Home » Minimum Wage Policy of Bangladeshi Rmg Workers: Impact on the Owners

Minimum Wage Policy of Bangladeshi Rmg Workers: Impact on the Owners

Existing Strategy of RMG Employers to Deal with New Wage Policy in Bangladesh Abstract This paper relates to the ‘minimum wage’ declared for the readymade garments in Bangladesh. The main objective of this study is to find out whether the employers of readymade garments are satisfied with the new policy of TK 3000 as a minimum wage or not. To do the research a total of 6 employers from the garments industry in Bangladesh are interviewed.

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In total, eight questions on labor unrest, minimum wage level, trade unionism, international competition, cost structure, workers motivation level and relationship between garment owners and workers were asked. It is concluded that most of the employers are not satisfied with paying that amount as a minimum wage to the workers. Since it seems workers are getting paid much more than the affordability of the owners. The new wage rate has increased the cost structure which has also resulted in an intense competitive pressure in the international market.

Introduction In the field of Industrialization garment industry is a promising step. It has given the opportunity of employment to millions of unemployed, especially innumerable uneducated women of Bangladesh. With the first garment exporting unit, Reaz Garments in 1978, and along with that initiative, Desh Garments, Bangladesh stepped into a new promised land of prosperity. The sector now dominates the modern economy in export earnings and employment generation. The Ready Made Garment sector constitutes nearly 80 per cent of Export of this country.

At present there are about 3000 garment industries in the country and 75 percent of them are in Dhaka. The rest are in Chittagong and Khulna. About half of the foreign currency from the ready-made garments is earned from European Union and the U. S. A. Besides, Canada, Japan, Australia, New Zealand, Middle East and Russia etc. also are other garments importing countries. The specialization in this readymade cloth has led Bangladesh to stay its position in the 4th place. The prime reason why garment industries have come out to be the champion in the field of export is obviously the cheap labor.

There can be hardly found any country where Labor is as cheap as it is in Bangladesh. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 1 Shockingly, this promising industry has been facing some problems impeding its development. The high priced cotton and thread color, illiteracy of workers, insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of communication, problem in taxes etc. are the major problems. One of the most controversial issues is the “minimum wage” demanded by the workers.

The minimum wage is fixed here by collective agreement between the owners and labors. The garments workers have long been agitating for a living wage. They recently vandalized garment units in Ashulia, Narayanganj and Gazipur areas to press home their demands for higher wages and benefits. Previously, garment workers’ organization has urged the government to announce TK 5,000 as monthly minimum wages for the apparel sector during July, 2010. But this amount was rejected by the RMG owners as it exceeds their affordability line and they suggested TK 2500 as the same.

Therefore, the government announced the new scale for the country’s three million apparel workers that propose to increase the minimum monthly basic wage to TK 3,000 (43 dollars). Since 1985 the Government has been fixing the Minimum Wage level starting from TK. 621. The minimum wage has been revised for four times consecutively in 1994, 2006 and 2010. To set any wages regarding garments, Minimum Wages Board (MWB) is involved. The board collected and reviewed data extensively on the inflationary trend and prices of essential commodities to make the wages “suitable” for an apparel worker.

It consulted with experts at Bangladesh Bank, Bangladesh Institute of Development Studies, Centre for Policy Dialogue, Consumers’ Association of Bangladesh and Bangladesh Bureau of Statistics with regard to the price spike of essentials. The board also took workers’ calorie requirement into consideration as nutritional status is closely linked to productivity. Thus the minimum wage of TK 3000 has been fixed. According to an international trade union body “the garment workers are this world’s most poorly paid and their rights are being violated increasingly by the manufactures”.

Like that Union, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Abdus Salam Murshedy agrees that the wages of Bangladesh’s RMG workers are relatively low compared to other countries, which also helps keep the local apparel products competitive in the global market. “The current minimum wage level in Bangladesh is below the poverty line calculated by the World Bank and thus does not meet the basic needs of the workers and their families,” said the international buyers.

