By virtue of being the only member representing RMG in the National Wage Board, I have to answer questions everyday. Friends in RMG have a straight request: Please, if you push the wage level from Tk 1,300 to Tk 1,400, we'll simply perish. Some even say: Bhai, please don't even think of going beyond Tk 1,200. We are all small factories, barely managing by sub-contracts. How will we even manage to pay more than Tk 1,200?

Friends outside the industry, especially journalists, have a common concern, and always have the same reasoning: How do you expect a family to run with anything below Tk 3,000?

I am regularly sandwiched between the workers' representatives demanding a minimum base of Tk 4,000 (Grade 7) stretching up to the level of Tk 24,625 (Grade 1), the multiple accusations, and my own standpoint. The board should have been the ideal place for a meeting place of positive interaction and settlement between the workers and the owners.

I have had to speak to about 300 owners with regard to this minimum wage issue so far. We have raised and discussed the issue in an owners' forum, seven times in Dhaka and twice in Chittagong. We have met almost all the leaders of the leading workers' unions. I have spoken to innumerable workers, leaders, and business people over the last couple of months just trying to find a common solution to our discomfort.

BKMEA, and the current and the last outgoing president of BGMEA, other members inside and outside of board have all been working tirelessly to find a solution to the minimum wage problem.

In this piece today I would like to highlight a few facts of our industry:

There are four different types of factories in our country:

• Ones that deal directly with the stores (approx 15%)
• Ones that deal directly with the importer (approx 20%)
• Ones that deal with buying houses or agents on the basis of a certain fixed cutting and making (CM) charge (approx 35%)

  Ones that survive through sub-contracting (approx 30%)

  The two things that we need to be careful about are not to have any negative impact on the large number of factories which operate on the basis of sub-contracts or CM basis and not to have any negative impact on the employment situation of the country. Let not workers be out of work owing to the wage increase scenario where the factory owner has to close down or to resort to trimming his current number of workers.

The industrial workers have seven grades. We are currently discussing the seventh ring of the ladder, meaning the Grade 7, which currently has a range of Tk 930 - Tk 1,320. Twenty per cent of the entire worker population currently belongs to this grade.

Generally, this grade has workers who are unskilled and have only recently joined the trade (many have seen the city for the first time). Most of them belong to the 16-17 year-old age group.

Their job, for the first couple of months, is mainly trimming the excess thread from the garment, passing a particular body of apparel from one table to another, learning the names of different parts of the garment, etc. They are identified as "helpers."

In case any operator falls sick or leaves the job, only then these helpers get the opportunity to sit at the automatic sewing machine for the first time. Since our factories run on line and chain system, when this young, inexperienced helper joins the production line, the productivity of the entire line suffers.

An experienced line, which generally produces 80-90 pieces of a product per hour is bound to produce only 20-30, maybe 40 pieces because of this new helper of the team. Therefore, another operator has to support the new member so that the productivity of the line is not endangered by the new recruit.

A new driver of a car obviously cannot steer the vehicle at 80-90 miles per hour in the very beginning. It is only natural that he/she will require some time to get used to the pace and the efficiency of the process. Since this country has no institutions to breed and groom operators, the owners usually train these novices in their own factories, almost simulating a scholarship venture. A helper usually takes 9-12 months to be trained as an operator. After that the worker bargains his/her salary with the owner as per his/her efficiency. Hence we seldom hear about Grade 1-6 employees protesting about their wage.

The question then comes down to what the minimum wage level of the Grade 7 workers should be and whether the owners have the capacity to accommodate that level.

I have presented to the board over 200 pages of documents related to the industry.

These papers contain the reality relating to the pre and post-MFA phase-out landscape.

During the quota regimen, the pair of pants which used to bring home a CM range of $25-30 per dozen today brings in $7-10. A dozen shirts that used to bring $12-14 bring $4.5-6 after quota phase-out. A dozen sweaters that used to fetch $24-30, today earns $13-16.

Our documents include the buyer's purchase orders, export LCs, invoices, import LCs, and various export and bank related documents. We have requested the board to have all these papers verified by any number of institutions as required.

At the same time, we have also presented documents and accounts of six or seven factories who work directly with the stores and the importers. These documents show that a particular factory, having 2,906 workers, and that exported merchandise worth Tk 112 crore, has in reality had a profit of Tk 1.84 crore (1.64%).

A factory of 918 workers has exported Tk 35 crore and yet has unexpectedly suffered a loss of Tk 58 lakh through an air freight bringing the factory to a negative earning percentage of 1.65%. Factories exporting approximately Tk 25 crore in about six months time have ended up having a profit of Tk 13 lakh only (0.52%).

