Contemplating sustainable solutions to garments sector unrest
THE readymade garments (RMG) sector is the country's premier foreign exchange earner. It accounted for about 80% of the total share of exports and earned $12.7 billion in 2008-09. This was about 14 % of the country's GDP.
In addition to the substantial contribution to the economic arena, the social contribution of the garments sector has also been significant. It has provided employment to about three million workers, the majority of whom are young, poor and illiterate women.
But there is a dark twist to this feel-good storyline. The RMG sector is going through severe turbulence. The series of recent clashes between law enforcers and garment workers is symptomatic of an unfolding crisis in the industry and puts it at risk of losing its competitive edge in the global market (see Table I).
Each violent incident has overtaken the other in scale and consequences. In the wake of the recent incident in Ashulia, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) decided to shut down hundreds of factories in the area. The factories opened only after receiving assurance from the government that their security would be ensured.
The grievances of the workers are genuine. In the absence of an appropriate formal channel to air grievances and seek redress, the only avenues open to the RMG workers are street protest, picketing, or gherao of a manager's office or a factory. (But questions have also been raised about the actual identity of the unruly people going by the name of workers, who have been causing havoc on the factories that provide them with their means of livelihood.)
So far, the government has largely left the RMG sector to its devices. But, given the recent incidents, the government has announced that it will be formulating a labour policy and set a minimum wage for the garment workers; a move that was long overdue. A cursory analysis of the labour legislation and a review of the institutions show that the incidents of violence in the garment industry stem largely from legal and institutional failures in the sector:
Reviewing and amending provisions of the labour act: The Bangladesh Labour Act, 2006 allows the owner to close the factory without having to inform an authority in advance. This legal provision goes against the international best practice that stipulates that a company must follow three steps before it declares a lay off; giving its workers at least one month's notice, publishing that notice in newspapers, and sending the notice to the inspector of labour. The Labour Act, 2006 needs to be amended to protect workers' rights and to facilitate the process through formal and legal channels.
Strengthening oversight and regulatory institutions: Most garment factories do not follow the labour law and ILO conventions. The Labour Act, 2006 clearly stipulates that the wages of a worker must be paid within seven workings days of the completion of the stipulated wage period [Section 123 (1)]. This is not followed in practice. In addition, some of the factories do not provide appointment letters/contract letters, identity cards and service books. Health safety and security condition are also not sufficient.
The Act has also empowered the Office of the Chief Inspector of Factories of the Ministry of Labour and Employment to investigate compliance of the factories with the Labour Act and report any violation of the Act to the Labour Court (Section 319). However, it is severely constrained by lack of capacity and qualified personnel.
Most of the RMG workers are illiterate and do not have any knowledge about workers' rights and labour laws, and cannot ensure the compliance of the laws on their own. A key challenge, therefore, is to carry out awareness programs for workers on rights and entitlements. Partnerships with civil society organisations, especially those working on labour rights, could be effective.
Ensuring appropriate wages for the workers: There is no stipulated national norm for minimum wage. The current minimum wage of a garment worker is Tk.1,664 per month. It was set in 2006 and has not been adjusted for inflation. If it had been adjusted for inflation (around 7%), the wage would have increased to Tk.2,334. The workers are presently demanding a minimum monthly salary of Tk.5,000 and other financial benefits.
The Minimum Wage Board of the Ministry of Labour and Employment needs to review the wages of the workers after every three years and ensure that, at a minimum, the cost of living adjustments are made by the factories. There should also be a provision of annual inflation adjustment. At 22 cents per hour, Bangladesh has the lowest labour costs in the world, lower than Cambodia, Pakistan and Vietnam, where the wages are 33 cents, 37 cents and 38 cents, respectively.
The labour cost (including wages, social charges, and a series of bonuses), however, is not the only factor for sourcing decisions. Other factors include labour productivity, quality and cost of available textile materials, energy prices, lead times, services offered to apparel importers or brands, import tariff rates in Europe or the United States, cost of freight, etc.
While it is accepted that cheap labour has been the major reason why Bangladesh remains competitive in the international arena, it may be high time to improve factors such as labour productivity to increase the industry's competitiveness.
Ensuring workers security: Given the recurring violence, regular security vigilance in the industrial areas is necessary. In India, there is a multi-skilled security agency, Central Industrial Security Force (CISF), set up in 1969, which provides integrated security cover to both public sector and private sector undertakings. The government of Bangladesh has a plan to form an industrial police force under the Ministry of Home Affairs and deploy it in four major industrial zones -- Ashulia, Savar, Gazipur, and Narayanganj.
However, the formation of the industrial police without ensuring appropriate workers' rights may put the workers' safety at risk. In order to protect their interests, a counter-balancing community-based committee should be formed, consisting of local law makers, community leaders, workers' representatives, owners' representatives, and local administration to facilitate security of workers and factories, monitor ecological impact, and resolve disputes locally.
Is trade union really an option? In the absence of a comprehensive labour act and strong office of chief inspector, another option that has been explored has been the formation of a strong trade union to protect workers' rights. The Bangladesh Labour Act, 2006 allows trade unions for both workers and owners.
The Act has laid down, in detail, the registration, membership, code of conduct of members and officials of trade unions. The government made a decision, in principle, to introduce trade unionism in garments sector in the aftermath of last year's bloody incident at Nippon Garments, and formed a committee for this purpose.
Currently, there are several registered trade union federations and alliances for garment workers. The noteworthy ones include the National Garments Workers' Federation and the Bangladesh Garment Workers' Unity Council. But despite the existence of those, the trade union movement in garments sector has been very weak.
Trade union activities in the garment factories are usually strictly prohibited. Many garment workers lose their jobs because they try to join, or form, trade unions. The garment manufacturers fear, rightly or wrongly, that trade unions may lead to an unhealthy collusion between political parties and trade unions, which, in turn, would hamper improvements in productivity and work environments. The owners also fear that the trade unions will hamper the low wage employment, which is vital for maintaining Bangladesh's competitiveness in the international arena.
The provisions in the Labour Act relating to joining and membership within trade unions must be reviewed with consideration for sufficient safeguards for the industries as well as the workers.
In conclusion, institutional and regulatory steps must be taken that ensure the competitiveness of the sector and also guarantee that workers' voices are heard. It is hoped that the labour policy that is being drafted will take the institutional and regulatory points into consideration.