Higher minimum wage for Bangladeshi apparel workers proposed

Higher minimum wage for Bangladeshi apparel workers proposed

After the tragic events in Bangladesh and the continuing up-rises, the appointed panel by the government recommends that the minimum wage for garment workers should be increased by almost 80 % reports the Wall Street Journal

The six-member committee of government officials, garment manufacturers and union leaders proposed last Monday an increase of the minimum monthly pay from currently 3000 Taka to 5300 Taka (USD 67). Before, unions asked for an increase to 8000 Taka. The last revision took place in 2010. Exponents from unions declared that the workers will likely accept the actual proposal by the panel.

Representatives of the Bangladesh Garment Manufacturers and Exporters Association on the committee were against the increase, and left the meeting without signing the draft agreement after they were outvoted. Atiqul Islam, the President of the Association stated “that his organisation will be studying the proposal, but factory owners have not agreed to the proposed figure. We acknowledge the need for an increase, but we would like to see a final wage solution the industry can support”. The factory owners association had proposed a 50 % raise of the minimum wage, saying anything higher would hobble the industry as costs of other elements of clothing production are increasing, despite the fact that demand from western markets are weakening.

Exporters relay on the fact that the Taka has improved against the USD, currently 77 Taka to the USD, up from 84 in January 2013. This is weakening Bangladesh’s competitive edge compared with rivals such a India, where the rupee has fallen sharply.

H&M Hennes & Mauritz offered some reserve in its reaction to the recommended wage increase, because the final decision from the Bangladeshi Government is missing. The company’s CEO, Karl-Hohan Persson met with Prime Minister Sheikh Hasina last year to raise the issue of higher minimum wages. The company would like to see a quick decision on the minimum wage revision and considers the panel recommendation as a step in the right direction and that minimum wages should be revised regularly. H&M is the largest buyer of made in Bangladesh clothes.

WalMart Stores is the second largest buyer of apparels from Bangladesh and supports efforts to promote better working conditions there, including higher minimum wages. It encourages the government of Bangladesh to review minimum wages for workers in the garment industry to ensure worker needs are met.

Observers state that the government, facing mass opposition rallies and strikes cannot afford further protests before election. Amirul Haque Amin, head of the National Garment Workers Federation, an umbrella group representing 37 unions, warned the country risked a repeat of the waves of sometimes violent labour protests as seen over the past month if a new minimum wage will not be approve.

At the end of June (end of the fiscal year), Bangladesh exported clothes in the value of more than USD 20 billion and employs around four million workers in that sector, thereof around 80 % are females from poor rural areas.

The largest importer of apparels from Bangladesh is the EU and has threatened to revoke its preferential treatment of imports if factory working conditions will not improve.

www.wsj.com


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