I have to say, I was a bit surprised by this headline, although, to be fair, it is in the “Money” section. The article has a cursory overview of what happened in Bangladesh (click here for a detailed summary of the events in Bangladesh) but something else stood out while reading it. On the wage hikes, an H&M representative pointed out that the increase in cost is “competition-neutral” affecting all brands equally.
What the H&M rep said would be accurate if we lived in a perfect world. But, when we talk of Bangladesh which has a low capacity to regulate and enforce the law, what ends up happening is that the minimum wage is almost like a suggested wage. Check out this inset from Stitching a Decent Wage Across Borders: The Asia Floor Wage Proposal 2009
Stitching a Decent Wage Across Borders: The Asia Floor Wage Proposal 2009, p. 25
Interesting. So, factories have the discretion to set production targets which helps control wages. This makes wages variable relative to production quotas which factories can play around with to manage their costs. We may be talking about a minimum wage increase but if production quotas change (i.e. increase) to match this wage hike then I doubt that any cost increases will be “competition neutral”. I predict that what may happen is that factories will play around with production targets to remain competitive compared to other factories. Why? Because factories work in a world driven by a “survival of the cheapest” philosophy. So while the CSR department may put pressure on the government and supplier factories to improve conditions and wages causing increases in unit prices, the buying department may start to look elsewhere for cheaper products which, more likely than not, means another factory with low wages and sub-par working conditions. Buying practices are a huge reason why producers are so worried about this wage increase.
Time to connect the dots:
This whole system is connected from the farm all the way into the closet and beyond that into the dump. Retailers, brands and other clients cannot be outraged at the low wages in Bangladesh and put huge pressure on factories to improve their conditions without acknowledging that at least some of the responsibility lies with their purchasing practices. Same with us consumers, we can’t be happy to pay an incredibly low price for clothing and then act completely shocked and outraged when we find out what it takes for that to happen. Who are we kidding? It’s like that scene from Casablanca:
“If the 3 ½ million mostly women garment workers win their wage increase, it will allow them to climb out of misery and at least into poverty.” (Charles Kernaghan, National Labor Committee)
The Bangladeshi Government has agreed to increase the minimum wage in Bangladesh by 80%. While you might think this is high enough, at first glance, it is unfortunately not sufficient enough to support the workers and their families. The Clean Clothes Campaign (CCC) has reported that staff and worker leaders at the Bangladesh Center for Worker Solidarity (BCWS) have become victims of intimidation and harassment, with criminal cases filed; the government has issued arrest warrants “against hundreds of workers and several labour rights leaders.” (CCC)
As a result, the SA Bangladesh Project will continue to campaign in solidarity with these workers.
through UK based clothing company People Tree is running a “Humanity in Fashion” campaign to help Bangladeshi garment workers win their fight for an increase in the minimum wage. Follow the link to sign their petition.
and throughWake-Up Wal-Mart is calling for action through a massive email campaign: follow the link to send a letter to Wal-Mart.
A Bangladeshi police slaps the face of a suspected protester during a clash with garment workers at Mirpur, Dhaka. Photo: Abir Abdullah/EPA via The Guardian
Let’s go back one year to July 2009. The world economic downturn was in full swing. In Ashulia, a major manufacturing center just outside of Dhaka, clashes were raging as “tens of thousands” of garment workers were protesting sudden wage cuts and unpaid salaries. The protests began in late June and continued into July as they escalated in intensity with 2 workers dead, many injured, one case of factory arson and numerous incidents of vandalism. The industry website Yarns and Fibers Exchange reported that:
Spectators and workers watch as cloud of smoke billows out of the burning Ha-Meem Group complex at Narasinghapur in Ashulia. PHOTO: Shafiqul Alam / The Daily Star
The government’s response to these protests was a crackdown for fear of a loss of business. In 2008, Bangladesh was one of the largest garment exporters in the world, second only to China. This event, among others, provided even more pressure on the government to accept a proposal for the formations of an industrial police which had been on the table for a while.
According to official records released in August 2009, Bangladeshi garment exports had reached an all time high in the previous fiscal year as the country became more competitive due to the economic crunch. While the industry became competitive within the global market, manufacturers still had to compete within the national market. As a result, manufacturers engaged in what has been described as a price war in an attempt to attract orders. Because of this price war, industry insiders claim that they had to cut prices by 20% which decreased their profit margins. But since many of the manufacturing companies are privately owned, fiscal data is not public and therefore these claims cannot be verified.
During the month of Ramadan (August 22-September 20), workers became restless once more as they demanded back pay, unpaid allowances and their Eid bonuses. Reports on this are confusing and I don’t know which side is telling the truth. The New Nation published two articles that reported the following:
Either way, the industry demanded 30 billion Taka (~US$430,725,047) of government aid for the payment of wages and Eid bonuses by September 7th, 2009, complaining that the industry is struggling because the economic crisis caused a decrease in the number of orders. This demand was rejected by the Finance Minister and later withdrawn by the BGMEA as an ‘error’. BDNews24.com reported that the union deadline for payment (September 16th) was ignored as some factories shut down for the Eid holiday without paying wages and bonuses. It is unclear whether this was a widespread problem or not.
