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Minimum wage hike for RMG workers creates mix reaction between workers and owners

Wages review will not change the workers’ life considerably as long as our government does not consider any safety net for the workers.

Bangladesh government has raised the minimum monthly wage for 4.4 million garment workers by around 51 percent to TK 8,050 ($96) from the existing TK 5,300 ($65). Earlier workers’ union demanded Tk12,020 ($142) while garments owners offered 6,360 TK ( $75.75) as a minimum monthly wage.

Comparison between approved allowance and proposed allowance
Figure 1: Comparison between the approved allowance and proposed allowance.

What workers representatives say

Begum Shamsun Nahar, workers’ representative of the board and also women affairs accepted the new gazette of minimum wage following the prime minister’s intervention. However, some trade union leaders rejected the wage hike and urged the prime minister to review it as soon as possible.

Md. Towhidur Rahman, Secretary General IndustriAll Bangladesh Council (IBC) and Nazma Akter, President of Sammilita Garments Sramik Federation and a workers’ rights group, urged the government to slightly raise the basic wage from the announced Tk 4,100 to 5,000 TK as other benefits such as bonuses and compensations are determined based on the workers’ basic pay.

Minimum wage hike for BD RMG workers
Figure 2: Minimum wage hike for RMG workers creates mix reaction.

Nazma, who represented the workers in the 2006 wage board, said, “Bangladesh government should also provide other issues for the workers’ accommodation, food and education so that they can save some money from their wages.”

“The owners may increase the production target after the raise of wage. But it should not be overburdened and workers health should be addressed. Negotiations for minimum wage this time were much weaker compared to the previous time. The workers’ representative should remain strong in their demands,” said Centre for Policy Dialogue Research Director Khondaker Golam Moazzem.

Bangladesh government has been requested to review about the wage increment in 2 to 3 years interval and to raise the basic minimum wage to 5,000 TK said, Md. Towhidur Rahman, Secretary General IndustriAll Bangladesh Council (IBC).

What owners say

For almost 4 to 5 five years minimum wage of garments workers was at a sustainable stage. For the new gazette of minimum wage garments suddenly rose up. The minimum wage was fixed at Tk 5,300 the last time in 2013, up from Tk 3,000 in 2010.

About the new gazette of the minimum wage that the Bangladesh government issued, small and medium types of factory owners gave different types of opinions.

Minimum wage lifts from 2010-1018
Figure 3: Minimum wage lifts from 2010-1018.

“Small and medium types of factories can’t provide this new salary and these factories will be forced to be shut down,” said Md. Saiful Islam, Managing Director, Essential clothing Ltd.

“As an owner, this salary is difficult for me. Our production cost is increasing day by day. We have already done a huge investment in compliance area according to buyers’ requirement. If buyers do not increase the price, we could not sustain. I think this wages will affect the country’s economy,” said, Shahid Rexa, Managing Director, Radiance Group.

“Many, even BGMEA, accepted the government decision. BGMEA always think about the welfare of the workers and BGMEA hopes that workers will be more productive which will help the industry. Now if buyers increase the price of the product and government support the association and decrease the corporate tax, we can fill up the $50 billion target,” said Mohiuddin Ahmed, First Vice President, BGMEA.

Small and medium types of factories can’t provide this new salary and these factories will be forced to be shut down.

Md. Saiful Islam, MD, Essential clothing Ltd.

“Basically worker’s wage should be increased and here 51% of salary has been increased. If we try to sustain and save small industries there are only two ways: Workers has to increase productivity and buyers have to increase the price of the product,” said Mohammad Hatem, Vice President, BKMEA.

Now the growth of the minimum wage will give many challenges to fill up the expected target of $50 billion. According to Saiful Islam Khan, “If minimum wage rises up to TK 10,000, 20-25 percent factory will shut down and almost 0.8 to 1.1 million workers will lose their job. So, the factory owners, workers, and Bangladesh government should come to a conclusion where the Bangladesh RMG sector can sustain.

“Wages review will not affect the workers life considerably as long as our government does not consider any safety net for them. The landlord will raise the house rent so their living cost will be higher. As a result, no changes will come in their living standards,” said the Manager of Marketing & Merchandising, York Group.

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

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