Minimum Wage Policy of Bangladeshi Rmg Workers: Impact on the Owners

Topics: Minimum wage, Wage, Employment Pages: 23 (7019 words) Published: August 6, 2011
Existing Strategy of RMG Employers to Deal with New Wage Policy in Bangladesh Abstract
This paper relates to the ‘minimum wage’ declared for the readymade garments in Bangladesh. The main objective of this study is to find out whether the employers of readymade garments are satisfied with the new policy of TK 3000 as a minimum wage or not. To do the research a total of 6 employers from the garments industry in Bangladesh are interviewed. In total, eight questions on labor unrest, minimum wage level, trade unionism, international competition, cost structure, workers motivation level and relationship between garment owners and workers were asked. It is concluded that most of the employers are not satisfied with paying that amount as a minimum wage to the workers. Since it seems workers are getting paid much more than the affordability of the owners. The new wage rate has increased the cost structure which has also resulted in an intense competitive pressure in the international market.

In the field of Industrialization garment industry is a promising step. It has given the opportunity of employment to millions of unemployed, especially innumerable uneducated women of Bangladesh. With the first garment exporting unit, Reaz Garments in 1978, and along with that initiative, Desh Garments, Bangladesh stepped into a new promised land of prosperity. The sector now dominates the modern economy in export earnings and employment generation. The Ready Made Garment sector constitutes nearly 80 per cent of Export of this country. At present there are about 3000 garment industries in the country and 75 percent of them are in Dhaka. The rest are in Chittagong and Khulna. About half of the foreign currency from the ready-made garments is earned from European Union and the U.S.A. Besides, Canada, Japan, Australia, New Zealand, Middle East and Russia etc. also are other garments importing countries. The specialization in this readymade cloth has led Bangladesh to stay its position in the 4th place. The prime reason why garment industries have come out to be the champion in the field of export is obviously the cheap labor. There can be hardly found any country where Labor is as cheap as it is in Bangladesh.

Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh

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Shockingly, this promising industry has been facing some problems impeding its development. The high priced cotton and thread color, illiteracy of workers, insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of communication, problem in taxes etc. are the major problems. One of the most controversial issues is the “minimum wage” demanded by the workers. The minimum wage is fixed here by collective agreement between the owners and labors. The garments workers have long been agitating for a living wage. They recently vandalized garment units in Ashulia, Narayanganj and Gazipur areas to press home their demands for higher wages and benefits. Previously, garment workers' organization has urged the government to announce TK 5,000 as monthly minimum wages for the apparel sector during July, 2010. But this amount was rejected by the RMG owners as it exceeds their affordability line and they suggested TK 2500 as the same. Therefore, the government announced the new scale for the country's three million apparel workers that propose to increase the minimum monthly basic wage to TK 3,000 (43 dollars). Since 1985 the Government has been fixing the Minimum Wage level starting from TK.621. The minimum wage has been revised for four times consecutively in 1994, 2006 and 2010. To set any wages regarding garments, Minimum Wages Board (MWB) is involved. The board collected and reviewed data extensively on the inflationary trend and prices of essential commodities to make the wages “suitable” for an apparel worker. It consulted with experts at Bangladesh Bank, Bangladesh Institute of Development Studies,...
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