The government has recently allowed trade unionism to operate in the garment sector. The collective bargaining has made them easy to get their wage structure updated time to time. A Study on “Labor Rights Implementation in RMG Industry” in Bangladesh by M. Monjur Morshed in 2007 shows the wage hike will lead to labor productivity and industry performance. Two Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 2 articles titled “Is RMG sector under threat? and “The rage over the wage” show the mixed reactions and focusing only the labor unrest but do not describe the effect to the employers. Francisco (2001) in his article regarding the minimum wage impact on the Brazilian labor market described the increased wage rate has short run effect and created two parties: winners and losers. The response of the workers was mixed but majority have accepted the new scale. In contrast, the employers of the garments are not happy with the new increased labor wage which will eventually decrease their competitive position in the world.

The latest unrest in the ready-made garments industry drew sharp reaction from the European Union which is the country’s top destination of textiles and clothing items, consuming around 57 per cent of the shipments. Government in Bangladesh has not shown proper sympathy over owners as they are facing troubles in this sector. If the RMG has to be the biggest contributor in export, the owners need to be affordable to pay high wages. At the same time the owners have to cope up with new wage policy and serve as world’s low cost suppliers to Europe and US. This has resulted in a dilemma for the RMG exporters.

If the wage rate continues to rise yearly, the country will have to suffer a lot in future. About 140 garments factories were closed in 2009 due to unrest accompanied by the crisis of power and gas, price hike of yarn, poor infrastructure, and low price offers from international buyers amid increased production cost. Aftermath of the increase of the minimum wages, several garments are going to be shut down. The final question may arise as “are employers satisfied with paying increased minimum wage of TK3000? ” This paper tries to find out the satisfaction level from the perspective of garments’ employers. Objectives

The main objective of this research is to find out whether the ready made garments employers of Bangladesh is satisfied with the new wage policy of garment workers set by the government and also their current strategy to deal with. This objective was fulfilled by asking the garment employers the following questions: ? Whether, the new wage policy is high or low from employers perspective and also is this the appropriate time for them to cope up with the new wage policy. ? To find out how the company is managing their new cost structure and how company now competing with foreign competitors; like China, Vietnam or India in terms of price.

Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 3 ? To identify the role of those association like BGMEA or BKMEA and their support activities to the company as per new wage issue. ? To find out the present owner-govt. relationship and how the employer is dealing with the labor union. ? Whether, the new wage policy really have impact on workers’ mind or their productivity level and find out whether the new wage policy creates more employment or not in this sector. Methodology

Methodologically, our research is a qualitative or descriptive research. Basically, it is a type of scientific research. In general terms, scientific research consists of an investigation that seeks answers to a question, systematically uses a predefined set of procedures to answer those questions, collects evidence, produces findings that were not determined in advance and produces findings that are applicable beyond the immediate boundaries of the study. Qualitative research shares these characteristics, Saunders (2003).

Additionally, it seeks to understand a given research problem or topic from the perspectives of the local population it involves. Qualitative research is especially effective in obtaining culturally specific information about the values, opinions, behaviors and social contexts of particular populations. The strength of qualitative research is its ability to provide complex textual descriptions of how people experience a given research issue. It provides information about the “human” side of an issue – that is, the often contradictory behaviors, beliefs, opinions, emotions, and relationships of individuals.

As this research is a descriptive research, such as that undertaken using attitude and opinion questionnaires and that enable us to identify and describe the variability in different phenomena, Saunders (2003). When used along with quantitative methods, qualitative research can help us to interpret and better understand the complex reality of a given situation and the implications of quantitative data. The three most common qualitative methods are participant observation, in-depth interviews and focus groups. Each method is particularly suited for obtaining a specific type of data.

In this research, the method used is called “Structured Interview Method”. Since we prepare a questionnaire exactly related to our research topic before taking the face to face interview. To do this research, we conducted a review of the literature on Existing strategy of RMG employers to deal with the government new wage policy in Bangladesh in order to gather knowledge on our research Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 4 proposition. After that we carry out the whole research through secondary ata and interview process in 6 readymade garments top level employer at Dhaka to assess their opinions and current strategy towards the new wage of minimum Tk. 3000 to RMG workers. Big, medium or small ready-made garments are relevant to find out different perspective from the employers point of view and how they are managing the issue from their stage. Thus, this is ensuring that to come out with the outcome or result that shows actual scenario in Bangladesh ready-made garments industry. A questionnaire has been developed with few important questions based on the research objectives which have been asked to the garment employers.

