25pc garment factories shed jobs despite receiving stimulus: CPD

Twenty-five per cent of garment factories that received loans from the taxpayer-backed stimulus package retrenched workers in a breach of conditions, according to a study of the Centre for Policy Dialogue (CPD).

The retrenchment indicates that the stimulus package could not guarantee jobs as many factories terminated workers. The factories had agreed that they would not lay off anybody while availing the stimulus fund.

The government has allocated Tk 10,500 crore to the garment industry as the stimulus package to help them pay wages and allowances to their workers since the crisis hit the country in March last year.

Again, factory owners have sought funds to pay the salaries and allowances to workers for three months from April to June this year.

Khondaker Golam Moazzem, research director of the CPD, shared the survey findings at a webinar on "Corporate Accountability of the RMG sector in view of Covid-19 Pandemic: Challenges in Ensuring Workers' Well-being".

The survey was carried out on 102 garment employers, 301 employed workers, and 100 unemployed workers in Dhaka and Gazipur districts. Five several stakeholder interviews with representatives of brands, government officials, workers and employers were conducted to complement the analysis.

The impact of Covid-19 was comparatively higher on the workers who lost jobs and remained unemployed. April and May of 2020 saw the highest job loss, but they lost jobs in all other months as well, the survey report showed.

"Job loss was a regular phenomenon in 2020."

In case of job loss, 59 per cent of the workers received the salary only, while 18 per cent got nothing from their employers.

Unemployed workers tried to survive by engaging in different temporary and low-paid jobs. Accountability of employers, the Department of Inspection for Factories and Establishments (DIFE), and brands lacked in these regards, Moazzem said in his presentation.

Only a fifth of the unemployed workers received a limited amount of support from the government and NGOs.

Unemployed female workers received less support both from the government and NGOs. A lack of proper planning in the disbursement of support deprived the female unemployed more.

In the absence of unemployment insurance, cash and kind support helped the unemployed to survive. But such supports are inadequate for workers to survive for a longer period.

The survey found that the average income for workers declined by 37 per cent. It was 39.9 per cent for the unemployed female workers. The decline in household income for employed workers was 0.7 per cent.

Borrowings rose for 53 per cent unemployed workers, compared to 37 per cent employed workers.

Sixty per cent of workers sold assets or used savings despite retaining jobs, while 88 per cent borrowed from others and cut expenditures. The situation is worse for the unemployed workers, the report said.

Unemployed workers tried to return to their previous jobs: 63 per cent approached their factory management. Sixteen per cent declined to accept the offer due to low wage.

Eighty-eight per cent are looking for jobs, mainly in the garment sector, and only 7 per cent thought that they had a prospect of getting a job in the next three months to May.

More than 67 per cent of factories applied, and 62.7 per cent received subsidised credit for four months. Forty-two per cent received the benefit of deferred payment for utility bills, the report said.

The study revealed that the corporate values maintained by garment enterprises were yet to reach the basic level as 82 per cent of factories indicated that they had some form of guiding principles for business operations, but they were not made public.

Some 77 small and 60 per cent non-member factories [those not affiliated with the BGMEA and the BKMEA] are lagging behind in maintaining the principles. In the majority of cases, management did not engage workers or informed less in formulating or revising the principles.

Seventy-two per cent of employers claimed that they conduct their business following their guiding principles entirely.

The condition that a potential borrower has to be affiliated with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) or the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to get the loan has deprived a good number of factories of applying.

Such a decision is likely to have a detrimental effect on the overall operation of factories that did not receive the subsidised credit, the CPD study also said.

A small section of non-member factories also received credit in a breach of the conditions. Such deviation, however, allowed a section of factories to pay wages to workers, the study said.

The DIFE did not address the issue. The labour and employment ministry, the Bangladesh Bank, the BGMEA, and the BKMEA, which were involved in scrutinising and finalising the list of workers, have responsibilities in this regard, the CPD said.

Union leaders, experts and government high-ups called for launching a strong social dialogue to resolve the disputes in the sector that stemmed from the fallouts of the Covid-19.

Commerce Minister Tipu Munshi suggested the CPD provide the exact number of factories that could not pay the workers timely despite receiving the loan from the stimulus fund.

Kalpona Akter, executive director of the Bangladesh Center for Workers' Solidarity, said buyers behaved irresponsibly by cancelling orders during the crisis.

"The buyers should have thought that the workers and suppliers have been working for them," she said.

Faruque Hassan, president of the BGMEA, said sub-contracting factories did not receive the loan from the stimulus fund.

Mohammad Hatem, vice-president of the BKMEA, said 519 out of 800 members of the association had applied for a stimulus loan, but only 420 factories received the financing.

Freedom of expression is the weakest part of corporate accountability of garment enterprises, the CPD said. 

"Workers do not feel free in speaking against any malpractices. They feel threatened to be 'blacklisted' in the database maintained by associations that would stop them from getting a job in the garment sector in the future," it said.

Workers' wages, overtime payment, entitled financial benefits, and payment for laid-off and retrenched workers are always concerning issues. A majority of workers can hardly challenge the decision of their removal even it seems unfair or illegal to them, according to the survey.

"The DIFE, the central bank and the associations had failed to monitor the irregularities. The oversight functions of the authorities need to ensure that factories don't benefit by depriving their workers."

Brands and buyers, by and large, failed to comply with their due roles in view of the pandemic, it said.

Mustafizur Rahman, a distinguished fellow of the CPD, moderated the discussion.

Sara Hossain, executive director of the Bangladesh Legal Aid and Services Trust; Montu Ghosh, president of the Garments Workers' Trade Union Centre; Abdullah Hil Rakib, director of the BGMEA; Fahmida Khatun, executive director of the CPD; Maheen Sultan, team leader of Shojag Coalition; and Pankaj Kumar, country director of the Christian Aid Bangladesh, also spoke.