Bangladesh poised to hike garment wages, but may not end strikes

Reuters

By Shyamantha Asokan

DHAKA, Oct 21 (Reuters) - Bangladesh's garment factoryowners are pencilling in a minimum wage increase of about 50 to80 percent and will ask retailers to pay more to defray thecost, as the government tries to end a wave of strikes that hitnearly a fifth of workshops last month.

The world's second largest clothing exporter hopes toannounce a new minimum wage early next month, bowing tointernational pressure after a string of fatal factory accidentsthat thrust poor working conditions and pay into the spotlight.

Workers want the minimum wage, which was last raised in2010, to go up to 8,000 taka ($102) a month - 2-1/2 times thecurrent rate.

Factory bosses have formally offered 3,600 taka. Several,however, told Reuters they anticipated that Bangladesh'sofficial wage board would set rates in the 4,500 to 5,500 takarange, and they intended to seek between 5 and 15 percent inprice hikes from retailers.

The wage board was due to meet on Monday before submitting adraft proposal to the government.

"These workers' rights are being discussed all over theworld now and the government is nervous," said Amirul HaqueAmin, the head of the National Garment Workers Federation, anumbrella group representing 37 unions.

"There is this pressure now," Amin said in an interview inhis ramshackle office, decorated with satirical posters ofharangued factory workers and fat tycoons. "This has given usthe opportunity to raise our voices."

The wage negotiations must somehow strike a balance betweenWestern fashion giants, politically-connected factory owners andprotesting staff.

The government did not respond to strikes over wages lastyear, but since then accidents including the collapse of theRana Plaza factory complex near Dhaka, which killed more than1,100 garment workers, have put the authorities on the backfoot.

ROCK BOTTOM WAGES

Rock bottom wages and trade deals with Western countrieshave propelled Bangladesh's garments sector to a $22 billionindustry accounting for four-fifths of the poor country'sexports, with retailers such as Wal-Mart Stores Inc, JCPenney Co Inc and H&M Hennes & Mauritz AB buying clothes from its factories.

Wal-Mart spokesman Kevin Gardner said the retailer"continues to work with other stakeholders in encouraging theBangladesh government to review minimum wages for workers in thegarment industry to ensure worker needs are met."

H&M said it had urged Bangladesh to raise the minimum wageand revise it annually.

"Wages are one of the issues that are at the top of ouragenda to drive improvement in the textile industry," HelenaHelmersson, H&M's head of sustainability, said in an emailedresponse to Reuters.

JC Penney did not immediately respond to a request forcomment.

The minimum monthly wage for garment workers is 3,000taka($39), around half of what those in rival Asian exportersVietnam and Cambodia earn and just over a quarter of the rate intop exporter China, according to International LabourOrganisation data from August.

Most Bangladeshi workers take home at least $54 a monthbecause of overtime pay, according to the Bangladesh GarmentManufacturers and Exporters Association (BGMEA).

Smaller factories will be hardest hit by the expected hike,factory bosses said. Muzaffar Siddique, whose mid-sized factoryin Dhaka employs 650 people, said he would have to chargeretailers 30 percent more if wages went up to 4,500 taka.

IMAGE PROBLEM

The government is revising the minimum wage as part ofefforts to address the industry's "image problem" and hopes toannounce the new rate during the first week of November, saidMikail Shipar, the top official at the Labour and EmploymentMinistry.

Sirajul Islam Rony, a member of the six-person independentwage board, also told Reuters that it was due to announce afigure by next month. It must then be approved by the law andlabour ministries.

Export growth is forecast to slow to 7 percent during thefiscal year that started in July, down from almost 11 percentlast year, as Western retailers grow nervous about doingbusiness in Bangladesh, according to an Asian Development Bankreport.

Garment factory staff went on strike over wages for six daysin September, affecting production at almost 20 percent of thecountry's 3,200 factories, according to the BGMEA. The strikesfollowed similar protests over the summer.

Workers also held a factory owner captive in his office formore than 18 hours earlier this month until he paid bonuses owedto them for the Muslim festival of Eid al-Adha.

Wages have not kept up with inflation, which is running at anearly 9 percent annual average since the last hike in July2010. They would need to hit 3,877 taka just to keep pace withinflation, which is more than factory owners have offered.

Factory bosses counter that they would like to pay workersmore but can only cover this cost by charging Western retailersmore, which could jeopardise Bangladesh's sole appeal - itsbargain basement rates.

"It's a very simple equation - wherever they get a cheapprice, they will go there," BGMEA president Mohammad AtiqulIslam said of the retailers. "It's not like they're here becauselike the Bangladeshi food or the Bangladeshi man."

Retailers have this year cut rates by 3 percent on average,Islam said.

Some factories are already struggling with higher costs dueto retailers demanding stricter safety standards after theaccidents, said Kutubuddin Ahmed, the chairman of the EnvoyGroup, which exports $200 million worth of garments a year tohigh-street brands including JC Penney and Inditex SA's Zara.

A factory fire 40 km (25 miles) from Dhaka on Oct. 8, inwhich seven people died and 50 were injured, has raised concernsthat standards have not changed significantly since the Aprilbuilding collapse.

"This is an issue for the small factories. They need moneyto become compliant," Ahmed said, defining small factories asthose that employed up to 500 people, which accounted for athird of the sector.

MORE STRIKES?

Many workers say they will go on strike again if theirdemands for a pay hike are not met, which would be a blow forthe ruling Awami League ahead of an election due by January.

While some staff would accept an offer below the 8,000 takatheir unions are demanding, anything under 6,000 is likely tospark widespread protests, said Kalpona Akter, the executivedirector of the Bangladesh Centre for Workers Solidarity, an NGOthat helps workers form unions.

Garment factory workers need around 6,450 taka a month justfor their basic living costs, according to a survey by theCentre for Policy Dialogue, a Dhaka think-tank, published inSeptember, with many relying on small loans.

"If it's less than 8,000 taka, we have to press thegovernment or the factory owners to increase," said MosammatJhumur, a 24-year-old factory worker who shares one bed in aDhaka slum with two other women and went on strike in September."If we need to go on the road to demonstrate, then we will dothat."

Rates

View Comments (0)