Two weeks ago, SA founder, Mary Hanlon alerted us to a little reported story on massive worker strikes in Bangladesh.  Following that, we decided to create Social Alterations // Visual Lab and introduced The Bangladesh Project.  We noticed a lack of context in the reports circulating, so we decided to just go ahead and give our readers the details behind the story.  Although the protests were most dramatic during the past month, this story has been unfolding for a long time.

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:

“Since early 2008, salaries have been cut by an average of up to 30 percent, according to union leader Tauhidul Islam who said this week’s violence had been fuelled by desperation. “The workers hit the streets because their backs are up against the wall,” Islam said.

The government’s Factory Inspection Department said this week that 122 of 825 factories surveyed – or 14.7 percent – between January and May did not pay staff on time with eight not even paying the minimum wage.”

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.

In the same month, the Minister of Industry alluded to a conspiracy by accusing “vested interests” of “trying to de-stabilise the ready-made garments sector” saying that “the government would not tolerate any attempts by these trouble makers to ruin the image of the garment manufacturing sector.” Meanwhile, Prime Minister Sheikh Hasina stated that an “industrial police could be an effective way to keep the export-oriented garment industry calm.” The government positions are understandable considering that the ready made garments industry accounts for around 80% of total exports, 40% of industrial jobs, and is a substantial source of foreign exchange reserves which are a valuable tool for maintaining currency stability (among other things).  Incidentally, the Finance Ministry rejected proposals for an industrial police due to the costs.

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:

“BGMEA [Bangladesh Garment Manufacturers and Exporters Association] president Abdus Salam Murshedy yesterday told The New Nation that it would become very tough to handle the possible labour unrest … “Workers are demanding double bonus ahead of Eid-ul-Azha. They are raising some demands, which are not mentioned in the labour laws,” he said.”

“Under the labour law, there is no provision of paying festival allowances for garments workers”.

In those same articles the following was also reported:

“Labour leaders said workers are agitating for realisation of their just demands. They said workers are demanding full trade union rights and implementation of tripartite agreement of 2006.”

“The workers and employees are demanding two months’ salaries and full festival allowance, while traditionally any worker or employee is entitled to get festival allowance for his or her job for minimum one year.”

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.

During this time, leaders of Samannito Garments Sramik Federation “demanded [the] formation of a wage board and payment of Tk 5,000 as minimum wage”. Meanwhile, Commerce Minister Faruq Khan announced that “a tripartite committee representing government, garment owners and workers has been working to fix the minimum wages for the garment workers.”

On October 31st, workers at Nippon Garments factory came to work in the morning to find a notice informing them that the factory had closed for one month because of the economic downturn.  This event sparked violent clashes during which police fired rubber bullets in response to  stones and bricks being thrown by protesting workers.  A committee formed November 1st to investigate the events announced its findings in December asserting that “both the garment factory owner and the law enforcement agencies [are] at fault for the widespread violence that left three people dead.”

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:

“We will wage movement by the first week of February. At first we will do conventions in different garment zones and later will hold a national convention to press home our demands…[n]ow we are sure that the government will not respond positively unless we go for tough movements.”

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 Nation that 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.

Worker unrest and the conditions related to it is a source of worry to global retailers and in February it was reported that they had “written a letter to the Bangladesh Prime Minister requesting her to take ‘swift’ measures to increase the minimum wage of nearly two million readymade garment (RMG) workers.” However, the same report pointed out that

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.

“Current minimum wages “do not meet the basic needs of the workers and their families,” the letter said, adding that the government should set up a review board to reassess the minimum wage.

“The increased cost of living during 2008 and 2009 has contributed to the unrest among workers in the garment sector as wages have not been regularly revised,” the letter added.”

The report also included statements made by an unnamed source:

“”It’s absolutely unacceptable that minimum wages are just 25 dollars,” the Dhaka-based head of a top Western store, speaking on condition of anonymity, told AFP.

“We pay enough to factory owners, but we don’t think that the benefits trickle down to workers or are being spent on improving conditions,” he added.”

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:

“It’s not fair that they want us to hike workers’ salaries while the buyers continue to cut order prices”

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.