My humble request to the board therefore rests on a single plea: Please have these documents verified/audited by any national/international entities. We have passed these papers on to the known workers' unions along with think-tanks like CPD and we have extensively discussed these issues with all of them. No matter how difficult it is to believe, the truth is that a factory today normally does not earn even 3-4% as net profit.

And that, too, is often threatened by unexpected political unrest and port strikes. Wages in Bangladesh are competitive, and even then, 45-50% of our CM charge is spent towards wages. Many of our documents bear testimony to this fact. Since the garment owners pay source tax based on their turnover, therefore there is no need for them to hide their profits.

Fortunately, we have not faced serious questions about all our papers submitted. I guess most of the people scrutinizing our accounts sincerely realized the reality of a factory owner. Manufacturers are often heard saying that for 4% profit we take 96% challenge, by importing the fabric, by purchasing the accessories, by manufacturing the apparel, by paying the salaries of the workers, by paying for all the rest of the expenses incurred in the factory. In case of any misfortune related to delay or buyer cancellation, the same merchandise that would be sold at Tk 100 becomes reduced to Tk 10.

Hence, the owners' question, similar to the demand of the minimum wage for the workers: What should be the minimum earning of a garment owner?

Questions have been raised with regard to the other six grades of the workers. But increasing 7th grade wage to the demand level and then increasing the other six grades by even Tk 500 each would mean closure for maximum factories in the country.

In one of the CPD seminars, we have mathematically shown the audience that even if a particular factory has a profit of 4%, increasing the Grade 7 wage to Tk 2,000 and the other grades by Tk 300 - Tk 400 would put the factory to a state of loss. We are not questioning the rationale behind the minimum wage level of Tk 3,000 - Tk 4,000, but would rather put forth our post MFA phase-out competitive scenario that has reduced us all to a state of complete and open competition that demands the absolute minimum level of CM. The business opportunities are decreasing by the hour. Lack of education and commitment and productivity of the workforce are also major factors in this negative reality. 2008 will spell more disaster for us as the USA/EU quota restrictions on China will cease.

What then should be the Grade 7 minimum wage? Bureau Veritas, a foreign NGO suggests that a worker should be able to live with a minimum wage of Tk 1,950.

This minimum level is even less if we base our decision on the Bangladesh Bureau of Statistics (BSS) and its indicated base of poverty line. In a CPD seminar, we have also shown that based on the inflation rate since 1994, the poverty line, and the calorie intake requirement of a worker, the minimum wage should be determined at Tk 1,600 - Tk 1,800. The variants used in this analysis are not very different from CPD's. In some cases, the figures are even lower than those provided by us.

Sri Lanka pays a minimum wage equivalent to Tk 1,700. Sri Lanka is not an LDC. The workers in a Sri Lankan factory are educated and their level of productivity is also much higher. Sri Lanka occupies a third position in the country branding list, whereas Bangladesh ranks ninth.

We are sincerely working towards a compromise between the owners' affordability and the workers' requirements. Let us proceed by increasing the wage to our best possible range and let the brothers and sisters who work with us and for us also compromise with their level of expectation.

We are aiming towards a goal that will mean a take home package of about Tk 2,000 for a worker including the monthly attendance bonus of Tk 100, excluding the festival bonus, and including two hours' overtime. Our goal remains to watch the same Grade 7 helper being promoted within a year to the next grade which will enable the worker to negotiate a better salary with his/her employer.

Meantime, let us watch the years leading us to 2008 with more caution and wisdom. An owner who will eventually face closure because of this revised scale of wage will also be able to buy some time. At the same time, if a factory is able to negotiate a better CM range from the buyer, it may also succeed within this time frame.

If the industry suddenly collapses today, the banks, the insurance, the whole economy will also face a chaotic reality to deal with, as at any point of time there remain hundreds of millions of LC and term loan liability.

The little time that this industry is going to get until 2008 will be an opportunity for the industry to take stock of its situation and plan accordingly. If by force or pressure, the factories face closure leading to unemployment of the same RMG workers, I am wondering who then will bear the burden of the consequences.

Besides, the manufacturers are not responsible for daily price hike of essentials and the concept of owners revising and adjusting wage levels in accordance with the price index of the land is incredible and absurd. Therefore, I humbly appeal to the better senses of all parties concerned and request all to look again at the scenario and pave a path safe enough for both the owners and the workers.

Annisul Huq is Director, BGMEA, and Member, Minimum Wage Board.