The questions in the questionnaire were to find out the opinion and the employers response which is recorded by us. The employer has been interviewed at an approximate time of 25-30 minute secession and we recorded (as per interviewee approval) the interview secession and the respondent’s answer in accordance to our questions. Another secondary data source (Relevant Journal, Article and News) has been used to find out more information that will present the actual result and impact of new wage policy in RMG sector in employer perspective.

After the interview secession and getting all required information, the analysis was done and presented in the next section. Findings Other than our main objective that is to find out the current strategy of RMG employers to deal with minimum wage policy and their satisfaction level with the new wage policy, we also find out some problems that the employers are facing related to workers wage issue and some other costs associated with their business as well as the probable solution from the perspective of the employers.

Among six employers that we interviewed three are designated as the respective companies’ owner and three are general manager of the companies. All the employers are in readymade garments (RMG) industry in Bangladesh and enlisted as BGMEA members. One of the owners is the vice president of BGMEA. All of them are following the wage scale fixed by the government. The number of workers in these garments is also medium. Half of the garments have factories located at Ashulia. Mainly, the “sweater” is the main product of these garments.

Only one garment is specialized in textile. Wool and Cotton are the raw materials that are imported from local suppliers and from China, India and Pakistan. Only the Merino Wool is supplied from Italy and Malaysia. Most of these companies are export oriented and U. S. A and Europe are their main buyers. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 5 Table 01: The brief overview of the garments Name of Garments Type Factory No. of Name of the Interviewees Kazi Azizul Karim Md. Abul Kalam Sarkar Md. Kamal Sharif Md.

Mobarak Hossain Tanjim Ahmed Gilbert Bivas Bayen General Manager Managing Director Chairman General Manager Managing Director Status Location Workers Glory Fashion Ltd. Kajana Fashion Ltd. The Finery Ltd Unicorn Sweater Ltd United Knitting Ltd. Knitting Knitting Knitting Knitting Knitting Textile & Fabric Banani Ashulia Mirpur Ashulia Ashulia 900 1050 1160 1350 1600 Unilliance Textile Ltd. Gazipur 1000 General Manager The research found that the minimum wages in Bangladesh is fixed up by the collective agreement instead minimum wage rates set up by the authorities for the garments’ workers.

In the recent change, the Minimum Wages Board recommended TK 3000 at the minimum level. The wage rate category is based on unskilled and juvenile workers and skilled workers. As our research is dealing with the minimum wage of readymade garments workers, so according to section 141 of the Labor Act, 2006 while fixing minimum wages the Board will consider the following: 1. Cost of living 2. Standard of living 3. Production cost 4. Production capacity 5. Price of produced goods 6. Inflation 7. Nature of work 8. Risk and standard 9. Business capacity and 10. socio-economic conditions of the country and the respective area 11.

And any other related matter. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 6 While fixing the minimum national wage it is also necessary to consider the present and also the future price of essential goods. Wages should be raised in proportion with the increase in commodity prices (present price hike is 9. 60 per cent) and inflation. This criterion was necessary so the real wages of the workers does not decline. Timely raise in workers’ wages will prevent agitations and consequent loss of productivity; according to the labor act.

During the interview secession, the interviewees were asked with same set of questions that are exactly related to our objective of the research, interviewees were asked some other related questions as well. The overall RMG new wage structure is given below: Table 02: The Proposed Wage Structure 2010 for the Garments Workers of Bangladesh Class Wage – Year 2006 In Taka 5,140 3,840 2,449 2,250 2,046 1,851 1,662 1,200 Wage – Year 2010 In Taka 9,300 7,200 4,120 3,763 3,455 3,210 3,000 2,500 Rate of Increase % 80. 93 87. 50 68. 23 67. 24 68. 87 73. 42 80. 45 108. 33 Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Apprentice The apprenticeship period is 3 months. Source: Rahman, 1 August 2010. P. 13 Falling trend of the prices of apparels in the international market Export Promotion Bureau and BGMEA sources say that apparels prices in the international market are gradually falling recently. In Table 03 (Appendix 02, Page 18) shows the price per dozen at which the foreign buyers purchased apparels from Bangladesh in the last 16 years from 1994-95 to 2009-2010. If the situation of minimum wage continues to grow in future, the RMG sector will definitely fall down since the apparel prices are showing the decreasing pattern.

