Where have all the negotiating tables gone?

By Nadine S Murshid and Awrup Sanyal for AlalODulal.org

 2013-09-14 15.03.10

“Economic growth cannot sensibly be treated as an end in itself. Development has to be more concerned with enhancing lives we lead and the freedoms we enjoy,” posits Amartya Sen in his book Development as Freedom (1999). Yet, Bangladesh has grown – developed at a decent rate of 6.7% over the last year – without enhancing the lives of workers, without the freedoms that Sen would like workers to enjoy, as exemplified, perhaps, by the recurrent protests by garment factory workers in Dhaka, protests that have a history of turning violent.

How should we view these recurrent labor protests? Why is the ‘language of negotiation’ so violent, so public? Why is there not a process of demands, listening, analyzing, negotiating, and implementing that should be a part of any industry, especially one that garners as much respect and clout as that of the readymade garment industry in Bangladesh? Why is there no participatory process that allows all actors to come together and make decisions in a democratic way?

The Current Revolt

The backdrop, according to trade union leader, Shahidul Islam Shobuj, is that the BGMEA has agreed to increase the minimum wage to Tk. 3,600 (USD 38) per month by Tk. 600 for the first time since 2010 – an increase that does not account for inflation, while the workers demand Tk. 8,100 (USD 100) because subsisting on $38 a month is next to impossible (Al Jazeera, 2013), forcing people to live well below the USD 1.50 poverty line set by the United Nations.

But factory owners are reluctant to raise wages. The question is why. Is it because:

1)    They will lose the comparative advantage, as some have suggested, given that Bangladesh has the lowest minimum wage in the world which gives Bangladeshi RMG manufacturers an edge in keeping costs and therefore prices down (see Table 1 below). OR

2)    They can continue to make the same amount of profits that they have been making (because in spite of the large numbers of agitated workers, Bangladesh has an abundance of unskilled labor that is willing and able to take the places of protesting workers). Is it just plain math; it makes zero business sense to give in to the demands of paying workers more than double of what they have been paying them because they know that they can get away with it.

Country Hourly Wage
United States $8.25-14.00
United Kingdom $7.58-9.11
Venezeula $2.73
Costa Rica $2.19
Guatemala $1.21
Colombia $1.20
Honduras $1.02
Philippines $0.94-1.00
China $0.93
Peru $0.92
El Salvador $0.92
Jordan $0.74
Malaysia $0.73
Nicaragua $0.65
Bahrain $0.57
Thailand $0.56
India $0.55-0.68
Mauritius $0.55-0.65
Vietnam $0.52
Egypt $0.50-0.87
Mexico $0.50-0.53
Sri Lanka $0.46
Pakistan $0.37
Indonesia $0.35
Cambodia $0.24
Bangladesh $0.21

Table 1. Minimum wage rates. Source: Institute for Global and Human Rights.

The math

When garment factories burn to ashes, who loses out? Building owners, factory owners, workers.  And when these three groups clash, who loses out? The entire nation. This is especially true in Bangladesh where the economy is dependent, to an extent, on the ready-made garment industry; where 80% of exports are accounted by RMG; where a large part of the female working population is employed in this industry. This is precisely why the current revolt by the workers needs to be taken seriously; this is the actual ‘aam-janata’. That they have to burn factory buildings to have their voices heard is not an indictment on them, the workers, but an indictment on garment factory owners, BGMEA, organizations such as Bangladesh Institute of Labor Studies (BILS) that are meant to advocate for workers, and perhaps even the government. Because, what they are asking for is not much: a $100 a month for working 60 hours week which often amounts to 80 hours a week according to reports from trade union leaders. (Sidebar: industry insiders insist that is because workers want overtime, to which one can respond: should the industry allow overtime that increases working hours to 80 a week? Maybe not.) Some disagree with the ‘not much’ notion; they argue that a $100 wage rate is high enough to strip Bangladesh of the comparative advantage that it has in providing cheap garments to foreign buyers (such as Wal Mart, H&M, Gap, Macy’s among others). Others argue that wages should be around $60 a month to still be wage-competitive in the international market. But who is doing the math? And how?

