Scope for garment wage hike: BIDS
Garment workers' real wages have increased but there is scope for a further increase as competitiveness of the $27 billion export-earning sector has not eroded due to a wage spike in 2013, according to a study by Bangladesh Institute of Development Studies.
The study calls for participation of global buyers and retailers to improve working conditions so that workers can make a living, saying that buyers and retailers take 75-88 margins over the retail prices of an apparel item.
“They cannot avoid their responsibility of sharing part of the cost of social upgrading," said Nazneen Ahmed, senior research fellow of BIDS, who presented the study at a programme -- BIDS Research Almanac 2014-15 -- at the institute's auditorium in Dhaka. Dev Nathan of New Delhi-based Institute for Human Development co-authored the report.
The study finds that the minimum real wages of garment workers rose 37 percent in 2013, helping to improve their economic and working conditions.
Citing the fears of entrepreneurs that wages would affect competitiveness, she said the reality is different: an increase in wages and an improvement in working conditions have not resulted in the loss of international competitiveness.
The unit value of garment exports rose 16.86 percent over the two-decade period of 1990-2009, benefiting entrepreneurs, said Nazneen. The rate was higher than in India, China and Vietnam.
Referring to International Labour Organisation, she said even after the increases in wages, Bangladesh's minimum wage is less than that in competing countries: $68 a month against $80 in Cambodia, $71 in India, $79 in Pakistan and $78 in Vietnam.
Despite improvements in economic and working conditions, she said: "These progresses still do not amount to what the ILO terms 'Decent Work', and the minimum wage in Bangladesh is not yet a living, family wage."
The 2006 price data of some garments showed that the living wage as a percentage of retail was as low as 0.3 percent to as high as 3 percent. The living wage was taken at Tk 5,000, as against the then-existing minimum wage of Tk 1,662 in 2006, she said.
Nazneen said the costs of factories will go up if they pay properly, invest in ensuring worker safety, and provide other legally mandated benefits to workers. "These increased costs have to be borne somewhere in the global production network and shared between buyers and suppliers."
"What is now needed is to make a regular quadripartite system (manufacturers, workers, government and global buyers) to manage industrial relations in the garment industry in Bangladesh."
Another study on municipal finances in Bangladesh showed that about 90 percent of holding taxes are not paid due to inefficiency and corruption. Out of Tk 100, only Tk 10 is collected in municipalities, said Mohammad Yunus, senior research fellow of BIDS.
BIDS Research Fellow Abdul Basher recommended the government should play a role in promoting migration of the poor, in another study on migration from Bangladesh for overseas jobs.
State Minister for Planning MA Mannan, and economists Prof Wahiduddin Mahmud and Hossain Zillur Rahman also spoke.