Disputes of garments industry in Bangladesh

DISPUTES IN GARMENTS INDUSTRY OF BANGLADESH

MARUF MAHFUZ

maruf.txt@gmail.com

Mobile: 01738676060

Department of Textile Engineering

World University of Bangladesh

Introduction:

In recent years, labor unrest in textile sector of Bangladesh has been a matter of serious concern. The RMG industry of Bangladesh started its modest journey in late 1970s and within three decades, it has been a flourishing sector. Contribution of the RMG sector in national economy is great. It is the highest foreign exchange earning sector. As garment industry is a leading sector in Bangladesh economy and labor unrest is a burning issue at present.

Problems surrounding Ready Made Garments sector:

Though RMG sector in Bangladesh enjoyed a meteoric growth and is contributing a great Problems with Human resources: to the national economy, this sector is facing a lot of problems. Acute shortage of power and gas, political instability, frequent hartals (strikes), poor port facility often hamper the production and export. Surpassing all these, labor unrest has become a chronic disease in this sector. At present, labor unrest has been labeled as a conflict of interest between the owners and workers. Generally labor unrest emerges when workers come to the street demanding some facilities (financial or other) which the owners are not ready to provide. Sometimes some rumors spread unrest among the labors. Conspiracy of home and abroad is also responsible. Sometimes it is found that workers of a factory attack intentionally another factory to damage the factory or hampers its growth as there is competition among the factories. Some NGOs financed by foreign donors are blamed to instigate the garment labors regarding their rights and privileges. The actual causes of labor unrest must be addressed and proper action must be taken to solve this problem. Government, owners and workers have to work hand to hand to come out the situation. Labor-force is an important input in industrial production and this is truer in garment industry of Bangladesh. Mechanization and automation have not diminished the role of human element in industrial establishments. In fact, the role of workforce has become highly critical in garment industry. Nor have the economic reforms belittled the significance of labor. Human resource is taken to be an important factor to increase productivity, improve quality and reduce costs; all necessary to survive in the competitive world. But the basic needs of the labor force must be mitigated. The socio-economic condition of labor force of RMG industry of Bangladesh, in no way, can be said well. As most of them are uneducated and unskilled, they get very poor salary in contrast to everincreasing expense of livelihood. Very often they do not get their salary, bonus and overtime bills in time. In many factories they are forced tow long work hours in unhygienic condition. Maltreatment by the mid-level officers is their common fate. As there is no provision for trade unionism, they don’t have any access to the policymaking process. In such a situation, they come to the street to raise their voice and involve themselves in vandalism and rampage. Despite having a significant achievement in national economy, labor unrest in this sector is diminishing all its credit. In order to survive in the quota-free competitive international market, addressing labor unrest has been a crying need.

Labor unrest:

Labor unrest is a term used by employers or those generally in the business community to describe organizing and strike actions undertaken by labor unions, especially where labor disputes become violent or where industrial actions in which members of a workforce obstruct the normal process of business. Labor-force is an important element in economic activities. Labor unrest occurs when the labor-force is aggrieved with some decisions of the authority or their demands are not fulfilled, they organize themselves, come out to the street to protest the decision of the authority or pressurize the authority to fulfill their demand. Sometimes, they engage themselves in violence and vandalism.

Recent Labor Unrest in RMG Sector, Events and the Possible Reasons:

The RMG sector has economic contribution as well as social contribution in Bangladesh. It has created employment opportunities for about five million people including young, poor and illiterate women. However, recently the RMG sector is going through severe disturbances. The clashes between garment workers and law forcers create serious crisis in this industry. In January 11, 2010, the garment worker created violence for getting the facilities such as lunch bills and encashment of casual leaves. Forty workers were injured, production of 30 garment factories were halted. The garment workers had created another aggression on April 28, 2010 for increasing their monthly wage rate from US$ 25 to US$ 70. During that incidence, more than 22 RMG factories were affected and 30 peoples were injured. The age rate (0.25 US$ hour) is the lowest in Bangladesh compare with other countries like China (0.35), Vietnam 0.40), Pakistan (0.40) and India (0.60). Overtime allowance is also inadequate in the garment sector in Bangladesh.

