Why there is crisis in RMG sector for no big reason?
In the year 2004 everybody used to say either of the following two lines about this sector:
01. 2005 is a wall and nobody can see what is behind this. Which means that there was total uncertainty about this sector in those days.
For all latest news, follow The Daily Star's Google News channel. 02. After 2005 the sector will totally collapse.
In reality, what has happened is known to everybody, yet I would like to write about it in detail. Orders in Bangladesh were drastically reduced and buyers started placing orders in China.
Fortunately for Bangladesh, the buyers started coming back due to the following two reasons:
01. Prior to 2005 China had a mechanism for re-exporting from Hong Kong and Dubai and probably from a few more countries by attaching the country of origin label in those countries. They stopped the practice when free global trade was introduced in 2005 after the elimination of quota regime. When everything started entering U.S.A in the name of China, a part of which earlier used to enter in the name of other countries, the U.S Custom record started showing alarming figures like an increase of 200 -350 percent from China in 3-4 months.
02. China was accepted as member of WTO on condition that, if any product from China entered USA or any European country, those countries could ask China for discussion about restricting entry of those products.
Anyway, while those discussions between China and U.S.A did not end up peacefully, U.S.A as per the condition, has slapped quota on China.
This imposed quota will be for three years from 2005. This means that the future of garment industry after 2007 is again uncertain since we still cannot compete with China.
That is the turning point for Bangladesh to be lucky to get its market back and even having a better share than it used to enjoy before.
Taking the opportunity, many businessmen built new factories and some of those factories are equipped with the best machinery and comply with all the existing rules and regulations in the country.
There is now a shortage of skilled workers in the sector. An operator of whatever standard she or he may be does not have to remain unemployed for a day. Even unskilled workers are not available because of the law restricting under-aged workers.
Everybody is talking about a minimum wage of Tk. 930.00, which a prudent employer will not really want to pay, because for that amount of money you cannot hire a worker who is fit to work in a garment factory. In my factory, the minimum wage is Tk.1,000 in the sewing department and Tk.1,100 in the finishing department. Nobody has pushed me to increase the salary. But I had to do it because below this amount I do not get workers. I have started feeling that, this amount too is not enough. Enough help is not still available and I have started thinking about another increase in salary. I think the increase I had to make or am planning to make is due to natural economic factor, not due to demand from any quarter.
Nobody should think much of the minimum wages. Why should a worker remain in that level to get the minimum wages. Most of the P.M. line chief and supervisors today entered the industry in the grade where they too had drawn minimum wages. All the operators obviously had been helpers and had drawn minimum wages. There is scope for skill development in this trade and somebody who has got the potential will automatically go up and put himself in a position to bargain for his salary. This is possible if they concentrate on their respective jobs. I feel that an intelligent and diligent worker can raise his position for drawing about Tk.10,000.00 in 6/7 years. Why then should they be on the street for agitating leaving their place of work.
I have seen in some newspaper that workers' group are asking for salary of 60% basic, 30% house rent, 10% medical allowance, Tk.12.00 transport daily, Tk.20.00 for lunch daily and Tk.150.00 attendance bonus . Roughly, I can say that except the lunch allowance most of the factories pay everything. In fact, while recruiting, we determine the gross wages we have got to pay and allocate this gross wage as per the given structure. So there is no problem here, either.
So, where is the confrontation? Why have the factories which are paying regularly, as per rules, been set on fire, broken up and the owners harassed or the workers killed. Let there be a committee formed to inquire into the incidents in every factory, and to take action against the perpetrators. There may be some problems in a number of factories but not in the industry as a whole. Those problems then can be investigated, the reasons ascertained and corrective measures taken by the appropriate authority.
Delay in the payment of salaries is another issue for which the workers are agitating. I very much understand that surviving for a week or two without salary is difficult for the workers. Yet, since running a garment industry is a business there is always a chance of incurring losses as well. Therefore, even if he wanted to from the core of his heart, an owner may not be able to pay the workers on 7th or 10th every month. There must be some kind of relaxation in payment of salary - in whatever form it is possible.
