2014 Annual Report on Korean Multinational Corporations’  Human Rights Practice

Field Research Report: Bangladesh (August 7 - 19, 2014)

Korean Transnational Corporations Watch (KTNC Watch)

[Advocates for Public Interest Law / GongGam Human Rights Law Foundation / Hope and Law / Korean House for International Solidarity / Lawyers for Democratic Society / International Labor Team / Korean Confederation of Trade Unions / Good Corporations Center]

This report was sponsored by the ‘Scenarios of Change Project’  of the Beautiful Foundation

2014 Annual Report on Korean Multinational Corporations’  Human Rights Practice

Field Research Report: Bangladesh

(August 7-19, 2014)

Korean Transnational Corporations Watch (KTNC Watch)

[Advocates for Public Interest Law / GongGam Human Rights Law Foundation / Hope and Law / Korean House for International Solidarity / Lawyers for Democratic Society / International Labor Team / Korean Confederation of Trade Unions / Good Corporations Center]

Sponsor: The Beautiful Foundation

Authors: Dong-Hyun Kim (Lawyer, Hope and Law); Sejin Kim (Lawyer, Advocates for Public Interest Law); Mikyung Ryu(International Director, Korean Confederation of Trade Unions); Young-Ah Park (Lawyer, GongGam Human Rights Law Foundation)

Date of Publication: December 2014

Publisher: APIL (Head Office of KTNC Watch)

#505, 47 Yool-gok ro, Jong-ro gu, Seoul, South Korea

Tel. (+82) 02-3478-0629 Fax. (+82) 02-3478-0527

Preface In 2013, South Korea’s Foreign Direct Investment (FDI) reached 33 billon USD, a 14% increase from the previous year that made Korea the 13th largest source of FDI in the world. With the rapid international expansion of Korean corporations, their human rights practice in overseas operations are also receiving attention. 72% of cases filed to the Korean NCP for breaching the OECD Guidelines for Multinational Enterprises are complaints against Korean corporations’ human rights violations abroad, while most of these cases involve labor union dissolution, nonpayment of wages, physical abuse, and layoffs. Thus, domestic human rights violations of laborers during the rapid growth phase of the 1970s and 80s in Korea are today repeating themselves abroad. As such, we saw a need for the government and civil society to take action against Korean corporations’ human rights abuses abroad, which, in turn, required a field investigation to better understand on the current situation. In particular, during the first few months of 2014, there were many instances of abuse in Southeast Asia in which Korean corporations are suspected to have been complicit: Korean corporations and the Korean Consulate are likely to have been implicated in the violent repression of Cambodian textile workers’ strike; a female employee of a subsidiary of Youngone Holdings Co., Ltd. was killed during a labor protest in Bangladesh; many workers were injured by private securities at a construction site for a new Samsung Electronics factory in Vietnam. In response, the Advocates for Public Interest Law (APIL), the head office of KTNC Watch, applied for support from the ‘Scenarios of Change Project’ of the Beautiful Foundation to conduct a field investigation of Korean corporations’ human rights conditions in the countries mentioned above. During the planning stage of the research, Cambodia was excluded since the Korean House for International Solidarity and the Korean Confederation of Labor Unions, both members of KTNC Watch, had already visited the country twice in 2014 and published reports. Instead, we decided to visit Philippines, where human rights and environmental issues surrounding dam construction were being raised. The ten researchers were selected amongst activists of organizations joining KTNC Watch, and the reports have been complied for each country visited. The kind and degree of human rights violations in which Korean corporations were involved were different in each country, but a common grievance involved the minimum wage. The minimum wage in the countries mentioned above were not enough to satisfy the basic living needs of the worker and his/her families, but many Korean corporations continued to pay no higher than the minimum amount. Besides releasing the findings of the field research in this report, KTNC Watch will use the information obtained to deal with these issues in various ways, and will take further action against Korean corporations’ human rights violations in other countries as well. December 25, 2014

APIL, Head Office for KTNC Watch

Table of Contents I. Introduction ----------------------------------- 09 1. Country Overview: Bangladesh A. General B. Economic Situation and Industrial Characteristics 2. Korean Multinational Corporations Operating in Bangladesh 3. Explaining the Selection for Report 4. Method of Filed Research

A. Period of Field Research

B. Researchers C. Detailed schedule of Field Research

II. Related Legal Statutes ------------------------------ 19 1. Bangladesh’s Ratification of International Human Rights Standards

A. Ratification of the ILO Conventions B. Ratification of International Human Rights Conventions

2. Domestic Statutes Related to Labor

A. Labor Act of Bangladesh 3. 2013 Increase of Minimum Wage in the Garment Industry 4. Domestic Statutes Governing Export Processing Zones and Private Export Processing Zones III. Major Findings from the Research: Korean Firms’  Human Rights Practice --------------------------- 35 1. Structural Problems in the Garment Industry

A. Importance of the RMG Industry in Bangladesh B. “The World’s Sewing Machine”: Dangerous Labor at the End of the Global Supply Chain C. General Labor Conditions in the Garment Industry

2. The Accord and Alliance A. Conclusion of the Accord and the Alliance B. Content of the Accord and the Alliance

C. Evaluation 3. Death of Employee at Subsidiary of Youngone Corporation: Human Rights Practice of Korean Corporations in Bangladesh

A. Youngone Corporation’s Relative Status in Bangladesh B. Youngone’s Account of the Incident’s Causes C. Youngone’s Contentions and Contrasting Testimonies and Reports D. Responsibility for the Incident E. Youngone’s Actions after the Incident F. Youngone’s Adherence to the OECD Guidelines for Multinational Enterprises

IV. Summary and Recommendations ----------- 61

Field Research Report: Bangladesh

I. Country Overview: Bangladesh A. General The official name of Bangladesh is “the People’s Republic of Bangladesh.” The country is located in the Northeast of the Continent of South Asia, bordering India and Myanmar. The population, as of 2014, stands at 158 million. Bangladesh is about 2/3 the size of the Korean peninsula (147,570 ㎢). About 98% of the population are Bengali, and 90% of the total population believe in Islam, the official state religion.1 Bangladesh is a unitary parliamentary constitutional republic, currently led by Prime Minister Sheikh Hashina of the Awami League who came into office in June 2009. The capital city is Dhaka, located between the East Asian Mountains and the Bay of Bengal; the city serves as the political and economic center of the country. Another major city is Chittagong, the biggest trading port in Bangladesh.

B. Economic Situation and Industrial Characteristics According to the World Bank, the GDP in 2013 was approximately 150 billion USD, implying a growth of 6.0% from the previous year. From 2007 to 2011, the average compound annual growth rate was 13.5%. The Asia Development Bank reports that Bangladesh had 6% real economic growth rate for the past five years.2

1 Korean Ministry of Foreign Affairs, “Overview of Bangladesh.”  Nov 2014.  2Korea Labor Foundation “Success Strategies for Personnel Management in Firms Operating in Bangladesh (Global Management and Labor: Bangladesh).” 2012. Pp. 50.  

Major Economic Indexes (Export Volume, Export Value, Import Value, External Balance, etc.)

2008   2009   2010   2011   2012  

Export volume index (2000 =

100)  

221.7077117   212.9125149   258.0642546   295.169767   300.7035541  

Export value index(2000 = 100)  

240.5634685   236.0748161   300.4288261   382.5199562   393.0646424  

External balance on goods and services

(current US$)  

-6692012826   -6366463961   -6633869734   -9746510605   -10385405740  

Import value index (2000 = 100)  

268.6029495   245.784082   313.1959923   407.6764607   384.2406845  

[Source: World Bank Database] Goods from the sewing industry make up most of the exports. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Ready-Made Garment (RMG) industry accounts for approximately 10% of the total GDP.3 RMG exports from Bangladesh are globally competitive. According to the World Trade Organization (WTO) data from 2012, Bangladesh is the fourth biggest exporter of clothing and garments in the world. Considering that the European Union is comprised of27 countries and that Hong Kong does not have any domestic production, Bangladesh may be regarded as the second biggest exporter of clothing products after China. Value   Share in world

exports/imports  Annual percentage change  

2011   1980   1990  

2000   2011   2005~11   2009   2010   2011  

3  Data from 2012 fiscal year. Korea Trade-Investment Promotion Agency (KOTRA). “Changes in the business environment of the Bangladeshi ready-made garment industry and issues.”  2013. Pp. 13.    

China   154   4   8.9   18.2   37.3   13   -11   21   18  

EU (27)   116   28.4   28.2   5   -15   2   16  

Hong Kong   25   -2   -18   5   2  

Domestic exports  

0   11.5   8.6   5   0.1   -39   -80   -28   -14  

Re-exports  

24   3   -11   6   2  

Bangladesh   20   0   0.6   2.6   4.8   19   15   25   27  

India   14   1.7   2.3   3   3.5   9   9   -6   28  

RMG exports from Bangladesh increased exponentially since 2000. According to the WTO data below, RMG exports totaled 5.067billion USD in 2000 from 643 million USD in 1990, before reaching 19.939 billion USD in 2011, accounting for 81% of total exports in 2011. Value   Share in economy’s

total merchandise exports  

1990   2000   2009   2010   2011   2005   2011a  

Bangladesh   643   5067   12525   15660   19939   74.1   81.6  

The most important reason for the competitiveness of Bangladeshi RMG exports is low wages. As the table below shows, manufacturing wages in Bangladesh are extremely low compared to other countries in competition. Compared to the base wage in China, the biggest exporter of RMG (449 USD or 395 USD), Bangladesh’s basic salary for manufacturing workers is meager (74 USD).

Comparison of Monthly Basic Salary Standards of Major Cities in Asia for Entry-Level Manufacturing Jobs

City (Country)  

Shanghai (China)  

Guangzhou (China)  

New Delhi (India)  

Jakarta (Indonesia)  

Karachi (Pakistan)  

Hanoi (Vietnam)  

Colombo (Sri Lanka)  

Phnom Penh (Cambodia)  

Dhaka (Bangladesh)  

Base Wage  

449   395   276   239   173   145   118   74   74  

(Unit: USD)

[Source: Japan External Trade Organization (JETRO). “Comparative Analysis on Investment-Related Costs.” Oct 2012.] Furthermore, thanks to its Least Developed Country (LDC) status, Bangladesh benefits from Generalized System of Preferences (GSP) in the European Union and other countries; when a RMG product from Bangladesh is exported to the EU, Japan, Canada, Australia, or another participating country, very little or no tariffs apply. 2. Korean Multinational Corporations Operating in Bangladesh Korean firms’ expansion into Bangladesh, mostly in the RMG industry, began in 1978 when Daewoo Co. made a joint investment in the sewing industry with the Bangladeshi government.4

4For further reference on the background for Daewoo’s initial entry into Bangladesh, see: “NPR Planet Mony, Nixon And Kimchi: How The Garment Industry Came To Bangladesh.” 2 Dec 2013. http://www.npr.org/blogs/money/2013/12/05/247360903/nixon-and-kimchee-how-the-garment-industry-came-to-bangladesh. Last accessed 24 Dec 2014.  

