Garment factories moving away from digital wage payment

Many garment factories that disbursed wages to workers digitally at the height of the pandemic in Bangladesh are gradually returning to cash payments although electronic transfers provide a lot of benefits, said speakers yesterday.   

Before the pandemic, 4 lakh workers from 300 factories used to receive salaries through bKash, the largest mobile financial service (MFS) in the country. 

The number of workers getting payment digitally rose to 11 lakh after the government imposed a lockdown in March last year to slow the spread of the rogue virus in the country.

The number of factories providing payments digitally soared thrice to 980, and workers received wages and salaries amounting to Tk 3,800 crore directly on their bKash accounts.

The situation started to reverse after the government eased restrictions in June last year. Now 7.50 lakh workers receive salaries through bKash.

Because of the pandemic, garment exports fell 18.12 per cent due to the cancellation of orders from Europe and America.

The government provided a stimulus package of Tk 5,000 crore to the garment sector, which was directed to disburse the funds through MFS operators to help prevent the spread of the virus, said Mizanur Rashid, chief commercial officer of bKash.

He spoke at a discussion on "RMG Payroll Digitalisation: Experience and Expectations" at the Pan Pacific Sonargaon hotel in Dhaka yesterday.

"It is an honour for bKash to assist in salary disbursements, especially during a challenging like the pandemic, where MFS had the scope to play an important role in reducing the spread of the virus," he said.

With the central bank's approval of retail merchant accounts, the financial use of digital mode among garment workers would increase manifold, Rashid said. 

The government's stimulus package given to pay wages to the workers for four months from April stimulated the digitalisation process in factories, speakers said.

Digital wage payment has decreased payroll processing costs and enhanced security associated with digital payments, they said.

Anwar Hossain Chowdhury, chairman of AJ Group, said many factories were facing a cash crisis, while a good number of small factories are paying wages phase by phase, resulting in a decline in the digital wage payment.

He said there were other MFS providers through which factories paid wages. Many factories paid wages through bank accounts too.

BKash's cash-out charge of 1.8 per cent was added to workers' salaries during the disbursement. Now factories are no longer able to bear the cost due to the capital shortage, said Rashid.

Inamul Haque, managing director of Ananta Garments Ltd, Amer Selim, director of New Asia Group, and Asif Ibrahim, vice-chairman of Newage Group of Industries, also spoke.