Health insurance in RMG sector
It was long overdue
Improving workers' health in the biggest sector of the economy, i.e. readymade garments (RMG) has been on the cards for some time now. This has been made possible under a project that has been piloted by SNV Netherlands Development Organisation that has been giving technical support to cover cost of health care services for garment workers and create awareness about the need for health insurance. According to a report published in this paper on December 17, the team leader of the project 'Working With Women-II' stated, "In 2015-16, we piloted the Health Insurance Plus in three factories and after the initial responses, we are now scaling it up for adoption across the garment sector."
It makes sense to insure RMG workers. As per BGMEA data, there are some 4.2 million RMG workers and 80 percent of them are female. Health-related problems among women workers remain a major drain on earnings. Under the scheme, a female worker paying an annual premium of Tk 100 is entitled to get coverage of Tk 12,000 of inpatient medical bills. The insurance allows for a policyholder to check into Centre for Woman and Child Health, a designated hospital, without worrying about bills, which is a major step forward for workers' health and today, there are some 10,000 workers from five factories in Savar, Ashulia and Gazipur who are covered by the policy.
According to The Daily Star report, one worker said, "I had never heard about an insurance policy before. Otherwise I would have to wait till I got my next month's wages before I could go see a doctor." The health insurance policy makes sense from an employer's point of view because a healthy worker is more productive than one with health issues. One of the reasons why this policy has been successful in getting factory management onboard is because the major portion of the Tk 575 annual fee comes from Carrefour Foundation (which bears Tk 375) whilst the rest Tk 200 is borne equally by employer and employee. The fact that Pragati Life Insurance Company Limited, one of the leading insurance providers in the country, came up with a scheme like this is because the market for insuring factory workers in Bangladesh is huge. If there is a 50 percent penetration, then the annual business could be worth as much as Tk 1 billion.
Although many RMG factories have in-house medical centres manned by medical staff, they have for whatever reason failed to address workers' health problems. From a management point of view, workers falling sick and failing to turn up at work is a major cause for disruption on the factory floor, and this had to be addressed. The insurance programme has gotten off the ground because all stakeholders were involved in the development of the business model—from factory owners, management, and workers. According to a report in The Financial Express published in January, this was made possible because of a baseline survey jointly conducted in 2014 "by the Health Economics and Financing research Group, ICDDR,B, in collaboration with the Bangladesh Diabetic Samity (BADAS) with foreign funding to assess the impact of health insurance on access and utilisation of healthcare and estimate the workers' out-of-pocket expenditure without health insurance and also their health-seeking behaviour. The findings showed that around 43 percent of the RMG workers become sick and lose around 4 days' salary due to sickness absenteeism. The study also showed that around 87 percent of the workers seek healthcare services, 40 percent of whom cannot afford the health services due to high cost. Around 75 percent workers were, however, found to be willing to pay for health insurance."
According to the World Bank, compliance with labour standards and workers' safety conditions are major issues for entry into the European Union (EU) market. Given that approximately 65 percent of our exports end up in EU, where RMG constitutes 80 percent of the export basket, it makes good business sense for RMG factories to invest in insurance for its workers. Now that we have a working model, it is time for the government to make it mandatory for RMG owners to contribute to a basic package. It would be futile to hope for foreign foundations to cough up the bulk of the premium if health insurance was made compulsory for the sector as a whole. The biggest concern voiced by owners is that mandatory benefits for workers (like a health insurance scheme) can harm competitiveness. Even if employers were to foot the whole Tk 575 premium per annum (Tk 375 borne by CarreFour Foundation in the pilot project + the Tk. 100 paid by factory owners + Tk 100 paid by individual workers), the monthly expenditure per worker comes to Tk 47.92, which is so low a cost that it will have practically no effect on the competitive advantage the RMG sector enjoys. At the end of the day, a healthy worker is a boon for any RMG factory as opposed to one who suffers from health issues. We love to showcase to the world how the RMG sector is the largest employer of women in the country. Isn't it about time we showed the world that we care for their physical wellbeing too?
Syed Mansur Hashim is Assistant Editor, The Daily Star.