Flexibility required to reach effective negotiation on wage structure

The newly formed wage board that was announced on Sunday for Ready Made Garments (RMG) workers should set their wages that allow room for savings.

In 2013, after the Rana Plaza disaster, the wage board set the minimum wage at Tk5,300 with a basic of Tk3,000 for entry-level garment workers with a 5% yearly increment on the basic.

The law stipulates that the new board has to finalize a new wage structure for the sector within six months after taking into consideration prices of essentials and other expenses of the workers.

Savings are crucial for RMG workers because they do not work under a pension scheme and their retirement benefits are very lower.

Almost every trade union leader, rights groups and RMG worker the Dhaka Tribune spoke to reiterated that the new wage board should consider savings into their new wage scheme.

Minimum wage calculations must take into account some key factors such as number of dependent family members, food, housing, healthcare, children’s education and recreation, they also opined.

The Dhaka Tribune spoke to a number of stakeholders about how the minimum wage should be structured for RMG workers as they contribute to the largest export industry in Bangladesh.

Nazma Akter
President of Sommilito Garments Sramik Federation

Minimum wage calculations must take into account some key factors such as number of dependent family members, food, housing, healthcare, children’s education and recreation.

Minimum wage should be increased as the current wage is not sufficient enough for saving especially because they do not have pension benefits.

The reason for that is mainly a high level of worker migration from one factory to the another, which is why an allocation for savings is crucial in their salary as they miss out on pension funds that only kick in after spending a few years in one factory.

During the formation of the last wage structure, the owners very slyly managed to reduce the basic income of workers. This new board should protect workers’ rights and structure their salary accordingly.

Syed Sultan Uddin Ahmed
Executive director of Bangladesh Institute of Labor Studies (BILS)

In setting the minimum wage, the board has to consider the living cost of workers.

As a rough estimate, about 20% of the cutting and making (CM) charge is spent for workers, which should be more.

An owner has to account for the worker’s wage when negotiating a CM with the buyer. If they fail to negotiate, it is their responsibility and a worker cannot suffer for this.

RMG factory owners also need to change their mindset about workers’ wages. They must learn to consider the workers as partners in development.

Abdus Salam Murshedy
Former president, BGMEA

New investment always creates new jobs. The Bangladesh RMG industry is going through a period of low investment. We should first thing about this industry being able to afford a new pay scale for RMG workers.

The wage board should also consider the interest of all factories, because there are small, medium and large factories which have varied financial capabilities. Otherwise a small investor will be hurt by high wages and that in turn will hurt the growth of the industry.

While, the production cost went up because of improving safety standards, the brands and buyers cut prices. In reaching an effective solution, focus should be given on the global supply chain as the business is consumer driven.

On top of that, we should also focus on improving the lives of RMG workers and they are the drivers of the economy.

Khondaker Golam Moazzem
Research Director Centre for Policy Dialogue (CPD)

Reaching an effective solution to set a perfect wage structure is very tough, as both the workers and owners start the negotiation from extreme view points. In order to reach a win-win agreement both parties need to be flexible at the start the negotiations.

While, another challenge is to have latest relevant data needed to calculate living expenses as well as the industry capacity.

Considering these aspects, there should a better idea of what the minimum wage should be. The number of family members and dependent should be taken into account, while they must have an opportunity to save a small amount.

While, production cost, price competitive edge and wages of other sectors need to be considered as unusual hike or lower amount in the RMG industry may create problems in other sectors.

AB Mirza Azizul Islam
Former finance advisor to Bangladesh caretaker government

It is a common phenomenon, a factory owner always thinks that paying less is better while a worker thinks earning more is always better.

As a result, there should have reasonable solution by ensuring a wage that can help meet the basic needs. The wages must also be inflation adjusted.

In increasing capability of the RMG industry to pay more, the owners must first invest in increasing worker productivity and then start to make value added products to earn more and thus pay their workers better.

In case of rise of living expenses, mid term review can be a great solution.