Currently, most of the firms are engaged in the RMG business. Youngone in particular has mass operations in Bangladesh, including the establishment of a private Export Processing Zone.

Youngone Subsidiaries Incorporated in Bangladesh

Name of Company   Abbreviation   Notes  

1   Youngone(CEPZ) LTD.   YCL  

2   Arirang Aviation LTD.   AAL   Subsidiary of YCK  

3   Youngone Sportswear(CEPZ) LTD.  

YSL  

4   Karnaphuli Sportswear Ind., LTD.  

KSL  

5   Lalmai Sportswear Industries LTD.  

LSL  

6   Titas Sportswear Industries LTD.  

TSL  

7   Arirang Aviation(IOM) LTD.  

AAI   Subsidiary of TSL  

8   Youngone Sports Shoes IND., LTD.  

YSS  

9   Kanaphuli Shoes Industries., LTD  

KSI   Subsidiary of YSS  

10   Youngone Shoes Accessories IND., LTD.  

YSA  

11   Youngone Hi-tech Sportswear IND., LTD.  

YHT  

12   Savar Sportswear Company LTD.  

SSL  

13   Youngone Padding(CEPZ) LTD.  

YPL  

14   Youngone Garment Accessories IND., LTD.  

YGA  

15   Shinhan Emulsion Co., LTD.  

SEL  

16   Savar Dyeing & Finishing Industries LTD.  

SDF  

17   Youngone Synthetic Fibre Products IND., LTD.  

YSF  

18   Sungnam Textile Mills LTD.  

STL  

19   Surma Garment Washing & Finishing Co., LTD.  

SWL  

20   Sungnam Leather and Sports Products IND., LTD.  

SLS  

[Source: Youngone Holdings Co. First Half of the Year Report. June 2014.]

The following table is a list of Korean corporations operating in EPZs in Bangladesh, according to the BEPZA (Bangladesh Export Processing Zones Authority) website. Besides the firms below, a large number of Korean companies are doing business in areas outside the EPZs.

Korean Corporations Operating in Export Processing Zones

Name of Company   Type of Industry  

1   Daeyu Bangladesh Ltd.   Textile  

2   Dhakarea Ltd.   Caps  

3   Dong Bang Facilities(BD) Ltd.  

Miscellaneous  

4   DongA Leather Ltd.   Footwear and Leather Goods  

5   Everway Chemicals (BD) Ltd.   Chemicals and Fertilizer  

6   Gunze United Ltd.   Garments and Accessories  

7   Hyopshin Company Ltd.   Textile  

8   J & J Medical (Bangladesh) Ltd.  

Miscellaneous  

9   Jae Mee Embotitch (Pvt.) Ltd.   Garments and Accessories  

10   Ju Hyung Ind. Co. Ltd.   Garments and Accessories  

11   Juksan (BD) Ltd.   Garments and Accessories  

12   New Star Hilon Co. Ltd.   Garments  

13   New Star Oriental Ltd.   Textile  

14   Savar Dyeing & Finishing Ind. Ltd.  

Textile  

15   Savar Sportswear Company Ltd.  

Garments  

16   SGWICUS (BD) Ltd.   Garments  

17   Sungnam Textile Mills Ltd.   Textile  

18   Swan Interlining Co. Ltd.   Garments and Accessories  

19   Swan Lon Co. Ltd.   Garments  

20   Youngone Hi-Tech Sportswear Ind., Ltd.  

Garments  

21   Youngone Synthetic Fibre Products  

Plastic goods  

[Source: BEPZA]

3. Explaining the Selection for Report

With the lowest minimum wage in Southeast Asia set by the government, Bangladesh, with a population of 160 million, has become the manufacturing hub of well-known American and European clothing brands and distributors. On April 24, 2013, the Rana Plaza, a commercial building in the Savar area in the Northeast of Dhaka, collapsed. 1,129 people died from this incident, and another 2,500 injured. This incident was particularly shocking because it was revealed that the factory manager at the time – although he was informed of the risk of collapse – had prevented the workers from exiting by blocking the doors and forcing them to work, even when the workers tried to escape . Rana Plaza is an eight-story building that houses five garment manufacturing factories, a hub for labor-intensive

manufacturing industries and international clothing brands near Dhaka. The clothing brands understood the Rana Plaza incident to have occurred from improper management of the building and fire risks, but criticism was raised that the tragedy was rooted fundamentally in the minimum wage that fails to reach even the minimum cost of living, and chronic subcontracting issues in the clothing industry; boycotts against fast-fashion brands in Bangladesh spread internationally. Despite the problems in the garments industry, Korean investment in the Bangladeshi manufacturing industry totaled 185 million USD, 85.6% (158 million USD) of which is poured into textile and clothing industries (as of September 2013, cumulative). A look at Korea’s investment in textile and clothing industries by country (as of September 2013, cumulative) reveals that Bangladesh received 158 million USD, Cambodia 111 USD, Sri Lanka 99 million USD, and Myanmar 69 million USD; thus, Bangladesh draws in the most Korean investment out of the four countries.5 Thus, we felt a need to investigate whether the criticism on the clothing industry in Bangladesh applies also to Korean firms operating in the area. We started with researching legal statutes, structure, and labor conditions related to the clothing industry. Furthermore, Youngone Corporation, which operates one of the largest manufacturing businesses in the Bangladeshi RMG industry, is a Korean enterprise. Youngone has 70% of its manufacturing plants located in Bangladesh, besides operating 17 manufacturing corporations and one airline company, hiring around 68,000 workers. In January 2014, a female worker died from gunshot fired by police cracking down on a protest by 5,000 workers at a factory of Karnaphuli Shoe Industries Ltd., one of the subsidiaries of Youngone. However, Youngone and the workers had contradictory accounts of the reasons for the protest, prompting us to investigate the facts of the incident as well. 4. Method of Field Research

A. Period of field research August 7 (Thurs) to August 19 (Tues), 2014

B. Researchers Dong-Hyun Kim (Lawyer, Hope and Law); Sejin Kim (Lawyer, Advocates for Public Interest Law); Mikyung Ryu (International Director, Korean Confederation of Trade Unions); Young-Ah Park (Lawyer, GongGam Human Rights Law Foundation)

C. Method of Field Research

The research was conducted mainly through interviews with local activists, garment industry workers, labor organizations, Bangladesh government officials, Korean garment business management, and officials of the Korean embassy and KOTRA. The interviews took place in

5 Korea Export-Import Bank. “Recent Labor Conditions in the Bangladeshi RMG Industry and Issues.”  2013.  

both Dhaka and Chittagong. II. Related Legal Statutes 1. Bangladesh’s Ratification of International Human Rights Standards

A. Ratification of the ILO Conventions

Ratification Status of the Eight Fundamental Conventions of the ILO

Subject Area   Name of Convention   Ratification Status (ratified year)  

Discrimination   Equal Remuneration Convention (No. 100)  

Yes (1998)  

Discrimination (Employment and Occupation) Convention (No. 111)  

Yes (1972)  

Child labor   Minimum Age Convention (No. 138)  

No  

Worst Forms of Child Labor Convention (No. 182)  

Yes (2001)  

Forced labor   Forced Labor Convention (No. 29)  

Yes (1972)  

Abolition of Forced Labor Convention (No. 105)  

Yes (1972)  

Freedom of association   Freedom of Association and Protection of the Right to Organize Convention (No. 87)  

Yes (1972)  

Right to Organize and Collective Bargaining Convention (No. 98)  

Yes (1972)  

Ratification Status of the Four Governance Conventions

Subject Area   Name of Convention   Ratification Status (ratified year)  

Labor inspection   Labour Inspection Convention (No. 81)  

Yes (1972)  

Labour Inspection (Agriculture) Convention, (No. 129)  

No  

Employment policy   Employment Policy Convention (No. 122)  

No  

Tripartite consultation   Tripartite Consultation (International Labor Standards) Convention, 1976 (No. 144)  

Yes (1979)  

B. Ratification of International Human Rights Conventions

Name of Convention   Ratification Date  

Convention on the Elimination of Racial Discrimination (CERD)  

June 11, 1979  

International Covenant on Civil and Political Rights (ICCPR)  

September 6, 2000  

International Covenant on Economic, Social and Cultural Rights (CESCR)  

October 5, 1998  

Convention to Eliminate All Forms of Discrimination Against Women (CEDAW)  

November 6, 1984  

Convention Against Torture (CAT)   October 5, 1998  

Convention on the Rights of Child (CRC)   August 3, 1990  

International Convention on the Protection of Rights of All Migrant Workers (CMW)  

August 24, 2011  

Convention on the Rights of Persons with Disabilities (CRPD)  

