The official price of dollars fixed by the central bank was Tk 86.45 five months ago, but it soared to Tk 95 now. The situation took a turn for the worse as the greenback is changing hands at a rate higher than the fixed price at the banks amid the crisis of foreign currency.
But the crisis came as a blessing for the factory owners as their income surged by Tk 10 to Tk 15 against each dollar earned from exports. However, the production cost at the factories increased slightly due to the hike in fuel oil price, inadequate supply of gas, and frequent load shedding.
The commodity prices are on the rise due to the high price of fuel oil, the dollar crisis, and the Russia-Ukraine war. The public transport fares also went up as an unavoidable consequence of the rise in fuel oil prices.
The high inflation is eventually reducing the actual wage of RMG workers and putting their lives in a tight corner financially.
The RMG workers thronged to the streets in Dhaka demanding wage increment in June last year. The owners, workers and government held a tripartite meeting after that. The workers were then assured of forming a minimum wage board at the earliest possible time by the owners. However, no improvement is reported yet in this regard.
The RMG sector implemented a new wage structure lastly on 1 December 2018, with a minimum salary of Tk 8,000.
Leaders of different workers’ organizations demanded the formation of a minimum wage board or dearness allowance for the workers to help them survive in this tiring time.
Although the owners are aware of the sufferings of the workers, they are reluctant to increase their wages right now. They claimed that their expenses have skyrocketed as compared to their income. In addition to that, the number of purchase orders is relatively low now.
According to the minimum wage board rules, the owners are supposed to award a 5 percent increment to the workers annually. But this increment rate turned inadequate when the inflation rate remained around 7 percent over the last three months.
In July, the food inflation peaked at 8.19 percent and the non-food inflation was 6.39 percent, which took the overall inflation to 7.48 percent. The commodity prices rose once again after the government hiked the price of fuel oil by 42-51 percent on 6 August.
Shahidullah Azim, acting president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Prothom Alo, “At least 30 per cent of the production capacity now remains unutilized at the factories due to inadequate purchase order. Besides, the production cost soared due to the crisis of gas and electricity.”
In some cases, the ongoing purchase orders are canceled. Many factories are being forced to take loans to pay wages to the workers. All these issues are eating up the additional income, he added.
Workers under inflationary pressure
Prothom Alo talked to some RMG workers in the past few days. They all disclosed their struggle in meeting family expenses amid the increased price of essentials.
Maryam Khatun works at a factory in Konabari of Gazipur and earns Tk 8,000 per month. Her income decreased slightly as her factory has no arrangement for overtime work over the past 1.5 months.
She spends Tk 3,000 as house rent and bears the other expenses with the remaining Tk 5,000.
Maryam said she could manage all expenses a few months ago despite many difficulties. But it has now been quite impossible for her due to the excessively high prices of essentials.
Bangladesh Bureau of Statistics (BBS), in its Urban Socio-economic Assessment Survey (USAS)-2019, released the average individual expenses on food. The Center for Policy Dialogue (CPD) prepared a chart of monthly family expenses in the light of the BBS survey, taking the commodity price chart of the Trading Corporation of Bangladesh (TCB) into account.
According to the CPD, a man residing in Dhaka spends Tk 5,339 for food and the expense stands at Tk 21,358 for a four-member family. If a family completely avoids fish and meat, their monthly expenditure on food will be Tk 8,106.
The amount includes rent of a one-room flat, gas and electricity bills, medical expenses, expenses on health care products, child education, transportation, mobile phone and internet bills.
Babul Akter, a leader of workers, said the workers are not in a good state. They are suffering from food shortage due to the unusual increase in the prices of daily necessities. They used to consume inadequate fish and meat and the consumption decreased further now. Those who used to go to the factory by bus are now depending on foot to commute.
He said, in the present context, a minimum wage board must be formed to retain the workers in the garment industry. Besides, the government should arrange essentials at subsidized prices for them.
How much did the income of owners increase?
When the owners’ income surged due to the exchange rate of the dollar, what is the problem in increasing workers’ salaries? Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said their production cost went up 8 to 10 per cent due to various adversities when their income rose slightly. Besides, the number of purchase orders declined by 20-30 per cent and therefore there is no scope to increase the wages of workers.
However, he admitted that the workers have been in dire straits due to the high inflation.
“It needs to arrange ration to mitigate the sufferings of workers. I hope an effective step will be taken in this regard at the government level,” he said.
Khondaker Golam Moazzem, research director of CPD, said the income and expenses of garment industry entrepreneurs are fluctuating due to various reasons, including the dollar price. Besides, the real income of the workers has decreased due to inflation.
A balanced initiative is required in the current context. It is possible to provide temporarily an additional increment of 5 per cent to the workers with one-fourth of the additional income that the owners are making thanks to the rise in dollar price. The workers will get some relief in the present difficult times, he added.
