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CPD study finds 25% RMG factories cut jobs after receiving stimulus

Brands and buyers, mostly, failed to fulfill their due roles amid COVID-19

A recent study by the Centre for Policy Dialogue (CPD) finds that 25% of garment factories shed jobs despite receiving stimulus package from the govt.

In March last year when the crisis hit the country, the government distributed Tk 105 billion to the readymade garment (RMG) industry as the stimulus package to aid them in paying workers’ wages and allowances. With the condition that RMG factories would not dismiss any workers after availing of the stimulus fund.

Disappointingly, CPD discovered this and other related findings. The survey was conducted amongst 102 employers, 301 employed workers, and 100 unemployed workers from the RMG industry of Dhaka and Gazipur districts.

CPD-study-25%-RMG-factories-cut-jobs-receiving-stimulus
Figure: CPD study findings.

While workers were laid off during last year, but April and May saw the peak of job loss.

Among the lost jobs workers’ only 59% received only their salary, 18% were laid off without any wage and with no aid that they could fall back on from their employers.

The jobless workers went on temporary and low-paying jobs to survive. Some got help from the charity. The most horrifying revelation is that jobless female workers received an unequal amount of support from NGOs and the government, compared to male workers.

The survey discovered that the normal income for workers deteriorated by 37%. It was 39.9 percent for the jobless female workers. While household income for employed workers declined by 0.7 percent.

However, during the pandemic uncertainty, 62.7 percent of the factories received govt. support for 4 months, 25 percent of them still sacked their employees. However, 82 percent of the RMG factories said they have a set of guiding principles to operate.

While unemployed workers borrowings grew by 53 percent, compared to 37 percent employed workers.

60% of workers sold properties or used savings despite retaining jobs, while 88 percent lent from others and cut expenses. The report highlighted that the situation is worse for jobless workers.

63 percent-unemployed workers’ approached their previous jobs. Sixteen percent of workers did not accept the offer due to insufficient wages.

88% of jobless workers’ are looking for jobs, mainly in the garment sector, and only 7 percent believed that they had a hope of receiving a job in the next 3 months to May.

The report also said that more than 67 percent of factories applied, and 62.7 percent received subsidized credit for four months. 42 percent received the help of late payment for utility bills.

The study exposed that the corporate values upheld by RMG’s were yet to reach the basic level as 82 percent of factories showed that they had some form of guiding principles for business operations.

Some 77 small and 60 percent non-member factories (those not allied with the BGMEA and the BKMEA) are falling behind in upholding the principles. In the majority of cases, management did not occupy workers or informed less in framing or revising the principles.

72% of employers said that they do business following their guiding principles.

The situation that a likely borrower has to be affiliated with the BGMEA or the BKMEA to get the loan has disadvantaged a good number of factories of applying.

The CPD study also said such a decision is likely to harm the inclusive operation of factories that did not obtain the subsidized credit.

A small section of non-member factories also received credit for a breach of the conditions. Such deviation, however, allowed a section of factories to pay wages to workers, the study said.

The CPD said that the DIFE did not address the issue and failed to monitor the irregularities. The oversight functions of the authorities need to ensure that factories do not benefit by depriving their workers. While the labor and employment ministry, the Bangladesh Bank, the BGMEA, and the BKMEA, which were involved in scrutinizing and finalizing the list of workers, have responsibilities in this regard.

To resolve the disputes in the sector, union leaders, experts and government high-ups called for launching a robust social dialogue.

Commerce Minister Tipu Munshi advised the CPD to give the exact number of factories that could not pay the workers timely despite receiving the loan from the stimulus fund.

Kalpona Akter, Executive Director of the Bangladesh Center for Workers’ Solidarity, said buyers behaved irresponsibly by canceling orders during the crisis.

“The buyers should have thought that the workers and suppliers have been working for them,” she said.

Faruque Hassan, President of the BGMEA, highlighted that the sub-contracting factories did not receive the loan from the stimulus fund.

Mohammad Hatem, Vice-President of the BKMEA, said 519 out of 800 members of the association had applied for a stimulus loan, but only 420 factories received the financing.

According to the survey workers’ wages, overtime payment, entitled financial aids, and payment for laid-off and reduced workers are always worrying issues. A bulk of workers can scarcely challenge the decision of their elimination even it seems unfair or illegal to them.

It also said that brands and buyers, mostly, failed to fulfill their due roles given the COVID-19 pandemic.

Mustafizur Rahman, a distinguished fellow of the CPD, moderated the discussion.

Sara Hossain, executive director of the Bangladesh Legal Aid and Services Trust; Montu Ghosh, President of the Garments Workers’ Trade Union Centre; Abdullah Hil Rakib, Director of the BGMEA; Fahmida Khatun, Executive Director of the CPD; Maheen Sultan, Team Leader of Shojag Coalition; and Pankaj Kumar, Country Director of the Christian Aid Bangladesh, also spoke.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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