BGMEA Owners Agree on 5300BDT Minimum Wage. Unrests continue …

After a lot of rejections from BGMEA, yesterday on 13.11.13, the BGMEA agreed on 5300BDT (68USD/50Euro) to be the minimum wage for garment workers in Bangladesh who have been demanding the wage to be at least 8000BDT. They also declared their honest intention to solve the concerns of the workers and requested them to be patient during this time. It was disclosed that this decision came after the intervention of the Prime Minister herself into the matter.

However criticisms still loom questioning the true intention of the factory owners. It has been raised by garment workers and activists that raising the minimum wage of the Grade 7 (Helpers) by 77% is not enough to ensure the raising of the wages of the other grades which includes Operators who make up to 75% of any factory. As per workers, worker leaders, researchers, and activists: “the raising of the minimum wage should also act proportionately to all the other grades of workers otherwise the change cannot reach the lives of most of the workers in this sector.”

Although the minimum wage is conceptually to be set at a level which covers the basic needs of the lowest earned workers on the job-ladder, i.e. entry-level workers (grade 7 workers), the practice in Bangladesh is that revision has been taken place for workers of all grades (grade 1 to 7 workers). In that case, it is a fixation of structure of wages of different grades instead of setting minimum wages. According to the last revision of the minimum wages, grade 7 workers should receive a wage of 3000BDT per month of which 2000BDT as basic, 800BDT as house rent (40 per cent of the basic) and 200BDT as medical allowances. However, an ‘informal’ grade below grade 7 has been introduced during the time of last revision of minimum wages in 2010 with the job title ‘trainee’. These temporary workers receive a lump-sum of 2500BDT per month. During the last revision, minimum wage for entry-level workers (grade 7) increased by 80 per cent, but a similar level of rise did not take place for workers in other grades (grades 3,4, 5, and 6). The relationship between wage level and seniority (skill plus experience) was not reflected in the structure as evidenced by the low differentials between these grades: 322BDT, 231BDT, 308BDT and 357BDT respectively [1]. Such a repetition is also expected when the Minimum Wage 2013 Gadget is finally published by 20 November 2013 when the 15 days time of suggestion/recommendation and final agreement passes.

It must also be noted that minimum wage in the Bangladeshi Garment Sector is not only the lowest in the world if compared with the same sector, but also the lowest in Bangladesh if compared to other sectors. Although this sector is the highest foreign currency earner and the biggest employer of the country.

Minimum Wage by Sector 2013

In a country with inflation rising, with the price of rice climbing, even 8000BDT is much too low than the minimum living wage for Bangladesh. However, the BGMEA claims that the buyer’s have no intention to pay them more for their garment and thus the challenge of paying this new higher wage might actually remove many of the factories from the scene.

In return of their agreement to the minimum wage proposal by the minimum wage board, the BGMEA leaders in a meeting this week at the labor and employment ministry demanded withdrawal of 0.80 percent tax at source, a separate exchange rate for the US dollar and easy loan for exportable goods. It could not be confirmed immediately whether the government had agreed to these demands for implementing the salary as recommended by the wage board. They also made an outcry to the Prime Minister to create an “exit plan” for some of the factories who would wish to leave the sector in an attempt to convince them that there is no possibility for the sector to go any higher than this minimum wage.

It can also be pointed out that even before this minimum wage was agreed upon, some of the factories in Savar and Ashulia already implemented this minimum wage, so as in an expectation that everything was obviously heading this way.

During this time, massive unrest have been going on in the Ashulia region which is known for its garment factories. Workers had been demanding at least 8000BDT as minimum wage, and they also demanded this raise to be proportionately equal. However, as there are no indication as to what will be the proportionate increase of wage in the other grades (which includes most of the workers), as well as a wage increase which the worker’s feel is too low if the current prices are taken into consideration; the disappointment has turned to anger.

45 Worker Federations have already demanded that the minimum wage should be revised and fixed at 8000BDT by 20 November 2013 or otherwise they will stage massive demonstrations and protests to get their demands met.

Only after the gadget is published, the minimum wage 2013 is going to be formally implemented. Although, as per the norm the decision of the Minimum Wage Board 2013 will be final and should be implemented starting from 1 December 2013.

RISE Society.

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[1] http://www.irinavandersluijs.nl/site/assets/files/1067/living_wage_report_bangladesh.pdf

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Posted in Garment Worker Issues

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