November 30, 2007  

2. Domestic Statutes Related to Labor

A. Labor Act of Bangladesh

(1) Overview The Bangladesh Labor Act was enacted in 2006, incorporating 25 labor-related statutes into one piece of legislation. After the Rana Plaza incident, following domestic and international pressure, the government revised the Labor Act in July 2013. New regulations on industrial safety were added, and the clause dictating that the list of labor union leaders be sent to the employer during the registration process of a labor union was eliminated. However, the clause requiring 30% of workers to join in order to establish and register a labor union was not revised. On the other hand, to improve the effectiveness of the law, the Office of the Chief Inspector of Factories and Establishment was elevated to the Department of Inspection of Factories and Establishment (DIFE). DIFE is scheduled to have 23 regional offices and 993 employees, 575 of whom will be Labor Inspectors; 392 new positions were added and 107 Shop and Establishment Inspectors were elevated to Labor Inspectors to the 72 original Labor Inspectors.6 However, the Labor Act does not apply to governmental organizations, not-for-profit medical, care and educational institutions, research institutions, railroad administration, communication and post officers, farms with less than five employees, and domestic workers. (2) Classification of Workers According to Article 4 of the Labor Act, workers are classified into ‘apprentice,’ ‘badli (alternative),’ ‘casual,’ ‘temporary,’ ‘probationer,’ and ‘permanent.’ . (3) Letter of Appointment, Identity Card, and Service book According to Articles five and six, every employer must provide an appointment letter and an identity card to all employees. Employers further have the responsibility to keep and manage a service book. (4) Retrenchment, Dismissal, and Termination of Employment The Labor Act differentiates retrenchment, discharge from service, (disciplinary) dismissal, and termination of employment. However, to terminate employment, the employer is not required to show fair cause. Though, depending on the type of termination, the amount of compensation and the notice period or wages provided based on the notice period varies. (a) Requirements for retrenchment According to Article 20 of the Labor Act, a worker who has been in continuous employment for at least a year not only receives one month’s notice in writing or the wages for the period of 6 “Technical Progress report: Staying Engaged - A Sustainability Compact for continuous improvements in labour rights and factory safety in the Ready-Made Garment and Knitwear Industry in Bangladesh.” 8 Jul 2014. http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152657.pdf  

notice in lieu of such notice, but also receives a compensation equivalent to 30 days’ wages or severance pay (called ‘gratuity.’ wages payable on termination of employment of a worker equivalent to 30 days’ wages for every completed year of service; if worker had been in employment for over 10 years, gratuity is calculated as the equivalent of 45 days’ wages), whichever is higher. The notice in writing must be submitted to not only to the Chief Inspector or a civil servant appointed by the Chief, as well as the collective bargaining agent, if applicable. The only requirement for retrenchment given is “redundancy.” (b) Discharge from service According to Article 22, a worker may be discharged from service for reasons of physical or mental incapacity or continued ill-health certified by a registered medical practitioner. No prior notice is needed, but the employer must compensate the equivalent of thirty days’ wages for every completed year of service, or gratuity, whichever is higher. (c) Dismissal (disciplinary) According to Article 23, if a worker is convicted for any criminal offence, or is found guilty of misconduct listed in Article 23, clause 4, in accordance with Article 24, the worker may be dismissed without prior notice. In this case, the worker is compensated the equivalent of 14 days’ wages for every completed year of service, or gratuity, whichever is higher. However, no compensation is payable if the worker committed theft, fraud or dishonesty in connection with the employer’s business or property. (d) Termination of employment Article 26 holds that an employer provide a dismissal notice in writing 120 days in advance for workers who are permanent and remunerated monthly; 60 days in advance for other permanent workers; 30 days for temporary workers remunerated monthly; 14 days for other workers. However, if the purpose of employment is completed, paused, discontinued, or stopped, this regulation does not apply. Prior notice can be replaced by the payment of wages equivalent to the days in the period of notice. Besides, an employer must compensate the equivalent of 30 day’s wages for every completed year of service or gratuity, whichever is higher. (5) Working Hours and Leave (Chapter IX) (a) Working hours Workers in general cannot work for more than eight hours per day, and 48 hours per week. While overtime work is allowed, it cannot exceed 60 hours per week, and on average 56 hours per week in any year. A worker is supposed to receive twice the regular wages for overtime compensation. Most governmental organizations have a five-day working week, with working hours from 9 a.m. to 5 p.m. measuring up to 40 hours per week (in accordance with Islamic beliefs, Fridays and Saturdays are off-days). For regular corporations other than factories, a 44-hour work week is common, with working hours from 9 a.m. to 5 p.m. Sunday to Thursday, and Fridays off. Large firms tend to stick to a five-day work week but many small- and medium-sized enterprises require work on Saturdays from 9 a.m. to 1 p.m. Factories are usually run on a six-day work week, giving only Fridays off. (b) Overtime Work

Workers have the right to receive an overtime allowance equivalent to twice the ordinary rate of basic wage. Since the minimum wage is extremely low and cannot meet the actual minimum cost of living, it is common for garment workers to work five to eight hours overtime in order to maintain their living. Since the overtime allowance is calculated based on the basic wage, the proportion of basic wage to minimum wage is a very important matter for garment industry workers.7 (c) Breaks and holidays All workers can use ten days of paid vacation per year, as well as 11 days of vacation for national holidays. A worker who has worked for over one year can, in the following 12 months, use a maximum of 40 days of leave, calculated one day per 18 workdays of the previous year If the employer had not permitted the worker to take the entitled leave, leave exceeding 40 days is also allowed. An employee who labored on a day-off per request of company can receive a special leave equivalent to the days he or she worked. Similarly, an employee who worked on a national holiday receives two days of special leave in addition to substitute holidays. (6) Wages (a) Time of payment of wages (Article 123) The wages must “be paid before the expiry of the seventh day after the last day of the wage period in respect of which the wages are payable.” (b) Permissible deductions (Articles 125, 128)

(a) fines imposed under section 25; (b) deductions for absence from duty; (c) deduction for damage to or loss of goods expressly entrusted to the worker for custody, or for loss of money for which the worker is accountable, where such damage or loss is directly attributable to the worker’s neglect or fault; (d) deductions for house-accommodation supplied by the employer; (e) deductions for such amenities and services, other than tolls and raw materials required for the purpose of employment, supplied by the employer as the Government may, by general or special order, authorize; (f) deductions for recovery of advances or loans or adjustment of overpayments of wages; (g) deductions of income-tax (h) deductions required to be made by order of a court or other authority competent to make such order; (i) deductions for subscriptions to which the provident Funds Act (1925) applies or any other recognized provident fund as defined in the Income Tax Ordinance or any provident fund approved in this behalf by the Government, during the continuance of such approval; (j) deductions for payments to any co-operative societies approved by the Government or to a scheme of insurance maintained by any Government Insurance Company or Bangladesh postal Department;

7 Kasheful, Hoda and Iqbal Tunazzina. Minimum Wage 2013 - An Insight. http://risebd.com/2013/12/08/gazette-minimum-wage-2013/  

(k) deductions, made with the written authorization of the workers for the contribution to any fund or scheme constituted or framed by the employer, with the approval of the Government, for the welfare of the workers or the members of their families or both, and (l) deduction of subscription for the CBA Labor Union.

Deductions other than those specified above are prohibited. Deductions for services provided by the company are permissible only when the worker agreed to the service or convenience, and cannot exceed the value of the provided accommodation, convenience, or services. The government may further impose other requirements in the case of deductions made for convenience or services provided. (7) Minimum Wage (Chapter XI) (a) Organization of the Minimum Wage Board The board consists of a chairman appointed by the government, an independent member, a member to represent the employers, a member to represent the workers, a member to represent the employers of the industry concerned, and a member to represent the workers engaged in such industry. (b) Minimum wage If the government decides, in view of prevailing rates of wages in a certain industry, that a minimum wage is necessary, it can direct the Minimum Wage Board to recommend a minimum wage. The government may then announce the recommended wage through official communication. If the government decides that the minimum wage is not fair to either the employers or the workers, it can request the board to reconsider. (c) Binding Force of the minimum wage Announced minimum wage rates are binding to all employers applicable, and employers cannot pay wages lower than the minimum wage rate. The force of the minimum wage may not affect, in any way, the right of a worker to receive wages higher than the minimum wage because of contract, court decision, or other reasons; and to continue to enjoy amenities and other advantages that are customary for him to enjoy. (8) Trade Unions and Industrial Relations (Chapter XIII) (a) Definition of ‘worker’ in the context of industrial relations A person who has been removed from employment in connection with or as a consequence of that dispute is included, but the definition does not include “a person employed as a member of the watch and ward or security staff or fire-fighting staff or confidential assistant or telex operator or fax operator or cypher assistant or any establishment.” (b) Establishment of a trade union An unregistered labor union cannot engage in labor union activities, nor receive labor union fees outside of membership fees.

The Labor Act of 2006 stipulated in Article 178, Clause 3 that the civil servant in charge of labor union registration must forward a copy of the application for registration and the list of union executives to the employer. This clause prompted criticism that employers may oppress union leaders with the list provided in advance, making it difficult for labor unions to be established; the amendments in 2013 thus removed this requirement. However, some have argued that the deletion of this clause permits employers who dismiss union executives to make the excuse that they did not know of their union leadership. In connection with this issue, Article 186 dictates that while the application for registration of a trade union is pending, no employer may change the conditions of employment or terminate the employment of any worker who is an executive member of the trade union. The 2013 amendments did not eliminate Article 179 Clause 2 which sets down the minimum membership requirement of “thirty percent of the total number of workers employed in the establishment in which it is formed” for registration. It has been pointed out that this clause constitutes an obstacle to establishing trade unions, particularly in large workplaces. If the Director of Labor finds the application to be deficient in some legal aspect, he can communicate such objection in writing to the trade union, and may further reject the application if the response is not satisfactory (Article 182). It has been pointed out that this article has been abused by Directors of Labor, making it difficult for workers to form labor unions. It is possible to appeal the decision of a Director of Labor to the Labor Court, but as we will discuss later, labor courts are largely inaccessible and ineffective as a remedy because of long pending periods. (c) Unfair labor practices Article 195 lists the following as unfair labor practices on the part of employers:

(a) impose any condition in a contract of employment seeking to restrain the right of an employee to join a trade union or continue his membership of a trade union; (b) refuse to employ or refuse to continue to employ any person on the ground that such person is, or is not, a member or officer of a trade union; (c) discriminate against any person in regard to any employment, promotion, condition of employment or working condition on the ground that such person is, or is not, a member or officer of a trade union; (d) dismiss, discharge, remove from employment or threaten to dismiss, discharge or remove from employment a worker or injure or threaten to injure him in respect of his employment by reason that the worker is or proposes to become, or seeks to persuade any other person to become a member or officer of a trade union, or participates in the promotion; (e) induce any person to refrain from becoming, or to cease to be a member or officer of a trade union, by conferring or offering to confer any advantage on, or by procuring or offering to procure any advantage for such person; (f) compel or attempt to compel any officer of the collective bargaining agent to arrive at a settlement, by using intimidation, coercion, pressure, threat, confinement to a place, physical injury, disconnection of water, power and telephone facilities and such other methods;

(g) interfere with, or in any way influence the election for the CBA; (h) recruit any new worker during the period of strike under section 211 or during the currency or a strike which is not illegal, except where the conciliator has, being satisfied that complete cessation of work is likely to cause serious damage to the machinery or installation, permitted temporary employment or a limited number of workers, in the section where the damage is likely to occur; (i) deliberately fail to obey the recommendations by the participation committee; (j) fail to give reply to any communications made by the collective bargaining agent in respect of any industrial dispute; (k) transfer the president, general secretary, organizing secretary or treasurer of any registered trade union in contravention of section 187; (l) commence, continue, instigate or incite others to take part in an illegal lockout.

