Payment of workers’ enhanced wages
RMG factory owners plan to discuss price rise of products with buyers
The country’s ready-made garment (RMG) makers are planning to start negotiations with international buyers on enhancement of the prices of apparel products. They feel the rise will help the industry implement the proposed new wage structure for the workers at factories, industry insiders said.
According to them, the buyers have expressed their willingness to raise the apparel product prices by 5.0 per cent from the existing level, following a 77 per cent pay hike proposed by the wage board.
“We have decided to sit with the buyers’ forum to explain the overall situation of the garment industry, including the proposed wage hike,” Md Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told the FE.
All the buyers’ representatives will be invited in Dhaka this month to discuss the ongoing issues, he said, adding: “we will request them to convey the matter to their respective head offices so that they raise the product prices in line with the wage hike.”
“The implementation of the wage hike is a matter of concern for us,” Abdus Salam Murshedy, managing director of Envoy Group, said adding the big factories are able to ensure the enhanced wages, but it will be difficult for the small and medium-category units, which mainly depend on buying houses or sub-contracts.
Unless the buyers or the retailers increase the prices of apparel products in line with the wage hike, it would be difficult for many garment factories to properly implement the enhanced wages, he said.
The buyers also put pressure on ensuring safety measures, including those involving fire and building structures, and also on increasing wages, but their response with regard to raising the apparel products’ prices is very slow, he noted.
“It is time to act responsibly both on the part of the factory owners and the buyers,” he said.
Replying to a question, he said the buyers have other options like India, Cambodia, Vietnam and Indonesia other than Bangladesh.
“Despite political turmoil, industrial accidents, they are placing orders here in Bangladesh only because of the competitive rate and quality products,” he said adding, “What we need is to retain them and increase the industry’s capacity.”
However, some of the owners are of the opinion that the general call to raise product prices hardly brings any positive result. The manufacturers need to enhance their negotiation capacity with their individual buyers.
According to BGMEA, the cost of production has increased about 12 to 13 per cent during the last two years, while the rate of apparel products remained more or less the same, and, in some cases, the prices turned lower.
On November 13, the apparel leaders at a meeting with the Prime Minister have accepted the wage board’s proposed Tk 5,300 as minimum wage for an entry-level ready-made garment worker.
Earlier on November 11, the BGMEA and the BKMEA leaders placed some demands, including re-fixation of source tax at 0.2 per cent, reduction in bank interest rates, introduction of a 3.0 per cent cash incentive for exporting products to traditional markets like the European Union, the USA and Canada, and a special exchange rate against the US dollar for ready-made garment exports, to the government. They maintained that these steps would help the industry increase its capacity to implement the new wage structure.
However, IndustriAll Bangladesh Council general secretary Roy Ramesh Chandra said they were in communication with the Accord signatories and other buyers to pursue them to increase the prices of products reasonably in line with the new wage structure.
“We raised the issue at a meeting held in Brussels on November 12, and it is going ahead,” he said adding he had also requested the visiting US assistant secretary of state for South and Central Asian Affairs Nisha Desai Biswal to look into the issue of fair prices of apparel products.
Labour secretary Mikail Shipar said the government has no plan to formally sit with the buyers in this regard as the issue is a part of the free trade economy, and it largely depends on the negotiation between the manufacturers and the buyers. “We have raised the issue on several occasions, and might raise it in the coming meetings with the Accord and the Alliance.”
-With The Financial Express input
