David Bergman
Only four Bangladesh businesses have complied with legislation enacted in 2006 which requires large industrial companies to deposit every year 0.5 per cent of their net profits before tax into a government worker welfare fund, New Age has learnt.
The money should come from the welfare funds that the companies are required to establish for the benefit of their own workers.
As a result, the government fund, which should have received hundreds of millions of takas for the purpose of distributing to needy workers and their families, has in four years only been given Tk 5.26 million or Tk 52.6 lakh.
New Age has also learnt that the board of the Bangladesh Welfare Foundation, responsible for distributing the money, has not yet employed any staff or published rules about how workers can apply for money.
The four companies that have put money into the government fund through their own welfare funds are the Renata Pharmaceuticals Ltd which deposited Tk 41.4 lakh, Coates Bangladesh Ltd which gave Tk 8.44 lakh, Renata Agro Industries Ltd which sent Tk 2.82 lakh to the fund and Fu-Wang Ceramic Industry Ltd which deposited Tk 17,575.
The Renata Pharmaceuticals is the only company listed on the Dhaka stock exchange to have made a deposit.
Analysis by New Age of the 2009 net profits of the listed cement, textile, pharmaceutical, engineering, tannery and private energy companies has found that together these 78 companies should this year have deposited over Tk 130 million into the fund.
Among the most profi-table listed companies, according to information on the Dhaka Stock Exchange web site, Square Pharmaceuticals should have deposited Tk 12.6 million into the fund, Lafarge Surma Cement should have paid Tk 5 million, Heidelberg Cement and Beximco Pharmaceuticals should each have given Tk 4.3 million and Summit Power group should have given Tk 3.5 million.
The amount that these companies should deposit into the fund are estimated on the basis of the ‘profit before tax’ figures set out in the companies’ own financial reports or, for Lafarge Surma Cement and Heidelberg Cement, on the Dhaka Stock Exchange ‘profit after tax’ figures.
Square Pharmaceuticals, Lafarge Surma Cement and Heidelberg Cement all say that they have deposited money into their own company welfare funds but that the trustees of the funds, half of which are workers, have reservations about sending half of the money to the government.
Square Pharmaceutical’s chairman Samson Chowdhury told New Age that he did not think that ‘the government should get this money. Not all companies make a profit but if the company works hard and makes a profit, why should they share it with others?’
He said, ‘The trustees of our own welfare fund do not want the money to be sent to the government welfare fund.’
Lafarge Surma Cement’s corporate affairs director Shuvashish P Barua told New Age that the trustees ‘have reservations about the payment of the amount to the foundation as per law. Once the trust passes a resolution on this matter, the trust thereafter will take necessary actions accordingly.’
Mustaque Ahmed, human resources director of the Heidelberg Cement Bangladesh Ltd, told New Age, ‘Like most of the other private organisations, we do not yet have a clear understanding about how the welfare foundation shall be used and how our workers are going to be benefited from the common fund.’
He added that the company would like ‘to have a clear communication from the ministry concerned’ and he proposed that private sector representatives should be involved in the committee that decides how the money should be distributed.
Tauhidul Islam, the managing director at Summit Power, told New Age that he did not consider that the company had an obligation to deposit any money into the government fund as the company did not employ people who met ‘the criteria mentioned in the definition of workers.’
‘The company operates the most modern, automated power plants requiring qualified engineers,’ he said. ‘Supporting workers are outsourced from different companies.’
Jamal Ahmed Choudhury, the general manager of Beximco Pharmaceuticals, said that he did not want to comment as the company’s chief financial officer was out of the country.
The Bangladesh Welfare Foundation Act 2006 requires that ‘industrial’ companies employing over 100 workers, or whose paid up or fixed capital is at least Tk 10 million or Tk 20 million respectively, must deposit 5 per cent of their gross profits each year into two funds set up by the company.
‘The act goes on to state that four-fifths of the money, which is equivalent to 4 per cent of the company’s profits, should go into a fund called the workers’ participation fund,’ said Kabir Chowdhury, who recently retired as joint director of labour.
‘The remaining one-fifth, equivalent to 1 per cent of the profits, should go into a fund called the workers’ welfare fund both of which should be set up by the company,’ he added.
These funds are meant for the benefit of workers that the company employs.
Section 14(3) of the Workers Welfare Foundation Act 2006, enacted a few months before that of the Bangladesh Labour Act 2006, requires that the trustees of the companies’ welfare boards, comprising both worker and management representatives, should deposit half of the money into the company’s welfare fund.
‘This amounts to 0.5 per cent of the company profits,’ Kabir said.
SA Hoque, one of labour law’s most senior lawyers who advises both employers and workers, told New Age, ‘Of course, the companies that fit the legal criteria should be depositing the money into the government fund and that had they been doing so, the fund would have a lot of money in it.’
Lawyer Jafrul Hasan, who has been working with the non-governmental organisation Manusher Jonno to get the government welfare fund set up, told New Age, ‘Companies have a legal obligation to deposit the money and I do not know why they are not doing so.’
‘It is no good for companies to simply undertake voluntary corporate social responsibility activities to get good publicity when they are not even complying with their legal obligations,’ he added.
Arun Kanti Aich, joint secretary in the labour ministry, confirmed to New Age that a very few companies have deposited money. ‘We are trying to get funds from companies,’ he said. ‘They have been asked.’
Until recently, there was no mechanism to enforce the obligation but in November 2009, an amendment to the Bangladesh Labour Act 2006 has, according to Hoque, firmly placed the obligation with the Inspectorate of Factories.
He alleged that they have so far taken no action.
‘The inspectorate is not doing anything,’ Hoque said. ‘What is the use of the law at the moment if no one is paying any attention to the obligation?’
Md Aminul Islam, chief inspector of factories and establishments, however, says that his department does not have this responsibility. ‘We are not legally obliged to collect the money. It is the responsibility of the Bangladesh Labour Welfare Foundation. It is responsible for both collecting the money and distributing it.’
It is not known when the government will start distributing the money that it does now have in the fund.
‘We are preparing the organogram at the moment,’ the joint secretary told New Age. ‘When that is agreed, we will apply for staff. I cannot say when we will start to distribute the money.’