On the other hand, Article 196 lists unfair labor practices on the part of workers:

(a) intimidate any person to become, or refrain from becoming, or continuing to be, or ceasing to be a member or officer of a trade union; (b) induce any person to refrain from becoming, or cease to be a member or officer of a trade union, by conferring or offering to confer any advantage on, or by procuring or offering to procure any advantage for, such person or any other person; (c) compel or attempt to compel any worker to pay, or refrain from paying, any subscription towards the fund or any trade union by using intimidation, coercion, pressure, threat, confinement to a place, physical injury, disconnection of telephone, water or power facilities or such other methods; (d) compel or attempt to compel the employer to sign a memorandum of settlement or to accept or agree to any demand by using intimidation, coercion, pressure, threat, confinement to or ouster from a place, dispossession, assault, physical injury, disconnection of telephone, water or power facilities or such other methods; (e) commence, continue an illegal strike or a go-slow; or instigate or incite others to take part in an illegal strike or a go-slow; (f) resort to obstruction of transport or communications system or destruction of any property in furtherance of any demand or object of a trade union.

With regards to Article 196, Clause 2 above, (a) and (b) have received criticism for restricting labor union activities because of obscure wording.8 (d) Federation of labor unions Trade unions have the right to form and join federations, and any such union and federation have the right to affiliate with any international organization (Article 176). The 2013 amendments, however, tightened the requirements for forming a federation: five or more trade unions in a similar industry are needed to form a federation, compared to the previous requirement of two or more unions. 8 ILO, Observation (CEACR) - adopted 2013 published 103rd ILC session (2014), Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87) Bangladesh  

(9) Labor Courts (Chapter XIV) Labor courts, formed in accordance with the Labor Act, have exclusive jurisdiction over disputes related to the regulations in the Labor Act. A labor court is comprised of a chairman (judge), a workers’ representative, and an employers’ representative. However, only the chairman (judge) presides in criminal cases and disputes involving wages and industrial accidents. A workers’ representative and an employers’ representative are selected by the chairman from a panel of six candidates each. Parties may appeal the decision of a labor court to the Labor Appellate Tribunal. There are seven labor courts nationwide in Bangladesh, a miniscule number compared to 1,300 magistrate courts in the country. Labor courts are thus deemed to be professional, but largely inaccessible because a worker who resides in an area without a labor court must travel to a court in another area, and because it takes an excessively long period of time for a case to be processed, making the court an ineffective remedy for protecting workers’ rights.910 3. 2013 Increase of Minimum Wages in the Sewing Industry A. Minimum Wage Scheme from the 2010 increase until November 2013 (excluding EPZs)

9 Legal Enforcement of Health and Safety Law in Bangladesh, The Bangladesh Worker Safety Programme, Centre for Corporate Accountability  10 http://www.mole.gov.bd/index.php?option=com_content&task=view&id=391&Itemid=448  

Grade   Basic salary   House rent (40% of basic salary)  

Medical allowance  

Gross salary  

1   6,500   2,600   200   9,300  

2   5,000   2,000   200   7,200  

3   2,870   1,148   200   4,218  

(Unit: Bangladesh taka)

4   2,615   1,046   200   3,861  

5   2,395   958   200   3,553  

6   2,230   892   200   3,322  

7   2,000   800   200   3,000  

Apprentice   2,500  

         

         

B. Minimum Wage Scheme released November 21, 2013, effective December 1, 2013 (excluding EPZs)

(Unit: Bangladesh taka)

Grade   Basic salary  

House rent   Medical allowance  

Transportation allowance  

Food allowance  

Gross salary  

1   8,500   3,400   250   200   650   13,000  

2   7,000   2,800   250   200   650   10,900  

3   4,075   1,650   250   200   650   6,505  

4   3,800   1,520   250   200   650   6,520  

         

         

         

         

         

         

   

5   3,550   1,412   250   200   650   6,042  

6   3,270   1,308   250   200   650   5,678  

7   3,000   1,200   250   200   650   5,300  

Apprentice   2,200   880   250   200   650   4,180  

C. Minimum Wage Scheme from the 2010 increase until November 2013 (EPZs only)

(Unit: USD)

Grade   Basic salary   House rent   Medical allowance  

Gross salary  

Skilled worker   60%  

30%  

10%  

109  

Senior operator   67  

Operator   61  

Junior operator   55  

Assistant   48  

Apprentice   39  

D. Wage standards released November 21, 2013, effective December 1, 2013 (EPZs only)

(Unit: Bangladesh taka)

Grade   Basic salary   House rent (40% of basic salary)  

Medical allowance  

Gross salary  

Apprentice   2,800   1,120   560   4,480  

Junior operator   4,200   1,680   560   6,440  

Operator   4,500   1,800   560   6,860  

Senior operator   4,800   1,920   560   7,280  

Skilled worker   7,600   3,040   560   11,280  

Furthermore, BEPZA’s announcement of minimum wage standards on December 23, 2013 states that “in addition to the above gross wage, food or food allowance and transport or transport allowance shall be provided by the enterprises. The enterprises those are already providing food /food allowance and transport / transport allowance shall continue and it shall not be less than what the workers are getting at this moment." 4. Domestic Statutes Governing Export Processing Zones and Private Export Processing Zones EPZs are special economic zones established by the Bangladesh Export Processing Zones Act (1980) with the purpose of attracting foreign investment. There are eight EPZs in Bangladesh,

which provide benefits including decent facilities, stable supply of electricity, tax exemption for a set period of time, and tariff exemption. All EPZs are under the jurisdiction of the BEPZA, an institute directly reporting to the Prime Minister. BEPZA was established by the 1980 Bangladesh Export Processing Zones Authority Act; it is currently headed by an incumbent military general.11 BEPZA has branch offices in EPZs around the country, managing and administering EPZs and dealing with corporate grievances, labor disputes, and other issues. BEPZA determines separate minimum wage standards for EPZs. Based on the Export Processing Zones Workers Welfare Association and Industrial Relations Act (2010) and other related statutes, establishing a labor union under the Labor Act is not permitted in EPZs. Instead, a Workers’ Welfare Association may be set up in its place.12 However, a Workers’ Welfare Association is practically under the control of employers and the BEPZA in its establishment and management, prompting criticism that it fails to serve as a channel through which employees may communicate their demands to and negotiate with employers.13 However, BEPZA does not have control over the KEPZ (Korea Export Processing Zone), the only private EPZ in Bangladesh that Youngone Corporation developed and currently owns in Chittagong. KEPZ was set up under the Bangladesh Private Export Processing Zones Act (1996), and legal statutes related to EPZs do not apply to the KEPZ. Some argue that since there do not exist any stipulations excluding the 2006 Labor Act, it should be possible for employees in the zone to form labor unions in accordance with the Labor Act. III. Major Findings from the Research: Korean Firms’  Human Rights Practice 1. Structural Problems in the Garment Industry

A. Importance of the RMG Industry in Bangladesh The RMG industry has a very important position in Bangladesh, accounting for 10% of GDP and 80% of exports. 4 million workers are employed in the industry, supporting around 20 million people. There are approximately 5,700 factories manufacturing clothing. Most of the factory ownership is domestic, but the majority of the foreign firms are located in the EPZs in Dhaka and Chittagong. 34 out of 324 members of the parliament are clothing factory owners; RMG industry has significant influence in politics as well.

11 A.K.M Nasim. Strengthening democratic practices in Bangladesh, empowering workers in Export Processing Zones. 11 Feb 2014. http://www.ned.org/sites/default/files/AKM-Nasim-PPT.pdf.  12 Stein & Partners. “Welfare Associations’ to negotiate for rights at Bangladesh EPZ 2014.” Pp. 7. http://www.steinandpartners.com/safe-work/welfare-bodies-to-bargain-for-rights-at-bangladesh-epz  13 A.K.M Nasim. Strengthening democratic practices in Bangladesh, empowering workers in Export Processing Zones. Feb 11 2014. http://www.ned.org/sites/default/files/Nasim%20Event%20Highlights.pdf  

In 1971, after Bangladesh gained independence from Pakistan through the Bangladesh Liberation War, the government turned the jute factories Pakistani owners had left behind into state-owned facilities. However, after the military government took power in 1975, state ownership was abandoned for privatization, leading to the formation of EPZs seeking to attract foreign investment. Thus, the government added the benefit of ‘no legal restrictions’ on top of low wages and abundant labor; various legal statutes are not applicable to the EPZs, and the formation of labor unions is forbidden. Bangladesh is the second biggest exporter of RMG in the world, surpassed only by China. After seizing power in 1980 through a coup, General Mohammad Ershad launched two measures to encourage private business and decrease the role of the government in the economy: to allow businesses and banks to use back-to-back letter of credit (system that puts the burden of default on the bank) and to approve bonded warehouses. As a result, the textile industry expanded exponentially. Moreover, China’s exports to the US had increased close to 80% after the Multi-Fiber Arrangement (MFA) of 1974, a protective policy that sought to control the amount of imports into developed countries, expired in 2005; pressure from the American textile industry and labor unions prompted the Bush government to impose quotas on China, who in turn voluntarily decreased its exports to avoid a trade war. As a consequence, US and European firms evading wage increases in China began to rely on Bangladesh again for its labor, consolidating Bangladesh’s position as a major source county for the international fast-fashion industry. Large retailers and mid- to low-priced clothing brands like Walmart, Tesco, Uniqlo, PVH, Levi’s, the Gap, Nike, C&A, H&M, Zara are at the center of the expansion of the RMG industry in Bangladesh. B. “The World’s Sewing Machine”: Dangerous Labor at the End of the Global Supply Chain The fire at the Tazreen fashion factory at the end of 2012 that killed at least 112 people and the Rana Plaza collapse that took the lives of more than one thousand people in 2013 revealed the dire conditions of workers at the end of the supply chain of ‘fast-fashion’ to the world. The tragedies did not arise solely from the lack of adequate safety facilities; workers had been unable to escape the fire because of the customary practice of locking the doors from the outside to control the movement of workers, and had been forced to continue working despite previous warning of collapse in order to meet deadlines determined by buyers. These incidents raised voices demanding that global clothing brands that maximize profits by quickly supplying merchandise produced cheaply through extremely dangerous working conditions must take responsibility. “Subcontracting” was cited as one of the reasons for dangerous working environment. . In November2013, the Dhaka Herald, a Bangladeshi newspaper, described that “many big companies take huge volume of direct export orders from the international buyers and give sub-contract to different factories as they are not able to produce such huge clothing items and supply in time as required by the international buyers” and that these companies also make extra profit through this process.14 14 Sub-contracting guideline for apparel industry drafted, November 6, 2013, Dhaka Herald. http://www.dhakaherald.com/news/business/sub-contracting-guideline-for-apparel-industry-drafted  