A man attempts to throw a burning mattress while others pelt policemen with stones and brickbats during a clash between agitating garment workers and law enforcers in Tongi yesterday. Photo: Amran Hossain / The Daily Star
In January 2010, Touhidur Rahman, President of Bangladesh Poshak Shilpa Shramik Federation, told the The New Nation that a written demand for the formation of a wages commission was submitted on December 12th. Salahuddin Swapan, President of Bangladesh Biplobi Garment Shramik Federation, claimed that the government had repeatedly assured them that a wages commission would be formed immediately to review the minimum wages of RMG workers. He added that:
According to Bangladeshi labour law, wages are to be reassessed and adjusted every 3 years. The last time that had happened was October 2006 meaning that the government was long over due. January also saw further isolated clashes with 2 dead and numerous injuries. The first wage commission meeting was held on January 24th but the BGMEA representative was absent leaving factory owners open to criticism that they were stalling the process. BGMEA president Abdus Salam Murshedy informed The New Nationthat considering economic conditions, it was “impossible” for factories to pay higher wages and suggested that the government step in and provide workers with subsidies on necessities.
Garment workers shout slogans as they block a street in Dhaka. Photo: Andrew Biraj/Reuters via The Guardian
retailers were paying lower prices than before for Bangladeshi products. The retailer perspective was also in the news in March as France 24 reported that Bangladesh is “too cheap for comfort for some brands” explaining that the letter sent in January included Walmart, H&M, Carrefour and Levi Strauss.
Other brands like Zara, JC Penny, Uniqlo, Tesco and Marks & Spencer have decided to forgo the middlemen and created their own liaison offices in Dhaka to “keep an eye on the conditions in which their branded goods are produced.” On the other hand, factory owners claim that the ‘concern’ of the retailers is a stunt pointing out that retailers have slashed order prices in response to low global demand. Shafiul Islam Mohiuddin, a factory owner and “vice president of the country’s leading exporters group” was quoted in the report complaining that:
Police say thousands of workers clashed with security forces at Ashulia via BBC
In another article in The Daily Star, BGMEA president Murshedy pointed out that the letter sent by retailers failed to mention unit prices and a need for an increase in order prices. According to him, operation costs have increased by 25% over the past year but his order prices remain the same.
At the same meeting, a BGMEA representative was present and stated that the industry was being held hostage by “10 to 12 so called labour leaders.” It is unclear whether any of the “so called labour leaders” were present at this meeting. However, they were present at the second wage board meeting that took place in April during which the board requested that detailed reports from both sides of the issue. A statement made by the Minister of Labour and Manpower, Mosharraf Hossain, to the AFP promised a wage hike within 3 months. This promise came as large-scale clashes rocked the country and labour unrest was no longer an isolated incident.
In June, large-scale protests continued and the world finally began to take notice.
The numbers were small at first and increased quickly from 8,000 workers in Jamgarh district of Ashulia to 50,000 workers in Ashulia industrial area. Clashes with government security forces were fierce as reports of tear gas, rubber bullets and water cannons were disseminated. Many factories shut down for a short time fearing vandalism and violence. The local police chief stated that protesters blocked a key highway, ransacked factories, fired live rounds and threw rocks. These events were accompanied by a threat of a nation-wide wage-hike campaign. The BGMEA responded with an appeal to workers:
In mid-July, the New York Times published an article entitled Bangladesh, With Low Pay, Moves in on China, in it, Li & Fung, one of the largest sourcing companies in the world, explained that they had increased their production in Bangladesh by 20% in the past year while decreasing production in China by 5%. The article also discussed the wage issue with factory owners arguing that a big increase of wages will make them less competitive not just against China but also against other cheap labour countries like Vietnam and Cambodia because those countries have better infrastructure and productivity levels. The article ends with a foreshadowing statement by factory owner and former head of an unspecified Bangladeshi garment industry trade group, Anisul Huq:
Garment worker Kulsi Begum, 20, shares this room with two other workers. They pay 1,500 taka rent a month, which is a large part of their 1,662 taka monthly salary. August 2009, Dhaka, Bangladesh. Taslima Akhter / Clean Clothes Campaign
In February 2010, the Bangladesh Garments Workers Unity Council, a federation of Bangladeshi garment worker organizations, submitted a list of 5 demands to the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). These demands are:
Social Alterations has put together a visual message to the workers and others involved. Bangladeshi garment workers need our support to increase their hourly wage. By uploading your photo and message, you are not only allowing these workers to see your face, but you are also empowering them with the simple statement that you can see them, and that they are not alone.
The United Nations defines extreme poverty as individuals living on less than a dollar a day…current minimum wages in Bangladesh sit at 11.5 cents/hour (that’s 25$ per month and less than a dollar a day).
Don’t forget to tell us where you are sending your photo from!
Not sure what to write on your sign? Here are a few suggestions to get you started:
“Bangladesh needs a living wage now!”
“I support Bangladeshi garment workers!”
“ < 1.00 $/day = extreme poverty”
“Less than 1$ a day is extreme poverty: Bangladeshi garment workers deserve better”