hrm report

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Labor Management Relations and the Extent of the Implementation of Labor Laws in

Bangladesh

Human Resource Management

Institute of Business Administration University of Dhaka

Labor Management Relations and the Extent of the Implementation of Labor Laws in Bangladesh

Course Title: Human Resource ManagementCourse Code: H301

Program: BBA

Prepared For,

Saeed Alamgir Jafar(Professor)

Institute of Business AdministrationUniversity of Dhaka

Prepared By,

Group: 04

Wajiha Reza Farah Siam Shahida Akther Ohidul Islam Jawaad Bin HamidRoll: RQ-04 Roll: RQ-11 Roll: RQ-34 Roll: ZR-35 Roll: ZR-41Batch: 17th (A) Batch: 17th (A) Batch: 17th (A) Batch: 17th (A) Batch: 17th (A)Program: BBA Program: BBA Program: BBA Program: BBA Program: BBA

Institute of Business AdministrationUniversity of Dhaka

Date: 30.05.10

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Case StudyTerm Paper

LETTER OF TRANSMITTALMay 31, 2010

Saeed Alamgir JafarProfessor Institute of Business AdministrationUniversity of Dhaka

Dear Sir:

We herewith present our “Term Report” authorized by you as a requirement for this course.

In this report, we studied the labor management relations primarily in the Ready Made Garments (RMG) Sector of Bangladesh and the extent of implementation of associated labor laws. We have further tried to provide an in-depth analysis of how employers and employees in this sector comply with various labor laws and their difference is perspective regarding labor management effectiveness.

If there is any need of any form of clarification, we would appreciate a call from you to any of our group members.

Sincerely,

Group: 04

Wajiha Reza Farah Siam Shahida Akther Ohidul Islam Jawaad Bin HamidRoll: RQ-04 Roll: RQ-11 Roll: RQ-34 Roll: ZR-35 Roll: ZR-41Batch: 17th (A) Batch: 17th (A) Batch: 17th (A) Batch: 17th (A) Batch: 17th (A)Program: BBA Program: BBA Program: BBA Program: BBA Program: BBA

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ABSTRACT

This report is divided into two parts.

Part I of the report gives a brief overview of the field of labor relations and the important issues associated with it. It analyzes from the perspective of both the management and employees, the advantages of trade unionism. However, the negative consequences of trade unionism have been mentioned as well. Besides these, the contract negotiation tactics and preparations essential to the management have been briefly discussed.

Part II of the report deals with the labor relations practices in the Ready Made Garments (RMG) industry of Bangladesh and the extent of implementation of labor laws in the same industry. The consequences of these two have been analyzed using both primary and secondary data obtained from trustworthy sources.

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Table of Contents

EXECUTIVE SUMMARY...................................................................................................................1

1.0 INTRODUCTION........................................................................................................................3

1.1 Origin of the Report.............................................................................................................3

1.2 Objective.............................................................................................................................3

1.3 Scope...................................................................................................................................3

1.4 Methodology.......................................................................................................................3

1.5 Limitations.......................................................................................................................... 4

PART I : LABOR RELATIONS: THEORETICAL PERSPECTIVE..............................................................5

2.0 LABOR RELATIONS STRATEGY..................................................................................................5

3.0 CONTRACT ADMINISTERING....................................................................................................7

4.0 CONTRACT NEGOTIATING........................................................................................................7

4.1 The negotiation process:......................................................................................................7

4.2 Management preparations for negotiations........................................................................8

5.0 Labor relations outcome..........................................................................................................9

6.0 Conclusion............................................................................................................................. 10

PART II: IMPLEMENTATION OF LABOR LAWS AND NATURE OF LABOR RELATIONS IN THE READYMADE GARMENTS INDUSTRY OF BANGLADESH................................................................11

7.0 BRIEF HISTORY OF READY-MADE GARMENTS INDUSTRY OF BANGLADESH:.........................11

8.0 EXTENT OF IMPLEMENTATION OF LABOR LAWS IN THE INDUSTRY.......................................12

8.1 Core labor standards..........................................................................................................12

8.2 Bangladesh Labor Law 2006...............................................................................................12

8.3 Extent of Implementation..................................................................................................13

8.4 Effectiveness of industrial inspectors:................................................................................15

9.0 LABOR-RELATIONS PRACTICES IN THE INDUSTRY..................................................................15

9.1 Trade Union Provisions Under Law....................................................................................16

9.1.1 Factories outside the Export processing Zones (EPZ)..................................................16

9.1.2 Factories in the EPZ.....................................................................................................16

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9.2 Trade Union Rights in Practice: The Real Picture...............................................................17

9.2.1 List of Trade Unions in Bangladesh.............................................................................18

9.2.2 Backward Nature of Trade Unionism in the Industry..................................................18

9.2.3 The Unionization Process and the Owners’ Responses...............................................19

9.2.4 The Owners speak in their Defense............................................................................21

9.2.5 The Role of Labor Unions in Ensuring Labor Rights.....................................................22

10.0 CONSEQUENCES OF POOR LABOR RELATIONS AND VIOLATION OF LABOR LAWS:.............24

11.0 CONCLUSION....................................................................................................................... 27

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Labor relations is the field that emphasizes skills managers and union leaders can use to minimize costly forms of conflict (such as strikes) and seek win-win solutions to disagreements with labor force. For management the decision involves whether the organization will work with unions or develop/maintain non union operations. The decision is influenced by outside forces such as competition, public opinions etc. While there are several advantages of unionism to both the members and the employers’, negative consequences on profitability and productivity have also been found by various researches. However, the best labor relations strategy is dependent on the tradeoffs between the positive and negative consequences and the external legal environment.

The readymade garments (RMG) industry of Bangladesh has contributed extensively to the export oriented growth of the country. Too much of the nation’s fortune is riding on this one sector. With the two million workforce it employs directly, and another one million in linkage industries, it supports the livelihood of some 10 million Bangladeshis. However, the rapid growth in these female-labor-dominated, export-based manufacturing industries is now also raising new issues and concerns about evolving industrial relations in the RMG sector.

It would be interesting to note in this connection that, from the very outset, most RMG factory owners tried their best to keep the factory units as informalized as possible, because that would provide them with greater flexibility in terms of labor management, unit production and working hours, without significant social obligations to their workforce. Any kind of unionization, including in-house unionization, was also perceived as undesirable by most garment factory owners because, as they argued, at the formative phase of their manufacturing businesses they could not afford to be distracted by “unreasonable” workers’ demands and “unnecessary disruptions” by the trade union leaders who, at one point or other, “might try to pursue their own selfish agenda in the name of worker’s participation”.

The owners of these enterprises utilized informalized labor recruitment and workplace policies, which included recruiting workers without proper “appointment letters” and providing the supervisory staff full authority to hire and fire semi-skilled casual workers (from other factories or unemployed) whenever necessary. Such practices enabled the owners to maintain their strong grip over management and labor relations and sought to rule out any kind of unionization.The trade union movement is relatively weak in RMG industry of Bangladesh. This is partly owing to the multiplicity of trade unions and partly owing to the considerable intimidation imposed in practice, especially workers’ fear of losing their jobs should they show any sign of union activity. The right to freedom of association and to collective bargaining at the workplace is not respected in the garment sector.

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EXECUTIVE SUMMARY

While trade unions exist, they are ineffective in the application of their objectives. The leaders of the trade unions are corrupt; making it is impossible for the trade union leaders to do some welfare for the general labor. This is due to the fact that almost all the CBA leaders have an open secret understanding with the owners of the establishments, which lead them to the uninterrupted corruption and irregularity. The CBA leaders seldom see the interests of the labor. The monthly subscriptions given by the labor are not used for their welfare. It is just used for the personal purpose of the leaders of the trade unions.

