What should be the new minimum wage for RMG workers and what will be the after math?

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The start of garment exports from Bangladesh was in the late 1970s, and after a long struggle, Bangladesh became the second largest garment exporter in the world in 2011. Meanwhile, apparel leaders, experts and government most of the times branded the industry as a cheap labor blessed cheap product manufacturing industry. It is true that the competitiveness of the RMG industry of Bangladesh, which accounts for over 80 percent of Bangladesh’s exports, rests largely on the availability of low-cost labors. But eventually the government has increased the minimum wages of RMG workers several times during the past three decades and recently it has opened initiatives to revise the minimum pay for them once again to be implemented within 2018. Many industry insiders have opined that with this current increase in wage, Bangladesh will no longer remain cost effective as per as the wages is concerned.

Figure 1: Most of the workers in the garment industry are women and what they earn is not enough for a standard of life.
Figure 1: Most of the workers in the garment industry are women and what they earn is not enough for a standard of life.

Why to increase minimum wage?

When the minimum salary for a sweeper on the government pay scale is Tk 15,250, but the minimum salary for a garment worker is Tk5,300, so, there is no doubt that the salary the workers get is not sufficient for them and it does not fulfill their minimum standard of life. Recently a survey report conducted by IndustriALL Bangladesh Council (IBC) showed that around 64% of RMG workers did not earn enough to meet their basic needs, while 77.2% work overtime in order to compensate for the insufficient wages. Khondaker Golam Moazzem, Research Director, Centre for Policy Dialogue (CPD), said that it is a common  word, a factory owner always thinks that paying less is better while a worker thinks earning more is always better.  Minimum wage calculations must take into account some key factors such as number of dependent family members, food, housing, healthcare, children’s education and recreation. “RMG factory owners also need to change their mindset about workers’ wages,” he added.

How much is affordable for the factories?

Anyway, there is another reality, which must have to take in consideration, otherwise workers, owners and country all will be fallen in danger. We already know that hundreds of factories have been closed for several reasons like production cost increase, high compliance cost and low price of product.

“I think workers salary should be increased, but it should be such amount which is helpful for both workers and industry owners, and then new wage board will bring new positive message for the RMG industry,” said Mohiuddin Rubel, Director, Denim Experts Ltd.

“I hope government will take right decision for the structure of wages, which will be suitable for workers and owners,” opined Rezwan Selim, Director, BGMEA and Managing Director, Softex Sweater Inds Ltd.

qouteThere are many garments factories who are already facing problems to sustain may not have others ways without closing their factories.  Saiful Islam Khan, Managing Director of Essential Clothing Ltd, said, “I think, if wage board increase minimum salary to close to 10 thousands then 25-50 percent factory will be shut off. Mid to small sized factories will face toughest challenge to survive.” Mr. Khan added that if overall salary expenditure increases by around 20 percent, the RMG makers may be able to afford them but if the increment be more than that number of factories will get closed.

“If the government helps by giving cash incentives, low interest bank loan and extra facilities for owners then it may be possible to sustain the industry,” he added.

“As a small entrepreneur we will face lots of problem for the new wage board. We hope Government, BGMEA, BKMEA leaders will take good decision which is suitable for us,” said Hafez Ahmed Shohel, Director of JSK Knitwear BD Ltd.

Buyers should take some responsibility

When a product is sold who gets the large amount of profit- miller or buyer (retailer)? Definitely, it is buyer and their profit margin is very high comparatively than manufacturers. In the issue of increasing worker’s wage, buyers should take part. Bangladesh Textile Today talked with several garments manufacturers who demanded buyers help in this regard. They opined that they could continue their business smoothly if the buyers consider the issue according to the retail price and cut their profit a bit or put the consumers in a bit pressure for the betterment of the poor garment workers.

“New wage board is our main challenge to sustain our industry. Already production cost is increased 18 percent and product price decreased 5 percent. Buyers also should take responsibility of workers,” Md. Shahidul Islam, Managing Director of Rupa Group.

Government help is inevitable

Bangladesh government has a dream to turn the country into developed nation by 2041. To make the dream successful, contribution of the apparel industry is must. But if the half of the apparel factory cannot run their business, what impacts it spreads throughout the country- it should take in consideration. Bangladesh’s economy, which is one of the fast growing economies in the world, will fall in an embarrassing situation and the dream to be a developed nation may not come as reality. On the other hand, workers, who get a minimum wage of 5,300 Tk now, they also fall in more crisis they ever seen.

In this context, government help is inevitable to sustain the industry. Industry owners are very much worried about their future and they opined that without government the apparel industry, which sometimes called the golden goose of the country, cannot survive.

They demanded government supports and more facility for the industry. “After wage board without government help like cash incentives, low interest of bank loan etc. it is impossible to survive,” said Hafez Ahmed Shohel, Director of JSK Knitwear BD Ltd.

Apparel leader and industry expert Faruque Hassan, Senior Vice president of BGMEA and Managing Director of Giant Group, said, “I hope government will set up same minimum wage board for all industry. The wage board will consider the interest of all factories, because there are small, medium and large factories, which have varied financial capabilities. Otherwise, a small investor will be hurt by high wages and that in turn will hurt the growth of the industry.”

Mohammad Hatem, Managing Director of MB Fashion Ltd and 1st vice president EAB and BKMEA, said, “RMG sector has been passing through a critical time as competitor countries have been garbing the market share of Bangladesh. I think, new wage board will be suitable for all industry. If any labor unrest take place in the country the RMG sector would be ruined as we are facing challenges in the global market due to lack of basic raw materials, deep sea port and poor infrastructure .

Finally, the initiative to increase the salary of apparel workers is a major pro-industry move that might bring overall improvement in the work culture of the country’s largest manufacturing sector. However, government support and buyers’ help are needed to make the initiative truly successful.

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