Garment wage digitalisation edges closer to target
Some 70,000 workers of seven garment factories have recently joined the ranks of people receiving wages through bKash, giving a boost to the government push towards building a cashless society, empowering women and financial inclusion.
The government aims to bring 90 per cent of the garment sector's 4 million-strong workforce under the digital wage system by 2021.
As of November last year, 1.5 million garment workers had been brought under this mode of payment.
Another 2.6 million were set to join them, according to the Access to Information (a2i) Programme, the United Nations Development Programme (UNDP) and others.
Digital financial service provider bKash said now it would be serving over 400,000 workers in 400 export-oriented garment factories.
Following in the footsteps of Noman Group, DBL Group and Mohammadi Group are the seven new factories: AJ Group, Purbani Group, Masihata Group, Sonia Group, TEAM Group, Aman Group and Al-Muslim Group.
Their inclusion was celebrated at a hotel in the capital recently when speakers informed that bKash initiated such salary disbursements in 2015, bKash said in a press release.
The service provider in the mid of last year said it bears the 1.85 per cent transaction charge in 90 per cent of the factories while jointly with the factory owners in case of the rest, meaning workers do not lose any money while availing the services.
Digital payments benefit both employers and employees in terms of security, efficiency, empowerment and independence while promoting stronger business relationships.
Garment factories recorded 53 per cent savings in staff time for their administration and finance teams.
British retailer Marks & Spencer, which sources nearly $1 billion-worth garment products in a year from Bangladesh, says the use of the digital platform since 2007 helped its affiliated factories reduce annual operational costs by 3 per cent.
Digitalised platforms provide 60 per cent less complexities over manual ones alongside real-time data, seamless monitoring and reviewing and recording variable component of salaries on top of the government mandated base, allowing sounder decision-making, says a study released in July last year.
It is a way to ensure female workers get full ownership of their earnings and more transparency in payment, said the Bangladesh Garment Manufacturers and Exporters Association.
Women were 15 per cent more likely to participate in household decisions related to spending and savings, says the a2i and the UNDP.
There is a stark gender gap in access to financial services in Bangladesh, where only 36 per cent of women have a formal bank account compared to 65 per cent of men, according to the International Finance Corporation.
It said to have run initiatives between 2016 and 2018 which helped over 70,000 female workers benefit from wage digitalisation, including helping send money, build savings and make payments securely.
Some 82 per cent of apparel factory owners will digitalise wage disbursement if it assures transparency, saves time and lowers complexities, says the 2019 study conducted by consulting firm LightCastle Partners.
Factory owners face multiple challenges with cash-based disbursements, the most pertinent of which is risks of transporting Tk 15-20 crore every month.
The other problems include losses caused by management malpractices and presence of fake and damaged notes, said the study, which had engaged around 40 management professionals and owners from the apparel sector.
At this point, there is consensus on the necessity for raising the financial literacy of the garment workers to implement the payment system.
The study recommended greater collaboration between buyers, suppliers, digital financial service providers, government agencies and industry associations to accelerate wage digitalisation.
The digital financial service providers need to expand the ecosystem to increase adoption among workers while factories must have enough options to digitalise at a realistic rate with a service provider that suits them, according to the report.
Digital advocates among large suppliers and hosting platforms for knowledge sharing are required alongside training for workers on tech literacy by stakeholders to make a smoother transition.
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