News reports published in leading vernacular and English dailies of the country in recent years suggest an increasing trend of physical assaults, gherao, demonstrations, rallies, work stoppages and lay-offs in the ready-made garment sector. Such “unhealthy” management-labor relations result in loss of wages for workers as well as loss of productivity.

The restricted laws regarding union association right of workers, lack of proper grievance procedure and communication mechanism in the factories, increasing prices of essential goods, salaries well below ‘living wage’ levels and limited trade union action are some of the main reasons behind the growing worker unrest which threatens the industry. Violent uprisings have been a common sight over the last few years and they have seemed to become a part of the industry.

The RMG sector in Bangladesh has been facing intermittent serious violence in recent years. It is belief of many that who are at the heart of the boom of the RMG sector that they have not been touched by the benefits of this growth. So they turn to violence, which is just a mere means to vent frustration.

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1.1 ORIGIN OF THE REPORT

This report entitled ‘Labor Management Relations and the Extent of the implementation of Labor Laws in Bangladesh’ was prepared for our respected faculty, Professor Saeed Alamgir Jafar, to fulfill the partial requirement of the course ‘Human Resource Management’, for the Bachelors of Business Administration curriculum in the Institute of Business Administration, University of Dhaka.

1.2 OBJECTIVE

The primary objective of this report is to study the labor management relations primarily in the Ready Made Garments (RMG) Sector of Bangladesh and the extent of implementation of associated labor laws.

The principal secondary objectives of the study are as follows:

To study the labor management relationship practices. To study the consequences and impact of existing labor management relations. To review the existing laws relating to labor rights. To study the extent of the application of labor laws containing labor rights. To examine the role of labor unions in ensuring the labor rights.

1.3 SCOPE

Our report focuses on the Labor Management practices of the RMG Sector of Bangladesh exclusively. The main focus of our report has been to conduct a detailed examination of the existing labor management relations and the extent of the application of the labor laws in the RMG sector of Bangladesh. This is only representative of one segment of industrial Bangladesh and may not reflect the trend of the entire country. It should also be noted that the research is conducted in the EPZ of Savar in Dhaka. Thus, the results are not representative of other EPZs in the country.

1.4 METHODOLOGY

In order to analyze the existing labor management relationship practices and determine the extent of the application of labor laws in Bangladesh, we have used both primary and secondary research techniques. The major research techniques employed are as follows:

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1.0 INTRODUCTION

Conducting phone interviews of relevant personnel (Owners, top level HRM Professionals to mid level supervisors) at select RMG industries regarding the existing labor management practices and the prominence and effectiveness of labor unions and labor laws.

Distributing detailed, standardized questionnaires to quantitatively analyze the attitude and beliefs of 15 workers towards labor management relations and labor rights.

Examining various online and newspaper articles, journal research papers and other secondary sources to supplement primary research data.

1.5 LIMITATIONS

The limitations of our research include the following:

Our report focuses on solely on labor management practices of the RMG sector in Bangladesh, and thus the results may not represent state of Labor Management as whole.

Our sample size of five companies may not be sufficient to analyze the state of labor management in the RMG industry. Thus our analysis may not be a fair representation of the industry.

Our research was conducted mainly through phone interviews and questionnaires. Thus if people were untruthful our biased with their answers, this would sufficiently effect the conclusion we have reached from the given data.

The amount of time within which we conducted our research was limited, and as such did not allow us to research the current labor management practices extensively. This would have affected the quality of our work.

Human Resource Management is a fairly new subject to us. Our limited knowledge and understanding of this topic has made an accurate analysis fairly difficult.

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Labor Relations: Theoretical Perspective

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Labor relations is the field that emphasizes skills managers and union leaders can use to minimize costly forms of conflict (such as strikes) and seek win-win solutions to disagreements with labor force. Labor relations involve three levels of relations:

Each of the three levels of relations is briefly discussed below:

For management the decision involves whether the organization will work with unions or develop/maintain non union operations. The decision is influenced by outside forces such as competition, public opinions etc. First of all, let us define unions.

Union: A union is an “organization” formed for the purpose of representing their members’ interest in dealing with employers. Workers can establish unions within the organization they work in. Unions independent from the organization also exist. Independent labor unions like National Garment Workers Federation (NGWF) in Bangladesh usually represent labors from a large number of organizations. Unions can be industry specific or non-industry specific, i.e. ones that represent workers working in different industries.

Many organizations have avoided unionization. In most cases, the managements of those organizations have provided satisfactory wages, working conditions, and job security for their employees. Other management practices that decrease the likelihood of unionization include creating a procedure for handling employee complaints, eliminating arbitrary and heavy-handed management and supervisory practices, establishing a meaningful system of two-way communication between management and employees, eliminating threats to employees’ job security, and making employees feel like they are part of the organization.

However, unionism still does exist in some organizations. Why do employees join unions?

There are two reasons why employees join unions:

LABOR RELATIONS

LABOR RELATION STRATEGY

ADMINISTERING CONTRACTS

NEGOTIATING CONTRACTS

PART I - LABOR RELATIONS: THEORETICAL PERSPECTIVE

2.0 LABOR RELATIONS STRATEGY


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First there is a gap between the pay benefits and other conditions of employment that employs actually received versus what they actually believe they should receive.

Second, if such a gap exists and is sufficiently large to motivate employees to try to remedy the situation using union membership as the most effective and instrumental means of change.

Advantages of unionization from the perspective of both members and employers are discussed below:

Member’s Perspective:

Wages and Benefits: Unions act as a collective bargaining agent for the employees with a company. Although the success of unions have been limited in recent years, union leaders contend that they have prevented deeper erosion and singling out of workers for cuts.

Job Security: Provision for job security continues to be an important issue for union members. In an era when long term employment is no longer assumed due to the economic turbulence since 1970s, unions have shifted their focus from increased wages to guaranteed job security, two-tiered wage systems, easing of work rules, etc. A relatively new approach to the job security issue has been for unions to become more actively involved in mergers and buyouts.

Training and Development: Many Unions are instrumental in the training of their membership. They often provide apprenticeship programs to develop highly skilled workers. As plant closedowns continue, industrial unions will need to be more involved with the company in helping their members to be retrained for new jobs requiring new skills.

Social Affiliation: Unions offer important social affiliation for their members to provide a sense of community and help to avoid alienation caused by the work routine. Unions often sponsor social events and involve members in the community.

Political influence: Unions often support political issues or causes. In recent years, labor has advocated more mandated benefits (e.g. guaranteed medical insurance, higher minimum wages, and time off for family emergencies) and it is more efficient to seek these benefits on a national scale. Thus unions may build coalitions with political and social advocacy groups that may share some or all of its views on certain issues.

Management’s Perspective

Management has resisted unionization and has viewed it as a limitation of management’s power and discretion. Management resistance can be either Union suppression or Union Substitution. Union Suppression is management tactics, legal and/or illegal, to keep a union out of a company. Union Substitution is the management’s creation of progressive and proactive HR policies so that employees will not want to unionize. e.g. high wages, complaint-resolution systems, participation plans, etc. However, the advantages of unionization for the management are:

Reduced Number of Negotiations: Once a contract is negotiated with the union, managers need not worry about being approached by individual workers for raises or special benefit


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considerations. This provides greater accuracy in forecasting costs. Also, if a dispute does occur, the company only has to deal with the union representative(s). Negotiations proceed as outlined in the contract, which also makes the results fairly predictable.

Specification of Work rules, disagreements and grievances: A union contract can clearly define work rules and guidelines for settling disagreements and grievances. If a worker disagrees with the actions of the management that fall within the guidelines, the worker must take that up with the union steward. This may reduce the information-processing load on the supervisors and the HRD.

