Bangladesh labour compensation laws - Need for an upgrade | The Daily Star
12:00 AM, May 20, 2017 / LAST MODIFIED: 01:12 PM, September 11, 2017

Bangladesh labour compensation laws - Need for an upgrade

The recent boiler accident at Jamuna Auto Rice Mills, located in Gopalganj in Dinajpur district, which killed 18 workers and injured 10 others, has once again forced us to reflect on the value of human life and the risks that workers in factories, transportation, construction, and the service industry bear as part of their work and for which they are hardly compensated. In many jobs, if the risk of an accident or death is higher, the workers are offered higher remuneration as an incentive. However, this practice is not prevalent everywhere and in every sector. If you are a human smuggler, you take a great risk of being caught but the rewards are equally high. However, in most jobs, for example, in Bangladesh's garments industry, you are paid a decent wage but are personally liable for any health or other personal injuries. Fortunately, this dark scenario is changing and it is time for all concerned to review the legal framework, and update our labour laws to keep up with changing times and the international marketplace.  

There are several issues related to workers compensation and Bangladesh needs to address some of these immediately and possibly others in the not-too-distant future. Responsibility is the primary issue and the factory owner has to be held liable. A factory owner needs to ensure work safety and set up practices to minimise the risks to an employee. But the government, as an enabler, must also own up to its role. Unsafe premises and hazardous materials must be regulated, and workers made aware of their rights and risks, through education, publicity, and institutions.

Here, I will, as an economist, also address the problem with compensation after an accident to the family of the dead and survivors. After the Dinajpur boiler accident, lawmaker and labour activist Shirin Akhter said, “It's murder, not an accident”. If Ms. Akhter's statement is true, then the murderer must be identified and brought to justice. But even if the culprits are brought to the court, the due process might take a little while. In the meantime, the families of the victims need immediate as well as long-term financial support. It is reported that the families of 17 deceased and the four injured workers received Tk. 50,000 each from Bangladesh Sramik Kalyan Foundation soon after the accident. When asked about any additional payments, the Secretary of Labour was reported to have advised the families of the victims to file a case under the Fatal Accidents Act of 1855.

It is indeed a joke to expect the families of workplace accident victims to seek legal help and go to court to seek compensation for the death or injury of their loved ones. And how much can they expect even if the owner, who has been identified as the prime accused of the deadly blast, is arrested, found guilty and ultimately forced to offer any monetary damages? If past history of industrial compensation in Bangladesh is any guide, each worker can expect to receive no more than Tk. 2 lakh each. This amount might cover the cost of burial for the dead, and some of the medical expenses of the survivors, but it can hardly compensate for the loss of life, pain and suffering, and the legal costs of the families concerned.

What can be done going forward? I would like to identify three important areas that need to be addressed: Worker's compensation insurance, enforcement of existing laws, and the value of life.

Many countries, including Vietnam, have set up and tightened workers' compensation regulations. In the US, workers' comp offers a no-fault system - a “grand bargain created a century ago, state by state”. Workers don't sue; “employers pay insurance premiums to cover medical costs and long-term income replacement for disability.” ILO Convention 121 provides rough guidelines for industrial accident compensation, and supports using the usual wage of a worker, the worker's age, and the severity of injury (or number of dependents if deceased) as factors in deciding lump sum or annual payments.

Unfortunately, establishment of workers comp guidelines is only a small step to ensure safe working conditions. I can guarantee that as Bangladesh moves towards its planned growth of industries, infrastructure, and technology, industrial accidents will not be a matter of history. And I will offer only two reasons: weak laws and abysmally low value of life.  

The value of life is an economic value used to quantify the benefit of avoiding a fatality. The principle has hardly ever been used in Bangladesh to compensate for the deaths in industrial accidents but has been successfully implemented in other countries. The amount offered to the dead in Bangladesh has varied from a few thousand takas to Tk. 2 lakh in the case of the Tongi accident last September. According to a newspaper report, “The Director of Labour (Joint Secretary) SM Ashrafuzzaman told reporters at the DMCH that families of the dead workers would get Tk. 2 lakh and the injured a maximum Tk. 1 lakh each as grants from the labour welfare fund.”

In 2015, the Rana Plaza Coordination Committee announced that it would need around USD 40 million to pay in full over 5,000 awards granted through the scheme. Assuming that the next of kin of each dead worker is given twice the amount offered to an injured worker, family members of each dead worker ought to receive a little over Tk. 10 lakh. Using this figure as a benchmark, the government and civil society can set up a future compensation scheme.

Admittedly, Rana Plaza is a special case because of the international interest surrounding the catastrophic event; it nonetheless can serve as a benchmark. Obviously, compensation must be tied to the earning capacity or “income lost”, but there needs to be strict laws to enforce the principle and to deter future accidents. If owners are held responsible for any accident, and accountable for damages, industrial accidents will certainly go down. 

To take another approach, a survey of Bangladeshi factories supplying Marks & Spencer carried out last summer found that workers' average basic monthly pay was Tk. 6,500 and their average take-home pay, including an average two hours a day of overtime, was Tk. 8,000. Although this amount is more than what many in the industry get, the average estimate of what workers consider is enough to live on and support their families, or a “living wage”, is Tk. 15,000 a month - about twice their actual pay. Using these two as a minimum and maximum value, a worker earns Tk. 96,000 a year or needs Tk. 192,000 to support a family. One could then set up a compensation scheme based on existing pay (or alternatively the living wage) and depending on a dead worker's age, set up a lump-sum compensation or annuity program. Assuming that a worker dies at age 35 and compensation is based on the “living Wage” criteria, she is entitled to a lump sum payment of Tk. 3,840,000. It is to be noted that the retirement age is on average 55.2, while the formula to calculate compensation for each age group: (55 minus age at death multiplied by annual income).

While the numbers I have calculated might appear a little bit outside the realm of practicality for Bangladesh, it is not too far-fetched to expect that the country needs to take the issue of safety, compensation, and liability seriously in light of the fact that they are linked to SDG Goals 8 (inclusiveness and decent work), 10 (reduction of inequality) and 16 (access to justice). The Prime Minister only a few months ago reiterated these principles at the Dhaka Summit on Skills Employability and Decent Work 2016: "The employers must ensure working environment in the industries , labour rights and occupational health and safety of workers."

The writer is an economist and writes on public policy issues. His new book, Economics and Policy in the Public Arena will be published later this year. 

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