WalMart leads call for higher pay in Bangladesh
By Syed Tashfin Chowdhury
August 4, 2012
Asia Times Online
DHAKA - WalMart, Nike, Gap and other international clothing brands whose businesses have been hurt by worker unrest in Bangladesh have taken the unprecedented step of urging the government to mitigate "industry disruptions and worker grievances" as these are now impacting their ability to "direct businesses to Bangladesh".
The warning by 19 big brands, which also included JC Penney and Marks & Spencer, came a month after violent clashes over pay demands closed more than 300 factories and an ominous caution by US Ambassador to Bangladesh Dan W Mozena's that "a storm is coming for Bangladesh".
Any move by international buyers to source goods from elsewhere would threaten a central pillar of the Bangladesh economy at atime when the garment industry is enjoying a huge boom - growing 40% in the 12 months to June 2011 - thanks to the relocation of factories from China and elsewhere under pressure of rising wages and other costs. The industry contributed about 78% of the country's US$22.9 billion total exports in that year and 13% of the gross national product. The big brands alone source around $3.8 billion annually from Bangladesh.
Workers in Bangladesh are demanding a bigger slice of the sector's growth. The clashes in June between thousands of workers from factories on the outskirts of Dhaka and police left 500 people injured, 300 vehicles damaged and 200 factories vandalized. At least 350 factories were closed for 10 days. Even so, local industry leaders played down the big brands' warning.
"The buyers' concerns are not a big threat," Sulav Chowdhury, secretary of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Asia Times Online. "However, it is a matter of image for Bangladesh."
The buyers' representatives met in a WalMart office in Dhaka on July 18 to finalize a message to be sent later to Prime Minister Sheikh Hasina, according to a Daily Star report. The gathering, the first of its kind, specifically called for an inflation adjustment to workers' wages while also expressing concern about the unsolved disappearance and death of labor leader Aminul Islam in April.
In response to the multinationals' concerns, the Labour Ministry reassured Bangladesh's industrialists a w[eek later that there is no need to be worried as the government had outlined plans to tackle the problem. However, the possibility of fresh unrest may aggravate the situation and further damage garment exports.
The apparel sector employs nearly four million workers in 5,000 factories across Bangladesh. The workforce, of whom about 85% are women, accounts for 40% of the country's industrial workforce. They earn around 3,000 takas (US$37) a month, and labor organizations have long spoken out against their cramped work conditions and long hours. They are not allowed to unionize.
The buyers identified wage issues as the prime reason behind the unrest, the Daily Star reported, citing an unnamed source who attended the two-hour discussion.
In the context of high inflation - which stood at 8.56% in June, with food inflation at 7.08% and non-food inflation at 11.72% - the buyers urged the government to conduct at least one annual review of minimum wages in line with the inflation and consumer price index.
"Once this functional review system is created and enforced, these revisions will help address the basic needs of the workers," the buyers intend to tell the prime minister.
The minimum wage of garment workers in Bangladesh was last revised in November 2010, when the monthly pay of an entry-level worker was fixed at the present 3,000 takas, up from 1,662 takas previously fixed in 2006.
Daily Star reported that US buyers were particularly concerned about the mysterious disappearance and murder of labor leader Aminul Islam from Ashulia, an area where the June unrest broke out, on April 4. Aminul's body was recovered on a highway outside Dhaka on April 5. Law enforcement agencies have yet to solve the murder although the US has been pressing the Bangladesh government.
That's only about half the report; the second part is just as interesting as the first. As for Sulav Chowdhury saying the buyers's concerns are not such a big threat -- I think that's putting on a brave face.