We are no mathematician (or economist), but we know that total costs of making a product, even in economic terms, are not just the monetary costs of production, i.e. the cost of labor  (wages), raw materials, land (rent), and capital; there are social costs that need to be taken into account.  By definition, social costs are “costs of production that are not borne by the producer or included in the price of the product” (Paul Craig Roberts, 2013). The social cost of the garment industry, therefore, includes not just the textbook example of ‘pollution’ that is associated with all factories, but the cost in terms of physical and mental health problems incurred by workers as a result of working long hours, the cost borne by the workers’ children who are deprived of their parents, the cost of stress and anxiety that unsafe working conditions create, in addition to the direct cost of unsafe working conditions that has led to factory collapses and fires that led to injury and death of many workers that have, in turn, resulted in loss of income and loss of livelihood for many families. In such a scenario, it is difficult to exactly measure how much it costs to produce a garment. But this much is clear: the cost is much higher than what we are told, and a large portion of this cost is borne by the workers themselves.

As such, when analysts do the math to figure out the ‘optimum cost’ they more often than not make it a one-factor model, i.e., wages, and don’t factor in the afore-mentioned social costs. Thus, the basis for measuring optimal cost remains largely economic, and largely inadequate, much like the poverty index.

Side bar: the counter argument against incorporating social costs into the math can be that there are social benefits of businesses being businesses, as they employ a large number of people which generates income aka purchasing power for those people, which is again injected into the economy and invested in education, health.  But, all of this would have been true had there not been such levels of dissatisfaction and unrest among the people that these businesses employ; had the positive externalities outweighed the negative.

Collective bargaining gone violent

When workers can no longer negotiate with their employers about working conditions, including minimum wage, we perhaps get what we are seeing today: clashes between workers and police who have resorted to using rubber bullets and tear gas to dispel what they call “unruly workers”, factories being torched, garment manufacturers via BGMEA threatening to withhold wages and Eid bonuses. And the question, again, is why. Why aren’t they talking to each other across a table? The garment industry, being as important as it is for Bangladesh, should have had in place a system of negotiation that works, a system that does not increase the afore-mentioned social costs in terms of infrastructure (damaged property), police activities that could have been deployed elsewhere, a climate of unrest, street violence, and associated costs of violence on the environment, in addition to the direct costs associated with workers being on the streets instead of the factories in which they work.

Why don’t we see BGMEA – the representative of garment manufacturers, and trade unions – the representative of workers, sitting together across a table to discuss grievances and demands for better working conditions and wages? What is it that happens when workers want change? Are their trade unions not allowed a chair on the negotiating table?  Or are workers not being properly represented by their trade unions? How exactly do their demands get translated to violence on the streets?  Possible answers:

1)    BGMEA does not allow trade unions in their premises

2)    BGMEA allows trade unions but do not accept their demands

3)    BGMEA accepts part of the demands made by trade unions but not to the extent to make workers “happy”

4)    Negotiations break down and problems are deemed unsolvable by all parties

What should BGMEA do?

A. Create an environment where all voices are heard, understood, and respected.

B. BGMEA needs to ensure that negotiations take place at the table, not on the streets, not via threats. Relatedly, they need to take into account the cost to the society (and even the losses they face everyday, which amount up to several crores a day) when workers go on strike and production comes to a standstill. This increased costs and potential losses should be enough reason for them to ensure that the negotiating table is where negotiations take place.

C. They need to instill the idea of efficiency in business owners, instead of focusing on wages, as a one-way road to lower costs.

D. They need to be more compassionate, need to understand that the cycle of poverty needs to end in the lives of the workers, that that is the root of the problem—that workers are really protesting against poverty; willy-nilly industries have a role in that too. Had BGMEA ensured an income for their workers above poverty line (living on USD 1.50 a day, as set by the United Nations), many would have found that to be an acceptable solution.  As Kazi Anis Ahmed of Gemcon Group said, “Ideally, one should be able to make a living wage with no more than 60 hours/week. Whether RMG can take $1.50 for eight hours a day as a starting point, someone in the industry has to say.”

E. They need to be aware that workers have many needs, one of which is economic. As a global player, the RMG sector has to start incorporating elements of the corporate world that they serve such as health insurance, education benefits, and paid holidays for their workers.