Wage increase has made the cost structure of the six garments in a high position which will make the garments confused about whether to increase price or exporting at the existing level. Most of the employers on their interviews said that the margin is Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 7 low compared to other countries. But after this wage rate, the margin will much less than previous which is not a good sign for our export sector. The next section of this research introduces the set questions and discusses the findings given by the interviewees. Question 01

The first question was asked to know the minimum wage level from the perspective of the employers of the garments. The question was also asked to know the minimum wage level from lowest to highest. Amongst employers of 6 garments, 4 of them have disclosed their minimum wage rate. The other 2 interviewees have not shared the wage range from their perspective. The minimum wage from the perspective of 4 garments is given below: Table 04 : Minimum Wage Range Name of the garments Unicorn Sweater Unilliance Textiles Limited United Knitting Ltd. Kajana Fashion Limited Wage Range TK(2200-2500) TK 2000 TK (2000-2200) TK (2400-2500)

One of the employers answered that they have no comment on the wage rate. According to him the rate is perfect. On the other hand, one GM said the wage rate is neither too high nor too low. The garment is financially strong to cover the risk associated with increasing rate. According to another GM, they are not actually ready for implementing new wage policy right now. He also said that the Government could increase the RMG labor wage in step by step or could provide them enough time to carry out. Though he did not give any wage range that he thought it should be, but he added that the new wage policy is too high for them to execute.

Sorrowfully, he said, “we are bound to the government! ” Unskilled apprentice worker should get TK 2000 not TK 3000 according to Mr. Gilbert. Four of the six garments’ employers, the minimum wage should fall between TK 2000-2500. It should not exceed TK 2500. Other two employers have already accepted their wage rate. That is the reason they had no comment on the new wage rate. Another Ashulia based garment employer said that the new wage policy is not too high for him to execute as his factory has 25 lines of machines which is big enough and has enough fund to evade financial risk.

Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 8 Question 02 The second question to the 6 interviewees was to find out the impact on the garments’ overall cost structure and competition in the global market. Almost all garments have stated that the new wage policy would hamper the production process by increasing cost. The Chairman of Finery Limited, Mr. Kamal Sharif answered that the policy would not affect the cost structure and he also mentioned that the competition has not reached too high.

The cost per labor for basic salary of TK 3000 has increased by TK 1338 which constitutes nearly 81% than before. For the existing employees whose basic is more than TK 3000, it adds 10% of the basic salary. The garments are budgeting for the new projects with little adjustments to meet extra cost increase. One MD stated that if the wage rate continues to increase the garment will not exist in future. In case of competition, 4 out of 6 garments are facing “intense competition” where another MD said that competition has increased slightly.

The competitive scenarios in garments industry and its reasons the employers shared are discussed below: ? Competitive pressure is considered worldwide since Bangladesh is exporting to major economies. The Unicorn Sweater has good buyers from Germany, France and US. But after this new wage policy the order placed from these countries are lower than previous. On the other hand, the other countries in the RMG sector are getting the offer. The competition has turned in to a game. If the buyers offer low prices without considering the labor wage and cotton prices issues, the factory will have to face losses within 1-2 years substantially. According to Finery Limited the competition is not intense because during the time of wage increase the garments companies informed the buyers that, they cannot provide products at the previous or at low rates. And it was granted by the buyers. ? Margin between the major competitors of Bangladesh, India and China has narrowed down, said by Mr. Ahmed. The buyers want previous priced garments despite there is a low margin created to the Bangladeshi garments. ? One owner said that the competition now is huge. As the garment is not a bigger one, it has to bear the intense competition.