Friday work is another issue. In fact, Friday working is required when there is over booking of orders and / or lower rate of production than planned and no extension of shipment date has been received from buyer.
I would now like to focus on two more issues; trade union and productivity level.
Desh Garments Limited, the pioneer in the sector and the factory which is responsible for the industry to be at this level today, had trade union since (I have seen) 1984.
In those days the agreement with the trade union in respect of production was 90 pc of basic shirt per line per hour using 22 plain machine + other auxiliary machine. As I remember the salary the helpers used to get at those days was Tk.150.00 per month and the operator about Tk 700.00 per month. Today, the operators are getting salaries of Tk. 2,300.00 to 2,700.00 a month and as already mentioned, the helpers get Tk.1000.00 to 1100.00 + payment for overtime work. The Minimum Wage Board ask for highest gross wages of Tk.2,100.00 for an operator. We are paying more for natural economic reasons. Why should the workers then be on the street to agitate for an increase in their earnings? Not only the wages, but even the staff salary we pay for the same natural reason is much more than that which is recommended by the Minimum Wage Board.
The productivity level in my opinion could have marginally increased, while the cost of making changes we get from buyers has gone down; which means that the additional amount we are paying to workers is being derived from the devaluation of currency. Real income of the workers has not gone up although the money income has risen; inflation has eaten up the additional income.
If Trade Union / CBA is established in the garment industry it will be suicidal because of the attitude of the political leaders of Bangladesh. The CBA leaders will be close associate of the leaders of that area, the local leaders will act as guardians of the CBA leaders and the factories will be a common place of visit by the leaders, and the factory workers will start thinking of getting paid even without working.
To get a better income, the productivity level has got to go up maintaining the required quality level as well. There is no short cut to it.
To end the present crisis, and for a long healthy employer-employee relationship, I think the following points can be considered for adoption by all the RMG units :
01. Let the minimum wages be fixed at Tk.1350.00 for confirmed workers.
02. Let the skilled workers fix their own gross salary which will be allocated under different head.
03. There must be weekly holiday, preferably on Friday. If required to work due to unavoidable circumstances working hours on Friday should not cross beyond 2.00 P.M, I suggest it should be from 7.00 A.M to 1.00 P.M with alternative Fridays remaining closed. Friday work will be considered to be over time work. The point requires amendment of existing law.
04. Basic salaries should be fixed at 60 % for workers of all grades. The existing system, which allows different percentage requires amendment.
05. There must be a separate formula drawn for the piece rate workers.
06. Factories in EPZ should follow the rules framed by BEPZA.
07. Maternity leave should be allowed with basic pay only, for twelve weeks if the date of birth of the baby falls after eighteen months from the date of joining. For the 2nd child the leave should be allowed with pay if it is after 05 years. Nothing for any more children should be entertained. The existing law in this respect needs to be amended.
08. There should be 10 days festival leave, 12 days of earned leave and 10 days of sick or casual leave with half pay. The existing law in this respect needs to be amended.
09. Employment letter and identity card can be given to workers.
10. A permanent worker must give 01 month's notice before leaving the job.
11. A worker on probation should give at least 03 days time for leaving the job.I mean that the worker cannot come and go at will and still get paid.
One must not forget that most of the factories pay attendance bonus and festival bonus to their workers though it is not required by law. These and some other facilities in few factories should continue to remain as optional facilities given by the employers.
Given rate of production must be maintained throughout the period the workers are at work. Basically, it will be the responsibility of the management to get the optimum production or they will fail to pay in time and the problem will come up. If the system continues for months together the factory is bound to become sick.
The owners should be in direct touch with the factories which will help them because the mid-level management who are responsible for running the factories are not educated enough or capable enough to run the show.
The workers and the owners are for each other. They cannot survive without each other. Therefore, the solution has been drawn keeping in mind the interest of the industry and the country.
If this sector collapses the total economy of the country will be drastically affected. From Pan Pacific Sonargaon Hotel down to the cosmetic company -- every sector will suffer.
For the industry I have got to say that we still have not taken enough measures to be competitive in the world market. A time will come when we will have to compete with China and other countries of the world.