F. In their effort to be globally competitive, BGMEA and factory owners have kept their wages low, which has resulted in Bangladesh becoming a destination for many clothes manufacturers across the world. However, events such as the Tazreen factory fire, the Rana Plaza collapse, as well as news of unrest among garment workers send chills across consumers, who respond by not purchasing from stores and brands with the ‘sweatshop’ stigma, which in turn affects decisions of the buyers in choosing their outsourced destination, resulting in businesses being driven away from Bangladesh. BGMEA needs to be cognizant of this stigma and its effects.

G. It is imperative to grade and then classify factories based on their working conditions including the wages they provide, so that there is transparency for both workers and buyers, regarding what they can and cannot expect from a factory with an associated grade. As such, a factory that earns A will provide a working environment that is conducive to productivity, will operate efficiently, pay minimum wages that are acceptable by workers; others will have to strive to earn that A. This way all the eggs are not in one basket, and the pressure is not global. It is up to BGMEA to create this classification system.

Whatever the case may be

There has to be a meeting of minds. Many minds. Minds of workers, trade unionist, relevant ministries and governing bodies (BGMEA), managers, buyers. The garment industry in Bangladesh cannot be viewed as ‘new age slavery’, as it has been since the Rana Plaza collapse that captured worldwide attention. For an industry as important as RMG, there must be a process that leads to healthy outcomes for workers, not just the economy. There should be no need for a rebellion; workers need to be treated as colleagues, as partners in development, not cash cows ready to be minted till they burn out. The day we all can view each other as partners, respect the lives and livelihoods of those who work for us, and those we work for, and organically work towards the common good, we can perhaps find harmony. There is no good in signing on to ILO conventions and talking about participatory processes if we cannot implement those ideas. There is no way that Bangladesh can sustain its comparative advantage in the RMG sector with workers who are consistently unhappy.

Relatedly, there must be zero tolerance on violence. On all levels. In all sectors. In all forms. All said and done, workers have the right to protest, but there has to be an acceptable ‘language of protest’ that has to be respected (and this applies to all forms of protests). And those protests cannot be met with violence. A ‘sit in’, a token strike, black armbands, and memorandum of demands placed to the public should not culminate in clashes with members of the police force or cadres of political parties. Because when protestors are met with police brutality (or any brutality), that is an injustice not just for those workers who are exercising their democratic rights, it is an injustice for a nation that believes in democracy. When protestors have to resort to lighting fires on buildings, it is a disgrace for BGMEA and garment manufacturers because it is a sign of failed talks/negotiations, a sign that there is no systematic process in which demands are heard and discussed cordially through proper channels. When such practices normalize everyday violence, it is at the expense of everyone who are forced to witness and experience the violence, and then use it when necessary when their turn comes, perpetuating a cycle of violence that can only incur irrecoverable losses for the nation. Needless to say, this cycle must be stopped. Moreover, we must be clear about where the violence is stemming from –from a need to stand up for themselves in reaction to violence inflicted upon them; from deep-seated poverty juxtaposed with deep-seated resentment at not being treated fairly, justly. For someone working up to 80 hours a week, that is the least that she can expect. The least she can expect is to live, even marginally, above the poverty line, with dignity.

And what exactly does it mean to live above that line? To have the freedom to lead an enhanced life not just through ‘income and wealth’, but “freedoms [that] depend on determinants such as social and economic arrangements (for example, facilities for education and health care) as well as political and civil rights (for example, the liberty to participate in public discussion and scrutiny)” (Sen, 1999).

The time has come to sit at the negotiating table. And talk.

References

Sen, Amartya. (1999) Development as Freedom. Oxford: Oxford University Press.

Al Jazeera. (2013). Factories ablaze as Bangladesh workers rally. Retrieved from: http://www.aljazeera.com/news/asia/2013/09/2013923143139644553.html on 9/28/2013.

5 thoughts on “Where have all the negotiating tables gone?

  1. BGMEA and Bangladesh labor unions etc are pretty much useless when it comes to worker rights. Also usually the trade unions are heavily politicized and so are their actions. I would have appreciated you guys delving more into “the math” instead of using it as a title and then meandering into social costs and such. I would want to know what the math REALLY is. For example, we all know people who have garments factories where there are no violent protests. I myself know of two. What is it that these garments owners are doing right? When the owners say increasing wages will lead to increased costs, is it really increased costs or do they mean less profits? (i think you touched on this issue but did not expand) if it is less profits, what is the percentage? Is it a matter of a 20 crore profit a month becoming 15 crore a month?

