September 26, 2013 by DhakaTribune

DHAKA TRIBUNE

Op-Ed

Wages in the RMG industry

n Mamun Rashid

y friend, a ready-made garment industry owner sounded annoyed: “Madam prime minister is visiting New York with a 150 member entourage. From where is the money coming?’’ Further asking: “And it is not just any money, it is hard currency in US dollars. Who earns this? Our exporters and wage earners?” He seemed furious to see the BGMEA president himself joining the prime minister on her New York trip, which he thought of as nothing but a pleasure trip just before the expiry of her term in the government. BGMEA has faced criticism for proposing only a 20% minimum wage increase for new garment workers, three years after the last wage board. He questioned why the prime minister and her cabinet members did not intervene in time to avoid the protests, fire, and vandalism at production units.

While our workers in the RMG industry do deserve a respectable wage, preliminary studies suggest that the present condition of the industries may not be supportive of a minimum wage hike to more than Tk5,200 or $65 per month

Bangladesh’s wage board for the RMG industry fixed Tk930 as the minimum wage in 1994, raising this to Tk1,662 in 2006 and Tk3,000 in 2010. Recent reports show workers’ associations and leaders want this to rise up to Tk8,114 (equivalent to $106). The owners meanwhile, are considering a 20% hike in the minimum wage so it goes up to Tk3,600, though there was

a corridor discussion that they were thinking of a number around Tk4,500. Knowing our government servants, politicians and other stakeholders, the easy way out would have been to resolve this around the mid-point. On the other hand, if one considered the cost of living of a 3-4 member garment workers’ family, reliable surveys point to a figure that is a little over Tk5,000, and if we consider the national annual per capita income of $1,044(just under Tk90,000), a monthly figure of Tk6,650 would be an appropriate figure. Optimum pricing in the marketing or management world has always been a challenge. While low pricing may affect the productivity and overall image or acceptability of the product, above-market wages or non-sustainable pricing may seriously impact the core competitiveness of the industry or product segment as a whole. While our workers in the RMG industry do deserve a respectable wage, preliminary studies suggest that the present condition of the industries may not be supportive of a minimum wage hike to more than Tk5,200 or $65 per month. With less than 2,700 units, out of around 5,500 woven and knitting factories, doing direct contracts, wage and price increase may have a devastating impact on the factories doing sub-contracts for less well known apparel brands or retailers. Obviously, Tazreen Fashion and most importantly Rana Plaza episodes have given a wake up call to all stakeholders in the apparel sector, and things can’t continue the way they were going. Global retailers, apparel buyers, unions and international development organisations are now taking much needed action to improve safety. This is a very good sign and should have happened much earlier to avoid the tragic incidents in Bangladesh’s RMG factories. However, minimum wage was not the key problem for Tazreen or Rana Plaza victims and survivors. Rather, it was all about non-compliance of

Thursday, September 26, 2013

RMG workers have repeatedly taken to the streets of Dhaka asking for a pay-rise building safety, workers safety, and workplace safety; more importantly, it was failure by garment owners in complying with minimum governance standards. Without doubt, we need to review the minimum wage in view of the price hikes and cost of living increases, but more importantly, we need to make sure that buildings will not fall down and injure or kill workers because of poor construction and that workers will not be burnt alive because of poor fire safety and negligence by owners and supervisors who, in the Rana Plaza case, forced workers to work despite an identified safety issue. Newspaper reports suggest around 2,000 factories may not pass the safety audit. We need to fix these units urgently. The factory inspectors need to make sure minimum standards are followed in our manufacturing plants. The fire brigade needs more fire-fighting equipment, manufacturing clusters need more integrated development, and the workers need to be encouraged to improve productivity and discipline at work places. Productivity has always been a major problem in our manufacturing sector. The minimum wage in China is more than $200. But a Chinese worker’s productivity is much higher. On average, Bangladeshi workers require

more time and almost the same money to produce a similar quantity of RMG products when compared to a Chinese worker, so there is only a slight cost advantage even though their minimum monthly compensation is $40.

Minimum wage was not the key problem for Tazreen or Rana Plaza victims and survivors. Rather, it was all about non-compliance of building safety, workers safety, and workplace safety

Reports on monthly wage rates show figures in the apparel industries of $113 in India, $118 in Pakistan, $120 in Vietnam and $204 in China, but I have not come across any reports clarifying whether these are the minimum or average wage. Whilst Bangladesh minimum RMG wage is $40, studies show the average earning of a Bangladesh garment in-

NASHIRUL ISLAM

dustry worker is Tk5,200 or $67 equivalent. However, with an aim of making best use of the workers participation and contribution with productivity improvement in recent years, Bangladesh has a cushion to go up further, at least against the new entrants. Where Bangladesh should position itself in the wage curve, is a tough question to answer and should be reviewed in accordance with the costs associated with fixing other pertinent issues like building safety, workers safety, power and energy investments, compliance of factory standards, productivity development, financing, replacement, and relocation costs in this industry segment. Our apparel sector has grown a lot in a short time and has much future potential. From almost $23bn now, it is likely to become a $50bn industry by 2021. No matter what the naysayers may say, the industry segment warrants much more attention, and cohesive actions from all the stakeholders – be it media, citizenry, producers, workers, buyers, development partners, and most importantly, the government. We need pro-active actions instead of episodic reactions. l Mamun Rashid is a business professor and financial sector entrepreneur.