Overall Causes of labors unrest:

Causes of labor unrest are many. First and foremost is the long-standing grievance of the workers. The growth of RMG industry of Bangladesh much depends on hard work of the labor force. But unfortunately they are deprived of minimum facilities. They are to live a sub-standard life in city slums for years. The wage they get is low. Very often they do not get their salary, overtime bills and bonus in time. Their recruitment system is hiring and firing as they do not get any appointment letter and identity card of the factory and at any time they can be dismissed by owners for any reason. They don’t know anything about their job contract. Being maltreated by owners and mid-level officers, working long hours in congested environment without sufficient rest,  Lacks of nutritious foods, medicine, right to legitimate protest against ruthless exploitations etc are their daily destiny.

They don’t have any access to the decision making process. Factory building collapse, fire accident, stampede render many dead and injured. Nevertheless, if any worker protests against owners or management, he/she is threatened by various types of harassment such as dismissal, arrest etc. Even physical assault by the hired hooligans of owners. Most of the labor force of this sector are uneducated and unskilled and have come from rural area simply in search of livelihood. They have to work hard in return for a very poor salary. The board recommended the minimum wages in light of 10 issues — cost of living, living standards, production cost, productivity, cost of the goods produced, inflation rate, job pattern and associated risks, business capacity, socio-economic condition of the specific industrial sector and the country as well as other relevant issues. The minimum wage board asked for and gathered views of various social stakeholders on the impact of inflation from the Bangladesh Bank (BB), Bangladesh Institute of Development Studies (BIDS), Bangladesh Bureau of Statistics (BBS), Centre for Policy Dialogue (CPD), Bangladesh Institute of Labor Studies (BILS), Consumer Association of Bangladesh (CAB) and others. It has also asked for a report on the nutritional requirements of the apparel workers from the Institute of Food and Nutrition of the University of Dhaka, Sramik Karmachari  Oikya Parishad (SKOP) and other garment worker’s association. While government institutions, like the BB, BIDS and BBS, reported that since 2006, the cost of living increased by at least 35 per cent, the private think-tank, CPD reported that the average cost of living has risen by around 70 per cent. CAB reported that the average cost of selected food items and other major utilities, consumed by workers, had increased by 53 percent on an average.

Table: Minimum wage structure for the garment workers Source: Minimum Wage Board, 2010

Institute of Food and Nutrition of University of Dhaka estimated that if a worker toils for eight hours a day, as a stitching operator or helper, he needs 3,200 calories daily. If the worker does two-hour overtime work every day, he requires 3,400 calories, said the 34 study that was submitted to the Minimum Wage Board. A female worker needs a slightly lesser amount of calories. The minimum wage fixed for a worker is not enough to live a standard life when compared with the high cost of living,’ says Razekuzzaman Ratan, general secretary of Samjtantrik  Sramik Front. According to him, a garment worker needs about 3,030 calories a day, accounting for a daily amount of Tk. 64.50. ‘Thus a person will need about Tk. 1,935 a month and to maintain a four member family, Tk. 7,740 would have to be spent on food alone. After adding utilities, house rent, transport cost, medicine and outfits, the total amount will stand at about Tk. 14,240 a month. If two members of a family are RMG workers, we believe that the minimum wage should be Tk. 7,120 per person,’ opines Ratan. On the other hand, according to the BILS survey, the minimum wage for a single worker has to be Tk. 5,277 amounting to Tk. 8,452 for a four member family to live a standard life. The minimum wage for workers of RMG sector, in any account, is very low in the face of ever-increasing prices of daily necessaries.