Efficient Communication and Enforcement of Predictable standards: Communication can be facilitated by a union contract. The company communicates with the union, and the union communicates with the members. The contract spells out communication procedures, and thus the total number of channels is reduced. This may eventually benefit management as well. Unions can be the source of highly qualified, well-trained and disciplined workers who help maintain productivity and high standards. One advantage to the management is the ability to hire only for the duration of the project. The company is assured adequately trained employees and does not have to permanently employ in slack demand phases.

These decisions involve day to day activities in which union members and the organization’s managers may have disagreements. Issues include complains of work rules being violated or workers being treated unfairly in particular situation. A formal grievance procedure is typically used to resolve these issues.

Contract negotiations in a union setting involve decision about pay structure, pay security, work rules, work place safety and many other issues.

4.1 THE NEGOTIATION PROCESS

Richard Walton and Robert Mckersi suggested that labor management negotiations can be broker into four sub processes:

1. Distributive bargaining: focuses on dividing fixed economic “pie” between two sides, for example, a wage increase means a union gets a larger portion of the pie and management gets a smaller share. It win-lose situation.

2. Integrative bargaining: has a win-win focus which seeks solutions beneficial to both sides, for example, if management needs to reduce labor costs it could reach an agreement with the union to avoid layoffs in return for union agreeing to changes in work rules that might enhance productivity.

3.0 CONTRACT ADMINISTERING

4.0 CONTRACT NEGOTIATING


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3. Attitudinal bargaining: attitudinal structuring refers to the relationships and trust between labor and management negotiators. Long term relationships between the two parties can have very important impacts on negotiations and their outcomes

4. Inter organizational bargaining: it reminds us that labor management negotiations involve more than just two parties. Within both the management and the union itself, different factions can have conflicting objectives. Management is unlikely to be one mind about how to approach negotiations for example, some will focus on long term employee relations while others will focus on cost control and still others will focus on what affect the contract will have on stockholders.

4.2 MANAGEMENT PREPARATIONS FOR NEGOTIATION

1. Establishing interdependent contract objectives: the employer’s industrial relations department needs to meet with the accounting, finance, production and other departments and set contract goals that will permit each department to meet its responsibilities.

2. Reviewing the old contract: this step focuses on identifying provisions of the contract that might cause difficulties by hindering the company’s productivity or flexibility or by leading significant disagreements between the management and union.

3. Preparing and analyzing data: information on labor cost and productivity of competitor as well as data the unions may emphasize needs to be prepared and analyzed. The union data might include cost of living changes and agreements reached by other unions that could serve as a target. Data on employee seniority and demographics are relevant for establishing the costs of such benefits as pensions, health insurance and paid vacations. Finally, the management needs to know how it would be hurt financially by strikes.

4. Anticipating union demands: recalling grievances over the previous contract, having ongoing discussions with union leaders, and becoming aware of settlements at other companies are ways of anticipating likely union demand and developing potential counter proposals.

5. Establishing the cost of possible contract provisions.6. Preparing for a strike: if management intends to operate during a strike it may need to line

up replacement workers, increase its security and so on. If the management does not want to operate during a strike it needs to alert suppliers and customers and consider ways to avoid the loss of their business. This could even entail purchasing a competitor’s product in order to have something to sell to customers. The conditions under which management is most able to take strikes are determined by the following factors:

Product demand-management is less able to afford strike when the demand of the product is strong.

Product perishability- a strike by certain kinds of employees for example trucker transporting perishable food will result in permanent losses of revenue and thus increasing the cost of strike to the management.

Technology- an organization that is capital intensive is less dependent on its employees and are more likely to be able to use supervisors or others as replacement


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Availability of replacement workers- when jobs are scarce replacement workers are more available. Using replacement workers to operate during a strike raises the stakes considerably for strikers who might me permanently replaced,

Multiple production sites and staggered contracts: it permits employers to shift production from the struck facility to facilities that, even if unionized, have contracts that expire at different times (so they are not able to strike at the same time).

Integrated facility: when one facility produces something that other facilities need for their products, the employers are less able to take a strike because the disruption to production goes beyond a single facility.

Lack of substitute for the product: a strike is more costly to employers if customers have a readily available alternative source from which to purchase the good or services the company produces.

7. Determining strategy: decisions must be made about the amount of authority that the negotiating teams will have, for example, on which issues it can compromise and which issues it cannot.

1. Strikes: strikes impose significant costs on union members, employers and society.2. Wages and benefits: unionized workers receive than their non union counterparts.3. Productivity: unions are believed to decrease productivity in 3 ways

The union pay advantages causes employers to use labor and more capital per worker than they would otherwise, which reduces efficiency across society

Union contract provisions may limit permissible workloads, restrict the tasks that particular workers are allowed to perform and require employers to use more employees for certain jobs than they would otherwise

Strikes and slowdowns result in lost production.

Unions can have positive effect on productivity as well: “Voice” – refers to communicating one concerns to management and exit refers to

simply leaving the company to work for a better employer. Unions are believed to increase the effectiveness of voice mechanism and this in turn is likely to reduce employee turnover and associated costs.

Unions can increase productivity through their emphasis in using seniority in pay, promotion and lay-off decisions. Although Management typically prefers on rely on performance in such decisions, using seniority has a potentially important advantage-mainly it reduces competition among workers. Hence senior employees are less reluctant to share their experience with newly hired as they have less fear regarding job security.

Introduction of union may have a shock effect on management, pressuring it into tightening standards and accountability and paying greater heed to imply employee input in design of management and production.

5.0 LABOR RELATIONS OUTCOME


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4. Profits and stock performance: Even if unions do raise productivity, a company’s profiles and stock performance may still suffer if unions raise costs e.g. wages, or decrease investment by a greater amount. Recent studies find that unions have a large negative effect on profits and that union coverage tends to decline more quickly in firms experiencing lower share holder return, suggesting that some firms become more competitive partly by reducing union strength. Similarly, on recent study finds that each dollar of unexpected increase in collectively bargained labor costs results in a dollar reduction in share-holder wealth.

Thus organizations should develop labor relations strategy considering the issues discussed above. We do not want to take sides for or against unionization. The trade-offs between unionization and non-unionizations and other external influences (legal environment) should be considered before deciding the labor relations approach.

6.0 CONCLUSION

Implementation of Labor Laws and the Nature of Labor Relations in the Ready Made Garments Industry of Bangladesh

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With almost 76% share in the total exports from Bangladesh currently, the readymade garments (RMG) industry of the country thrived since its existence and contributed extensively to the export oriented growth of the country. The readymade garment industry has become the lifeline of the Bangladesh economy. It is the source of its strength and could be the cause of its vulnerability. Too much of the nation’s fortune is riding on this one sector. With the two million workforces it employs directly, and another one million in linkage industries, it supports the livelihood of some 10 million Bangladeshis.

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 per cent of those firms are locally owned with the exception of a few foreign firms located in export processing zones. The RMG firms are located mainly in three main cities: the capital city Dhaka, the port city Chittagong and the industrial city Narayanganj. Bangladesh RMG firms vary in size and capacity.

Ready-made garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products.

The apparel manufacturers of Bangladesh export readymade knit and woven wear to 164 countries of the world but major destinations European Union and USA account for more than 90% of the exports.