He also said “we are lagging behind India”. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 9 Question 03 When the question of comparing the minimum wage rate of Bangladesh with China, Vietnam and India was raised, all of the interviewees have replied “low”. If it is compared to China, India and Vietnam, the labor wage is still low in our country which was a major competitive advantage. But by doing the research it is concluded that increasing wage rate will no longer be a competitive advantage for Bangladesh. Table 05: Minimum Wage Rates Among Compititors

Country Minimum Wage ($) Minimum Wage (BDT) China India Vietnam Bangladesh $217 $135 $101 $43 15,190 9,450 7,070 3,000 Source: The Financial Express: Monday, August 2, 2010 The employers of these garments have stated many reasons for the high wage rates among competitors. Some parts of the interviews are given below to have a glimpse: ? One interviewee said, “China or Vietnam pays high to their workers, since they have infrastructural support, high quality machineries at lower cost to purchase, efficient and skilled work force, stable political environment and most importantly government support.

However, we are lagging behind them if we compare those sectors”. ? In terms of Bangladeshi living standard, “a labor coming from village areas without zero or few learning the minimum wage with overtime reaches to TK 5000 which is quite high”, told by one GM. ? Another respondent said, “Comparing with other countries for example, China, India or Vietnam, the new wage policy is low”. He said that they do not need to compare with other countries because those countries living structure or cost are totally different from ours.

But if they think from our country’s perspective- the wage rate is too low. ? “The new policy has made the wage of every labor higher than India, China and Vietnam and so on”, said one owner. He replied, “Our country is well-known for its cheap labor but now it is not cheap to all”. However he thinks that Bangladesh is in a winning position in labor wage. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 10 Question 4 At this point, the employers were asked how the employers manage or handle the buyers against increasing high cost or high wage issue.

All employers responded in a same way that the buyers are already aware of the new wage issue, though few employers are dealing with the existing rate right now. On the other hand the employer of Unicorn Sweater, United Knitting, Finery Ltd. and Kajana Fashion Ltd. negotiate to their buyers and dealing with them in a new price, because of high production cost and new wage issue. The employers also said that the good buyers always concern for quality of the garments product rather than price and those clients are their main customer group. However some buyers are price concern and always compare prices of different companies.

To deal with them the employers try to adjust the price in against of their cost. An interesting comment of Mr. Gilbert from Unilliance Textile Ltd. was, “It’s not only the new wage factor that increases our cost of production, the high inflation of production materials are basically lifting up our per unit production cost, for that we also have to face difficulties in setting up prices and managing our buyers. ” Most of the employers said that as because of high inflation they have to lay off inexperienced and less skilled workers so that the costs of labor can be reduced to adjust overall production cost. Question 5

The next question that was asked; how is association like BGMEA or BKMEA assisting the RMG Companies in terms of new wage policy and what would be the government role. The interesting fact that we found while asking this questions is that, there is a mix reactions between the employers. The employers of Glory Fashion Ltd. and Unilliance Textiles Limited replied that they are not actually benefitted or getting guidance from the association BGMEA or BKMEA in terms of increased cost or new wage issue. Rather sometimes these associations impose some rules and regulations which appear as a burden to most small and medium RMG companies.

Until now, they didn’t get any assistance from them, since the associations are quite bound to the government so do the RMG companies also, said the two employers of those garments. On the other hand, employer of Unicorn Ltd. , The Finery Ltd, and United Knitting Co. and Kajana Fashion Ltd. stated that they are getting help from those associations which is satisfactory to them. According to their answer these helps include: ? ? Information regarding good buyers as well as potential market. Ensuring investment friendly environment. Page 11 Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh ? ? In the interest of RMG companies negotiating with the government on vital issues. Settling down with the labor union if any conflict arises. Associations give full support while making the gazette. In the second part of the question we asked the employers what could be the government roles to support the RMG industry in terms of the new wage policy. Almost every employer replied that an intensive planning is needed from government to assist this earning sector of Bangladesh since many niche exporters are now compelled to shut down their operations.