In August 2013, Fault Lines, an Al Jazeera program, dealt with the custom of “Subcontracting” in its investigative documentary entitled “Made in Bangladesh.”15 Samie’s Finishing House, company in charge of finishing work for products delivered to Walmart and Gap, was not registered with the BGMEA, and most of the work was performed by adolescents under the age of 15. At the Tazreen Fashion factory where the fire occurred, remnants of a garment with a Walmart label was found. Walmart had initially denied any relationship with the factory, before changing its position to contend that “Simco” with whom they had originally formed a contract had illegally subcontracted Tazreen Fashion. Simco in turn argued that it had given the subcontract because the orders were too much, but Walmart quitted business with Simco as a result. The April 2014 report by the Center for Business and Human Rights at New York University’s Stern School of Business describes that these unregistered subcontractors “have been the auxiliary engines of Bangladesh’s incredible production capacity.” The report further states that “as contracts are subcontracted to one factory and sometimes re-subcontracted to another, margins get smaller and smaller and oversight becomes more distant. Factory owners at the bottom of the sector cannot afford the most basic investments to improve safety and working conditions. These facilities often lack clean drinking water and toilets, conditions are cramped, and basic safety equipment is missing. Regulations that are difficult to apply at the top of the sector – either by the government or private companies – are much less likely to extend to this network of indirect suppliers […]Yet the business of garment production in its current form would not be possible without subcontracting.” Subcontracting occurs because grad-scale factories seek to more easily secure capital from banks which prefer factories with large volumes of orders and deliveries, while small-scale factories do not have the capacity to directly receive orders from global brands. Buyers contend that they forbid obscure subcontracting as a policy, but factory owners argue that buyers “turn a blind eye to this practice, they do not care how they receive the products.” Mujibul Haque Chunnu, the Minister of Labor and Employment, stated in our interviews that he had “not been completely aware of the subcontracting issue. There were many problems including factory owners who received orders from buyers and sent orders they could not process in time to other factories. Many of these factories that are re-subcontracted are unregistered. We set up a new guideline permitting only registered factories to engage in subcontracting. We are also going to have labor inspectors visit major industrial complexes to crack down on unregistered factories; unregistered factories will be fined. We plan on reforming these factories to become registered, safe workplaces where labor rights are protected.” An officer of a garment workers’  federation, suggested that the RMG factories in Bangladesh may be classified into three classes: “factories that deal directly with global brands are large in size, have comparatively decent wages, and obey labor condition standards. Mid-sized factories are not bad, either. But the problem occurs in subcontracted factories.” He further pointed out that “considering personnel shortage and the mechanism of government administration, it is impossible to manage and supervise subcontracted factories. The government does not have the 15 Made in Bangladesh - Fault Lines - Al Jazeera English http://www.aljazeera.com/programmes/faultlines/2013/08/201382611617275364.html  

capacity and the system to regulate these factories.” Indeed, before the Rana Plaza incident, there were only 80 labor safety inspectors in the whole country; 80 people had been responsible for inspecting every workplace in Bangladesh, including the 5,700 sewing factories. The Minister of Labor explained that the government newly added 500 labor inspectors – including safety inspectors, general inspectors, and health inspectors – and plans to expand the number consistently as well. C. General Labor Conditions in the Garment Industry 1) Long working hours and insufficient wages The minimum wage for the RMG industry that came into effect since December 2013 is 5,300 Bangladesh taka (68 USD), which includes the basic wage and allowances. However, this amount is simply not enough for most of the worker who need to maintain not only their own but also their family’s subsistence. Therefore, many workers opt to work overtime or work on holidays to pay for their basic living expenses. Another activist for garment workers’  rights described the issue of long working hours:

Workers in Bangladesh suffer from long hours of work because of the structure of fast-fashion manufacturing and distribution. The law holds the working week to be 48 hours, but it is common to work 14 hours a day. When I was working myself, I had even worked 21 to 26 hours consecutively. People want to work overtime because they need to pay for their rent and education, and support their families. It is almost impossible for workers to have any social life because of such long hours.

The chairman of another garment workers’  federation, echoed this view: “legally, people can work only 10 hours per day, 8 regular hours and 2 overtime hours. But most people work more than this, like 12 to 14 hours a day.” Furthermore, we found that it is impossible for workers to refuse overtime work if a manager decides additional work is needed to satisfy the large quantity of orders. An employee who works at a Korean firm in an industrial complex near Dhaka testified:

When someone refused to do overtime work, the manager retorted, ‘who is going to do it if you don’t?’ and when the person still refused, the manager then asked him/her to sign a blank piece of paper. Everybody thought at the time that he/she was signing to say “I don’t agree to work overtime”, but later found out that it was a letter of resignation. When you challenge a manager like this, in most cases, they make you sign a blank piece of paper fire you afterwards. If one refuses to sign, the manager threatens to ‘call the police.’ How are you supposed to say no to overtime work in this kind of situation?

Delays in wage payment are also common. On the day we arrived in Dhaka, the workers who were on a hunger strike demanding three months’ worth of outstanding wages were forcefully dismissed by the police. The president of Tuba Group, parent company of Tuba Fashion where these workers were employed, was in prison for allegations of ‘accidental homicide’ for the fire incident at Tazreen Fashion, another subsidiary of Tuba Group. When workers went on strike

demanding overdue wages, BGMEA officials contended that the president of Tuba Group needs to be released from prison in order to solve the issue. After the workers participating in the hunger strike were dispersed by force, the president was bailed out, and Tuba Fashion shut down its business after paying only one month’s worth of wages out of the three months’ in arrears. 2) Difficulties in establishing trade unions The Bangladeshi government has ratified ILO Convention No. 87 (Freedom of Association and Protection of the Right to Organize Convention) that even the Korean government has yet to ratify. However, the Labor Act has overly strict regulations on the union establishment process, receiving recommendations from the ILO to revise the law multiple times. According to the Labor Act, 30% or more of the employees at the workplace need to join in order to form a labor union, and it used to be that the civil servant in charge of labor union registration had to forward a copy of the application for registration and the list of union executives to the employer. After international pressure in response to the Rana Plaza incident prompted the 2013 amendments, this clause was removed. However, the law still fails to protect basic labor rights in Bangladesh. A more significant problem is the ban on labor union formation in EPZs, in which clothing factories are concentrated, because relevant clauses of the Labor Act does not apply to EPZs. As a result, there are only 160 labor unions amongst the 5,700 factories in the RMG industry. About half of these 160 unions were established after the 2013 amendments, but many of them are virtually nonexistent or established by the employer. Therefore, the International Trade Union Confederation (ITUC) are continuously demanding the Bangladeshi government to revise its labor law. A labor activist explained that “[as Bangladesh consolidated its position as a source country in the fast-fashion industry] the legal rights of workers have been taken away in return for economic opportunities.” She further criticized the current situation and vulnerability of labor unions:

The requirements for forming labor unions have loosened somewhat, since Bangladesh has received international attention following the Rana Plaza incident; comparatively, there have been established more labor unions recently, but many of them are not carrying out union duties properly. Yes, the number of unions increased, but there is no qualitative improvement. The voices of workers are not represented at all. When you submit an application for labor union recognition, the government must complete the registration within 60 days. During this period, union leaders are protected, but after the union is set up, there is no clear legal protection of union leaders.

3) Unrestricted dismissal We found that another reason behind weak basic labor rights in Bangladesh is that the requirements for dismissal are excessively low. While the law has regulations for retrenchment, dismissal, discharge and other forms of termination of employment, most of these require only that the employer compensate the equivalent of one to three months of wages. More problematically, the hiring procedure is very simple since labor is in abundance and does not

require high skills, and the employment contract is not clearly defined. Most companies seek new workers by posting a ‘hiring ad’ in front of the factory, and employ workers through an oral interview without an employment contract in writing. An ‘identity card’ proves that the worker is employed by the factory, but there is no way to find out under what conditions the person was employed. In this context, terminating employment on oral notice is possible, without any legitimate reasons required.

How are workers supposed to gather 30% of workers at a factory when the employer can freely dismiss any worker? Employers use their authority over dismissal to ensure that their factory is union-free. If a worker focuses on labor union activities more than job duties, co-workers will talk about it, and it will lead to dismissal. The law guarantees the right to form trade unions, but the restrictions and obstacles and huge in real life. (An officer of a garment workers’  federation)

The chairman of another garment workers’  federation, also testified that “one factory that had 17,000 workers managed to organize 3,000 workers to form a trade union. In response, the employer fired the union leader and threatened other union activists.” A worker at Company A, a Korean owned firm operating at an industrial complex near Dhaka, explained the practice at his factory:

Last July, 400 to 500 out of 8,000 people were dismissed, because the company wanted to avoid having to higher wages to experienced workers. There are about 7,000 people working now. The company regularly replaces about 50 to 70% of workers.

4) State-led violence in issues of industrial relations As with Cambodian clothing companies who have close relations with airborne troops and frequently employ them to manage industrial relations, local goons or “Mastan(Muscleman in local language)” help factory owners control the workers. Factory owners maintain good ties with the goons by providing small economic benefits, while creating amongst local goons hostility against workers by calling them ‘outsiders’ who moved into cities from rural areas in search of work. These gangs are then called on when employers need them. In 2010, ‘industrial police’ was newly set up, who specialize in suppressing labor disputes; industrial police has stations in major footholds inside industrial complexes, and maintains a close watch. Moreover, an anti-terrorist troop called “Rapid Action Battalions” is also employed when protests occur. Veiled Kidnapping and murder of activists are also problematic. One workers’  federation office we visited displayed a picture of Aminul Islam, a labor activist who was kidnapped and killed in 2012 while under the surveillance of an information agency. Factories inside EPZs have their own security companies, and EPZ Authorities have their own police. An activist explained that “EPZ Authority police possess guns and rubber bullets, and are only a phone call away. They hire people who had been dismissed from the factory as police in order to make workers feel less on guard. There are even cases in which such police pretends to be a dismissed worker and approaches labor activists.”

