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B'desh wage hike: Too much, too little
Publication Date : 24-09-2013
A 20 per cent rise in wages is too minimal, while a 170 per cent hike is too high. It begs the question: Why this huge disparity between the garment workers’ expectations and the reality?
The workers’ representative on the wage board called for raising the minimum wage to 8,114 taka (US$102) a month from the current 3,000 taka, but the owners are willing to increase it only by 600 taka.
“An industry that operates in a competitive global landscape will simply not be able to sustain the pay rise that the workers are demanding,” said Mustafizur Rahman, executive director of the Centre for Policy Dialogue (CPD).
He singled out the small and medium factories, which would be hit hard by the 170.5 per cent wage rise “given the local and global trends of business”.
In an industry of 4,000, there are 2,200 small and medium factories, according to Arshad Jamal Dipu, owners’ representative on the wage board. “That is more than 50 per cent of the industry would be unable to bear the huge hike in salary.”
“But then again, a 20 per cent wage rise that the owners are pushing for would not make much difference in the workers’ living conditions,” said Mustafizur of the CPD.
He, therefore, called for a median pay rise, one that allows the industry to maintain competitiveness and profitability and at once affords the workers “a decent life”.
The CPD executive director, however, has declined to give a figure as the think-tank is scheduled to present a paper on the matter in a seminar today at the Cirdap auditorium.
Sirajul Islam Rony, workers’ representative on the wage board, said that the 8,114 taka figure was arrived at after taking the workers’ basic needs into consideration.
Their proposed minimum wage makes monthly allowance for: food 2,189 taka, rent 3,000 taka and medical 500 taka. But the owners are only willing to cover for food 2,400 taka, rent 960 taka and medical allowance 240 taka.
The workers also want allowance for clothing, conveyance, recreation, personal grooming, festivals and refreshment, but the owners refuse to give any.
The proposal that roused the workers to take to the streets is now seen as a source of all troubles.
Sadiq Ahmed, vice-chairman of Policy Research Institute (PRI), said the impact of salary hike by such margins on the cost of production had to be considered.
“The production cost has already been increasing by nearly 13 per cent every year — incorporating that salary hike would send the cost through the roof.”
Moreover, the pay rise is likely to shut the door for the currently unemployed pool of workers, the PRI vice-chairman says.
“If the garment owners increase the salary to a large extent for a limited number of workers, would they be able to afford any new hires? That has to be considered too when bargaining for a higher minimum wage.”
The country’s main advantage is its surplus labour, so the wage should be fixed in such a way that it makes the best use of the boon. “As things stand, we can divert much surplus labour from the agricultural sector to manufacturing.”
Sadiq cited the case of China, whose undisputed position as the number one apparel supplier in the world is dissipating due to rising costs of production by way of high wages.
“The safety and security of the workers should also be taken into cognisance while fixing the salaries of the workers,” he added.
After extensive criticism from around the globe, the government in May announced a new wage board to fix the salaries of the 3.6 million garment workers.
The minimum wage for the garment workers was first fixed at 627 taka in 1985, which was increased to 930 taka in 1994. Then in 2006, the garment workers were handed out a 78.79 per cent pay rise, which was raised to the current level of 3,000 taka in 2010.
US$1 = 77 taka