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Subsistence not enough PDF Print E-mail
Thursday, 31 January 2008

The current minimum wages are far from living wages, which itself is a concept developed to sustain merely a constant supply of labour but not to create opportunities for the labourers to grow beyond and realise their inherent human potential in other creative activities of life. Since living wages are the bare minimum that a person must have, such wages do not allow the working classes to graduate to a higher standard of living

Tanim Ahmed

IT IS indeed a matter of good fortune that one's article is read with keen interest and the message taken seriously. It is even more heartening when such an article elicits critical and enlightened response from among those very quarters that it was addressed to. The article titled 'A bridge, perhaps?'

A note of thanks to begin with. Rubana Huq admits and acknowledges the dire state of the garment workers and furthermore that their employers, the garment factory owners, have done too little too late with candour that is seldom forthcoming from her counterparts. There is no disagreement either with the essence and spirit of the bridge that the writer desires. However, several points that were raised warrant further clarification.

Two recent events to start the discussion. A delegation of the Bangladesh Garment Manufacturers and Exporters Association demanded that the interim government include their workers in the ongoing food rationing system. After his meeting with Mirza Azizul Islam, the finance adviser to the military-controlled interim government, the BGMEA president, Anwarul Alam Chowdhury, was quoted as saying he had urged the government to include garment workers in the government's rationing system such as the vulnerable group feeding programme or some other programmes since the situation had become unbearable for the workers. 'The recent incident at Mirpur was not merely for wage or allowance. It was the outburst of sufferings from the high price of essentials.' When asked about the practicality of providing rations for over 20 lakh workers, the BGMEA president referred to the case of India where there were such systems for low-income groups.

A coalition of international and national non-governmental organisations also made the same demand on January 26 under the banner of Make Trade Fair Alliance. This group made another demand for 'living wages', suggesting an immediate upward revision of the minimum wages.

The two recent incidents point to several facts. The current minimum wages are far from living wages, which itself is a concept developed to sustain merely a constant supply of labour but not to create opportunities for the labourers to grow beyond and realise their inherent human potential in other creative activities of life. Since living wages are the bare minimum that a person must have, such wages do not allow the working classes to graduate to a higher standard of living. But the country's garment workers are not even paid that amount, which is evident in the implicit admission of the BGMEA delegation when they demanded government-sponsored food ration for their workers.

It is understood and accepted that any industry goes through a process of plundering and exploitation during its initial stages but once the industry matures, as should be the case of garments, it is expected that the owners will behave like true capitalists and at least provide for living wages. By making such a demand, the garment owners' representatives are also admitting that the main driver of Bangladesh's exports and, indeed to a large part, the economy cannot provide for its workforce. A sector that is expected to drive the economy is instead asking that its workers be included in a system exclusively designed for the poverty-stricken multitudes with no source of income or those unable to work. It only raises questions about the long-term sustainability of the entire industry in case the factory owners refuse to share some of their profits with the workers.

There is no disagreement that a failure of the garment industry would spell doom and prove rather disastrous for the economy. That is perhaps why the state takes an active interest in sustaining and supporting this sector. To reiterate, the dollar, although falling across the world, remains robust against the taka, and thus costs the populace more by way of more expensive food and other essentials. It means that the entire population, rich and poor, are making financial contribution to make sure that the garment factory owners continue to make profit. By demanding rations, the BGMEA delegation seemed to suggest that the state should further tax the people to provide for their employees since a rationing system would be bound to be sourced from public money. There is no doubt that the workers need rationing system; however, such a system should be provided by the factory owners themselves.

The factory owners have their own system of representation and carry out regular elections. The factory owners, as a united group and as garment and knitwear manufacturers, wield more leverage and bargaining power when their delegations engage in negotiations with the government. Their workers are, however, denied this right. In fact, the interim government does not allow trade unions, terming them political activity, and thus deny the workers the same leverage and meaningful engagement with their employers. Nor does the state compel the factory owners to allow trade unions, which is recognised across the world as a necessary element for healthy labour and industrial relations. Furthermore, as pointed out in the previous article, trade unions would allow the factory owners with an effective avenue to negotiate with their employees in times of agitation or unrest and would also be helpful in dispelling rumours of dead bodies being hidden in factories fuelling mass street demonstrations.

This brings up the matter of compliance and labour standards that are stipulated by national laws and international regulations to which Bangladesh is a signatory, some of which were also part of the 10-point tripartite agreement signed between the workers, the owners and the government following the violent demonstrations of May 2006. There are surely instances of factories paying higher than the stipulated minimum wages of Tk 1,662.50. There are surely instances of commendable working environment at some factories. But those factories are the exception. Another point that must be raised here is that compliance with the minimum wages does not constitute compliance with the entire tripartite agreement or core labour standards that include identity cards, appointment letters, payment of wages and overtime within the first week of the month, festival leaves and allowances, weekly holidays, earned and sick leaves, fully paid maternity leave of 12 weeks, day-care centres, canteens besides the unhindered right to association and trade unions.

Indeed a single factory that abides with all the regulations and stipulations would be hard to find and prove to be the rarest of exceptions. These regulations that the factory owners are pledge-bound to abide by, which are also stipulated by labour laws, are not strictly enforced by the state. Over 300 garment workers have died and over 2,000 injured in fires at garment factories over the past 15 years but a single factory owner is yet to be prosecuted for violating building codes and ignoring mandatory provisions of fire exits. But the state does not take lightly to dalliance of the workers who are almost routinely harassed and persecuted by law enforcers for taking to the streets regardless of how justified or rational their demands are. The state and the RMG sector are surely separate entities but the former is certainly more biased towards the factory owners rather than their employees. If that is an insult to the sector then it is one brought upon by factory owners in general and their representatives in the case mentioned earlier.