Testimony from a worker dismissed from Company B, a Korean firm in an industrial complex near Dhaka, sums up the issues:

A day before the Eid in July, the manager suddenly posted an announcement saying that overtime allowance will be eliminated and holiday bonuses will be reduced to 50%. Back in March, 40 middle managers and 350 workers in knits had been fired. At that time, we couldn’t do anything in response, but this time, we decided to take collective action starting with the worker who first saw the announcement. On the first day, we stopped work and refused to work for the next two days – then, the police and local gangsters came and threatened workers by verbal and physical violence. On the third day, we resorted to a sit-in outside the factory, which was suppressed by the police and security using rubber bullets and tear gas. Eventually, we were able to have a conversation with the company, but our wages and bonuses were not provided properly. After this incident, 15 to 20 people were dismissed, including myself; on the day when the sit-in started , I was standing at a bus station with about five other people on my way home, and local goons came and robbed me of my identity card. Since we can’t enter the factory without an identity card, I told the production manager, but he told me to retrieve the card from the gangsters, which is impossible. So I couldn’t go to work, and was thus fired.

5) Domestic and international efforts of labor unions to expand basic labor rights and improve labor conditions There are six national centers of labor unions in Bangladesh that are part of the ITUC: Bangladesh Free Trade Union Congress (BFTUC), Bangladesh Jatyatabadi Sramik Dal (BJSD, Bangladesh Labour Federation (BLF), Bangladesh Mukto Sramik Federation (BMSF), Bangladesh Sanjukta Sramik Federation (BSSF), and Jatio Sramik League (JSL). However, local activists explain that most of these organizations serve political needs of the political parties to which they have connections, and that they are not interested in defending the rights and interests of workers. . Furthermore, there are 60 labor union federations in textile/clothing industries. One activist commentedl:

It is true that there are 60 federations, but the workers wouldn’t be in present condition if the federations were doing their jobs properly. Out of the 60 ‘federations,’ 50 or so do not have a member union at the factory-level; so they are just claiming to be ‘federations.’ This is because all political parties want to have their own sector organizations, and the RMG industry becomes a major target because of its size. Political parties don’t care how many federations exist in a certain industry.

Nonetheless, he stated, federations that have experience operating and those with well-known leaders often suggest co-activities to and liaise with each other. Perhaps because it is a source country for the global fashion industry, many international organizations have offices in Bangladesh. The violation of basic labor and human rights in the

Bangladeshi RMG industry not only attracts attention from international groups but also gets brought up as an issue in relation to American and European trade policies.16 International organizations engage in a variety of activities:

- Demand labor law amendments through the ILO (ITUC, etc.) - Demand global brands to take responsibility for wage increase and occupational safety

(IndustriALL, etc.) - Pressure the Bangladeshi government to respect labor and safety standards by using

strategies of trade relations/connecting trade to labor standards Consumer activism including boycotts

- Supporting workers through education/training/consultation services by setting up local institutes

Local activists suggest that heightening trade barriers to Bangladesh, or boycotting goods from Bangladesh citing violation of labor rights are not desirable solutions. One activist argues that “If exports decrease because of trade barriers and jobs go down, it will certainly affect workers directly. But boycotting certain targeted global brands that violated labor and safety standards could be effective. It could prompt competition between brands, leading them to abide by labor and safety standards.” Another activist, further states: “Why do you think the US government makes demands for basic labor rights only to the RMG industry? It’s because there is lobbying from the clothing industry in America. Rights cannot be imported. Only through the struggle of workers could we change the situation meaningfully.” 2. The Accord and the Alliance A. Conclusion of the Accord and the Alliance The 2013 Rana Plaza incident and the fire at Tazreen aroused the attention of the international community on labor safety in Bangladesh.1718 For instance, after the Rana Plaza incident, Pope Francesco called the poor labor conditions “slave labor.”19 It became widely understood that the issue of poor working conditions could not be solved through negotiations between suppliers and laborers (or labor organizations) in Bangladesh, nor through the interference and control by the Bangladeshi government, and voices started demanding that international brands seeking profit must do something. This context – along with Bangladesh’s inability in problem solving because of low governance, the pressure on brands, and demands from labor rights groups – prompted 16It has been brought up to the US Congress that local gangsters were employed to suppress labor protest at Chunji Knit, a Korean firm. http://democrats.waysandmeans.house.gov/press-release/levin-miller-urge-bangladeshi-government-improve-working-conditions  17On April 24, 2013, Rana Plaza, an eight-storey building in the Savar area near Dhaka collapsed, killing 1,130 lives and injuring 2,500 people (estimated). One of the suggested causes is unauthorized extensions to the building (four stories).  18A fire occurred in the Tazreen Fashion building in Acheulea in the suburbs of Dhaka, taking the lives of about 100 workers. At the time of the incident, there were 1,200 workers doing night work, who were ordered by the middle manager to continue working even though a fire alarm went off. Many workers suffocated to death near the emergency exit, as the exit and stairs were locked.  19 BBC, Bangladesh 'slave labour' condemned by Pope, 2013. 5. 1. http://www.bbc.com/news/world-asi a-22370487 Last accessed 25 Dec 2014.  

international brands to directly get involved through the conclusion of the Accord on Fire and Building Safety in Bangladesh (hereinafter ‘the Accord’) and the Alliance for Bangladesh Worker Safety (hereinafter ‘the Alliance’). B. Contents of the Accord and the Alliance Besides the fact that the Accord mostly involves European brands and the Alliance is mainly based on American and Canadian brands, the Accord and the Alliance are largely similar in that they set up a mechanism to inspect fire and building safety of supplier factories and indirectly carry out the inspection through their own orders, supported by voluntary conventions with buyer brands.2021In other words, both form groups that conduct fire safety inspections independent from the Bangladeshi government and other organizations, which clothing brands support financially through a fund. Employers have to agree to this inspection and make remedies if problems are found, in order to maintain contract relations with the buyer brands.22 The burden of improving fire safety conditions is on the employer in principle, but buyer brands also have the responsibility indirectly.23 C. Evaluation Since their establishment in May 2013, the Accord and the Alliance have been conducting inspections of applicable factories. The two initiatives have completed inspections of about 1,700 factories thus far.2425 Before these independent initiatives came into being, some brands had been applying their own standards (known as ‘compliance’) to supplier factories. It is indeed positive that thanks to the Accord and the Alliance, most of the supplier factories now receive proper inspections on building and fire safety, thus securing at least basic adherence to safety standards. Nonetheless, there are some voices questioning whether this approach really has the effect of improving the labor conditions of Bangladeshi workers in the RMG industry. Since the inspection is limited only to factories who are in direct contract relations with signatory companies, the re-subcontracted firms that do not have direct dealings with buyer brands – although they pose the real threat to industrial safety – are outside the watch of the initiatives; buyer brands practically cannot achieve complete success in forbidding and controlling re-subcontracting through their ‘compliance.’ 20The list of signatory firms and labor unions of the Accord is available on the Accord website: http://bangladeshaccord.org/signatories/  2126 brands participate in the Alliance. The list is available on the Alliance website: http://www.bangladeshworkersafety.org/about/members  22For both the Accord and the Alliance, the organization structure, content and procedure of activities are based on the respective texts of agreement. The texts are available on their websites.  23For instance, signatory companies must make reasonable efforts to ensure that any workers whose employment is terminated as a result of any loss of orders at a factory are offered employment with safe suppliers (The Accord, Paragraph 14).  24 The Guardian. “Inspections are not enough to fix garment factories in Bangladesh.” 20 Oct 2014. 10, http://www.theguardian.com/sustainable-business/2014/oct/20/inspections-garment-factories-bangladesh-fashion-business-accord-alliance. Last accessed 25 Dec 2014.  25The inspection report must be made public after a set period of time following the inspection; inspection reports are available through the website.  

Another concern is that the surveillance of the Accord and the Alliance are limited only to aspects concerning fire and building safety. That is only one specific aspect of labor or workplace ‘safety.’26 However, fire and building safety are only the very minimum labor standards that need to be met. Challenges from the international community were also restricted to solely protecting workers from building collapse and fire. Considering that buyer brands received criticism for making maximal profits from dismal labor conditions in Bangladesh comparable to ‘slave labor,’ there is a need for buyer brands to acknowledge their responsibility and for them to put pressure on suppliers in aspects other than building safety as well. 3. Death of Employee at Subsidiary of Youngone Corporation: Human Rights Practice of Korean Corporations in Bangladesh A. Youngone Corporation’s Relative Status in Bangladesh Youngone Corporation engages in original equipped manufacturing (OEM) business with well-known international brands including Nike and the North Face, as well as domestic and overseas distribution of outdoor brands. Youngone Corporation is one of the top 100 enterprises in Korea (aggregate market value; Korea Composite Stock Price Index -KOSPI), ranked 94th in terms of aggregate market value (2.2111trillion Korean won; stock price 49,900 Korean won) as of December 19, 2014. Youngone Holdings Co. Ltd., the parent company of Youngone Corporation, is a large conglomerate with over 40 subsidiaries in and outside of Korea, with the 162th aggregate market value (1.1208 trillion Korean won; stock price 82,200 Korean won) amongst all companies listed in the KOSPI. Youngone Corporation’s gross sales totaled 1.1082 trillion Korean won, and Youngone Holdings Co. Ltd. Recorded gross sales of 1.5300 trillion Korean won in 2013 (in terms of consolidated statement of profits and losses). 70% of Youngone Corporation manufacturing facilities are located in Bangladesh. Youngone is one of the biggest clothing manufacturers in Bangladesh, operating 17 manufacturing firms and one airline company with approximately 68,000 employees. In 2007, Youngone became the first private business to receive a permit to build and administer an export processing zone (the KEPZ) in a 2,492ha-wide site by the Karnaphuly River near the Chittagong Airport.27 The Korean Ambassador to Bangladesh we met during the field investigation boasted that there is no enterprise in Bangladesh that is comparable to Youngone, and the company was known amongst Korean firms to provide workers with relatively high wages and benefits. However, a female employee’s death during a massive strike in January 2014 at Youngone Corporation, did not appear to be in line with above description. On January 9, 2014, 5,000