READY MADE

GARMENTS

KNIT

T-SHIRT SWEATER POLO-SHIRT

WOVEN

TROUSERS SHIRTS JACKETS

PART II – IMPLEMENTATION OF LABOR LAWS AND THE NATURE OF LABOR RELATIONS IN THE RMG INDUSTRY OF BANGLADESH

7.0 BRIEF HISTORY OF READY MADE GARMENTS INDUSTRY OF BANGLADESH


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62%

31%

4% 2%

Major destinations of RMG export from Bangladesh

EUUSACanadaJapan

8.1 CORE LABOR STANDARDS

The ILO’s standing over the context of international labor standard stems from its position as the definer and “enforcer” of core labor standard throughout the world. “Core” labor standards are those considers so basic and universal that according to the ILO “they apply to all people in all states – regardless of the level of economic developments” the ILO defines four core labor standards according to eight fundamental conventions. The major fundamental conventions are:

i) Freedom of associationii) The effective recognition of the right to collective bargaining iii) The elimination of all forms of compulsory or forced laboriv) The effective abolition of child labor, including the worst forms of child labor, and v) The elimination of discrimination with respect to employment and occupation.

8.2 BANGLADESH LABOR LAW 2006

Labors in Bangladesh had been waiting for a long time for a comprehensive and democratic labor law. Previous labor laws were outdated, irrelevant and misleading. Before the Labor Law 2006, there 51 labor laws of them 13 dates back to British period, 25 were formed when Bangladesh was part of Pakistan and 13 have been passes after Independence. A thorough review of the labor laws was required which included present realities. More importantly a simplified labor law is required because previously among the different laws one contradicted the other and implementations of the laws were difficult. The rationale behind a new labor law as that it would simplify complexities of the earlier laws and its implementation can be easier.

8.0 EXTENT OF IMPLEMENTATION OF LABOR LAWS IN THE INDUSTRY


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There have been several criticisms among workers and trade unions. Some of them include:

Article 211 says laborers cannot striker or lock out in the new factories or foreign owned or joint venture factories. Hence, owners can overlook logical demands of workers.

Previously a fired worker could get his or her payment within two days; the new law increased it up to thirty days. However, the law does recommend that the minimum wage bill will be revised every five years.

Article 100 says organization can extend work up to 10 hours. Though, after 8 hours, laborers will get double payment for the rest 2 hours.

If a factory owner done not provide 16 weeks of maternity leave and benefits, the owner will be fined for 5000 taka. Indeed, it is profitable for the owners to pay the fine rather than several months of leave and benefits.

8.3 EXTENT OF IMPLEMENTATION

Although, all the employers we interviewed assert that they follow all the labor laws, interview of employees and secondary research from various articles and reports claim otherwise. Following is a list of specific categories on which the implementation of labor laws was analyzed.

Overtime work:

Overtime work represents one of the biggest problems. Overtime is forced, not optional; whenever factory management decides, workers are bound to work extra hours or lose their jobs. There is a common feeling of deprivations and being cheated in terms of overtime pay. Calculation of overtime is always considered fraudulent. Workers have to accept the overtime work hours calculated by the factory management. The workers’ impression of fraudulent practice is rooted in the fact that when workers complete five extra hours work, the official record book shows that they have worked only two extra hours. This serves multiple purposes such as apparently complying with local labor law, satisfying foreign buyers about legitimate use of overtime and most importantly cheating of workers’ hare-earned wage.

Holidays and leaves:

In most of the garment factories, workers are forced to work 14 to 16 hours a day ignoring the labor law that states a maximum of 10 hours per working day. Though officially Friday is supposed to be day off, in practice most of the


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garment workers have to work on Friday. The workers do not get a weekly holiday or even annual leave. The factory management does not compensate them with days off or overtime payments. Moreover, garment workers are not aware of the legal provisions on annual leave and festival leave with pay. If workers do not know the national labor laws concerning leave with pay, they may not request the said leave. As a result, workers may lose their entitlement to annual leave with pay. Forced retirement/retrenchment is a common practice in Bangladesh. Garment owners usually sack workers without any particular reason.

Child labor:

In August 1992 the US congress passed the Child Labor Deterrence Act to ban the importation into the United States of products manufactured using child labor. Also, a memorandum of understanding on 4 July 1995 concerning child labor in the Bangladeshi garment industry was signed by the BGMEA, UNICEF and ILO. The BGMEA responded by urging its member to remove under-age workers from their workplaces in conformity with the national Factory Act that set a minimum age for employment for 14 years. In an ensuing climate of fear and panic, abrupt dismissals of many thousands of child workers began in 1993. It was reported that as many as 40000 to 50000 children were laid off. However, child labors continue to work in several garment factories. For example, an estimated 200 to 300 under aged children, some 11 years old or even younger are working at the Harvest Rich factory. These children are routinely beaten, cheated of their wages by the factory management. Moreover, children are victims of force overtime, excessive production goals and unhealthy working conditions. And one daring to ask for their proper pay or that their most basic legal rights be respected can be attacked and fired. Before U.S corporate monitors arrive for factory inspections, the children are either sent home, if there is time or quickly hidden in the dirty bathrooms, the emergency stairwells or on the roof.

Gender discrimination:

Legal provisions demonstrate specific rules for the employment such as Women shall have equal rights with men in all spheres of the State and of public life. The law prohibits discrimination; however, the government does not strongly enforce laws aimed at eliminating discrimination. Investigations have shown that many factories do not pay some female operators


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the same wages as their male counterpart, though they had the same years of service and were doing the same job.

Health and safety measures:

In the law, under the heading of Health and Hygiene the law articulates cleanliness; disposal of wastes and effluents; ventilation and temperature; air pollutants; overcrowding; lighting; drinking water; latrines and urinal; fire safety; welfare. In many garment factories there is no written policy or guidelines on safety and health, no health education program. Managers and supervisors do not know their responsibilities of safety and healthy. Safety and health rules are not communicated to the workers. There is no system in place to consult workers on safety and health issues. There are usually no safety signs, posters or notices at the workplace. Moreover, factories do not keep record of work related accidents. One of the workers interviewed revealed that she missed a day to go to the doctor, her manager then deducted two days’ pay and she lost her full attendance bonus. On return she was told to do an extra eight hours of unpaid work to catch up with her target.

8.4 EFFECTIVENESS OF INDUSTRIAL INSPECTORS

While labor administration does exist in Bangladesh, they are neither efficient nor updated. An effective labor administration system is necessary in order to maintain and strengthen a developed labor market in the country. The government’s Factory Inspection Office under the directorate of labor is responsible for overseeing if the factories have been built as per rules and if they have got the essential safety measures. Enforcement by the Labor Ministry’s industrial inspectors is weak, due to both the low number of labor inspectors and endemic corruption and inefficiency among inspectors. The Bangladesh Department of Labor and Inspectorate of Factories said to be lacking ‘sufficient resources, staff and logistical support to adequately perform the task of monitoring labor laws. There are allegations that garment producers keep their garment factories outside labor inspection by bribing labor ministry officials.

The labor relations practices in the industry are very controversial. Poor labor relations have been constantly reflected in some of the demonstrations of the highest form of class struggles over the past few years.

9.1 TRADE UNION PROVISIONS UNDER LAW:

9.0 LABOR RELATIONS PRACTICES IN THE INDUSTRY


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According to the rights of association with trade unions, the industry can be divided into two parts:

9.1.1 Factories outside the Export processing Zones (EPZs):

The Constitution provides for the right to form or join unions. There are many restrictions, however. Before a union can be registered, 30 per cent of workers in an enterprise have to be members and the union can be dissolved if its membership falls below this level.

Membership provisions: Membership in a union is restricted only to workers currently working at an establishment, meaning that severance from employment also results in the end of a worker’s membership in the union.

Right to strike not recognized: The right to strike is not specifically recognized in law. Three quarters of a union’s members must agree to a strike before it can go ahead. The government can ban any strike if it continues beyond 30 days (in which case it is referred to the Labor Court for adjudication), if it involves a public service covered by the Essential Services Ordinance or if it is considered a threat to the national interest. In this last case, the 1974 Special Powers Act can be used to detain trade unionists without charge. The government may ban strikes for renewable periods of three months. Sentences of up to 14 years’ forced labor can be passed for offences such as "obstruction of transport".