Isolated clashes continued throughout this time and in early April at a meeting organised by Garment Shramik Sangram Parishad (a platform of garment workers) in Dhaka, 7 worker demands were reiterated:

• Minimum wage at 5,000 Taka
• Changes to labour regulations
• Amend the Bangledeshi Labour Act of 2006 to match ILO convention
• Punish non-complaint factory owners
• Shut down unsafe factories
• 1 million Taka (~US$14,358) compensation to the families of workers who die due to safety violations
• Ensure the flow of gas and electricity to factories

President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazlul Hoque, agreed that there was a need for a wage hike but again pointed to other factors that need to be considered like productivity and inflation.  He also “called upon the workers to leave the labour leaders who exploit them, provoke rampage in the factories and destroy properties.”

Meanwhile, the government activated their security apparatus which created 8 “crisis management cells” situated in the main garment manufacturing districts.  The intelligence agency had a government mandate to investigate and “identify the culprits who were involved in making garment sector unstable through creating artificial chaos”.  Continuing with the conspiracy theme, The New Nation reported that following a meeting at the Ministry of Labour and Employment sources informed them that:

“the Government believes that a vested quarter is active in the field to deteriorate the law and order situation in the country through raising differences among the owners and workers of the RMG industry.

They are trying to destroy the highest foreign exchange earning sector through creating chaos. To this effect they start to ransack in the garment factories on simple issues…

There are allegations against some labour leaders that they were destroying the RMG sector through creating chaos in a planned way. To stop their unruly activities the Government has ordered the detective agencies to investigate the legal status of their organisations.”

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.

Speaking on May Day, Prime Minister Sheikh Hasina accused a “third party” of instigating unrest: “I’ve already come to know about the evil force, the persons involved in conspiracy to create unrest in the garment sector”.  The Minister of Labour called for the creation of labour unions saying that “[o]therwise the problems of the garment factories won’t be solved”.  Later in the same month, factory owners released their minimum wage proposal of 1,800 (~US$26) to 2,200 (~US$32) Taka/ month.  And as World Cup fever spread across the world, France 24 quoted one factory owner: “My garment factory has bled cash over the last few months as we lacked export orders due to the global meltdown…[b]ut over the last two weeks, I have used 50 workers to sew World Cup flags and made a great profit. Next month, I’ll be able to pay workers on time”.

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:

“We have been reeling under acute gas and power crisis, which has affected our productivity…[a]nd now comes the call for shutdown from the unions. They should be logical. We have yet to bounce back from global meltdown and it is not the right time to seek such a huge wage hike”.

Factory owners suspended production indefinitely which alarmed many workers who took to the streets to protest the action.  After meeting with government representatives, production facilities opened again with assurances of safety and protection from violence and vandalism.  Again, clashes erupted 3 days after opposition parties called for a nation-wide general strike prompting the arrest of 131 opposition activists.  It is unclear how the garment worker protests are related to the general strike protests.  Still, at the end of June and into early July, scores of garment workers came out to protest prompting the dispatch of riot police.  Photos were released showing children, women and men being beaten by the police using batons and bamboo.  On July 2nd, garment workers began a month-long peaceful agitation program waiting until the results of the wage board negotiations on July 27th.

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:

“If it’s 5,000 taka, I would close all my factories…[e]ven if it’s 3,000 taka, lots of factories will close within three or four months.”

The wage board announced two days ago that the new minimum wage would be set at 3,000 Taka (~US$43).  This amount includes a 200 Taka allowance for medical expenses and an 800 Taka allowance for housing leaving workers with 2,000 Taka (US$29) for other expenses.  The Daily Star reported that the factory owners’ representative would sign the deal today (July 29th) after adding some conditions including security for factory owners, release of an industrial stimulus package, a four-month time frame for implementation, zero tax at source, reduction of ship turnaround time at Chittagong port, and suspending a minimum charge on the use of gas and electricity.  Meanwhile, reports are mixed on the reaction of labour groups to the new minimum wage.  In the same Daily Star article as above, it was reported that:

“Towhidur Rahman, a coordinator of the Garment Sramik Oikya Parishad, said, “Tk 3,000 is not enough. I urge the government to reconsider the proposed pay structure.”

…Labour leaders and garment workers yesterday protested the proposed pay.

“We reject the proposed wage structure. We will stage demonstrations against the proposed pay in early August,” said Mushrefa Mishu, president of Garment Sramik Oikya Forum, at a rally in the capital’s Muktangon area.”

In an article published by the Jakarta Globe yesterday, unions claim that workers will accept this wage hike adding that “[n]early a dozen left-leaning unions, none of whom had representatives on the wage board, organized a protest in Dhaka on Wednesday, but the demonstration’s turnout was low.” The new minimum wage of 3,000 Taka will be formally announced today at 5pm by Labour and Employment Minister Hossain.  As for other demands, we just have to wait and see.