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Bangladesh Wage Drama Continues: Were Labor Unions Bribed?

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The Bangladesh government is set to enact an eagerly anticipated revision of the minimum wage for garment factory workers, now that a tripartite board last month finalized the new salary structure.

Industry insiders and some labor activists, however, say the violent protests might continue well after implementing the new wage structure. They allege that components of the  minimum wage were restructured questionably by factory owners.

Persistent worker demonstrations have often turned violent and have halted business. Protests forced approximately 300 large and medium-sized factories at the outskirts of Dhaka to shut down. Some were shuttered for as many as three days while production in many others slowed considerably.

The tripartite Wage Board unanimously finalized the new wage structure that was announced on November 4. Initially, factory owners rejected the recommendation. After the meeting, Arshad Jamal Dipu, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the Sourcing Journal that they eventually agreed to accept the recommendations only after Prime Minister Hasina intervened and ordered them to do so.

Serajul Islam Rony, the representative of the workers on the board, told the Sourcing Journal that workers immediately accepted the revised the wage structure. The new wage structure went into effect December 1.

Protests following the Wage Board’s decision overran Gazipur, Ashulia and Savar, where  300 large and modern factories are located. Manufacturing units there, operated by major exporting houses, produce nearly half of the country’s annual apparel shipments amounting to $21.5 billion annually. Meetings between the BGMEA leaders and the labor representatives from more than fifty labor organizations failed to stop the protests until police and paramilitary forces finally intervened. Workers also cooled down after the Prime Minister Sheikh Hasina on Wednesday requested them to end the protests and report back to work.

At least two workers died in November during protests that followed the announcement of increased minimum wages. The BGMEA arranged a dinner attended by leaders of more than fifty labor organizations to discuss ways to quell the persistent violence. Journalists would not be invited to such an affair. Shamima Nasrin, among the leaders present, said, “Most labor leaders at the dinner opined that instigations of miscreant and miscommunication inspired workers to protest.”

But the issue of the stubborn protests is not so simple, said Mushrefa Mishu, president of the Garment Workers Unity Forum, one of the organizations supporting increased minimum wages. According to Mishu, most workers have not accepted minimum wages at Tk 5,300. Moreover, she said, parts of the new salary structure were manipulated by the owners’ lobby, intentionally misguiding the Prime Minister. Ultimately, these manipulations were responsible for the unfolding demonstrations. Also, the new minimum wage doesn’t apply to workers in the sweater industry.

Originally, the workers had requested Tk 8,200 ($105) as a minimum wage, a significant improvement over the existing Tk 3,000. But those representing factory owners, mainly the BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), proposed Tk 3,600. Labor organizations were outraged by what they considered to be an insulting proposal. Owners procrastinated making a counter-offer during the next two meetings, finally proposing Tk 4,200.

The workers swiftly responded with massive protests designed to shut down the manufacturing industry, using the only leverage they wield. On November 4, the Wage Board announced their final recommendation that the minimum wage be upwardly revised to Tk 5,300.

The factory owners were not initially inclined to compromise, threatening to shut down factories, jeopardizing workers’ livelihoods. Leaders of both the BGMEA and BKMEA plotted to block the new wage recommendations, also lobbying for tax cuts and bank loan subsidies. It was at this point that Prime Minister Hasina weighed in to force a resolution.

Last month the wage board finalized minimum basic wages at Tk 3,000. Workers says it was fixed earlier at Tk 3,200. The board also fixed 40 percent of the basic wage or Tk 1,200 designated for house rent, 10 percent or Tk 250 for medical allowance and Tk 200 for transportation allowances. Food allowances have been finalized at Tk 650 and workers say it was fixed at Tk 300 earlier. Labor activists say food allowances are usually paid by owners as incentive for overtime so its inclusion as wages, they say, is a dishonest maneuver.

The final recommendation for grade-6 garment workers is now fixed at Tk 5,678, up from existing Tk 3,322; grade-5, Tk 6,042, up from Tk 3,553; grade-4, Tk 6,420, up from Tk 3,861; grade-3, Tk 6,805, up from Tk 4,218; and grade-2 Tk 10,900, up from Tk 7,200. A grade-1 worker, the worker with a maximum of experience, will now get Tk 13,000, up from Tk 9,300.

Controversy still remains about the relationship the BGMEA has to some of the labor organizations. Some charge the factory owners lobbying group with bribing labor organizations in order to improve their negotiating position. Mishu told the Sourcing Journal: “The BGMEA managed some paid trade union leaders, and together designed and implemented a new wage structure far behind the demand of general workers.”

Syed Sultan Uddin Ahmed, assistant executive director of Bangladesh Institute of Labour Studies, told the Sourcing Journal in November, “One reason for last week’s protest is that workers in all grades found their basic wage increased disproportionately. Protesting workers believed that owners’ lobby reduced basic wage as they want to deprive workers.”

Sultan added when speaking to Sourcing Journal in November, “Protests continued last week even after meeting held between BGMEA and some trade unions as many workers now believe that owners’ lobby has good relations with leaders of some trade unions who take care of the interests of owners more than they do for workers.”

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