    I found it sweet that you gave a list of things that BGMEA should do. You are truly optimistic. Unfortunately it is the nature of man to not change, ever. not even in his own interest. no one can change, Owners would rather their factories burn down then listen to their workers. Probably an ego issue. How dare those ungrateful @#$% make demands!! That’s probably the thought process.

    I found this piece to be a little on the lazy side. Didn’t find any new information. You basically did some arm-chair research and wrote the piece. Would have appreciated some new insights, instead of talking about what we already see on the news. Its clear no one went and talked to a worker (or if you did then i didn’t find any impact of that info on this feature). And no answers regarding the difference between factories that get violent vs. factories that are managing fine. These are things we don’t know. Would have been nice to know. And not too hard either.

  2. 1. Please see point G, copied here for more on distinguishing between factories:
    “It is imperative to grade and then classify factories based on their working conditions including the wages they provide, so that there is transparency for both workers and buyers, regarding what they can and cannot expect from a factory with an associated grade. As such, a factory that earns A will provide a working environment that is conducive to productivity, will operate efficiently, pay minimum wages that are acceptable by workers; others will have to strive to earn that A. This way all the eggs are not in one basket, and the pressure is not global. It is up to BGMEA to create this classification system.”

    2. We are theorizing about the math, not doing it. The math cannot be based on one factor – wages, as it has become, and “optimum costs” need to be more inclusive.

    3. Armchair research? This isn’t research at all. This is our op-ed on the situation based on the lenses we have. These revolts are a consequence of bad working conditions, low wages, and most importantly failed negotiations. And the center piece of the article, as suggested by the title, is that – the negotiation process.

    4. It’s not about being “sweet”; when there is a dereliction of responsibility by BGMEA (or anyone else), we need to point it out, we need to hold them accountable. Again and again and every time they fail to do their job. That is what we are doing here.

    5. Thanks for your comments and a chance to clarify these pertinent points.

  3. yeah read point G. read every point. i appreciate you guys pointing out a “things to do”, but these are all general knowledge. i feel regarding the garments sector the public is in a “fog of war” state. no one really knows what’s going on. so an example of work ethics of good factories (or at least non violent factories) vs bad factories would have brought in some much needed clarity and would have made your editorial sharp and incisive.

    i felt your last article had a lot of teeth. this one’s soft. work harder.

  4. Ok, yes, this article is about the negotiation breakdown. And then you throw no light whatsoever on why. you simply ask the question and some very basic possibilities are floated. Which are centered on how the BGMEA behaves (BGMEA does not allow trade unions on their premises etc). Not on WHY. Yes you talked about rising wages leading to losing comparative advantage as a premise for garments owners to refuse to increase wages…and you did not follow that through. So yeah, i WOULD like to know why the negotiations are breaking down. But without any explanations being offered you went straight to suggestions of what BGMEA should do. Doesn’t sound right.

  5. Negotiations are breaking down perhaps because:

    1) BGMEA does not allow trade unions in their premises

    2) BGMEA allows trade unions but do not accept their demands

    3) BGMEA accepts part of the demands made by trade unions but not to the extent to make workers “happy” OR

    4) Negotiations break down and problems are deemed unsolvable by all parties

    If you ask owners of factories that are in this mess, they will blame it on the workers, as have many newspapers who have taken a strong anti-worker stand, calling them “unruly” and what not. And workers blame factory owners who don’t respect them. Our stance is pro-worker, and despite being ‘general knowledge’ as you call it, there has been little discussion about it/them.

    The point of the article, as far as I am concerned, is to ask BGMEA and relevant ministries, trade unionists, and owners to re-examine the process of negotiation. We don’t know WHY, Shakib, because, well, everyone lies. But that doesn’t mean that these actors should not be questioned. That’s what we are doing, we are raising questions, and providing an understanding of what may be going on based on conversations we have had with some of these actors.

    That said, you have raised some good points, which we can perhaps address in a follow up article.

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