While asking this question, except from one interviewee the all other interviewee stated that they are getting not much government support as required to assist them regarding their problems. Only one respondent said that government supports the garment owners. He also replied that as it is noticed, the relationship between the government and NGO’s is quite unpleasant and it is also the same with the garments owners. NGOs are adding fuels to the situation stating different labor rights issues. That is why government sometimes works in favor of garments’ owners. As a duty to the citizens, government always tries to appease the labor unrest by providing law enforcing agencies like Police, RAB etc. in front of the agitation site and factories also. The minister also urged the RMG workers not to create unrest in the sector ‘as per NGOs command’ as they (NGOs) did not have the authority to fix wages for them”, said by one employer. Question 6 The next question to the interviewees was whether the employers think the new wage policy has created a distance between the owner and the government and it will create more conflict between the owner and worker or not.

They were also asked how the employers deal with the labor union. Out of 6 interviewees 1 of them straightly said that the new wage policy has created distance between the owner and the government. Because, it is not possible for many of small RMG owners to increase their workers wage by more than 80% at once. Another interviewee said, the distance has not created yet but the distance can be created in the future. The third interviewee’s answer was quite different. The answer was like this“Many employers are involved in politics. Some do Awami League and others do BNP. So the BNP minded mployers think a distance has created between the Govt. and the owner. But Awami League minded employers think everything is alright! ”. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 12 Three garment owners think that, there is no distance created between the owners and government because government is always helpful to the garments. In the second part of the question 4 of the interviewees said that there exists more conflict between the owner and worker. The reasons are given below? The supervisor and the operator are getting the same salary though they are not in the same grade. Workers are demanding TK 5000 as the minimum wage rate. The answers of the third question are similar to the six garments owners. And that is- the owners are trying to manage the labor unions by giving Government set wage rates and other benefits which include: insurance per worker, Eid bonuses, Earn Leave and other benefits regarding workplace safety. Sometimes they are giving bribes to the labor unions. Question 7 The next question was if the employers think the increasing wage really motivates the workers or increases their productivity and if yes how it is motivating workers to work in RMG sector.

In this answer, 4 interviewees said- “No”, one said “Yes” and another one said “Same as before”. The response of the owners’ is presented in table: Table 06: Increased wage really motivated the workers: The employer response Response Result Employer United Knitting Ltd. Unicorn Sweater Ltd. Glory Fashion Ltd. The Finery limited Unilliance Textiles Ltd. Kajana Fashion Ltd. Highly Motivated Motivated Same as Before Not motivated v v v v v v Page 13 Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh

The answers from Unicorn Sweater Limited, Finery Limited and Unilliance Textiles Limited and Kajana Fashion Limited were like this- The workers are not satisfied with the behavior of the employers and the surrounding environment. A worker can sew 80 pieces a day but she or he sews only 20-30 pieces when she or he is disappointed and frustrated. But it is true that, the unemployed people from villages are always interested to work in garments because they can get TK 3000 without proper qualification. Also due to 3 bonuses, medical facilities, over time duty with food facility people are eager to work at garment factories.

But the different scenario we can see in United Knitting Ltd. The owner of this garment told us that the labors are satisfied and motivated to work. The factory is running at full force to complete following consignments on due time. The productivity of the factory has increased. He discourages the government to introduce Industry Police which may present some outrageous movements of labors, provoked by invisible power aimed for hindering the progress of this prominent sector. Question 8 The last question was asked whether the employer is satisfied or dissatisfied paying Tk. 000 minimum wage to their worker according to the new wage policy. Except one garment, other four garments are not satisfied with paying TK 3000. However, one garment had no comment on the increased wage issue. We have tried to show the satisfaction level on three options which include1) YES 2) NO 3) NO COMMENT The answers were like this- Table 07: Employers’ Satisfaction in New Wage Policy Name of Garments Unicorn Sweater Ltd. Glory Fashion Ltd. The Finery Ltd. Yes No No Comment v v v Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 14

Unilliances Textiles Ltd. United Knitting Ltd. Kajana Fashion Ltd. v v v Conclusion The research that we completed has its own limitations as the number of samples size that we have taken is six garments and its respective employers of ready made garments industry to deal with. Hence, the findings and result that we came out with from our research might not be the overall scenario or all employers’ perspective of RMG industry. However, the thorough interviews of the mentioned company’s employers have provided us valuable insights and facts to portray a real picture of our research objective.

