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CPD proposes Tk10,028 as minimum wage for garment workers

  • Published at 01:17 am August 6th, 2018
CPD
Experts speaking at CPD's 'Minimum Wages and Livelihood Conditions of RMG Workers' on Sunday Rajib Dhar/Dhaka Tribune

CPD Distinguished Fellow Mustafizur Rahman moderated the dialogue

Centre for Policy Dialogue (CPD) a local think tank on Sunday proposed Tk10,028 as minimum wage for readymade garment (RMG) workers at the “Minimum Wages and Livelihood Conditions of RMG Workers” dialogue at Brac Inn in the city. 

CPD Research Director Khondaker Golam Moazzem in his keynote presentation said: “Taking into consideration the average family size is 4.4 based on a sample survey, the average monthly expenditure of sample RMG workers was found to be Tk22,435 where the food cost is Tk8,125 and non-food cost is Tk11,142.

“Considering the slowdown in profit margin of enterprises as well as possible future business risks such as trade wars, rise in petroleum and gas prices, etc; the proposed minimum wage for a garment worker is proposed to be Tk10028, (US$119).”

In case the worker has no children, the wage for grade VI worker could be Tk9228 (US$110), they proposed. 

In setting minimum wages for RMG workers, CPD urged to consider the inflation rate, number of family members and earning members of the workers’ family, slowdown in entrepreneurs’ earnings, revision in wage structure, and reducing gap in minimum wages between Bangladesh and major competing countries.

According to the CPD-RMG study 2018, about 53% enterprises made a profit less than 5% (which was 38% in 2012) while 10% enterprises made loss in 2016 (which was 6% in 2012).

Since the workers’ efficiency has increased because of the introduction of new technology, machinery, departments and management practices, the think tank proposed the reduction of minimum wage grade to six instead of existing seven.

The study found that the workers’ overall cost of living has increased by 17% per year between 2013 and 2018. 

“Such rise in expenditure is not fully explained by rise in inflation - only adjustment of minimum wages will seriously undermine the workers’ requirements, although the rise in expenditure is partly influenced by rise in income as well. Living expenses have increased the most in Gazipur as 28% of factories are located in that area and 35% workers of total RMG workers live there,” Moazzem said. 

CPD Distinguished Fellow Mustafizur Rahman moderated the dialogue.  

Government mulls contributory provident fund

CPD has urged the government to introduce a central provident fund for RMG workers that can be used when they retire. It proposed 3% of the basic income be contributed to the fund. 

“Workers need to be encouraged to save a part of their income – a central ‘provident fund’ could be made with workers’ saving,” said Moazzem.

“We are thinking of introducing a contributory provident fund for RMG workers, where the worker and government will contribute to a workers’ central fund,” said State Minister for Labor and Employment Mujibul Haque Chunnu who was present as chief guest. 

In case of death, workers will get Tk2 lakh in addition to provident fund sum, he added. 

Call for rent control 

Taking part in the dialogue RMG stake holders including trade unions and owners urged the government to control rents as landlords tend to increase the charges once a new wage structure is declared. 

“If the rent goes up after the new wage structure is announced then the workers would not benefit from the minimum wage at all. This is why the government needs to set up rent control in the areas where RMG workers live,” said ANM Saifuddin, a director of BGMEA.

As per an RMG study in 2018, data shows that a majority of workers live in poor housing conditions with lack of basic facilities and on an average a family has to spend about Tk2,684 per month on accommodation.

Workers’ expenditure for housing has increased by 38% in case the worker is living in the same area as the factory.