A net living wage remains a pipe dream

Global rights bodies have been calling for workers to have decent wages in a safe workplace. In Bangladesh, where a minimum wage has not been revised for major industries in years, a decent living wage remains a pipe dream.

Minimum wage, set by a government body for private industries, remains unchanged at Tk8,000 (less than $80) per month since 2018, when the workers' pay was last revised for the largest manufacturing employers-- the readymade garment and textiles.

Double blow to workers

Much has changed since then– low-wage earners around the world saw their biggest blow since World War-II from twin shocks – Covid-19 lockdowns and the Russia-Ukraine war.

Workers were thrown out of jobs by the millions and as they started recovering, a second blow came from the war that caused economic slowdown, job or wage cuts amid a wild inflation running amuck across the whole world-- hurting rich or poor alike, but the poor were more inconvenienced.

The International Labour Organisation (ILO) says the current global economic slowdown is likely to force more workers to accept lower quality, poorly paid jobs which lack job security and social protection, so accentuating inequalities exacerbated by the Covid-19 crisis.

Its World Employment and Social Outlook: Trends 2023, released in January this year, projects that global employment growth will be only 1.0% in 2023, less than half the level in 2022--a year marred by the pandemic which also saw a strong growth and job recovery before the shocks felt from the war, inflation and dollar crisis.

In addition to unemployment "job quality remains a key concern", the report says, adding that "Decent Work is fundamental to social justice". A decade of progress in poverty reduction faltered during the Covid-19 crisis.

Workers have to take whatever comes their way

The current slowdown means that many workers will have to accept lower quality jobs, often at very low pay, sometimes with insufficient hours. Furthermore, as prices rise faster than nominal labour incomes, the cost-of-living crisis risks pushing more people into poverty. This trend comes on top of significant declines in income seen during the Covid-19 crisis, which in many countries affected low-income groups the worst.

Inequality, both between and within countries, is growing and the recovery from the pandemic has been deeply uneven. The highest-paid workers are much more likely to have returned to work than are lower-skilled migrant workers, an earlier World Bank report said.

This trend is reflected in the official statistics of Bangladesh, showing that inequality has widened though poverty marks a decline in the last six years.

The latest Household Income and Expenditure Survey (HIES),  released last month by the Bangladesh Bureau of Statistics (BBS), gave the good news that the poverty rate in Bangladesh dropped to 18.7% in the last six years. But the improvement came with widening income inequality in the Gini coefficient scale.

It shows higher poverty incidence in villages than in towns with people spending more on goods and services other than food. In 2022, more rural households were in debt than people living in the cities.

'Upbeat data'

Another official data might have made policymakers feel upbeat. The latest Labour Force Survey, released in March by BBS, says the unemployment rate in Bangladesh declined to 3.6% in 2022 mainly riding on an upward trend in women's and youths' participation.

The number of unemployed people in the country has decreased by 70,000 over the past five years. Now 26.30 lakh people in Bangladesh are unemployed, it says.

In the BBS count, one is unemployed if he or she did not have work for pay even for an hour in the week before the survey.

The numbers seem encouraging as 96 out of every 100 working age people are doing something to earn.

But what is the quality of the work? How does it pay?

Local research organisation Sanem finds readymade garment workers in Bangladesh get a monthly wage only enough for meeting 50% of the minimum living wage.

Living wage requirements vary from a city to a district or satellite town. It is estimated at a range between Tk19,200 to Tk22,900 for Dhaka and its surrounding industrial towns, while a worker's median wage was Tk9,984 for a regular work month in 2022, it says in a report in January this year.  

Workers had to do more overtime to make up for the gap, it notes.

A basic but decent living cost includes food, housing, daily essentials and small savings to meet any emergency for a family of four. The Sanem findings are close to a report of the Global Living Wage Coalition, a workers rights group, that put the take-home amount at Tk21,638 for a net living wage.

In February, rights group IndustriALL's affiliates in Bangladesh called for an increase in the minimum wage from Tk8,000 to Tk23,000 for garment workers to help them make ends meet amid the roaring inflation.

No revision of wages in 6 years

Bangladesh's  labour law requires revision of wage structures every five years. But the RMG workers' wage was last reviewed in 2018. With inflation touching 9% in recent months, workers are barely living today with a wage set five years ago, the group said, asking for a minimum wage board to review minimum monthly wages without delay.

"Rising inflation has put garment workers in a dire situation. Their wages need to be revised accordingly, along with adequate social security measures,"says Amirul Haque Amin, president of IndustriALL Bangladesh Council.

This is the scenario of the country's largest export earning sector and also the biggest employer of the manufacturing workforce.

How are workers in other industrial sectors doing?

The government is supposed to fix and periodically review the minimum wage of 44 industrial sectors. Only a few sectors, including security services, saw mill, printing, rubber and biri, saw a review in the last two years. In the latest review in 2023, minimum wage for rubber industry workers has been set at Tk12,910.

Not even in decades

But this represents a small segment of formal industrial jobs. There are instances that wage had not been reviewed in decades-- such as the foundry industry having its last review in 1983 at Tk521 per month.

Lack of wage revision can be explained in the changing trend in jobs, with industrial sectors losing workforce. Agriculture still remains the highest sector absorbing 45.33% of the total workforce in 2022, up from 40.6% in the fiscal 2016-17.

People employed in the industrial sector decreased from 20.4% to 17.02%, while employment in the service sector dropped from 39% to 37.65%, the latest BBS survey shows.

Md Ehsan-E-Elahi, secretary of the labour and employment ministry, ‍has underlined the "lack of skill" for the fall in manufacturing employment. "Now industries are not getting enough  workers, especially skilled workers. Many, including BGMEA and BKMEA have expressed concerns about this," he pointed out.

But can industries expect skilled workers keeping the minimum wage unchanged for years and ignoring the workers' call for a living wage?

However, informal workers, though more exposed to vulnerabilities than those in formal sector workers, have their own choice. Manual workers-- like those working in farmland, pulling rickshaws and working as domestic help, can raise their own wage citing price spiral.

No  benefits if unemployed

But none of them– either formal or informal– are fortunate like those in the USA or other rich countries, where workers are given unemployment benefits in tough times. US workers enjoyed the benefit so much that many of them refrained from returning to work for long, putting many sectors, including transportation, in a crisis for workers. But there is no such blessing for workers in Bangladesh. Here no work means no food.

So workers here are desperate, doing more than one job at whatever pay, to survive. That gives the employment data a happy look and policymakers a happy smile– our unemployment is dropping and more youths and women are participating in the labour force. The workers cannot afford to smile any wider.