage. The lack of explanation given while announcing minimum wage indicates that in most cases this is done arbitrarily or as a compromise between what the owners are willing to pay and the demand of workers, often tilted in favour of owners. According to the UN Special Rapporteur on Poverty, the minimum wage paid to a garment worker is one third of what is required for a decent living. According to a finding by the think tank SANEM, on average a worker received Tk 9,984 per month during April- June, 2022, while the requirement was for Tk 19,200 to Tk 26,000, that is the wage was less than half of the minimum requirement.
The standard reaction of owners to the demand for wage increase has always been that this will make their exports uncompetitive. They do not raise this objection while paying for higher prices for other items used in garment manufacturing. Nor are they willing to the margin of their hefty profit earned from exports. They have shown no inclination to share windfall gains like depreciation of Taka against Dollar from which they benefit. For instance, exporters are now getting Taka 110 per US Dollar as against Taka 86 a year ago following depreciation of Taka by about 25 per cent. Most of the owners are only interested in increasing the size of profit at the cost of the distress of workers. The wealth accumulated and the life of luxury enjoyed by them bear testimony to the profiteering tendency of most of the owners. Many allege that the number of owners off-shoring their wealth in safe havens are not few. It is not that governments at different times were not aware of this fact of common knowledge. But none of the governments since the ascendancy of RMG sector has come down hard on their owners because of alleged nexus between them and the political parties. In fact, the owners of quite a few RMG have been lawmakers at various times under different governments. Small wonder then that government policy towards RMG, when it comes to payment of wages to workers, has been lenient and indulgent.
Due to instant publicity in media, the irregularities in RMG sector become well-known at home and abroad in no time. In addition to exploitation of workers many acts of harassment have drawn the attention of foreign governments that set a great store by appropriate labour standards and recognition of labour rights. In addition to the workers’ movement in October for wage hike after four years, the tightening of noose around workers in the wake of the recent wage hike movement by owners have been noticed by them. According to a national daily the circular issued by the apex bodies of RMG on 9 and 14 November to suspend fresh recruitment of workers and update their biometric data are seen by workers as a backlash by owners to punish the protesters during the last movement for wage hike. Quoting the Industrial Police, the daily mentioned that factories terminated jobs of some 91 workers since October 23 till November 26 in an apparent act of reprisal (The Financial Express, November, 29).
The same national daily carried a headline news on the same day regarding Bangladesh embassy in Washington alerting the government about possible sanctions over violation of labour rights. The embassy has interpreted the mid-November US Presidential Memorandum on labour rights, as a ‘signal’ of potential action from America, Bangladesh’s single largest export destination, that could affect Bangladesh RMG exports. In a letter to commerce ministry on November 20, the embassy reportedly noted that ‘ labour issues in Bangladesh were specifically quoted by the US Secretary of State and the acting Secretary of Labour at the launching ceremony of the Presidential Memorandum.
To say the least, given the present tension and fragility in bilateral relations between the two countries, the latest developments in RMG sector and the important policy announcement by the present American Administration does not augur well for RMG sector and Bangladesh economy as a whole. To avoid adverse consequences the Bangladesh Embassy in Washington has urged the government to address labour issues on an urgent basis. One would like to add to this the treading for the run up to the general election discretely and pragmatically. The embassy is worried about US Administration ‘using the labour situation for political purposes’. So should the power that is in Bangladesh now.

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