Figure: Bar chart 1 ranks various causes of labor unrest

A-I: Various causes of labor unrest

0-45: Frequency

A- Irregularities in payment

B- Low wages- Mistreatment of the workers by managers/ officers

D- Rumor

E- Absence of trade unionism

F- Conspiracy

G- Non-execution of labor laws

H- Unruly nature of the workers

I- Political intervention

Out of 50 respondents, 78% take irregularities in payment as one of the prime causes of labor unrest. Irregularities covers delay in payment of salary and bonus (a policy followed by the factory owners and managers to hold them in their factory and have control over the workers), cutting salary for causal leaves or late attendance; dilly-dally in executing of new wage scale etc. Payment of salary is a vital issue for the workers. Many things of their lifecycle depend upon it. One of the interviewees observes, if it is delayed or disturbed, it badly troubles their family life which pushes its wave to the factory and production. 74% respondents think low wage of the workers is the cause of labor unrest. 66% respondents think mistreatment of the workers by the managers/ officers forces the workers to go the street. 60% think rumor works as an agitating factor among the workers. 50% think absence of trade unionism, 44% think conspiracy, 34% think non execution of labor laws (national and international), 30% think unruly nature of the workers and 24% consider political intervention as causes of labor unrest in the readymade garment sector of Bangladesh.

Impact of labor unrest:

Whatever might be the cause of labor unrest in the RMG sector, impact is, beyond doubt, catastrophic. All the four parties- the workers, the owners, government and foreign buyers will be affected. If labor unrest continues, the foreign buyers will cancel their orders and divert to other exporters like, India, China or Cambodia. Hundreds of factories will be closed. Many owners may be bankrupt. Labors, losing jobs will lose the livelihood and many will involve in criminal activities. This will create burden on the existing unemployment problem and increase various types of crimes in the country. The government will be deprived of huge foreign exchange and revenue income. The industrialization process of the country will be impeded. The foreign buyers, who could buy quality garments at a low price and make huge profit in the US or EU market will have to eye on another exporter country from where they have to count a high price for the same garments. Hundreds of businesses, grown based on RMG industry, will suffer. The whole economy of Bangladesh will be adversely affected.

The Case Study Organization:

Urmi group is one of the fastest growing and rapidly diversifying group of companies in Bangladesh. It was established in 1984. It consisted of Urmi Garments Ltd., Attires Manufacturing Company Ltd. and Fakhruddin Textile Mills Ltd. The group has given more emphasis on different types of knitted fabrics and garments. Urmi Group’s product lines include: T-Shirt, Polo Shirt, Tank Top, Shorts, Trousers, Fleece Jacket, Vest and Ladies Dresses. Urmi Group mainly produces Men’s, Ladies’, Boys’, Girls’ and Infant’s garments. Urmi Group uses modern and updated machineries. Majority of workers in Urmi group are young. Twenty-five percent of workers are aged between 18 and 23years, 45 percent are between 24 and 29 years, 20 percent are aged between 30 and 35years and only 10 percent workers are aged above 36. Nearly 65 percent workers are working with Urmi group for less than 3 years. 25 percent are working for four to six years and only 10 percent of the workers are working with Urmi Group formore than 7 years. Eighty-five percent of workers earn on an average below US$ 78.Only 15 percent workers earn between US$ 80 and US$ 90 dollars.

Results:

The following section presents the results of the FGDs with the managers of Urmi Group. Major issues highlighted during FGDs includes the roles of trade union and labour rights, conflicting relationship with first line supervisors, demand for work-life balance, self-respect and participation, job turnover and absenteeism, efficiency and productivity of workers, workers motivational issues, and key reasons for recent unrest in the RMG sector. Common causes of labor unrest in the RMG sector in Bangladesh are discussed briefly below from the experimental overview of urmi garments.

Role of Trade Union and Labor Rights:

Traditionally, trade union plays critical role in ensuring workers right in a particular industry. Although garment sector in Bangladesh has a history of nearly thirty years, trade union in this sector is fairly a new phenomenon. However, participants claim that garment workers are aware of their employment rights. They often ask for legal support from labor union and agencies. Workers are more aware of their wage details, job termination benefits and the process of ensuring termination benefits through legal action. For example, workers now complain to the wages department if there is any miscalculation in overtime. Alongside with trade union, garment workers are also supported by various NGOs such as AWAZ (the most active NGO working for RMG workers) and other legal right agencies. Manager of a human resource department reported that in many cases workers threaten for legal action to the management in different issues, termination benefits for instance. Workers are more aware of their job security, employment rights. However, managers complain that some workers misuse their opportunity to get access of legal support. For example, in some cases where workers changing their jobs due to a better opportunity, they go to Awaz (legal support agency for labor right) to get their termination benefits and last salary by accusing forceful employment termination.

