Most of them used to work as maids in urban kitchens, in most cases, for subsistence known as 'pete-bhate' in Bengali. Then came the opportunity to work in the manufacturing sector, more specifically, in the readymade garments sector (RMG). They left the urban kitchen forcing the urban people to do their own dishes. Today, about 4.0 million workers, about 90 per cent of whom are girls and women, are working in the RMG sector. Local and international social activists are very concerned, rightly so, about the rights and pay of these workers.
Not all girls of Bangladesh are fortunate to find their way in the RMG sector, and hence still doomed to work as maid. There are Aduris, who are deprived of the 'Ador' (affection) of her parents due to the abject poverty, and sent to urban household by her parents for the bare minimum. Media frequently publishes news of them being tortured, abused, humiliated and sometimes even killed. Yet, there is none to speak for them.
There are garages in our own neighbourhood where children coming from poor background work in one of the most inhumane working conditions. They serve the urban people who are the main users of transport, both private and public. Their suffering right in front of us goes unnoticed. While our vigilance on the RMG sector should continue, the other unfortunate victims of inhumane working conditions and low wages should not go unnoticed.
Talking about low wages, the RMG sector is always blamed by media, activists, researchers, NGOs and international organisations for not providing enough to its workers. Very recently, the International Labour Organisation (ILO) published its country report on Bangladesh.
The report says, "Bangladeshi workers earn some the lowest wages in the world. For example, as of August 2013, the monthly minimum wage for entry level workers in Bangladesh's garment sector was US$39 per month - about half of the lowest applicable rate in other major garment-exporting countries, such as Cambodia (US$40), India (US$71), Pakistan (US$79), Sri Lanka (US$73) and Viet Nam (US$78)." Different print and electronic media published different reports, columns and editorials highlighting these numbers. Before drawing any conclusion on the imperatives of these numbers, one has to pay attention to some other factors.
First of all, the number cited in the ILO report does not reflect the recent decision to increase the minimum wage of the RMG sector after a long tripartite consultation involving representatives of manufacturers, workers, and government. The new pay structure will become effective from December 2013. The minimum wage for entry level RMG worker has been set at Tk.5300, which is equivalent to US$68. From now on, it will be adjusted annually like the other countries.
Second, from pure efficiency point of view, wage should be determined on the basis of marginal productivity. Existence of a perfectly competitive market ensures this efficiency requiring no intervention by government. However, perfect competition is more of a myth than reality in Bangladesh for several reasons. In such a situation, government needs to intervene to set the wages for the working class to lessen their exploitation by employers.
However, the minimum wage cannot be determined by completely disregarding the overall economic situation and living standard of a country. People's values change with the level of development. The objective of the historic labour movement in Chicago in 1886 was to reduce the working hours from 10 hours a day and 6 days a week to 8 hours a day and 5 days a week. Although this objective seems very logical, it was not accomplished automatically. Many died in that movement, which is still known as Haymarket massacre.
What a developed country can afford to provide to its workers, a less or undeveloped country cannot sometimes think of it. A regular worker of McDonald's or KFC, the global chain first-food shops, can own a car in the United States. But this will be far from reality in Bangladesh. This is why one cannot draw any conclusion from a black and white comparison of minimum wages among different countries which vary in terms of level of development.
How do we gauge the level of development? In the absence of any better measures, per capita GDP (gross development products) is being utilised for long as a proxy of economic development. Whether a country is generous or not in setting its minimum wage, one needs to take the per capita GDP of that country into account.
The World Bank publishes per capita GDP for all countries of the world every year. Their estimation is globally comparable as they follow the same methodology for all countries. According to their estimates, Bangladesh had the lowest GDP per capita in 2012 among the countries mentioned above [Table 1]. A simple logic will say that the minimum wage will be the lowest in Bangladesh.
Per capita GDP also represents average level of living standard in a country. So, the minimum wage as a percentage share of monthly per capita GDP will indicate whether living standard of the minimum wage recipients are at par with the national average living standard or not [Table 2]. If minimum wage in a country accounts more than 100 per cent, the living standard of the minimum wage recipients would be higher than the national average living standard, and vice versa.
People working for minimum wage in Bangladesh receive about 109 per cent of the country's average per capita GDP. In case of Cambodia this share is also more than 100 per cent. Only in these two countries people working for minimum wage can maintain a living standard which is higher than the national average. In case of other countries, they miserably fail to do so. In case of Sri Lanka, for example, the living standard of people working for minimum wage is less than one-third of the national average.
Undoubtedly, the minimum wage in the RMG sector in Bangladesh is lower than that in many of its competitors as mentioned in ILO report. However, when evaluated as a proportion of the per capita GDP, Bangladesh provides the highest among these countries to the people working for minimum wage. With this relatively better pro-poor distribution, the most effective way to ameliorate the life of the working people of the country is to foster growth.
Abul Basher, PhD is Researcher at Bangladesh Institute of Development Studies (BIDS), former economist, World Bank, and former faculty, Willamette University, USA.
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