The new pay structure under which more than three million garment workers are set to receive increased wages this week will not put pressure on factory owners as their income has increased sharply in recent times.
Industry watchers and labour activists cautioned that habitually some factories may try to deprive workers of their rightful wages and suggested for strong monitoring by the authorities to ensure compliance of the new wage structure.
A tripartite wage review commission in July declared a revised minimum wage structure for the garment workers but with the consent of the government its implementation was deferred by three months.
According to a government gazette, the new pay structure should be implemented with effect from November 1 with workers set to receive the new wages in the payments in December.
A top official of German retailer’s sourcing office in Dhaka told New Age that they had sent a note to their Hamburg headquarter that payment of increased wages would be implemented smoothly.
‘Our assessment has found that earnings of most of the factory owners have already increased before they start paying the increased wages,’ said the official.
Bangladesh Garment Buying House Association vice-president Kazi Iftekhar Hossain said CM [cutting and making] charges, on what Bangladeshi factory owners mainly make deals, increased by at least 40 per cent in the last three months or so.
Some merchandisers at different RMG factories in and around Dhaka told New Age that CM of one dozen of five-pocket basic jeans, a widely stitched apparel in local factories, is now at least $12.
‘Big and complaint factories are charging even much more of the average rates,’ said one buying house representative.
Six months back many factories had even made the deal at $8.
The ‘China factor’ has boosted business and earnings of the local garment factory owners, industry watchers believe.
With orders shifted from
China, most of the Bangladeshi factories now have work orders for next six months or year, they pointed out.
In July-October of the current fiscal year, RMG export increased by 39 per cent year-on-year to reach $5.24 billion, which is 78 per cent of the country’s entire export proceeds. Industry analysts foresee country’s garment export turnover to cross $16-billion mark by the end of this fiscal year because of increased orders.
‘Factories that work on package supply have contracts given the fluctuating cost of yarns, fabrics and accessories as the importers’ burden,’ said an employee, who works at the Dhaka office of a Turkish clothing brand.
‘Many representatives of western clothing importers are now staying in different hotels in Dhaka hotels for days having failed to find a suitable factory to make sourcing deal with.’
Bangladesh’s apparel export industry has turned into a sellers’ market… it’s no more a buyers’ market as factory owners are now deciding the prices,’ said one factory owners.
Bangladesh Garment Manufacturers and Exporters Association president Abdus Salam Murshedy admitted that factories are carrying over enough orders now due to increased demands from global importers. ‘But this situation does not mean that cash flow in factories is very good.’
He pointed out that due to increased price of cotton, yarn and fabrics many factory owners could not make expected earnings as cost of production increased after contracts were made.
‘Problems in port that had compelled many factory owners to airship garments reduced profits on deliveries and idle hours due to erratic gas and power supply reduced earnings of many factory owners,’ he added.
The leader of the garment factory owners said that despite many odds, the owners would start paying wages according to the new pay structure from December 5. ‘BGMEA is keeping watch on the industry and communicating with factory owners to ensure payment of wages according to the new pay structure,’ said Murshedy.
He however feared that some small and medium sized factories with weak cash flow might face difficulties in paying increased wages. ‘Government should arrange release of stimulus funds for SMEs to the garment sector.’
After talks with stakeholders over several months, the minimum wage board revised the RMG pay structure.
Under the new wage structure, wages of Grade 7 (entry level) apparel workers increased to Tk 3,000, up by 80 per cent from the earlier Tk 1,662. Workers’ representatives had earlier demanded Tk 6,200 in wage for entry level workers.
A grade 6 worker would get Tk 3,330, up from Tk 1,851; Grade 5 Tk 3,553, up from Tk 2,046; Grade 4 Tk 3,861, up from Tk 2,250; Grade 3 Tk 4,218, up from Tk 2,449; Grade 2 Tk 7,200, up from Tk 3,840 and Grade 1 Tk 9,300, up from Tk 5,140.
Nazma Akter, a leader of garment workers, said, ‘In fact factory owners will not bear the total increase on wages at one go as due to shortage of workers, wages at many factories were already raised above the previously set legal minimum wages.’
‘Given the good business situation, the government should strictly monitor that no factory owner shows any pretext and deprive workers of their legally increased wages,’ said Nazma, who had represented workers in the previous wage review commission.