Conflicting Relationship with First Line Supervisors:

Several participants reported that poor relationship between workers and first line supervisors (FLS) is a common source of conflict. First line supervisors are promoted from workers and they prefer workers to follow the chain of command in every type of communication. Supervisors are often accused for failing to ensure fairness in dealing with workers in many issues such as recommending workers holiday, leave and overtime payments. First line supervisors react negatively for any direct communication between workers and administration or HR department. On the other hand, Urmi group encourages direct communication and follows an open door management policy. However, management always asks for details of the incident from supervisors to maintain chain of command in the case of any complain. Management prefers to resolve conflict through discussion between both parties. Participants believe that mutual understanding among the workers and supervisors are critical in maintaining sound working condition. Supervisor’s attention to listen workers ‘complains is a prerequisite for a better mutual relationship. Well-behaved supervisors are reported to be more successful in achieving higher worker productivity.

Demand for Work-life Balance:

Garment sector workers are becoming more conscious about work-life balance. Workers in the garment sector are reluctant to take extra work-load, avoid long shift, do not prefer to work in the week-end, and even dislike overtime in many cases. Financial benefits seem to be no longer much powerful to keep the workers for overtime. For instance, finishing manager presented a case where a women worker regrets to work overtime after 7 pm so that she can watch schedule TV programme. The garment company with less work pressure and overtime facility attracts more workers. Participants argue that higher wages rate, increasing number of working couples and availability of micro loans are drivers for better work-life balance. On the other hand, employers are providing free food, maternity leave and day care center for worker’s kid and so on to gain the worker’s loyalty and commitment towards the organization. Moreover, workers do not prefer job sharing and job rotation. For example, workers dislike relocation among differentfloors.They often consider their team as family; often couples/siblings are working together andlike to keep self-comfort. Managers often allow change in work floor/work line when there is a lack of good relationship among the co-workers and supervisors or as a punishment for poor performance of the respective worker. Need for Self-respect and Participation large number of managers observed that sense of self-respect among workers in the garment sector is increasing. Supervisors and managers need to show respect and positive attitudes towards the workers to have sound working environment. Comparatively skilled workers are more sensitive to self-respect and often decide to resign from the job if they feel lack of self-respect. Unlike the past, workers are no longer can be forced to follow the management decision. Workers feel valued when they are given chance to participate in decision making. Management decision is often altered based upon employee reaction, and employee suggestions. One of the key responsibilities of supervisors is to convince workers about the management decision. In some extreme cases, lack of workers participation in decision making results in either threaten to resign or show reluctantnessto follow that decision. Unfortunately, some workers consider performance feedback as against self-respect. For instance, an assistant production manager presented a case where skilled worker has threatened to resign for providing performance feedback.

Job Turnover and Absenteeism:

There is a strong relationship exists between the location of the factory and workers absenteeism. Workers who are living far from factory and working at night-shift are tending to be more absent at work. Garment industry is experiencing high labour turnover which has negative impacts on their productivity. High work-load, poor behavior of the supervisors, lack of required skill, lower wages rate are the notable reasons for high job turnover. Interestingly, a worker gets around US$ 5 to US$ 10 increment in monthly salary if he or she changes to a new job. However, there is an adverse relationship between level of education and job turnover. Literate workers are more aware of their rights and job responsibilities. Frequent job changing incurs huge opportunity cost for the workers as they lose the option of getting bonus, and other long-term benefits. Getting another job also takes time and they become temporarily unemployed. Most of the workers who switch job frequently are not often aware of their long-term employment benefits. Workers working for many years in the company leave the job by formal notice, and they usually get all the benefits. On the other hand, the frequent job leavers leave the job just after the payment of salary without prior notice and they do not care about their long-term employment benefits and even the salary after their last cut-off day. Workers also get influenced by peer group. If their friends leave the company, they also like to move out. Another reason for high job turnover is lack of salary standard for the workers in the garment sector.