The open source solution

Green growth is good growth

Why reinvent the wheel? Office, without any license fee. n Mohammed Amir Dhedhi Mozilla Thunderbird – a replace-

n Mohammad Mizanur Rahman

ost Bangladeshis reading this article on the web are probably using a PC loaded with a pirated copy of Microsoft Windows. Are there any legal options to use similar software without paying $500 per PC for MS Windows and MS Office? Yes there are. Open source software can be downloaded for free and used legally instead of pirated software. This can and will protect companies and government departments in Bangladesh from future software piracy lawsuits. Open source is a powerful movement transforming the software and information industry worldwide. It is a global community of companies and individual programmers that have produced robust and complex software applications. Open source developers have proved that they can produce solutions equal to or better than proprietary programs, and also making these available free of cost for anyone to use. Many people and companies in Bangladesh are already using open source software of which the most common ones are:

ment for MS Outlook/Outlook Express e-mail. Gimp, a replacement for Adobe Photoshop. VLC player, which plays most formats of video/audio files. These are just a few examples of great open source software that anyone can download and use for free. Any computer science student can modify the software and improve it as they like, developing their programming skills in the process. Businesses and government organisations requiring customised business solutions can hire a software company to customise existing open source software for them; this is cheaper than developing software from the ground up and much more affordable than buying commercial software from companies like Microsoft Businesses executives and government officials in particular should become familiar with open source software and technologies, as these are applicable for every industry and organisational activity. Many organisations worldwide are moving to open source software to lower costs without any compromise in quality.

Open source software can be downloaded for free and used legally instead of pirated software. This can and will protect companies and government departments in Bangladesh from future software piracy lawsuits

Linux Mint / Ubuntu Linux operating systems (Google’s Android mobile operating system is another variant of Linux). Mozilla Firefox or Google Chrome (the most popular web browsers). OpenOffice / LibreOffice – Free word processing, spreadsheets and presentations, all compatible with MS

Open source alternatives for businesses have been growing in numbers: website content management systems (CMS), enterprise resource planning (ERP), human resources management (HRM) and project management are all organisation activities which can be managed by free open source alternatives.

Running a web/software development firm, I prefer to use Linux operating system and content management systems (CMS) like Word Press and Drupal, along with many other open source technologies to help our clients save costs. There is no longer any point developing most business systems from zero. Why reinvent the wheel? The economics which I see in my company applies everywhere. Hence open source business models are emerging around the world. Software companies can use tested and tried software from the open source community and sell customised versions of these to their clients, where the cost of modification is much lower than any other option. These businesses can choose to contribute back to the community or create a custom solution, which may be proprietary for a specific or multiple businesses using open source. It is a popular misconception that open source software is developed by unpaid volunteers, and hence unreliable. In fact, most open source developers are employed by companies who use or sell open source software, and contribute their time to the community development of the software they use because doing so saves them money. Currently, Intellectual Property Rights (IPR) laws are not strongly enforced in Bangladesh, and software piracy is widespread. However, the situation is changing rapidly. Large Bangladeshi organisations are already getting letters from multinational software companies asking how many copies of unlicensed software they have on their PCs, which is always a precursor to launching a lawsuit to realise the license fee. Bangladeshi companies and government departments can protect themselves by adopting open source software. l Amir Sattar Dhedhi is a technology consultant.

reen growth is growth that fosters economic growth and development while ensuring that environmental resources are not harmed. According to the World Bank Group, green growth is efficient in its use of natural resources, clean in that it minimises pollution and environmental impact, and resilient in that it accounts for natural hazard. It focuses on the synergies and trade-offs between the environmental and economic pillars of accelerating economic growth. Bearing concern for developed and developing countries is the extent of the trade-off between environmental policy and international competitiveness, at both the national and firm level. That growth approach will focus on the relationship between green policy and competitiveness, investigating the impact of green growth policies on the patterns and volume of trade, as well as on national and firm competitiveness, the legitimacy of the pollution havens hypothesis in developing countries, the risk of trade disputes arising from green policies, and methods for realising the comparative advantage provided by natural capital endowments while avoiding reliance and excessive exploitation. Green growth involves avoiding the convention of “grow first, clean up later.” Rather, it attempts to catalyse investment and innovation in ways that give rise to more sustainable growth. The approach is a globally recognised one for sustainable economic growth that has been developed in South Asian countries, Bangladesh included. Its growth system generates green jobs, enhances economic vitality, and protects the environment. A group of themes are vital in the work on green growth, for example, greenhouse gas emissions, natural resources including biodiversity, quality of life including access to clean drinking water, and related policies

concerning cost-effective management of natural resources. Some increase in carbon dioxide emission has been observed with per capita emissions of 0.3 metric tonnes in 2007 and projections suggest a rise to 0.38 by 2015. Green energy would bolster the economy, generate green jobs, reduce carbon emissions and reduce longterm energy costs. Additionally, Bangladesh currently produces about 75megawatts of electricity from green energy sources. But, it is so little to meet our huge demand.

ladesh, adjust to the United Nations green initiatives for sustainable development especially, “Green economy and green energy” for all, introduce international, regional and national level projects and financial support services for fostering green economic development for Bangladesh. Lastly, people want growth, they want growth that is fair, clean and they want a green economy, not more hazards for mother Earth. l Mohammad Mizanur Rahman is a botanist, researcher and columnist.

Green energy would bolster the economy, generate green jobs, reduce carbon emissions and reduce long-term energy costs. Additionally, Bangladesh currently produces about 75 megawatts of electricity from green energy sources

Recently, the Danish government gave its support to a one-year Climate Change Adaptation and Mitigation Project (CCAMP) in the coastal areas of Bangladesh. The project will run from July 2014, with a budget of about Tk69m. It said Denmark’s opportunities to make a difference in Bangladesh were significant by supporting renewable energy as well as the green energy sector and energy efficiency through the implementation of CCAMP. As things stand now, we would do well to follow these recommendations on green growth for Bangladesh: Prepare plan of action on green growth development for Bangladesh, continue implementing projects for “greening” national economic activities, expand and review existing renewable energy policy and green banking policy for fostering green development of Bang-