That the profitability of this industry still hinges on labour exploitation and low wages is recognised even by scholastic work. To quote from the same book, the same chapter and the same paragraph, that was referred to, Chapter 11 of 'Venturing into a quota-free world', edited by Dhaka University economics teachers Selim Raihan and Abdur Razzaque, Bazlul H Khondker, author of the chapter titled 'Effects on Changes in Garment Exports on Employment, Factor Earnings and Poverty Incidence: Results from an Integrated Modelling Approach', notes, 'Low wages and abundant labour supplies yield natural comparative advantages of low-income developing countries for labour-intensive activities.' In another chapter titled 'International Competitiveness of Bangladesh's Garment Exports' of the same book, Abdur Razzaque and Momotazur Rahman, write, 'An important factor influencing competitiveness is the relative cost of labour. There is an overwhelming consensus that the cost of labour in Bangladesh's apparel industry is one of the lowest in the world. Cross-country data on average wages of workers also support this consensus view.'

That there will be large-scale unemployment with falling garment exports and conversely employment generation with increasing exports goes without saying. Bazlul H Khondker predicts some 0.74 million may become unemployed with 20 per cent reduction while another 0.26 million may gain employment with a 15 per cent rise in garment exports. But the state of the workers, who would graduate into a 'non-poor state', as he observes in the chapter's conclusion, is hardly desirable since it suggests a perpetual state of subsistence-level survival and more so as it concerns the largest export sector of the economy. Such employment would hardly be gainful or allow the workers to rise above their marginal status.

Razzaque and Rahman point to two sets of data compiled in 2004. According to one that provides absolute value, hourly wage in Bangladesh is $0.25, $0.35 in China, $0.60 in India, $0.40 in Indonesia, $2.40 in Mexico, $0.40 in Pakistan and $0.45 in Sri Lanka. But these are old statistics. Bangladesh's exports have seen commendable growth since then and become one of the top 10 suppliers in the developed country markets. While it might be suggested that it is unfair to compare Bangladesh's wages with Nepal, India, China or African countries that either enjoy state support in different ways or have leverage over Bangladesh due to preferential trade arrangements, factory owners in Bangladesh have hardly rewarded their workers with increased wages as their business expanded.

There have barely been any upward changes in the general wage structure of the garment workers corresponding to the leverages that Bangladesh received through the years in the international market –preferential access to Europe or Canada for instance. As recent statistics indicate, Bangladeshi workers still has one of the lowest wages among the significant garment manufacturers. Recent surveys also point out that basic labour standards are yet to be implemented. In this connection, the survey of 1,000 factories – the source of which was not mentioned in the last article and the omission was rightly questioned –provides a fairly reasonable picture of garment industries across the country.

The findings of this research were made public at a press conference on December 17, 2007 under the banner of Nagorik Shanghati, a citizens' organisation working for the rights of the poor classes. The survey grouped garment factories into 10 clusters within Dhaka, Chittagong and Narayanganj. The data was collected from focus group discussions with workers of each of the factories. The survey included 522 factories from Dhaka, 151 from Chittagong, 199 from Narayanganj and 128 from Gazipur. This survey found that 75.7 per cent factories do not provide appointment letters, 42.2 per cent factories do not provide identity cards, 3.3 per cent factories still do not have a weekly holiday while in another 21.9 per cent it is irregularly given. An overwhelming 44.4 per cent do not observe government holidays and some 42.2 per cent do not provide any earned leave. The provision of a fully paid maternity leave of three months is still a far cry. As for working hours, 90.4 per cent factories have more than an 8-hour workday but only 29.4 per cent pay proper overtime, while 68.1per cent of the factories do not pay wages by the first week of the month. The minimum wage was fully implemented by only 28 per cent of the factories it found.

The low wages have also been found to have a direct correlation with productivity and retention of workers which would enable factories to gradually increase their base of skilled labour and move up the apparel ladder to value-added products. In this case, as was pointed out, value addition would hinge upon the level of education among the workers. This points to the fact that although overall literacy rates in Bangladesh have increased over the years the garment factories have failed to attract that section of the people, perhaps because the level of education required for value addition in garment manufacturing offers more gainful employment in other sectors. It only reflects on the inadequacy of the compensation package in the garment industry.

The 'state of defence' that the garment factory owners are apparently in would have hardly come about had they acted more responsibly or even began to take initiatives in the right direction. The right direction must be decided upon with workers' welfare on one hand and increased market access to lucrative markets on the other. But initiatives that ignore the rights and privileges of the section that contributes some seven per cent of the GDP would hardly prove to be sustainable. To begin with, the factory owners could take sincere steps towards full compliance of the tripartite agreement recognising it as workers' rights. Secondly, some factory owners, if not all, could set examples by helping their workers set up effective labour unions while the associations could lobby the government for allowing trade unions at every factory pointing out its benefits.

There is overwhelming agreement across all sections of the people regarding the survival of a thriving garment industry as it offers means towards genuine transition to industrialisation for Bangladesh. Criticisms are, therefore, not for the sake of it or for merely taking a populist stance but to point out the inherent shortcomings only so that the entrepreneurs engage with their workers with due sincerity and earnestness to resolve labour problems and eventually become genuinely competitive.

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