Apparel factories opt for layoffs as workers stare at bleak future

Most garment factories in the country have quietly gone for layoffs – a move that will save owners around 40 percent of the amount they spend on paying monthly wages to their employees and workers. 

The layoff moves, while benefiting owners, will push workers to financial ruin. Under the labour laws of the country, they will get merely half of their basic salary plus house rent during the layoff period. 

If a worker's regular monthly wage is Tk10,000, s/he will receive Tk5,500 per month as long as s/he remains laid off.  

This has happened due to Covid-19, which has thrown the world into a shutdown and brought all economic activities into a standstill. 

The impact of the pandemic is evident everywhere in Bangladesh. From boatmen to rickshaw pullers, construction workers, factory workers, to executives and businessmen – all are reeling from its devastating effects.

"We are laying our workers off by paying them as per the law," said an exporter who has 16,000 workers in 20 factories. 

He has to pay Tk25 crore a month as wages. During layoff, the amount comes down to Tk15 crore, meaning that he saves Tk10crore a month. If his factories remain closed for two months, around Tk20 crore will be saved.

"We are not getting any free money. The government is giving us loans at 2 percent interest. When we have no work, how will we repay the loans?" said the exporter.

Another big exporter has to spend Tk70 crore for paying monthly wages to his 37,000 workers. The layoff will save him some Tk40 crore in two months, but he still has to pay Tk100 crore in these two months.

"Moreover, there is the issue of giving the Eid bonus next month. I don't know how we will arrange another Tk35 crore for that purpose," he said.

These are not just two scattered cases. Over 80 percent of around 4,500 apparel factories have announced layoffs at their units, according to owners and labour leaders. They said the remaining factories will also be closed in the next 3 to 4 days. 

According to an official of the Department of Inspection for Factories and Establishments, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) wrote to them on April 15 mentioning that it wants to announce layoffs in all factories with retrospective effect from March 26 when the nationwide shutdown came into force.

"No one can go for layoffs in factories with retrospective effect," said the official, requesting not to be named. Later, BGMEA informed the department that it did not need any response to the letter, he noted.   

Meanwhile, workers are worried about having their benefits reduced. Also, there is anxiety over the guarantee of jobs.

"I live with my family in Dhaka. How will I go to my village now?" said a perplexed Abdul Halim, 35, who is employed in a garment factory at Section 12 in Mirpur.  

Governments across the world have taken measures, either to protect jobs or provide support to people who have become jobless as a result of the pandemic. 

That is why many companies in the United States, the United Kingdom, Australia and in some European countries have continued to furlough workers, which is a temporary leave of absence without pay for economic reasons.

Companies in the UK that fail to maintain their current workforce because of the coronavirus impact can furlough employees and apply for a government grant that covers 80 percent of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions.

The Japanese automaker Honda has furloughed over 50 percent of its employees in America, mostly hourly workers at auto parts and vehicle assembly plants. It said it would furlough a majority of its white-collar staff in California from April 17, followed by similar action at other locations from April 19. 

The US government is handing out unemployment benefits of $1,200 a month among its citizens.

Even rich Cricket Australia on Thursday announced that it had decided to furlough the majority of its staff members on reduced pay until the end of the financial year to cope with the challenges posed by the Covid-19 pandemic.

People in the US, UK or Australia are entitled to state benefits, be it unemployment, social safety nets or insurance schemes if they become jobless, but Bangladesh has nothing like that. 

Mustafa K Mujeri, a senior economist, said the garment owners are not the lone sufferers during this pandemic.

Workers suffer the most, he stressed, before raising the question, "How will they run their families with the curtailed salaries they will get during layoffs?" he said. "The landlords of these workers will not take less rents from them," he said.

Mentioning apparel owners as a powerful lobby, Mujeri said they will get cheap bank loans to overcome the challenges. "But nothing has been given for the informal sector that employs over 85 percent of people," he argued.

The noted economist expressed the hope that factory owners would come forward to ease the burdens on workers.

Sirajul Islam Rony, a labour leader who has been in the garment sector since 1984, urged the government to launch ration cards for garment workers so that they can buy essentials at affordable prices.