The bare minimum of RMG

A woman breaks down as she holds her daughter's coffin with a grandchild in her arms at Adhar Chandra High School playground in Savar on May 3. The Rana Plaza collapse claimed 1,127 lives last month. Photo: Star

While the US has been pushing for improved working conditions and safety standards at garment factories in Bangladesh, the European Union has also voiced concerns. The Savar tragedy has indeed triggered a fast reaction: the BGMEA has announced imposing compliance audits on all the factories, with the government increasing the number of factory inspectors to 200. A tripartite understanding with the International Labour Organisation has been reached in this regard. The amendments to the existing labor law of 2006 have also been drafted by the government to empower the labour force to have collective bargaining rights leading to formation of trade unions. And last but not the least, the labour leaders have also pushed hard to revise the minimum wage level where the basic pay (without working extra time) is barely $38.
A few responsible government officials have rushed to some garment factories, shut a few shops and announced the construction of a minimum wage board along with the decision of paying retroactive salary with effect from May 1, 2013, which is testing the garment exporters' community with the harshest of measures. At this point, we need to study the consequences.
With minimum wage standing at Tk 4,000, the garment cost will go up by 10 cents on an average, 20 cents with Tk 5,000, 30 cents with Tk 6,000 and 40 cents with Tk 7,000. With Vietnam and Cambodia being barely 20-30 cents away from where we are now, we will lose out on being competitive. I certainly hope the government has a fallback plan for the four million workers in this industry.
Let me clarify my position first. I am a strong advocate of an increase in the wage level. The minimum wage level, which was revised twice, is not still enough to support a life. After working overtime, the average worker's take home package stands at anywhere between $70 and $80 a month. In a family of three, assuming that the man of the house is a rickshaw puller, the woman a garment worker with a child, the rent of one room for that family, even when it is split between the husband and wife, costs $20 per adult, the average food intake of 30 kg per person costs $13 a month; vegetables, occasional meat and fish another $20 and in case if the child is used to milk, then that would mean an extra $5.
Of course the current minimum wage level is not enough. And of course, we need to make value added products where the manufacturers will have the advantage of asking for more margin, where the retailers will treat us as a one-stop shop. But, without that leap in quality, we cannot ask for more margins.
Firstly, if we are to retroactively pay the workers from May 1, not one manufacturer will be able to pay wages. Since we have already secured our orders till October 2013, the government should kindly consider revising the date of effect, especially because this extra hike is not accounted for in our costing. After the announcement of the revised minimum wage level, manufacturers would still need three more months to negotiate new orders at new unit prices and buyers too would need time to decide whether or not to place orders with us.
Secondly, the BGMEA must kindly classify factories immediately and label them as Tier 1, Tier 2 and Tier 3. Tier 1 compliant factories may conduct first level audits on the Tier 3 factories, identify the basic areas of weaknesses, and suggest corrective action plans instead of simply waiting for the BGMEA to turn up at our door steps with a team headed by Rajuk and Buet engineers, asking for our structural drawings and soil test reports. We should ourselves conduct the load tests or hammer tests to ensure safety.
Thirdly, after the Savar tragedy, most of the Tier 1 factories will walk away from subcontracting with the Tier 3 ones. No work for these 2,000-2,500 Tier 3 factories would put 10 lakh workers at risk of unemployment and Bangladesh will lose its capacity to produce at least two hundred million pieces a month, assuming that the factories produce basic shirts/blouses. Therefore, a short-term step would mean the third tier factories to meet their minimum safety requirements. Many of these Tier 3 factories are not equipped with fire fighting equipment. Fire Service and Civil Defense charges a factory Tk 16,500 for training 40 workers. In a factory of 500 workers working in four lines, 13 such training sessions would be needed. The government could provide this training and fire fighting equipment free of cost.
The buyers require quality, compliance, delivery and quantity. A big retailer comes into the market with an expectation of sourcing the maximum quantity at the best price. If we want to retain all these advantages, we would need to turn our Tier 3 factories around by supporting them in order to retain our maximum capacity offers.
While all the discussion on this tragedy impacting future business goes on, all of us engaged in the readymade garment manufacturing need to reconcile with our own conscience, bridge our differences with our own labour sector and then attempt to explain to the world where we ourselves have gone wrong. We also need to tell the world that without them buying these clothes made by our women, without them placing the orders at reasonable prices in our factories, without them helping us improving our working conditions, and ensuring the minimum safety to these four million workers out here, at least 20 million people depending on this workforce in Bangladesh will go hungry every night.

The writer is the managing director of Mohammadi Group, a garment manufacturer.