Strikes are not allowed in new establishments either owned by foreign investors or established as joint-ventures in collaboration with foreign investors for a period of three years from the date the establishment begins commercial production.

Compulsory conciliation and court referral procedures: The labor law requires that parties to an industrial dispute must follow procedures (such as request conciliation, serve notice of a strike or lock-out, or refer the dispute to the Labor Court for settlement) within a specified period or the labor dispute will be considered legally terminated. The issue or subject of an industrial dispute which is terminated in this manner cannot be raised for a calendar year after such termination.

Collective bargaining limited: Only registered unions can engage in collective bargaining, and each union must nominate representatives to a Collective Bargaining Authority committee, which is subject to approval by the Registrar of Trade Unions. The National Pay and Wages Commission, whose recommendations are binding, sets public sector workers’ pay levels and other benefits.

9.1.2 Factories in the EPZ:

The EPZ Trade Union and Industrial Relations Bill 2004 provided for the formation of trade unions in EPZs from 1 November 2006.The law foresees the phased introduction of freedom of association, providing for a different type of workers’ organization at each stage.


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Stage one – Worker Representation and Welfare Committees: Until the end of October 2006, workers in Bangladesh’s EPZs were still operating under the first stage of the law. They were only allowed to set up Worker Representation and Welfare Committees (WRWC). The law requires all enterprises in the EPZ to have one WRWC, whose elected representatives have the power to negotiate and sign collective agreements on a limited set of topics but not to strike or organize demonstrations. However, workers and labor activists in Bangladesh reported that in 2006 employers generally refused to enter negotiations or sign an agreement with a WRWC.

Under the law, all WRWCs were supposed to cease to exist on 31 October 2006, unless the employer gave an explicit agreement that the WRWC should continue

Stage two – Workers’ Associations: The second stage of the law provides that a trade union, referred to as a Workers’ Association (WA) in the law, can be organized provided over 30 per cent of the workforce requests that the association should be set up. More than 50 per cent of the workers in the factory must vote affirmatively for the WA to be formed.

This was scheduled to start on 1 November 2006 but in practice there were significantly delays, notably because the Bangladesh Export Processing Zone Authority (BEPZA) did not provide the necessary forms for applying to set up WAs. In new enterprises that start operations after 1 November 2006, workers are not permitted to form an association for the first three months after the commencement of commercial activities.

Only one federation can be formed per EPZ, and over 50 per cent of the registered WA in the zone must vote to affiliate before a federation can be formed.

The BEPZA Executive Chairman also has almost unlimited authority to deregister a Workers’ Association, should he determine that the WA has committed an "unfair practice", contravened any part of the WA’s own constitution, violated any aspect of the EPZ Law, or failed to submit a report to him. Essentially, the law has made illegal the right of workers to talk about unions in their workplaces or to engage in pressure tactics to persuade recalcitrant employers to sign a collective agreement.

Finally, the law explicitly forbids any strikes in the EPZs until 31 October 2008.

9.2 TRADE UNION RIGHTS IN PRACTICE: THE REAL PICTURE

The trade union movement is relatively weak in RMG industry of Bangladesh. This is partly owing to the multiplicity of trade unions and partly owing to the considerable intimidation imposed in practice, especially workers’ fear of losing their jobs should they show any sign of union activity. The right to freedom of association and to collective bargaining at the workplace is not respected in the garment sector. Where unions do file applications for recognition, their registration is often delayed long beyond the 60 days foreseen by law.


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9.2.1 List of Trade Unions in Bangladesh

There are 4 registered and at least 10 other unregistered trade unions and union federations in Bangladesh. However, only a few are active. Given below is a list of some of the trade unions and union federations:

Bangladesh Free Trade Union Congress (BFTUC) Bangladesh Ganotantrik Sramik Federation Bangladesh Jatio Sramik League Bangladesh Jatiyo Sramik Jote Bangladesh Jatyatabadi Sramik Dal Bangladesh Labor Federation Bangladesh Mukto Sramik Federation (BMSF) Bangladesh Sanjukta Sramik Federation Bangladesh Trade Union Kendra Jatio Sramik Federation Jatyo Sramik League Samajtantrik Sramik Front Bangladesh Independent Garment Workers Union Federation (BIGUF) Bangladesh Garment & Industrial Workers Federation (BGIWF) National Garment Workers Federation (NGWF)

9.2.2 Backward Nature of Trade Unionism in the Industry

It goes without saying that the structure of ownership and management determines both the structure of trade unions and the mechanisms for resolving industrial disputes. In the emerging formal private sector of Bangladesh, particularly in the field of RMG industries, the owners, who generally tend to be patrimonial as a class, still try to resolve industrial conflicts through autocratic and unilateral decisions. One reason for this could be a historically sustained inbuilt authoritarianism in all spheres of Bangladesh’s entrepreneurial class. The earlier dominance of the semi-feudal and large land owners has influenced the attitudes of most of the industrialists of Bangladesh in their dealings with subordinates and workers.

Moreover, backward, docile and timid nature of the migrant rural women workers are the major constraints forming labor unions and launching labor movements in the RMG sector. Because of overwhelming majority of the rural migrants women, who have been socialized with traditional purdah system and patriarchal values, the owners exploit these meek and docile workers absolutely.Against such a backdrop, it is no wonder that most garment factory owners do not have a positive attitude toward unionization in the RMG industries.

Workers who try to create a trade union are not protected before registration and are therefore often persecuted by their employers, sometimes by violent means or with the help of the police. The names of workers who apply for union registration are frequently passed on to employers who


26

promptly transfer or dismiss them, particularly in the textile sector. Even after registration, workers suspected of carrying out trade union activities are regularly harassed. One popular ploy is to dismiss a worker for misconduct, as they are then no longer entitled to become a trade union officer.

9.2.3 The Unionization Process and Owner’s Responses Labor-management relations in the RMG industries are affected by a lack of mutual trust between union leaders and owners. That is why union leaders always try to pursue their unionization process as secretly as possible, while the garment factory owners always try to find out what the federations and garment workers in respective factories are up to. In fact, most of the male federation leaders as well as female unit union leaders whom we interviewed claimed that in order to remain informed of the activities of the federations and their activists, most garment factory owners place people in crucial places both in the factories and at the Directorate of Labor.

We had collected data from 28 unit unions to figure out at what stages and how the owners —according to the federation and unit union leaders — came to know about the unionization processes. The table summarizes the results:


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Owners had employed agents’ provocateurs so that they could know beforehand which workers of their factories were trying to form unit unions, in order to force those workers out from the factories before they could even submit applications for registration to the office of the Registrar of Trade Unions. It was important if they had to go for this kind of pre-emptive attack; they did so before the submission of the application for registration, because once the application for registration was submitted, it would have become not only more difficult for the owners to stop the process of unionization but any attempt to do so could have also made them subject to legal prosecution for misconduct under Article 15 of the Industrial Relations Ordinance, 1969. As Table 9 further reveals, the owners also had their informants in the office of the Registrar of Trade Unions, who informed the owners as soon as they learned about the submission of the applications for registration. In most cases, the owners then traced the office bearers who were involved in the unionization process and tried to stop the process in various ways.

We were informed by federations and/or unit level leaders that in the cases that the owners were not informed beforehand of the unionization process, either the office bearers of the unit unions or the federations bribed officials at the Registrar of Trade Unions, or the federations had such political backing that the officials of the Registrar of Trade Unions did not dare to disclose the information to owners. The general response of the owners, as described to us by the federation and unit union leaders, are discussed below:

Verbal threats Physical assault Threatening by hired musclemen Filing false criminal charges on the union leaders Bribing the union leaders Fulfilling some demands of the union


26

The majority of our respondent owners did not agree with the information provided above. Some owners did not contradict the authenticity of the information, but claimed that they themselves never resorted to any such activity.