Efficiency and Productivity of Workers:

Participants think that both motivation and procedural punishment for the workers are needed to increase productivity and efficiency. Presence of performance based reward and punishment systems helps to increase workers efficiency and thereby productivity. For example, participants advise that a poorly performing worker should get least priority for overtime or if anyone does any unfair means, 7 days unpaid suspension can be issued. However, participants suggest that punishment should be given by following proper procedure. Human Resource manager reported that termination with benefits is cheaper than dealing with disciplinary action. To make workers motivated and increase productivity, they should be rewarded for their hard work and punctuality. For example, award for 100% attendance, extra payment for best performer are the catalysts for motivating workers. Work coordination is also important to increase productivity and meet specific production target. Participants believe that sound employee behavior and efficiency bonus help to meet the target and increase productivity. Residence facility, recreational activities at workplace, free nutritious food for physical strength and good work relation make workers more sincere.

Workers Motivational Issues:

Motivating workers for higher productivity is the most critical challenge for the managers in garment sector. Traditionally, supervisors used to apply forces to the garment workers for achieving target. Supervisors are no longer allowed to apply any forces or abuse the workers. As a result, supervisors need to motivate workers to improve their performance. A manager reported that workers often tend to work at a lower capacity so that supervisors cannot measure their actual work capacity during the work-study period. He further deed that workers hide their actual capacity to avoid extra work load or to work in a comfortable speed. Another participant added that workers work at a lower capacity to avoid future work load. Financial benefits are motivating tool in the RMG sector. Performance based reward, extra payment for additional production and established long-term pay plans (pensions or provident fund) for the workers help to improve performance. Efficiency bonus for achieving target is given on group performance in the garment sector. However, workers prefer to be judged by individual performance rather than the group. A participant suggests that employees will be motivated towards high-performance if front line supervisors identify high performing workers and appropriately reward them. Failure to appropriately recognize a high performing worker results in dissatisfaction and in some cases job turnover. Interestingly, money is not sufficient enough to motivate workers to work on the weekend or overtime in the late evening, according to some managers. Workers do not prefer to work in a garment factory where working on the weekend or working for overtime in the late evening is too frequent. One participant reported that workers work at very high capacity if they are allowed to leave early at the completion of their current assignment. Moreover, though workers get over time payment, extra work target decreases their performance. That means allowing workers to have more time for their personal life motivates them to work at a high performance. Good behavior of managers, competitive employee benefit package, social events (like picnic) have positive impact on worker’s commitment and performance.

Findings & Analysis:

Ready Made Garments sector is the largest source of foreign exchange earning in Bangladesh and a large number of people is employed by this sector. However, it is evident that workers are frequently creating unrest in this sector. Poor labour management such as lower wage rate late payment of wage, inadequate overtime allowance, low house rent allowance, gender discrimination, lack of training, inadequate promotion, high work load, absence of effective performance appraisal, poor relationship between workers and supervisors, insufficient safety and security condition, relocation among different floors, lack of self-respect, lack of workers participation in decision-making, and forcing workers to achieve target in some garment factories are contributing to this unrest. Some other factors such as low literacy rate, availability of semiskilled workers, lack of awareness about labour rights and labour laws and wrong practice of various NGOs and legal agencies are also found liable for poor working condition in the RMG sector. This study also reveals that adherence of workers to rumor about unfair management practices and influences of peer group are significant sources of unrest.

Conclusion

In respect of production, export, earning foreign exchange, contribution to GDP, employment, investment and business mobilization, RMG sector of Bangladesh has been a flourishing industry. Its importance has crossed geographical boundary of the country. Garment business of many international markets in Europe and North America depends on production of garment factories of Bangladesh. It involves stakeholders from various corners covering public, private and international organizations. Given the fabulous volume of trade of the industry, the increasing trends of labor unrest in the RMG sector has been a matter of serious concern. Solving labor unrest in this sector is nearly impossible by a single agency like government or BGMEA or a civil society organization. Findings from data analysis show that public-private cooperation is themost chosen way of addressing labor unrest in the RMG sector of Bangladesh.

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