From the findings of the research, it can be said that new wage policy introduced by government has different influence on particular RMG exporters that we have chosen. Every company stated their position, opinion in different style and which divided them into two major groups. Some of them are not actually worried about the new wage policy where as some are not actually ready for implementing new wage policy right now. Thus, there satisfaction level is different here. Thus according to us, these differences came as because of the sizes of their company they are holding.

The employers of the company who have enough capital as well as entrepreneur of a big garment industry have no such problem paying taka 3000 minimum to their workers. Hence, they understand the present cost of living in capital Dhaka and quite aware of the present situation of their workers in terms of their wages. However, things that they are concern for is difficult business environment with labor unrest, political obstacles or government dilemma in policy making, inflation rate that raises their total production cost, inefficiency in infrastructure like in electricity, gas etc. nd some other factors that really hampering their business process. On the other hand, employers of medium and small garments are passing through a tough time as their manufacturing and operational cost are increasing day by day and the new wage policy really does matter for them since it is increased by a high percentage by which they are not prepare to pay this right now. Even staying in the break even they are running their business. The government could rather give them adequate time to implement the workers wage step by step to match up with their costs.

Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 15 According to the interview, the employers gave mix reaction regarding getting help from BGMEA or BKMEA. One portion said that they are not at all enjoying any facility from these associations. On the other hand, some of them said that they are getting help from the associations. In addition, we can say, that capability and productivity is not same by the way, the major variables under consideration are wage, cost adjustment, competitiveness, associations, labor, government and finally macro-economic point of views.

Prior to our research, everyone always thought about the labors but we tried to make a difference by considering many RMG exporters of our country who are conducting most profitable and contributing sector to our GDP. This study has provided sufficient information for a business student regarding business policy and environment government policy as so on. One group of owners is thinking that the new policy will not affect the operation significantly and other is taking drastic effect.

The workers are also satisfied and motivated in one hand and in other hand are dissatisfied and disrespectful to their task, so the grievance is prevailing. But almost all of the garments are observing the same motivation level and it is believed that the worker motivation level will not increase proportionately with the high minimum wage. To conclude it can be said that the minimum wage set by the government has created a dilemma to the garments owners with a view to coping up with the international buyers. Majority has considered this wage hike as warning for future export.

The almost doubled wage will surely be a crucial factor in determining the prospect of readymade garments sector. References 1. Karim K. Azizul. Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Arefin I. 24th October. 2. Sarkar Md. Abul Kalam. Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Afrin S. 12th December. 3. Sharif Md. Kamal. Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Chakma A. 28th November. 4. Hossain Md. Mobarak.

Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Afrin S. 3rd December. Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 16 5. Ahmed T. Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Hasan M. 5th December. 6. Bayen G. Bivas. Existing strategy of RMG employers to deal with new wage policy in Bangladesh. [Interview] Ehsan S. Bin. 10th December. 7. Morshed M. Monjur (2007). A Study on Labor Rights Implementation in RMG Industry in Bangladesh: Bringing the gap between theory and practice.

MSocChgDev-Res thesis, Center for Asia Pacific Social Transformation Studies, University of Wollongong. Available from: http://ro. uow. edu. au/cgi/viewcontent. cgi? article=1039&context=theses 8. Khan S. (2008). Is RMG sector under threat? The Financial Express. 17 th January. P. 1. Available from: http://www. thefinancialexpress-bd. com [Accessed: 3rd December 2010] 9. Zafour, A (2009) “Problems and Prospect of Garments Industry in Bangladesh”, Bangladesh Study, [Online] Available from: http://www. reportbd. com/articles/191/1/ (Cited 10 December 2010) 10.

