adv-06 adv-06

Bangladeshi Garment workers on poverty, pay are left without billions of their wages during pandemic

adv-07

bangladesh-garments-industryMillions of garment workers around the world have not received their regular wages, or have not been paid at all, for months since the start of the Covid-19 pandemic, shows a new report by Clean Clothes Campaign. In Bangladesh, before the pandemic hit, according to industry figures, roughly 4.4 million workers were employed in 4,500 ready made garment (RMG) factories across the country. The minimum wage for the garment industry is 8,000 BDT (94 USD), but general estimates indicate that workers, on average, take home 9,580 BDT (112 USD) at the end of the month. This brings the combined monthly wage of all workers to 42.15 billion BDT (approximately 496 million USD). Unlike the garment industries in countries like China, Cambodia, and Myanmar, Bangladesh remained largely unaffected by the Covid-19 pandemic in February and factories remained open as brand orders continued. There were, however, disruptions to the arrival of raw material from abroad. Things changed rapidly in March, however, when brands started cancelling orders at a high pace. Already by 23 March, reportedly 1.5 billion USD of orders had been cancelled. In March, 150 factories closed at least temporarily. It is estimate in total 147 thousand workers did not receive any wages, while the remaining 4.2 million got only 8,622 BDT (101 USD) on average. In consequence, the wage gap at the end of the month would already be 5.48 billion BDT (64,5 million USD). To prevent the spread of Covid-19, the Bangladesh government introduced a shutdown for ten days, declaring a public holiday from 26 March until 4 April. The shutdown was repeatedly extended until 16 May. Initially, lack of clarity existed about whether garment factories were to close as well, a situation which was repeated around the moment of potential reopening of factories and caused a lot of insecurity and hardship for workers travelling back and forth to their villages in absence of public transport16.

On 25 March, the government announced a stimulus package of 500 billion BDT (5.9 billion USD) for export-oriented sectors, including the RMG industry. Businesses can apply for funds from the package at 2% interest. Money from the package can only be used to pay workers’ salaries for up to three months. Management must provide salary sheets, workers’ lists, and workers’ account details to banks, so that salaries for April can be directly disbursed into a worker’s bank account or mobile financial service account. Factories announcing layoffs amid the coronavirus outbreak will not have access to the government’s financial package. To qualify for the stimulus package, factories must have exported 80% of products in recent years. This means many small and medium-sized enterprises that worked as subcontractors for big factories have been unable to qualify for funding and,as a result, are unable to pay their workers. The government introduced further stimulus packages on 5 April, with 2.3 billion USD set aside to provide working capital for small and medium enterprises. However these loans did not come with conditions of ensuring workers’ wages were paid.

Under influence of the combination of the lockdown and cancelled orders, the wage situation for workers escalated in April. An astonishing 580 factories closed, while 2,203 factories remained in lockdown. 119 factories were in lockdown without access to government support, leading to dire consequences to the workers of these factories. 1,598 factories continued operations through most of the month. Despite the extension of the national lockdown into May, most garment factories started to reopen from 26 April on with a reduced number of workers. Under government regulations, workers affected by the lockdown in April were to receive 60% of their wages — later increased to 65%; those who worked the full month to receive full wages; and workers who resumed work after 26 April to get 65% wage for 25 days and full wage for the remaining five days. This was to be paid by the factory owner. This means that most likely workers in closed factories received no wages, workers in factories under lockdown generally received 65%, and workers in factories without government support received nothing. Workers who continued to go to the factory often also did not receive full wages, due to cancelled orders, which by now had risen to 3 billion USD. As a result, we estimate employers could, on average, only afford to pay 90% of normal wages. These wages were generally received with considerable delay. Following these assumptions we conclude in April a total of 22.86 billion BDT (269,12 million USD) in salaries was paid, 226.95 million USD less than two months earlier.

In May, It is estimate that half of the 580 closed factories as well as factories that were in lockdown during March and April reopened again28 and more went back to work. Estimation says that the number of factories in operation through May was 4,210, employing around 4,116,444 workers. Interview-based wage data reported by Microfinance Opportunities show wage payments increased substantially in May; therefore we assume workers working in May received 80% of their average wages. As a result, the wage gap decreased in May, according to our estimates to 10.6 billion BDT (124.75 million USD). In May, Eid bonuses were due, which all factories are obliged to pay, but a substantial share of workers reported not to have received their Eid bonus. It is assumed that only 80% of workers received this bonus and not in full but, on average, roughly 80% of the bonus. This adds an estimated 85.15 million USD to the wage gap for this month. In sum, we estimate the wage gap for the months of March to May including (Eid bonus) was around 501 million USD.