Minimum wage – the way forward

For the last few days, the minimum wage for garment workers has been one of the hot topics in the country. Aggrieved RMG workers rejected the minimum wage proposed by the authorities as there was a substantial gap between their expectations and the proposed wage.

Consequently, RMG workers' protests engulfed Dhaka and surrounding areas, causing damage to valuable assets and leading to the loss of two innocent workers' lives. By having a robust, caring, and responsible process in place, we surely could avoid such tragic incidences.

Bangladesh does have a process to fix the minimum wage. We have an authority known as the Bangladesh Minimum Wages Board, established in 1959 following the ILO convention. As per the guidelines, the board forms a tripartite committee -- comprised of representatives from the government, factory owners and workers -- who recommend the minimum wage.

According to Bangladesh's labour laws, the minimum wage needs to be reviewed every five years. While fixing the wage, the committee considers the overall condition of the specific industry, cost of living of workers, standards of living, cost of production, productivity, inflation, type of work, risks and standards, business potential, the socio-economic condition of the country and other relevant factors.

It sounds like a comprehensive list and a well-defined process. Then why couldn't we reach an amicable solution?

Apparently, the gap between what the owners had proposed and what the labour organisations demanded was significant.

Labour organisations emphasised the unprecedented levels of inflation while owners accentuated an unfavorable global macro-economic environment which has led to less demand while unbearably higher cost of production and increased logistics costs are also adding to their woes.

They also highlighted the low productivity of our workforce.

It is true that Bangladesh is behind all seven garment-producing Asian countries except Nepal and Cambodia in terms of labour productivity despite being the second-largest garment exporter in the world after China.

According to the APO Productivity Data Book-2022, Bangladesh's labour productivity is 9.20 percent. The average labour productivity in South Asia is 10.90 percent.

One of the Bangladesh Knitwear Manufacturers and Exporters (BKMEA) leaders commented: "Workers in Vietnam produce 300 T-shirts an hour, in Sri Lanka the number is 350 and in China 400 while it is only 200 in our country. As a result, the wages of our workers are in no way lower than those of competing countries."

We need to keep in mind that productivity is a function of a better working environment, efficient technology, and nutrition. According to the World Health Organization, adequate nourishment can raise national productivity by 20 per cent.

A report by Global Alliance for Improved Nutrition (GAIN) says about 43 percent of garment workers were suffering from malnutrition. This challenge can be addressed by ensuring better pay to workers so they can afford nutritious food.

While fixing the minimum wage, we need to be absolutely fact-based. We can develop a mathematical formula to set the minimum wage as it is done in France so that any unnecessary dispute can be avoided. In France, the minimum wage is tied to the consumer price index and updated annually.

The time has come to revamp the process of fixing the minimum wage for the sake of all stakeholders and the country above all.

The writer is chairman and managing director of BASF Bangladesh Limited. Views expressed here are personal.