RMG exporters seek to stop workers’ annual increment for two years

Garment exporters have urged the government to suspend the annual increment of workers for the next two years, saying that their businesses have been hit hard by the Covid-19 pandemic.

They wrote to the state minister for labour and employment on Sunday in this regard, according to a letter of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

However, it is a legal obligation for apparel exporters to hike basic wages of garment workers by 5% annually.

Sources said the BGMEA has paid no heed to their appeal, fearing workers' unrest like what happened in 2019. Rather, they have advised their members to stick the pay hike obligation anyway. However, its officials declined to make any formal comment on it.

Economists and labour leaders said if the government agrees to the factory owners' demand, sufferings of workers will mount up. Consequently, deprived workers might take to streets like they did in previous years and the situation will be more crucial. 

They suggested finding an alternative way to face the challenges.

On 27 December, the BKMEA forwarded the letter, signed by its president AKM Salim Osman, also to the prime minister's principal secretary and the commerce minister.

The Business Standard has got a copy of the letter.

The BKMEA letter said the scope of employment has been squeezed with the pandemic hitting the global economy hard. Measures like temporary closure, workers' termination and cut in a certain percentage of wages were taken to cope with the situation.

The letter cited the example of India that has suspended the implementation of its labour law in some labour-intensive provinces. 

Till now, there is no sign of the situation improving soon. The industry does not have sufficient work orders and even there is no indication about future flow of orders, the letter added.

Apparel exporters get payments 180-200 days after shipments. Moreover, buyers were slashing prices by 10-15%. They have no way out but to take low-priced work orders to continue their business, it said.

"It is not realistic to raise wages by 5% in such a situation when many sectors of the world, including Bangladesh, reduced wages and other allowances," the letter read.

The BKMEA requested the government to suspend the legal provision of 5% annual increment for the next two years.

In December 2018, the government had last fixed a minimum wage for entry-level garment workers at Tk8,000.

Labour leader Nazma Akhter said workers earn a 5% increment after continuing a year in their jobs.

How can owners want it to suspend? she questioned. "None of the workers will accept this irrational move."

"If workers do not get an annual increment at the end of a year that may aggrieve them," said Nazma.

Professor Mostafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said it will not be wise to consider factory owners' demand. Workers are already under pressure to meet their daily expenses.

"RMG workers' monthly wages are not high in amount," said Professor Mostafizur Rahman, adding that reducing basic salary is not rational. 

He advised the government to provide additional support if it requires, as entrepreneurs are under various pressures, even after getting stimulus loans from the government. 

Dr Ahsan H Mansur, executive director of the Policy Research Institute, said the pandemic has already affected workers' livelihood. Now, the annual increment issue has come as a double bind for workers. 

The owners might go for job cuts if they are to hike wages of workers, on the other hand, workers will be in trouble without increment, he added.

CPD Research Director Dr Khondaker Golam Moazzem said the wage board has a option of 5% increment to adjust workers' income with annual inflation.

The main objective of the annual increment is to prevent income erosion but the 5% hike is not sufficient for that, he said adding that this annual increment is not an additional income of workers, he added.

However, if it happens, workers will suffer a lot.  

The economist also mentioned that buyers and brands have to pay more in the line with the national wage hike.

Apparel makers may talk to the government to start bargaining with buyers to fulfil their commitment. Otherwise, imposing the whole burden on workers is not desirable, Golam Moazzem said.

The RMG industry has received Tk10500 crore from the government stimulus package to pay its workers four months of wages beginning from April this year.