After a massive round of negotiations that concluded this last Sunday, Bangladeshi factory owners announced they would raise wages by whatever percentage a government board decides. The weekend discussions included more than a dozen factory owners, and the representatives of more than forty labor groups representing over three million workers in over 4,500 factories.
Atiqul Islam, head of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, “We told the unions that we’ll hike wages for all workers as soon as new minimum wages are announced by the government panel. We are also ready to hike wages as much as the panel determines. We will accept even if it is more than 20 per cent. But obviously our hope is that the enhanced wages will be win-win for the industry and the workers.”
Factory owners and union groups have clashed acrimoniously in recent months over the heated issue of wages. Bangladesh convened a meeting of the Minimum Wage Board, comprised of labor union representatives, governmental bureaucrats and factory owner representatives. Arshad Jamal Dipu, speaking on behalf of factory owners, proposed a minimum wage increase of no more than 20 percent, an increase of Tk 600 to Tk 3,600. Dipu said this number was the result of calculating several variables, including the costs of living and daily calorie consumption for workers.
Still, his primary rationale for the percentage he proposed was economic, citing an expectation of an increased cost of production of 12.5%. He also mentioned the rapid appreciation of the taka and its effects on the garment industry, rising 8.6% against the U.S. dollar. “Hidden costs of business are also on the rise,’ said Dipu.
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Dipu’s proposal starkly contrasts with what factory workers have demanded. Sirajul Islam Rony, a labor leader also on the Minimum Wage Board, angrily called Dipu’s calculations “illogical and inhuman.” He recommended a new minimum wage of Tk 8,114 per month, a 170.5% increase from the current level. He said, “I urged the owners to reconsider the proposal as it is too low from our demand.”
The dispute between labor representatives and factory owners has been brewing ever since the Minimum Wage Board was assembled and Prime Minister Sheikh Hasina assured workers their salaries would be increased.
Historically, a wage board assembles every five years to revisit the issue of compensation for workers. Given the ferment surrounding labor conditions in Bangladesh, especially in the still hot contrails of the Rana Plaza tragedy, the government decided it would be prudent to meet earlier than scheduled.
In her remarks, Hasina emphasized the importance of the garment industry to the whole of Bangladesh’s otherwise fragile economy. She discussed the sector as an antidote to poverty and an engine of gradual female empowerment.
Still, the high point of Hasina’s address were her comments on the possibility of wage increases, confidently delivered. Salaries for garment workers have not been raised since 2010. Then, it was lifted 82 percent.
The true costs of compliance are only now starting to come into sharper focus. Ismat Jahan, Bangladesh’s ambassador to the European Union, estimates that making garment factories safe will add about $0.10 to the cost of each garment. The total cost is estimated to be approximately $3 billion. He expects that Western consumers were be willing to bear the new cost increase. “I believe consumers in the West are ready to pay a small increase in prices for the millions of women who stitch for them in a faraway land,” he said.
However, Jahan was also cautious about the prospect of increasing prices too much. ‘Realistically speaking, unless we can ensure fair pricing of the products, any significant increase of the salaries will not be practical in this highly competitive industry.”
Last week, protests turned violent in Dhaka, and police opened fire on a crowd of demonstrators with rubber pellets and tear gas.
At least for now, the new factory owners’ concessions have calmed simmering tensions. Baharine Sultan, president of Jago Bangladesh Garment Sramik Federation, expressed cautious optimism, “We hope there won’t be any unrest until the panel announces a pay hike. And we also hope manufacturers will keep their word.”