No stimulus after layoffs

Export-oriented companies will not get any benefit from the government's Tk5,000 crore stimulus package if they declare layoffs at their factories during the ongoing countrywide shutdown. 

The government has formed the Tk5,000 crore fund so that workers in the export-oriented sectors do not lose their jobs and owners can receive loans at a rate of just 2 percent service charge and pay the wages of workers for three months. 

But factory owners in garment and other sectors have declared layoffs to reduce their expenses. 

In this situation, the finance ministry has informed the central bank about this decision. 

The finance ministry on Sunday sent such a directive to the central bank. 

Sources said the Bangladesh Bank will issue a circular in this regard very soon. 

Besides, those factories which do not export directory but supply their products to the export-oriented companies will be able to receive loans from the government declared Tk20,000 crore package for Small and Medium Enterprises (SMEs). 

Analysts have supported this decision of the government. They think despite this most owners will declare layoffs at their factories. Exporters opposed the decision and said decaling layoffs is their legal rights. 

Officials at the finance division said as the government has not declared any fund for many garment accessories manufacturing factories and indirectly exporting companies, many in these sectors may declare layoffs.  

The Bangladesh Bank has sought opinions from the finance division to set its action plan in this regard. 

The finance ministry said the industries which export 80 percent of their products will get the benefit for paying wages of their workers. If any factory declares layoff, they will not get any financial benefit under this package. 

It further said companies indirectly engaged in export will be able to receive working capital loans from the Tk20,000 crore package for paying wages to their workers. 

Ahsan H Mansur, executive director of the Policy Research Institute, told The Business Standard, "It is local not to give loans from the stimulus fund to the companies that have declared layoffs. Despite that most owners will declare layoffs to cut their expenses. And thus their cost on wages and allowances will come down by around 40 percent." 

He said this problem would not arise if the government had given grant instead of paying loans for clearing wages of workers. The owners will not pay full salaries to workers keeping them idle. That is why they have declared layoffs at their factories. 

He termed the Tk20,000 crore fund for the SMEs insufficient and said so the companies indirectly involved in exports should have been given the loan facility from the Tk5,000 crore fund formed for exporters.  

Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, told The Business Standard, "The government has arranged the loans at a low interest for paying the wages of workers so that no workers are fired or no company declares layoff. Factories should not declare layoffs even if they remain closed now. The factories will lack experienced workers when they will resume operation. That is why the government decision is good for both workers and owners." 

Khan Monirul Alam Shuvo, Media and PR standing committee chairman of the Bangladesh Garment Manufacturers and Exporters Association, said as per circular from the Department of Inspection for Factories and Establishments (DIFE), factories having urgent export orders or making emergency protective equipment are allowed to operate.

Factories without work have the option to adopt provisions in labour law.

Thus, all the factories that have shut down, have the option to follow the related labour law in this worldwide pandemic situation.

Fazle Shamim Ehsan, director of the Bangladesh Knitwear Manufacturers and Exporters Association, told The Business Standard, "Declaring layoffs is a legal right of any factory owners and it is applicable when an epidemic appears."

"This decision of the finance ministry is contradictory to the law. If you want to stop anyone's legal benefit, you can request them, but you cannot deprive anyone."  

A big garment exporter, wishing not to be named, said, "No owner wants to declare layoffs or fire their workers. It is better to pay partially after declaring layoffs instead of becoming loan defaulters by paying workers full salaries keeping them idle. We will not declare layoffs if the government pay us grant instead of loan in the name of stimulus." 

Garment labour leader Nazma Akter said, "Owners pay half wages to workers after declaring layoffs at their factories, then why the government will pay them stimulus. So, the government's this decision is logical."