Minimum wage: Livable wage too a democratic right
Bangladesh does not have any national minimum wage. This indicates weakness and disorganized state of the economy, as well as the deprivation of the mass people. Although there are minimum wages in different sectors but these are not much in effect as well. Readymade garments industry is the biggest export oriented sector in the country but the minimum wage in the sector is paltry.
The minimum wage does not get any better despite all sorts of movements. An agitation demanding increase in the minimum wage in the garments sector has been going on for a while. A wage board has been formed, but the outcome is still uncertain. The state of other sectors are baggers description.
The minimum wage of Tk 8,000 set in the garment sector in 2018 was only half of the demand of different labour organisations. The basic salary was increased by Tk 1100, and various benefits of the factory owners were further increased due to this hike. I can remember well that the RMG owners demanded rise of their benefits as much as the increase in the minimum wage of the workers. Therefore they demanded tax cut and cash incentive from the government. After making the demand, they did not have to become frustrated like the workers despite waging movement and taking to streets for months. The day the owners raised the demand, the National Board of Revenue (NBR) and Bangladesh Bank issued two different circulars. In these two circulars the cash incentive was raised and tax at source for the RMG exporters and corporate tax were decreased.
The coronavirus epidemic at the beginning of 2020 created a calamity. Many workers were laid off and fell into debt. Then came the persistent price hike of fuel, gas, electricity and other commodities, alongside rise in the price of everything including transport fare and house rent. This disquieting trend of price hike continues. Now added with it is dengue, that hit hard the work and income of workers, and add the treatment cost to the list.
The prices of essential commodities shot up most. As per TCB, the highest rate of increase of prices of various such products from 24 September, 2018 to 24 September, 2023, is as follows (in percentage): Rice 15, pulses 120, flour 88, potato 80, crude soybean oil 95, salt 68, egg 67, milk 100, sugar 180, chicken 48 and fish 100. Due to continuous rise of price, the net value of minimum wage set in 2018 has now decreased to less than Tk 5,000. In other words, the workers should get over Tk 11,000 to maintain the lifestyle they would maintain at Tk 8,000 in 2018. The income of the workers did not increase, but the devaluation of taka against US dollar fetched the owners an extra amount of over Tk 900 billion in last one year.
Yet many illogical arguments are heard when the question of wage raise or rationalization comes forth. One such ill-argument is ‘the productivity of Bangladeshi workers is less and that’s the reason of low wage’. It is true that scope is there to boost the productivity of the workers of Bangladesh. But it should be kept in mind that the productivity mainly hinges on the role of the owners, technology, work environment, management, training, wage, nutrition and leisure. It all is part of the responsibility of the owners. To increase productivity, if that of the workers is low, depends mainly on the owners.
Another argument is, ‘readymade garment industry is not capable. The industry would collapse if wages are increased.’ But all the available statistics go against this argument. All the past instances of adjustment of wage (2006, 2010, 2013, 2018) in this sector due to movement and public pressure did not lead to collapse of the sector, rather it flourished the industry. The minimum wage was Tk 930 in 1994 while the export income in the sector was USD 2.09 billion. The amount of export income increased to USD 6 billion in 2006. When the minimum wage got increased to Tk 1662 in 2006, the export income rose to USD 13 billion in around 2010. The export income of the garment sector was USD 25 billion in 2013 after setting the salary at Tk 3,000 in 2010. After the wage was increased to Tk 5,300 in 2013, the export income in 2018, while the issue of wage hike appeared, was USD 29 billion. The minimum wage of Tk 8,000 was implemented at the beginning of 2019.
Then the real income of the workers decreased, and the crisis of livelihood increased. By this time the export in the sector has increased to USD 46 billion from USD 29 billion. This indicates the sector is becoming more efficient and its footing in the world market is getting stronger.
The minimum wage is calculated based on subsistence of a family. So the minimum wage cannot be in any sense below the poverty line income. A campaign is running strong that poverty is decreasing fast in Bangladesh. But the system to calculate poverty is not transparent here. A bit of math reveals the discrepancy of showing the low poverty line income by World Bank and the government. Data of Household Income and Expenditure Survey is the main source in this regard in Bangladesh. The latest survey was published in last April in Bangladesh. The overall calorie intake per capita per day is 2393.0 Kilocalories in HIES 2022. The survey mentioned basic consumption bundle that provides minimal nutritional requirements. These items are coarse rice, wheat, pulses, milk, oil, meat, fish, potatoes, vegetables, sugar and fruits. Egg was left out in the bundle. The workers need at least 3000 kilocalories per day based on their work. But the required kilocalorie for the upper line of official poverty line is considered to be around 2,200 kilocalories.
A calculation of the existing prices of these items on 24 September reveled that a four-member family needs at least Tk 23,000 a month only to avail these food items. Adding house rent, transport fare, treatment and study cost of children shows that a four-member family needs at least Tk 40,000 outside Dhaka and Tk 50,000 in Dhaka. In this consideration, the demand of setting minimum wage of Tk 25,000 is rather paltry and the owners should readily accept this demand. Experience shows that such partial rise of wage would boost this sector further.
It should be remembered that the demand of workers is not a matter of mercy, neither are the owners the parents of the workers. The wage that workers get now by working 10 to 14 hours is not normal income, they are supposed to get a living wage by working for 8 hours. Moreover, the rational demand of wage cannot be dismissed by giving reference that two or more persons of a family is wage earner. It becomes very unusual and unreasonable if the income of two-three members of a family is not equal to the income only one supposed to earn. This is what happening in Bangladesh. This situation must be changed. The national minimum wage must be livable. This is also as much democratic right as other rights such as right to vote, express opinion and association.
*Anu Mohammad is an economist, professor of Jahangirnagar University and editor of Sarbajankatha