The iconic status held by the RMG industry in Bangladesh’s national economy is acclaimed by all concerned nationally and globally. The industry’s current earning is over US $21bn in export receipts, contributes to nearly 80% of the country’s total export earnings and roughly 13-14% of the gross domestic product (GDP).
Nearly 5,000 RMG units constituting the industry provide employment opportunities to roughly 4 million men and women, which is close to two thirds of the work force employed in the manufacturing sector of Bangladesh.
Thus in every conceivable way, the RMG industry is the key driver of the growth of the national economy of Bangladesh and will play a crucial role towards sustained growth and expansion of the country’s industrial economy in the coming years.
Against this backdrop, the RMG industry is now under constant scrutiny by the international buyers because of severe turmoil besetting the industry. The workers’ unrest for raising their abysmally low wages, fight against problems of irregular payments, poor working conditions poor safety standards, and consequent accidents and deaths, and especially the colossal loss of human lives and opportunities for livelihoods for the workers and their families which are leading to constant loss of work and productivity in the RMG sector.
Because of frequent occurrences of such catastrophic incidents such as building collapse and devastating fire incidents and continued workers unrests, the industry is now facing a serious image problem globally.
The RMG exporters of Bangladesh have already lost GSP facilities in the US market and similar impending threats are looming large in the European Union markets. These are glaring examples of several internal and external issues currently confronting the industry which need to be resolved for enabling the export-oriented industry to emerge as the world’s number one RMG exporting “powerhouse” surpassing China.
The most important contentious issue requiring a quick solution is a fixing of workers’ wages at reasonably higher levels (somewhere between workers’ expectations and the owners’ capacity to pay) through mutual understanding on an agreed minimum wage demanded by the workers (Tk8,000 per month) and offered by the BGMEA authorities (Tk4,500 per month).
It is agreed by all that the current basic wages of the workers in Bangladesh (ie roughly $58 per month) is the lowest in the world and hence needs to be raised to ensure a decent level of living for the workers and their families.
Hard negotiations are going on among the relevant stakeholders to fix a basic minimum wage for the RMG workers, but possibilities of reaching a consensus seem to be moving away further. The BGMEA leader’s argument for not raising the wages as per worker’s demand is that the demand of the workers is untenable for at least two reasons.
First, it is unaffordable by them as being too high to raise cost of production and erode industry’s international competitiveness. Second, the workers’ productivity being low, compared to that in the neighbouring Asian countries, the workers’ demand for Tk8,000 per month is significantly above the “efficiency wage”.
Both the arguments are credible theoretically, but the ground reality dictates that considerations of more pragmatic issues may sufficiently counter the owner’s arguments.
As far as international competitiveness of the RMG industry is concerned, the industry is currently enjoying large market shares primarily due to comparative cost advantages arising from unlimited supply of cheap labour.
Entrepreneurial management competence, market shares and technological innovations leading to higher productivity and overall enterprise level efficiency are now more important determinants of cost-effectiveness and market competitiveness. Indeed, superior product quality, design innovations, robust delivery performance, and excellent customer services are some of the distinctive manufacturing characteristics which are required to achieve world class excellence and strong competitive edge over the leading exporting nations involved in RMG businesses and exports.
Turning to the labour productivity issue in the export-oriented RMG industry, the BGMEA leaders have a significant stake to be mindful about arrangements for skill training for the production workers and supervisors and middle rank managers.
The ongoing efforts have to be intensified as part of their human resource development strategy. Thus, modern management efficiency, technology innovation and adaptation, human resource development, enterprise level efficiency, effective labour-management co-operation, and greater customer orientation must be combined to ensure a greater competitive edge in the global market instead of depending on cheap labour.
The message being delivered is that instead of cutting corners on workers’ wages and ultimately their safety, prosperity must be shared with the workers as a humanitarian gesture. It has to be noted that besides the economic cost, the unmet demand of the workers for reasonable minimum wages (ie living wage) has social and humanitarian costs.
Industry leaders, foreign buyers, the government, and the workers representatives must amicably settle the wage and compliance issues and restore peaceful industrial relations to help maintain Bangladesh’s position in the global market.