26Inspections from the Accord and the Alliance focus almost all on evaluating safety compliance of buildings and facilities. Details on inspection standards of the Accord and the Alliance can be found on http://bangladeshaccord.org/building-standards/ and http://www.bangladeshworkersafety.org/programs/standards-assessments, respectively.  27Korea Labor Foundation. ““Success Strategies for Personnel Management in Firms Operating in Bangladesh (Global Management and Labor: Bangladesh).” 2012.  

workers went on strike at Karnaphuli Shoe Industries Ltd. (hereinafter KSI), a Youngone subsidiary in the KEPZ of which Youngone has 89.91% shares.28 During the process of suppressing the strike, a 20-year-old female employee was killed by a gunshot in the head and at least 12 people were injured. B. Youngone’s Account of the Incident We requested an interview with the KSI in order to get their view of the incident, but were refused.29 Instead, Youngone explained the cause of the incident in a written reply, reproduced below:

KSI was scheduled to pay higher wages in accordance with new minimum wage guidelines from the Bangladeshi government, but some workers misunderstood the revised wage standards and participated in a sit-in on the grass field outside the factory. Local police was dispatched in response, who, without proper understanding of the situation, were excessively suppressing the protest by force when a female employee was unfortunately killed by a gunshot fired by the police […] since the incident was caused solely by excessive suppression by the police, there was no further dispute at the KSI factory […] KSI gave workers a clear explanation of the revised wage system as to prevent another misunderstanding, and has been implementing the increased wage standards in accordance with the law until present.

Furthermore, Youngone Corporation gave the following explanation for the incident on its website:

Wage systems in government-run EPZs and privately-run EPZs in Bangladesh are different. The KSI factory in the KEPZ raised worker wages and revised wage items in accordance with the increase in minimum wage standards and the law. However, there was some unrest when around 100 workers who had been familiar with the wage system of a government-run EPZ misunderstood the wage system that has different wage items. In response, in order to protect the safety of workers and facilities, the company paused the factory operations, prompting many employees to gather in the grass field outside the factory. At this time, some of the seven police officers who arrived at the scene approached the workers and publicly assaulted one worker in particular. Enraged, workers resisted the police, who then fired shots at workers without going through a proper procedure and killed one employee in the process. The company was put in an

28 KSI is a subsidiary of Youngone Sports Shoes Ind.,LTE.(YSS; has 100% of the shares), which is in turn a subsidiary of which Youngone Holdings (has 98.23% of the shares). Youngone Holdings Co. Ltd. 2014 Half-Year Report.  29In response to APIL’s request for an interview, Youngone Corporation sent a written correspondence through a large law firm that read: “you have requested an interview with KSI officials with regards to the death of the female employee. Please excuse us that we cannot set up an interview because of internal circumstances at KSI.”  

awkward position because of this incident, and is still unsure why the police reacted in such a way.30 The article published in January 2014 directed the blame that should necessarily be directed at local police to the company, which is in fact a victim, thus reversing aggressor and victim […]31

In other words, according to Youngone Corporation, 1) only a part of the employees participated in the strike, 2) although the company raised the wage in accordance with new minimum wage guidelines, the strike occurred because of workers’ misunderstanding, and 3) the death of the female employee was caused solely by the police’s excessive suppression of the strike, and Youngone Corporation is not the aggressor but the victim. C. Youngone’s Contentions and Contrasting Testimonies and Reports First, Youngone Corporation contends that the unrest was prompted by one hundred or so workers who misunderstood the wage system in which wage items were different from the government-run EPZ wage standards. However, according to local testimonies, almost all of the KSI workers participated in the strike on January 9th. Moreover, media in and outside of the country reporting close to the date of the incident also estimated the number of participants to be around 5,000.32 Therefore, it seems unlikely that the strike occurred because of only a few workers. Furthermore, with regards to wage item grievances that prompted the strike, according to the testimony of a KSI employee who was interviewed by the Daily Star, the transportation allowance had been cut from 400 taka to 200 taka, and lunch deductions had risen from 50 taka to 650 taka.33 Youngone Corporation evaded direct explanation of such cuts in allowances, simply stating that “wages were scheduled to increase in accordance with the new minimum wage guidelines,” without providing any evidence.34 Therefore, we looked into whether the reduction in allowances was in line with the Bangladeshi government’s minimum wage guidelines. First, we compared the minimum wage schemes in 2010 and in 2013. As revealed in the table, the 2010 minimum wage in the RMG industry in Bangladesh is comprised of the basic salary,

30Website of Youngone Corporation. “Youngone’s Position with Regards to the Article Published by the Hangyure.”  26 Aug 2014.  31Website of Youngone Corporation. “Youngone’s Response to the False Report Published by the Hangyure.”  5 Sept 2014.  32Yonhap News. “Mass labor protests in Korean industrial complex in Bangladesh…1 dead.”  10 Jan 2014.  33 The Daily Star. “Worker killed in police firing.” 10 Jan 2014.  34Youngone provided monthly wage slips when it applied for press arbitration with regards to the incident in October 2014, but the slips are dated January 13, 2014; the slips are therefore not what had been given to workers on the day of the strike, but seem to have been recorded following wage increases after the incident became more serious after the worker’s death.  

house rent, and medical allowance, while the 2013 minimum wage is composed of the basic salary, house rent, medical allowance, transportation allowance, and food allowance, adding the last two to wage items, with minimum amount for transportation allowance being 200 Taka and and 650 Taka for food allowance, Before 2010, the gross salary was composed of a variety of allowances, including attendance bonuses, on top of the basic salary. However, the inclusion of house rent and medical allowance in the minimum wage since 2010 had the effect of suppressing an increase in basic salary, which serves as the basis of calculating overtime allowance. A research study conducted by the Alternative Movement for Resources and Freedom criticized this change as a ‘non-illegal, but immoral’ measure.35 However, notwithstanding such criticism, the 2013 minimum wage scheme added transportation and food allowances, further suppressing an increase in the basic salary.

2010 Minimum Wage Scheme in Bangladesh

(Unit: Bangladesh taka)

Grade and Main Posts  

Basic salary   House rent (40% of basic salary)  

Medical allowance  

Gross salary  

Grade 1: Pattern Master, Chief Quality Controller  

6,500   2,600 200   9,300  

Grade 2: Mechanic, Electrician, Cutting Master  

5,000   2,000   200   7,200  

Grade 3: Sample Machinist, senior Machine Operator  

2,870   1,148   200   4,218  

Grade 4: Sewing Machine Operator, Quality Inspector, Cutter, Packer, Line Leader  

2,615   1,046   200   3,861  

35 Minimum Wage Implementation in Bangladesh's Garment Sector, A research study conducted by Alternative Movement for Resources and Freedom (AMRF), 2012  

Grade 5: Junior Machine Operator, Junior Cutter, Junior Market  

2,395   958   200   3,563  

Grade 6: Operator of General Sewing/Button Machine  

2,230   892   200   3,322  

Grade 7: Assistant Sewing Machine Operator, Assistant Dry Washing Man, Line Iron Man  

2,000   800   200   3,000  

Trainee   -   -   -   2,500   [Source: Adapted from Bhulyan (2013)]

2013 Minimum Wage Scheme in Bangladesh (Unit: Bangladesh taka)

Grade and Description of Position  

Basic salary  

House rent  

Medical allowance  

Transportation allowance  

Food allowance  

Gross salary  

1   8,500   3,400   250   200   650   13,000  

2   7,000   2,800   250   200   650   10,900  

3   4,075   1,630   250   200   650   6,805  

4   3,800   1,520   250   200   650   6,420  

5   3,530   1,412   250   200   650   6,042  

6   3,270   1,308   250   200   650   5,678  

7   3000   1,200   250   200   650   5,300  

Probationary period (apprentice)  

2,200   880   250   200   650   4,180  

[Source: Adapted from Bhulyan (2013)]

We discussed earlier that KSI had reduced the transportation allowance from 400 taka to 200 taka, and increased the lunch deductions to 650 taka from 50 taka; these are reductions that followed the new minimum allowance standards for transportation and food allowances. However, according to an Aninsight report related to this matter, “an important law is that those Garment Factories already paying more than the minimum wage declared in this law cannot decrease that wage to adjust with the new wage structure.”36 Furthermore, Article 149, Clause 2 of the Bangladesh Labor Act states with relation to the minimum wage that the minimum wage scheme shall not affect “the right of a worker to continue to receive wages at a rate higher than the minimum rate declared under this chapter, if, under any agreement or award or otherwise, he is entitled to receive wages at such higher rate, or to continue to enjoy such amenities and other advantages as are customary for such worker to enjoy.” Therefore, reducing the original amount of allowances could not have been intended by the increase in minimum wage. In other words, even though transportation and food allowances are included in the wage items comprising the minimum wage, there appears to be sufficient ground for the view that a reduction of original allowances is unlawful. At the very least, Youngone’s reduction of transportation allowance and increase of food deductions seem hardly to be in accordance with the new minimum wage scheme. Moreover, minimum wage is simply what it purports to be – the minimum permissible wage. Therefore, it is not the case that an employer must pay the exact amount determined by the Minimum Wage Board. In other words, an employer cannot pay an amount lower than the minimum wage standard, but it is not in violation of the law to pay a higher sum. Thus, Youngone’s did not cut the transportation and food allowances to ‘obey the new minimum wage scheme,’ but rather attempted to suppress effective wage increases by abusing the new guidelines. On the other hand, KSI workers complained that the wages at KSI were lower than the Youngone factories located in EPZs. About this issue, Youngone Corporation stated on its website that “the wage schemes for workers in government-run EPZs and in private EPZs are different.” Thus, Youngone had applied the regular minimum wage laws instead of the EPZ laws to its employees based on the fact that KSI is located in the KEPZ. However, using this same logic would force Youngone to acknowledge the legal capability of workers to form labor unions in the KEPZ, since applying the regular statutes would make the ban on labor unions in EPZs inapplicable. D. Responsibility for the Incident Youngone contends that the police is responsible for the death of the female worker, even arguing that the “victim and the aggressor have been reversed.” Put differently, Youngone claims that they are at no fault since the police fired without going through a legal procedure, irrespective of the will of the company. 36 “An Insight, Research initiative for social equity.” Minimum Wage 2013. http://risebd.com/2013/12/08/gazette-minimum-wage-2013/comment-page-1  

