Govt may allow RMG factory owners to ditch workers’ group insurance

Published in the New Age on 22, May 2017

Country’s export oriented RMG factory owners are likely to get exemption from paying premium for group insurance for workers as the labour ministry and sector leaders have agreed in principle to realise the insurance claim from the RMG central fund.
According to members of the executive board of the central fund for the RMG sector, the garment factory owners would have no need to introduce group insurance in their establishments rather if any worker dies in any establishment the company would send the claim to the fund through Bangladesh Garment Manufacturers and Exporters Association.
Terming the initiative violation of labour law, labour rights activists said that factory owners cannot get exemption from introducing group insurance under the existing insurance laws.
According to the labour rules the premiums of the group insurance can be deposited from the central fund but the fund cannot realise insurance claim of workers as it was not any insurance company, they said.
‘In an establishment where at least 100 (one hundred) permanent workers are employed, the employer shall introduce group insurance under the existing insurance laws,’ section 99 of amended labour act said.
‘The meeting of the executive board of the central fund will be held today and the decision will be taken to realise the claims of the workers who died from October 2016 to September 2017,’ Mahmud Hassan Khan Babu, vice president of the BGMEA, told New Age on Monday.
He said that they do not go to any insurance company any more for introducing group insurance in the sector rather the central fund would realise the death claim of Tk 2 lakh what the dependents of the dead workers are getting from the insurance company.
The amended labour act stipulated provision of central fund for the export oriented RMG exempting the garment factory owners from the provision of participation of workers in the profit of the companies.
The labour ministry on March 27, 2016 formed a 10-member board to set up the RMG fund, determine contributions and their realisation procedure and provisions for utilisations of the money for welfare of beneficiaries in the RMG sector.
The government started collecting 0.03 per cent of freight on board prices from the readymade garment factory owners on July 1, 2016 for depositing the money in the central fund.
As of May 20, a total of Tk 40.90 crore has been deposited in the fund, labour ministry officials said.
According to the labour rules, the money would be deposited equally in the two accounts –– one will be beneficiary account and the other will be contingency account.
Grants for workers or their family members would be taken from the beneficiary account while amount deposited in the contingency account would be used to meet the dues of workers of any closed factory if its owner is unable to pay the workers.
As per the rules, the premium of group insurance and health insurance would be paid from the contingency account.
‘Hopefully we will be able to realise the claim of group insurance from the central fund from November this year. We do not want to go to any insurance company for signing agreement for group insurance rather we want to realise the death claim of Tk 2 lakh from the fund,’ labour secretary Mikail Shipar said.
He said that group insurance through any insurance company is a matter of huge premium money and it would be difficult for the fund to provide the premium.
Syed Sultan Uddin Ahmed, executive director of Bangladesh Institute of Labour Studies, said that factory owners are liable for the insurance of the workers and if the central fund is used to realise the claim of group insurance beyond insurance company the group insurance system will disappear from the RMG sector.
He said that the initiative would be contradictory with the labour act.
When asked, BGMEA vice president Babu said that they were yet to scrutinise whether the realisation of insurance claim from the central fund would be contradictory with the labour act.
‘I will discuss the issue in the meeting so that no violation of law takes place,’ he said.