The findings clearly show that owners used all sorts of possible methods to stop the unionization process, and also to destroy, wherever they could, the unit unions. To achieve their goals, they first tried to employ pressure tactics, including verbal threats, physical assault, and intimidation through hired musclemen. If these pressure tactics failed to bear any fruit, they tried to stop the process simply by bribing influential federation and/or unit union leaders. When that ploy did not work, they started filing criminal charges against union leaders so that they could harass them with the help of the police. Since most of the unit union leaders were female and also often poor, they could not withstand such pressure indefinitely. In the end, many unit leaders left the factories. The unions, if constituted but not yet registered, ceased to exist. In other cases, the owners simply dismissed union leaders. It was often quite easy for owners to dismiss union leaders because many union leaders did not have proper appointment letters, and hence no proof that they were working in a particular factory. If the unions were registered, the owners sometimes tried to fire union leaders with packages of three months’ wage compensation. However, in some cases where the unions were very strong and the general workers were united, the owners either declared a lock-out of the factories or met, at least for the time being, some demands of the workers.

9.2.4 The Owners Speak in their Defense

Irrespective of their educational, socio-cultural and economic background, most of the garment factory owners seem to have a very negative attitude toward the existing garment federations and their affiliated unit unions. The root cause of this negative attitude seems to be grounded in their perceptions of trade unionism which, again, emanates from what they have seen of the activities of the trade unions in the public sector.

We have interviewed 5 owners of randomly selected factory situated inside and outside EPZs. According to most of our respondent owners, the Bangladeshi entrepreneur involved in RMG industries at the moment faces a few common labor-related problems. These are:

lack of discipline among workers workers not committed to productivity illegal and unreasonable demands placed by representatives of garment workers an unfavorable labor code that specifies privileges but does not spell out duties of workers politicization of trade unions multiplicity of federations and unit level unions and consequent rivalries between them

Under these conditions, according to some of our respondent garment factory owners, the situation is not yet ripe to allow full fledged unionism in a nascent industrial sector like RMG. However, 2 of our respondent owners claimed that they would have no objection to unit unions if they were formed independently, and not through what they called the instigation of outsiders or


26

“professional trade unionists”. But before these unions are formed, the workers must be properly educated regarding existing labor laws, basic rights, and inalienable obligations so that they cannot easily be manipulated by “professional unionists” with vested interests. These owners suggested that NGOs might like to develop awareness-building programs for female garment workers which could provide education about their legal rights.

Most of our respondent owners refuted the allegations of the federation and unit union leaders that they resorted to all kinds of intimidation tactics to sabotage the unionization process in RMG industries. Rather, they mentioned the preoccupation of the garment workers, and their high turnover rates as the two most important factors hindering the process of unionization. As far as existing labor management relationships in the garment industries are concerned, most of the owners indicated that they maintained contacts with the general workers primarily through the floor supervisors and/or production managers. Only two owners claimed that they sat with the workers in general meetings at least once a month. Two other owners claimed that they always encouraged the general workers to come to them, with prior appointments, whenever necessary.

ISSUE POSITIVE RESPONSE NEGATIVE RESPONSEShould full-fledged trade

unionism be practices in the industry?

2 3

Are union leaders harassed inside the factory?

0 5

Do harassment practices prevail in the industry?

5 0

Does effective communication system exist between workers and managers?

5 0

Total number of respondents: 5

Regarding the linkage of wages with labor productivity, most garment factory owners opined that the RMG industries’ capacity to pay the workers a minimum wage should be linked to their profitability, which, again, depended on the prices of their products relative to material input prices, and on labor productivity trends.

9.2.5 The Role of Labor Unions in Ensuring Labor Rights

The trade unions of Bangladesh are ineffective in the application of their objectives. The leaders of the trade unions are corrupt; making it is impossible for the trade union leaders to do some welfare for the general labor. This is due to the fact that almost all the CBA leaders have an open secret understanding with the owners of the establishments, which lead them to the uninterrupted corruption and irregularity. The CBA leaders seldom see the interests of the labor. The monthly subscriptions given by the labor are not used for their welfare. It is just used for the personal


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purpose of the leaders of the trade unions. Due to pressures from the trade union leaders, the workers are working hard, but they are not getting remuneration accordingly.

Many female unit union members are happy with the idea of delegating their right to negotiate to the federation leaders. In fact, this has remained the most controversial aspect of federation unit union relations. On the one hand, most female garment workers feel technically too weak to negotiate, both individually and through their unit unions, because owners are often quite autocratic and patrimonial in handling industrial disputes. Female garment workers thus welcome the intervention of federation leaders on their behalf in disputes with the management, both in bipartite negotiations and extended conciliation, as well as compulsory adjudication. On the other hand, many female garment workers and unit union leaders confessed to the author that they are apprehensive about some male middle-class federation leaders, who might be pursuing their own interests rather than pursuing the interests of the female garment workers and their unit unions. Some garment factory owners have labeled some federation leaders as “trade unionist brokers” who “milk” both sides — the RMG workers and/or their unit unions and the owners — in the name of solving industrial disputes. According to them, in times of industrial conflicts, some of these federation leaders take money from the owners to “buy off” the prospective male troublemakers among the garment workers (interestingly, most of the owners have confessed to the author that it is much easier to bribe a male leader than a female one). At the same time, they also try to squeeze money from mostly female workers by promising them protection from harassment from members of the law enforcing agencies or the hired musclemen of the owner.

Reasons for corruption in trade unions

The labor of Bangladesh is mostly illiterate. It makes them insecure and weak to fight against the corruption and ill practices.

Most of the laborers of Bangladesh do not know that, specifically for them, there is a law in Bangladesh named Bangladesh Labor Act, 2006. For the ignorance of trade union laws they cannot fight against the violation of their rights.

Section 187 of the Bangladesh Labor Act, 2006 provides “no President, General Secretary, or Treasurer of any trade union shall be transferred from one district to another without his consent”. This section is a great weapon, which is manipulated by trade union leaders. By abusing this provision trade union leaders have the opportunity to stay in the same establishment and be connected with the local politics.

In the third world countries most of the laborers are so poor even they cannot live their lives hand to mouth. CBA leaders give them job in an industry requesting the owners with their influential powers. Usually, the labor gets the job by the CBA and never dares to speak against the leaders though he does many violation of trade union right of the labor.

The owners always want the labor to work hard and gain profit. So, they use the trade union leaders as a weapon. When the labor gets heavy workload but does not get the expected remunerations, they usually go to the trade union leaders for the assurance of justice. In this situation the CBA leaders never speak on behalf of the labor as by then they have already taken the bribe from the owners to not fight for the labor right.


LOW WAGE SET BY MINIMUM WAGE POLICY

RESTRICTED TRADE UNION LAWS

VIOLATION OF LABOR LAWS

GAP BETWEEN RECEIVED AND EXPECTED WAGE AND BENEFITS AND QUALITY OF WORK LIFE

EMPLOYER’S NEGATIVE ATTITUDE TOWARDS UNIONS AND POOR GRIEVANCE PROCEDURES

URGE OF LABOR TO JOIN UNIONS

POORLY CONSTRUCTED EXPRESSION OF GRIEVANCE: STRIKES AND VANDALISM

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The Bangladesh Labor Act provides that the inspectors will have the right to inspect the trade union activities, but inspectors seldom go to do it. Even if they go, the trade union leaders bribe them so that they never speak against the irregularities of the trade union.

Lack of experienced and educated leaders among the labor is another reason of malpractice and corruption.

