Revitalising garment industry

The garment industry has experienced violence on two occasions in the past; mainly on the issue of increasing wages of the workers. There are a few factories that do not pay as per the scale prescribed by the government and there are some that, on occasion, fail to pay wages in time. Those are usually sick factories. But only the reputed factories that pay in time as per the scale were vandalised on those two occasions.
A monitoring team consisting of the police, intelligence and BGMEA unearthed the quarter involved in vandalising factories. Their finding shows that a big majority of the involved are self-styled leaders and not industry insiders. 22 NGO, too, were found to have contributed in the violence.
We request the government to take necessary measures to give exemplary punishment to the persons/institutions involved, ensure continuous monitoring, and not let any kind of intrusion in future in the industry which will cause repetition of violence.
The primary responsibility of making the platform which helped these elements to get in lies with the owners who made imprudent expansions, causing shortage of workers in the industry. Concentration in Ashulia, Gazipur and Savar too was very high, which is not usually recommended for labour-intensive industry.
A huge number of big factories were built in Savar, Gazipur and Ashulia since 2004 and, when shortage of workers began, the interested quarters grabbed the opportunity and allured the workers by promising higher salaries to go for agitations. This quarter has vandalised many factories in 2006.
Neither the government nor the BGMEA had been sincere enough to give a scale effecting increase of wages after every 5 years. Yet, the industry did not experience any major violence because supply of labour was more then required. A long queue in front of the gate of all factories was a common scene during that period.
The new scale was given in 2006 after 13 years (the last scale was given on 12.01.1994) in the face of agitations by the workers.
Again, a new scale was declared, to be effective from November 2010, with increase of 67% 80% on gross salary. On this occasion the government is reported to have identified the persons/institutions responsible for the violence that marked, at some stage, the agitation of the workers for higher wages.
It is now time to see government action in the face of international pressure. Launching of industrial police will be another milestone in securing congenial atmosphere in the industry. This department must ensure safety of lives and property.
Further expansion, specifically by way of foreign investment in this sector, should be carefully monitored as long as the labour supply situation does not stabilise. About 10% 15% of the machines in the factories in Ashulia, Gazipur and Savar are idle due to shortage of workers.
The value of labour is determined through interaction of demand and supply; the scale does not have much to help on this point. The minimum wages now is Tk.1,662, and there is about nobody in my factory drawing less than Tk.1,900.
Wages in Grade 3, the highest, is Tk.2,449. The highest amount in different factories ranges from Tk.3,200 to Tk.3,800. In different highly concentrated areas owners are paying even more. It is, therefore, clearly understandable that wages alone was not the cause of the violent agitations.
This industry will get benefit in the second stimulus package that was declared by the government on November 25, 2009. The most important feature of this package was that garment factories exporting up to $3.50 million worth would be entitled to receive 5% on the export made by them in the year 2008 -2009. (There was no other condition for entitlement of this benefit.)
The latest circular issued by the Ministry of Finance on September 8 has surprisingly completely deviated from the original recommendations. For getting the benefit mentioned above it has added the condition that factories not having bonded warehouse facilities and using only local fabrics would be entitled to get this benefit.
There is no factory which uses only local fabrics and does not have bonded warehouse facility. Who, then, will get this benefit? No one. The 5% benefit pledged has been reduced to 1% by adding condition of paying it on value addition (which was earlier on FOB value), which again is a tedious calculation. Benefit on electricity bills and license renewal fees for captive generators has been dropped altogether in the latest circular.
The package was declared after assessing the eligibility of those who suffered during the worldwide economic recession. Why, then, has the government deviated from its original policy? It should immediately make a clear decision on this issue. We do not want to remain hanging any longer.
Industry owners accepted the government prescribed wage structure for the workers of this industry. However, the load on some factories will be rather high. Due to erratic power supply every factory had to buy generators by borrowing from bank, on which it is required to pay interest and installment. There is huge expense on purchase of diesel as well.
The government was not logical in doubling the tax payable by the factories at the same time. If at all required, it could be done in subsequent years after observing the industry situation after increase of wages. VAT on rent payment by factories too needs be withdrawn. The government has kept this industry exempted from paying VAT partly or fully on many heads. A new levy, thus ,does not seem justified.
The situation in the port is bad. Clearance of imported consignments requires an average of seven to ten days, against three to four days during the period of caretaker government. The government should use he same machinery/system it was using during the caretaker government and improve the situation immediately. Interest on borrowing from banks in our country is very high, which should be lowered in phases to match the rate in the industrially developed countries.

Md. Karibul Mowla Chowdhury is Managing Director, Niponika Garments Ltd. E-mail: [email protected]