As the stimulus package is accessible to all factories registered with the BGMEA/BKMEA, trade union leaders pointed out that they can pay one month’s salary from the package and many owners should be able to pay two months wages on their own
Since the outbreak of Covid-19, data from Bangladesh Garments Manufacturers and Exporters Association (BGMEA) shows that $3.18 billion worth of orders were cancelled from 1150 factories from mid-March till April 16, affecting approximately 2.28 million workers, leading to many workers being sent home without pay.
In the midst of this crisis, trade unions in theRMG industry have stepped up to the front lines of the pandemic to negotiate the rights of the 4.1 million workers employed in this industry, demanding factory owners to comply with government mandated lockdowns by keeping factories shut and to protect the jobs and wages of the workers.
Sadly, the reality of the RMG sector and all of its workers is that there is no one-size-fits-all solution in this unprecedented crisis.
The government stimulus package
On March 25, the prime minister announced a fiscal stimulus of Tk50 billion for export-orientated industries, which includes the RMG sector.
The stimulus package has been introduced with the objective of protecting workers by ensuring job security and regular wage payments, as well as protecting the industry through retention of qualified workers and a smoother transition into a post Covid-19 economy.
The conditions set forth by the stimulus package stipulate that an interest-free loan will be given to employers for the sole purpose of payment of wages and benefits to workers for up to three months. Upon successful applications to scheduled banks, the wages will be disbursed by the bank directly to the workers through their Mobile Financial Services (MFS) or bank accounts.
The declaration of this package at the onset of the lockdown in Bangladesh shows the government’s priority and commitment to protecting the RMG sector and its employees.
As part of BRAC Institute of Governance and Development (BIGD)'s own Rapid Research Response to Covid-19 initiative, a study was undertaken to understand the different channels and extent of the impact of the Covid-19 crisis on the RMG industry by talking to the trade union leaders.
The study also aims to understand how the government stimulus package can mitigate the impact of Covid-19 on the RMG sector and highlight the validity and effectiveness of the deployment strategies.
The study titled, ‘Covid 19 Impact on RMG Sector and Managing The Financial Stimulus Package: Trade Union Responses’ is an in-depth qualitative study with structured interviews with twenty gender-balanced trade union leaders from factory based unions as well as national federations, of different political affiliations. The study was led by Maheen Sultan, BIGD, Dr Md Shanawez Hossain, BIGD, Kabita Chowdhury, BIGD, Jannatun Naim, BIGD and Farah Huq, BIGD.
Trade union leaders’ assessment of the role of factory owners and their associations in dealing with workers’ welfare during the Covid-19 crisis
In general, the trade union leaders expressed frustrations overs the response of factory owners and their attitudes towards workers welfare in the wake of the pandemic.
There was a noticeable gap between trade union expectations from factory owners, and the reality, especially surrounding the issue of factory closures. There was a general expectation that factories would be shut, and work suspended, but respondents stated that most owners were not committed to comply.
“Some unions have sat with their owners and they have been able to obtain good results and positive outcome. Owners agreed to give due wages and not fire [workers]. We have created some leaflets which we are trying to distribute to make workers aware.” – A trade union leader
The mental pressures of providing for their family in the wake of rampant job insecurity and financial suffering as a significant vulnerability for workers, who barely have enough money to support themselves or their families for more a few days as a result of abrupt factory closures without clearing outstanding salaries and older wage backlogs.
Efforts and challenges of trade unions to deal with the Covid-19 backlash
Trade union leaders have been trying to play an active role in negotiating with owners, associations, the BGMEA and the government to ensure worker safety, job security and wage payments.
“We are not used to working in lockdown. But we have to figure out a way how to group together on this.” – A trade union leader
Some trade unions have been able to reclaim jobs of workers that were made redundant as a result of factory closures, while others have even been able to obtain guarantees in writing to ensure full payment of any outstanding worker salaries.
Trade union’s assessment of the stimulus package
The stimulus package has been widely acknowledged and appreciated as a timely initiative. However, a key question raised was the adequacy of the package to fully fund wages and benefits for the entirety of workers in the sector.
Given that the RMG-sector dispenses Tk40 billion per month as wages, as stated by BGMEA, Tk50 billion for three months is clearly insufficient.
Using the CPD 2018 estimate of the number of active workers (3.6 million), this study estimates that the monthly payment of minimum wage only would require almost Tk29 billion per month; the current size of the stimulus package is only about 57% of the amount needed to pay the minimum wage for three months.
Trade union leaders highlighted that the stimulus package should be complemented with a needs-based principle.
Additionally, as the stimulus package is currently accessible to all factories registered with the BGMEA/BKMEA, many respondents pointed out that surely many owners should be able to pay two months wages on their own without government support.
Naureen Khan is Research Communications Manager at BIGD