Absar, S. S (2001), “Problems surroundings wages: The ready made garments sector in Bangladesh”, Labor and management Development Journal, Vol 2 Num 7 [Online] Available from: http://www. nla. gov. au/openpublish/index. (Cited 10 December 2010) 11. Marriott R. (2010). The rage over the wage. 4th August. Available from: (http://libcom. org/news/rage-over-wage-04082010 [Accessed: 3rd December 2010] 12. Carneiro F. Galrao(2001). An overview of the effects of the minimum wage on the brazilian labor market. Catholic University of Brasilia working Paper.

No. 39 – 2002 13. Saunders, M. , Lewis, P and Thronhill, A. (2003), Research Methods for Business Students, 3rd Edition, Pearson Education, India. Appendix 01 Research Questions Existing Strategy of RMG Employers to Deal with New Wage Policy in Bangladesh 1. Question: What could be the minimum wage from the perspective of employer? Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 17 2. Question: How would the new wage policy affect the company’s cost structure and overall competitiveness in the market? 3.

Question: What do the employers think about the new wage policy; (high or low) if we compare other countries; Like China, India or Vietnam? 4. Question: How the employers manage or handle the buyers in against of increasing high cost or high wage issue? 5. Question: How is association like BGMEA or BKMEA assisting the RMG Companies in this regard? And what would be the govt. role? 6. Question: Do the employers think the new wage policy has created a distance between the owner and the government? And will it create more conflict between the owner and worker? How would employers deal with the labor union? . Question: Do the employers think the increasing wage really motivate the workers or increases their productivity? Do you think that more workers will be interested to work in RMG industry? 8. Question: Is employer satisfied paying Tk. 3000 minimum wage to their worker according to the new wage policy? YES NO NO COMMENT Appendix 02 Table 03: Apparels price per dozen Year 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 Price per Dozen in $ 35. 65 35. 38 37. 06 38. 52 39. 63 38. 87 Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 18 000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 (July-November) 39. 19 32. 64 32. 31 31. 23 30. 22 28. 85 27. 69 27. 50 26. 82 26. 62 Source: Hasan, The Daily Ittefaq, 58th Year, No. 211, 26 July 2010, P. 2. Table 08: Categories of Working Class by Designations Class Categories of Working Class Wage in Taka per Month Grade 1 Pattern master, Chief quality controller, Chief cutting master, Chief mechanic, Chief electrician, Collar master and Graphic designer Mechanic, Cutting master, Asst. Pattern master, Asst. Collar master, Asst.

Graphic designer Special machinist, Senior swing machine operator, Senior winding machine operator, Senior knitting machine operators, Senior linking machine operator, Senior cutter, Senior quality inspector, Senior marker, Senior line leader, Senior over lock machine operator, Senior kwacha machine operator, Lay man, Senior auto cutter, Senior marker etcetera. Swing machine operator, Winding machine operator, Knitting machine operator, Linking machine operator, Dry man, Packer, Over lock machine operator, Line leader, Auto cutter, Cad operator, Lay man, Bundling man, Rib cutter, Tag man, Printer, Quality operator etcetera. 9,300

Grade 2 Grade 3 7,200 4,120 Grade 4 3,763 Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 19 Grade 5 Junior swing machine operator, Junior winding machine operator, Junior knitting machine operator, Junior linking machine operator, Junior dry man, Junior packer, Junior over lock machine operator, Junior line leader, Junior auto cutter, Junior cad operator, Junior bundling man, Junior lay man, Junior rib cutter, Junior tag man etcetera. Ordinary swing machine operator, Ordinary winding machine operator, Ordinary printing machine operator, Ordinary linking machine operator, Ordinary auto cutter etcetera.

Creasing man, Line iron man, Dry washing man, Over lock machine assistant, Button machine assistant, Kwacha machine assistant, Finishing assistant, Asst. Bundling man, Asst. Fusing machine operator, Asst. Auto spreader, Lay man, Embroidery operator, Printing operator, Printer, Helper etcetera. Apprentice 3,455 Grade 6 3,210 Grade 7 3,000 —— 2,500 Source: The Daily Ittefaq, 58th Year, No. 216, 1 August 2010. P. 13 Existing Strategy of RMG Employers to Deal With New Wage Policy in Bangladesh Page 20

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