The low minimum wage set by government and violation of labor laws on top of that have compelled the garments factory workers to look for ways to stand up for themselves. Their urge of join unions is further thwarted by the restricted legal provisions and threats from the employer. The rest is history. Past is the witness of several strikes and vandalism attacks led by thousands of garments workers and union leaders to protect their rights. Loss of lives, destruction of valuable property and above all tarnished reputation of the industry in front of the international buyers-all these have threatened the existence of the country’s economic lifeline, the industry itself.

We have analyzed 15 incidents of strikes and vandalism by the garments workers in Dhaka and its outskirts. These incidents took place between January 2006 and May 23, 2010. The sources of the information are various daily newspapers- The Daily Star, Financial Express, etc. There were two important findings:The turmoil is more prevalent in the knit sector rather than the woven sector: Sweater is the fastest growing segment within the garment industry, growing over 30 per cent a year in the last five years. Sweater factories are to blame for festering labor unrest in the country's US$11 billion garment industry, as four out of five violent wage protests had their origins there. According to a

10.0 CONSEQUENCES OF POOR LABOR RELATIONS AND VIOLATION OF LABOR LAWS


26

report published in daily star in May 26, 2009: 16 out of the last 20 violent unrests in the garment factories had their origins in sweater plants.

80%

20%

Percentage of strikes in two different sectors of RMG industry

Knit Woven

Source: Government’s factory Inspection department.

The department also found that 15 per cent of 825 garment factories it surveyed between January and May don't pay wages in time. At least eight of them don't pay the basic minimum wage of Tk1662.50 per month. (Source- The Daily Star, Wednesday May 26 2010).

Six root causes led to the protests: Our analysis revealed the following 6 root causes of protest: The workers had multiple reasons behind each of the incidents. The frequency of the 6 root causes in the 15 incidents is plotted in the graph below. The two red bars represent the two primary root causes.

wage cuts Pay raise Pay arrears Working Hours Perks and other benefits

Ill-treatment from supervisor

0123456789

ROOT CAUSES OF PROTEST

NUM

BER

OF

INCI

DEN

TS

1. Wage cuts: When the global recession led to shrinking apparel demand, many RMG factory owners unscrupulously resorted to wage cutting practices. Since the beginning of the global recession late last year, some 200 sweater factories have cut rates by 20-30 per cent. The situation has become very explosive. The workers who used to earn as high as Tk12,000 are now being paid at Tk7,000, despite toiling same amount of hours


26

2. Demand for pay raise: This has been one of the primary reasons of wave of fierce class struggle in the Bangladesh garment industry over the last five years. As inflation rose and cost of living rose to almost unaffordable heights, the minimum wage policy has done little to alleviate the pain workers go through in matching income and expense. A recent global survey of the world’s garment industries by the US-based consulting house, the Jassin-O’Rourke Group, shows the following wage disparity shown in the table. It, however, pointed out that if productivity is considered, Bangladesh lags behind as productivity here is only 42 per cent compared to more than 70 per cent in China and around 60 per cent in India. Productivity is not only the worker’s responsibility; it depends on uninterrupted and well-managed production flows which are designed and implemented by the managers and entrepreneurs,’ said a top official of another Europe-based buying house.

3. Demand for wage payments in arrears: There were 7 incidents in which workers protested demanding their pay that had been in arrears for 2 to 3 months. According to the labor law, every worker should be paid his or her wages within the 7 th of the following month. The so-called “Good” factories pay the wages on the 7th day of the following month. But many factories pay the wages at 10 or 15 day of the following month.

4. Demand to shorten working hours: According to law and international standards, women should not be made to work after 8 pm but, at times, they are asked to work until 10 pm or 11 pm. Sometimes they even work the whole night.

5. Demand for perks and other benefits: These include demands for raise of attendance bonus, demands for meals during overtime, etc.

6. Demand for the dismissal of supervisor: Ill treatment and harassment by supervisor is prevalent in the industry. Lack of proper grievance procedures made workers come out in the streets demanding dismissal of such supervisors.

Country Wage(US cents) /hr

Bangladesh 22

Cambodia 33

Pakistan 37

Vietnam 38

Sri Lanka 43

Indonesia 44

India 51

China 86

Philippines 107

Malaysia 118

Conclusion

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The salient points that emerge from the foregoing discussion are: 1) in Bangladesh, industrial conflicts in the private sector, particularly in the RMG industries, have so far been resolved through autocratic and unilateral decisions of garment factory owners; 2) there has not been a healthy growth of trade unionism from within the RMG industries, 4) labor laws are generally observed by a significant number of employers in the garment industries, and in some cases the laws themselves have become outdated and hence inadequate.

Therefore, for many of Bangladeshi garment factory owners, being competitive has so far meant being “cost effective”, mainly by lowering labor standards and taking advantage of opportunities for low-wage employment due to the abundance of a young female labor force. As a consequence of their economic priorities, many of them have become virulently anti-trade union because, according to them, as “market distorting entities” trade unions would not only raise production costs and create industrial disorder, they would also eventually offset Bangladesh’s comparative advantage by dismantling the low-wage employment structure of the female labor force.

Contrary to their arguments, there is also clear correlation between unionization and productivity. In an example from the industrializing economies, Standing has found that in Malaysia the unions have contributed both to productivity enhancement and a narrowing of the gender gap in wages (Standing, 1990). Unionization and on-the-job training can also be helpful in checking high labor turnover in the RMG industries. There is evidence from Malaysia that unionized firms had working environments that encouraged trained workers to stay and to undertake further training and productivity improvement (Standing). With this example in mind, it can be argued that the time has now come for the garment factory owners in Bangladesh to look at the issue of unionism from a different angle.

11.0 CONCLUSION

APPENDIX

26

APPENDIX

APPENDIX

26

INTERVIEW WITH EMPLOYERS

Company profiles:

Shanta Garments - Shanta Garments Ltd. is a sister concern of Shanta Group, based in Bangladesh with sustained goodwill and expertise in exports oriented ready-made garment manufacturing. It principally focuses on producing woven tops and bottoms, and has a production capacity of about 15000-18000 units, depending on the style. It is located in the Export Processing Zone (EPZ) area.

SF Fashions- Located in Narayanganj; SF Fashions produces shorts, trousers and skirts for export. It operates its divisions according to the various lines of garments it produces.

Goldstar Group of Companies- Established in 1992, Goldstar Group of Industries produces and exports high quality apparels to mainly US and European markets.

Opex & Sinha Textile Group- One of the major players in the RMG sector, Opex & Sinha Group has been producing export-oriented products from their Narayanganj based factory for over several years. Recently, the company was at the receiving end of some bad publicity due to worker strikes, clashes with security guards and the resulting injuries to employees.

Floret Fashion Wears (Pvt.) Ltd. - It is a 100% export oriented garments manufacturing Industry, started its operation in the year 1997. With hard work, sincerity and commitment "Floret fashions wears (Pvt.) Ltd." has earned its remarkable goodwill & reputation in the market and

expanded successfully day by day. This factory is located at 315/B, Tejgaon Industrial area. Mainly our products are children wear. Its employees are regularly updated and provided with training, as the company believes continuous improvement.

Employer Interview Questions

Name of the Company: Shanta Garments (in EPZ)

APPENDIX

26

Q1. Does the company abide by the labor laws?

Yes, it does. It strictly abides by the laws applicable for garments in the EPZ.

Q2. Is there trade (labor) unions existing within the company’s employees?

No there is no trade union. The worker’s association (WA) in EPZ is there to represent the interests of the garments workers in EPZ. 15 members from each company are selected and they are registered in WA as the representatives of the rest.

Q4. Do the union leaders face ill treatment and harassment? Do you agree that such practices are prevalent in the industry?

I do agree that such practices do agree but we do not support or entertain any of these.

Q5. What problems might the company face if it does have trade unions?

The workers might take undue advantage if allowed to have full-fledged trade unions. Frankly speaking, no employer will be able to run factories profitably if there are trade unions. For example, the minimum wage rate is $20, we provide here $ 30, even then they nag about wages. Workers need to be properly trained regarding issues of professional collective bargaining. Then I would have no problem with unions.

Q7. What harm to the reputation does a company face from outside buyers if it does not implement trade unions?

Outside buyers want assurance that the workers are able to represent themselves to the management. This is done so by the WA. Therefore, the foreign customers have no complaints.

Q8. What differences exist between unionized and non-unionized companies?

I believe there is little difference because we pay our workers as much as any other company in the industry.

Q9. Are disruptions to production caused as a result of union impacts?No disruptions, thankfully, so far.


Name of the Company: FS Fashions, Narayanganj

APPENDIX

26


It does.


No there are no trade unions. One person of each line (a line consists of a number of machines) is selected and the entire line representative talk to the management about their problems and demands every month.


I do agree that such practices do agree but we do not support or entertain any of these.


Trade unions in our country might do more harm than good. They might often become the means for a clever few politically inspired people to do their bidding rather than voice employee rights. In fact, that is what has been happening in our country in other areas.


Outside organizations are often concerned about the rights of labor within the companies in our country as we are often labeled as a source of cheap labor. However, we have employee associations within our country who can present the rights and demands of the workers to management. So, we have not faced any pressure from outside organizations regarding this matter. And buyers are usually satisfied with this information as well. They are principally interested in cost and time issues.


All workers, regardless of union membership status, are paid a standard rate, often more than that including overtime. So, little difference exists regarding this.

Q9. Are disruptions to production caused as a result of union impacts?

Last week, employees gathered in a strike with some demands regarding wage increase and behavior of 3 supervisors. Their demands were fulfilled and the 3 supervisors were dismissed.

APPENDIX

26


Name of the Company: Goldstar Group of Companies


Yes of course.


No there is no trade unions because the workers of the company have not demanded so.

Q3. If not, then who is the labor representative?

There is a workers participation committee who represents the labor problems. The main form of problems is basically physical and verbal abuse by the factory supervisors of the workers. I have a kind of open door policy here. The representatives can come and talk to senior HR managers about their problems with prior appointment.


I do agree that such practices do agree and some supervisors may resent such leaders due to fear of strikes but we see to it that no harassments are inflicted on the leaders.


As we know, garments workers frequently cause many problems to production such as strikes. If there are representative bodies, they will put up further obstruction in an organized way. Also, they may create political affiliations and use it as leverage when bargaining.

Q6. What problems might the company face if it does not have trade unions?

Often foreign bodies regard a lack of unions as an indication of low labor rights. But that can be countered with worker associations.


Outside buyers want assurance that the workers are able to represent themselves to the management. This is done so by the worker participation committee. Therefore, the foreign customers have little complaints.

APPENDIX

26


I believe there is little difference because we pay our workers as much as any other company in the industry.


No disruptions, thankfully, so far.


Name of the Company: Opex & Sinha Textile Group


Every company has to abide by the labor laws.


No formal unions.


There is an association that acts the purpose of trade unions.

Q4. What is the impact of trade (labor) unions in the company? (Both beneficial and problematic)

Outside trade unions have spread rumors about our company to defame our image. So far, beneficial aspects of trade unions are yet to be seen.


None.


So far we have faced no problems because we do not have a trade union. However, if the workers demand so, we will think about it.


APPENDIX

26

As said above, unions are of concern mainly to foreign buyers as they feel workers’ rights are not being represented if unions are not present. However, this misconception is cleared in detailed personal meetings and examination of relevant documents.


There have been a few major disruptions, but mainly due to personal grievances rather than union impacts. Also, activities of outsiders and politically motivated people caused strikes that led to little image problems of the company. But those situations have been resolved peacefully in the end.


Name of the Company Floret Fashion Wears (Pvt.) Ltd


Yes.


No.


There is a workers participation committee who represents the labor problems. But it does not need to be active that much because we take care of our workers.

Q4. What is the impact of trade (labor) unions in the company? (Both beneficial and problematic)

-


As we know, garments workers frequently cause many problems to production such as strikes. If there are representative bodies, they will put up further obstruction in an organized way. Also, they may create political affiliations and use it as leverage when bargaining.


APPENDIX

26

So far we have faced no problems because we do not have a trade union. However, if the workers demand so, we will think about it.


It might face image problems at first but after clarification of the situation with appropriate documents and such, those are resolved.


We pay one of the highest rates in the industry, so are far better off than most unionized and non-unionized companies both.


None.

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Employee Survey Questionnaire

PLEASE NOTE THAT THIS IS THE TRANSLATED VERSION OF THE ORIGINAL QUESTIONNAIRE WHICH WAS IN BANGLA. FOR RESPONDENTS WHO COULD NOT READ OR WRITE, WE HELPED THEM FILL IT UP. THE ADDITIONAL COMMENTS FOR EACH RESPONSE WERE DULY NOTED DOWN AND USED DURING DATA ANALYSIS.

We, the students of IBA, are conducting a research on the ‘Labor Management Relations and the Extent of the Application of Labor Laws in Bangladesh’, especially in the RMG sector. As a part of our research, we are conducting this survey on the employees of RMG industries to obtain their perspective on the issue. Your cooperation would be appreciated in this regard.

Q1. Age:

<15 15-25 25-30 30-40 40>

Q2. Do you know about the specific labor laws?

_______Yes_______No

Q3. If yes, do you think the current labor laws are appropriate in preserving labor rights?

_______Yes_______No

Q4. Do you feel the company abides by the labor laws?

_______Yes_______No

Q5. If yes, to what extent does a company follow labor laws in the following specific regions?

Criterion Excellent Good Satisfactory PoorOvertime WorkChild LaborEqual EmploymentHolidays and LeavesHealth and safety measures

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Q6. Does the company have an employee trade union?

_______Yes_______No

Q7. If yes, then to what extent does the union prove effective in preserving employee rights and benefits?

Excellent Good Satisfactory Poor

Q8. If you do not belong to a trade union, do you belong to any other worker associations? Please specify.

_______Yes (Please specify-_______________________________________________________)_______No

Q9. If yes, then to what extent does the association prove effective in preserving employee rights and benefits?

Excellent Good Satisfactory Poor

Q10. Does the company encourage or discourage the forming of trade unions?

Highly Encouraging

Slightly Encouraging

Neutral Highly Discouraging

Q11. If the company discourages trade unions, please specify the means it takes to do so.

Q12. In the absence of trade unions, do you seek assistance from other outside associations for help regarding employee rights?

_______Yes (Please specify-_______________________________________________________)_______No

Q13. Do you feel a trade union is necessary in order to appropriately look after labor rights?

_______Yes_______No

-Thank you for your cooperation and time-

26

REFERENCES

Standing, G. (1990)Do Unions Impede or Accelerate Structural Adjustment? IndustrialVersus Company Unions in an Industrialising Labour Market,Working Paper No. 47, World Employment Programme Research, ILO, Geneva.

Global Wage Report 2008 / 09,Minimum wages and collective bargainingTowards policy coherence, Geneva, International Labour Offi ce, 2008

Newspapers:

The daily independent BangladeshThe daily starThe Financial Express

Links:

http://survey07.ituc-csi.org/getcountry.php?IDCountry=BGD&IDLang=ENhttp://www.sacw.net/article889.htmlhttp://www.nosweat.org.uk/story/2009/02/02/interview-struggle-bangladeshi-garment-workershttp://bdnews24.com/details.php?id=159888&cid=2www.ilo.org

http://www.ilo.org/

http://bdnews24.com/details.php?id=159888&cid=2

http://www.nosweat.org.uk/story/2009/02/02/interview-struggle-bangladeshi-garment-workers

http://www.sacw.net/article889.html