However, labor condition issues, including wages, should in principle be settled by voluntary negotiations between the employer and the employees. The minimum wage scheme of 2013 had already created much dispute. Under domestic and international pressure to raise the minimum wage after the Rana Plaza incident, the Bangladeshi government formed a Minimum Wage Board to increase the minimum wage standards. But there was an acute conflict between laborers and enterprises over the extent of wage increases. In the initial minimum wage scheme, manufacturing assistants (Grade 7 workers) were earning a minimum of 3,000 taka; employers suggested that the amount be increased to 4,500 taka (58 USD), and workers argued for 8,000 taka (103 USD). In this context, 50,000 Bangladeshi workers went on strike for six days in late September of 2013, and thousands more protested in the outskirts of Dhaka in November 2013; at least two were killed in these demonstrations, and another 30 injured.37 In the end, the Grade 7 minimum wage was settled at 5,300 taka in 2013, a 77% increase from the 2010 standard. However, this sum is still insufficient to support basic subsistence. In September 2013, the prestigious Center for Policy Dialogue at the Dhaka Bureau of Economic Research calculated the minimum cost of living in cities to be 6,430 taka. More recent statistics from the same center suggested that the basic cost of food ingredients per month for a family of three is 67 USD. Johma Begum, a clothing factory worker, said in an interview with the Voice of America that “the price of daily necessities, including rice, is so high that we are unable to live off of 66 USD a month. What are we supposed to eat and where are we supposed to live with this kind of salary?”3839

Estimated required monthly income for basic subsistence in Bangladesh

(Unit: Bangladesh taka)

Household size   3.20  

Number of earners   1.61  

Number of effective earners   1.24  

Monthly expenditures for the family  

37 “Tens of workers die in Bangladesh while protesting for rise in minimum wage.” News Team at Korean Economy, hankyung.com. 19 Nov 2013. http://www.hankyung.com/news/app/newsview.php?aid=201311194447g  38“Minimum wage in Bangladesh not enough for even basic subsistence.” Weekly Kyunghang. 7 Dec 2013. http://weekly.khan.co.kr/khnm.html?mode=view&artid=201312101454341&code=117http://weekly.khan.co. kr/khnm.html?mode=view&artid=201312101454341&code=117  39The 2013 minimum wage scheme was criticized not only for the extent of increases, but also for the wage items. To discuss some of the major areas of critique, first, the basic salary is set to rise 5% every year, but the current inflation rate in Bangladesh is higher at 7.13%. Second, it is not sufficient to raise solely the basic salary when food allowance, transportation allowance, house rent and medical allowance are all affected by inflation. Third, since all grades of workers receive the same amount of medical, transportation, and food allowances, the rate of increase for gross salary decreases as the grade goes up.  

Component   Amount  

Food costs   5,180.10  

Non-food costs   10,352.40  

Total food+non-food costs   10,352.40  

Estimated required monthly income = (food + non-food costs of the family)/ number of of earners  

6,430.00  

‘Effective’  monthly income = (food + non-food costs for the family) / number of effective earners  

8,349.00  

[Source: Authors’ estimation based on data collected from the FGDs in August 2013] Thus, since there had been much dispute over the 2013 minimum wage scheme, Youngone should have been able to predict conflict between the company and the employees as a result of the new guidelines. Furthermore, Youngone had already had similar experience back in 2010 when the difference in the rate of increase between skilled workers and unskilled workers, the complexity of the scheme, and an effective drop in the rate of increase of salary prompted a mass demonstration; four workers died during the crack down of these protests.40 As discussed earlier, the minimum wage scheme of 2013 had similar problems as the 2010 scheme, which should have indicated to Youngone a need for prior explanation of the revised wage standards to and ample communication with the workers. However, Youngone was two to three days late in giving out the wage statements when the workers were waiting for wage increases as announced by the government. In other words, the workers learned of the drop in allowances only on the day of the tragic incident.

40 “Youngone Workdrs in Bangladesh clash with Police, killing 4.” The Korea Times. http://www.koreatimes.co.kr/www/news/nation/2014/05/113_77916.html, 2010. 12. 13.  

Youngone Corporation’s failure to attempt communication with the workers can also be traced back to the absence of a labor union due to the company’s ardent opposition to labor union formation in the KEPZ factory. On January 31, 2001, the Bangladeshi government had announced that it will restore the rights of workers in EPZs from January 1, 2004; but opposition from Korean investors, led by Youngone, eventually led to a lawsuit challenging the policy of the government that ended up in the Supreme Court of Bangladesh in late December of 2004. In response, the International Textile, Garment, and Leather Workers’ Federation (ITGLWF) filed a complaint against Youngone Corporation to the Korean National Contact Point of the OECD Guidelines for Multinational Enterprises. Youngone subsidiaries are notorious in Bangladesh for being strictly anti-union, even forbidding the formation of Workers’ Welfare Associations in EPZs.41 In conclusion, while it is true that the female employee’s death was caused by the police’s gunshot, Youngone is also responsible for the incident because it requested or permitted the interference from the police despite the peaceful nature of the workers’ demonstrations, and neglected its necessary duty to prevent physical conflict between the police and workers and failed to rely only minimally on governmental power to resolve the issue; further, prior to the incident, Youngone had failed to initiate proper communication with the workers regarding the wage and had suppressed workers’ collective voices by forbidding the formation of a labor union. E. Youngone’s Actions after the Incident After the incident, Youngone Corporation restored the allowances to the original amount. For the family of the deceased worker, the company provided 600,000 Bangladesh taka, and promised employment to her brother. However, according to the bereaved family, Youngone Corporation has yet to initiate any further communication, ignoring the family members when they visit:

At first, they came to give us a check for 600,000 taka and said, ‘if your daughter was alive, she would have gotten a lot of money. Take this check for now and we’ll be back again with more aid.’ They also said they’d give her brother, a job as a driver at the factory […] about three or four months later, he went to the factory with a resume to no avail, and they don’t even pick up our calls. We went to the civil servant who had visited us with a Youngone Corporation manager [the first time], but he said ‘what can I do if Youngone’s not willing to help?’ (Deceased worker’s family)

For the workers who were injured during the demonstration, Youngone had apparently compensated nothing but the initial hospital fees:

Around 2 p.m., we were standing outside, and the police fired – that’s why the workers started to throw rocks at them. After that, one person died […] another person (pointing to his right thigh) had a (bullet) penetrate here, (the bullet) came out this way, it came out through this side of the pants […] he still can’t walk properly […] he got 100,000 taka as

41 A.K.M Nasim, Strengthening democratic practices in Bangladesh, empowering workers in Export Processing Zones, 2014. 2. 11. (http://www.ned.org/sites/default/files/AKM-Nasim-PPT.pdf)  

consolation but nothing afterwards […] hospital fees were given only in the beginning when people were sick, afterwards, they didn’t provide anything.

In addition, an activist testified that Youngone Corporation had unlawfully dismissed participants in the demonstration:

There are about 300 people who were fired for taking part in the protest – most of them were men. After that incident, KSI stopped hiring workers. Even when positions become available, men can’t apply, only women can […] (KSI managers) dismiss people in an outrageous way; they know all the people who were at the protest, so they send the police to each of their houses, which scares the workers to the point where…they don’t go to work. KSI makes absences like that and fires them citing unauthorized absence.

F. Youngone’s Adherence to the OECD Guidelines for Multinational Enterprises In light of the death and injuries from the strike on January 2014, Youngone has been directing all blame to the police and the workers’  misunderstanding of the minimum wage scheme, despite having the responsibility to do its best to correct the adverse human rights impact in which it was involved. Youngone’s neglect to engage in proper after-measures is a violation of Chapter 4 of the OECD Guidelines for Multinational Enterprises, which orders in articles one to three that corporations “address adverse human rights impacts with which they are involved.”  Furthermore, even if Youngone is able to deny the responsibility for causing the strike, it cannot avoid the blame for failing to abide by articles three to six in the same chapter that demand enterprises to carry out human rights due diligence and to “seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations,” despite having had a massive strike related to a similar issue and subsequent worker deaths back in 2010.

Furthermore, even though the current minimum wage standards in Bangladesh cannot satisfy the basic subsistence costs, Youngone has wrongfully treated the ‘wage floor’ as the ‘wage ceiling,’ providing only the very minimum in accordance with the scheme; this practice is a violation of Article 4, Chapter 5 (Employment and Industrial Relations) of the OECD Guidelines, while opposing the formation of labor unions breaches upon Article 1, Chapter 5.

Excerpt from the OECD Guidelines for Multinational Enterprises (2011 Edition)

IV. Human Rights

States have the duty to protect human rights. Enterprises should, within the framework of internationally recognized human rights, the international human rights obligations of the countries in which they operate as well as relevant domestic laws and regulations: 1. Respect human rights, which means they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved. 2. Within the context of their own activities, avoid causing or contributing to adverse human rights impacts and address such impacts when they occur. 3. Seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they do not contribute to those impacts. 4. Have a policy commitment to respect human rights. 5. Carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts. 6. Provide for or co-operate through legitimate processes in the remediation of adverse human rights impacts where they identify that they have caused or contributed to these impacts. V. Employment and Industrial Relations Enterprises should, within the framework of applicable law, regulations and prevailing labor relations and employment practices and applicable international labor standards: 1. a) Respect the right of workers employed by the multinational enterprise to establish or join trade unions and representative organizations of their own choosing. b) Respect the right of workers employed by the multinational enterprise to have trade unions and representative organizations of their own choosing recognized for the purpose of collective bargaining, and engage in constructive negotiations, either individually or through employers' associations, with such representatives with a view to reaching agreements on terms and conditions of employment. 4. a) Observe standards of employment and industrial relations not less favorable than those observed by comparable employers in the host country. b) When multinational enterprises operate in developing countries, where comparable employers may not exist, provide the best possible wages, benefits and conditions of work, within the framework of government policies. These should be related to the economic position of the enterprise, but should be at least adequate to satisfy the basic needs of the workers and their families.  

IV. Summary and Recommendations

The Rana Plaza Collapse and the fire at Tazreen Fashion Factory triggered international attention on the working conditions in the Bangladeshi RMG industry. In particular, more voices began to direct the blame to global fashion brands that enjoy enormous profits through the work of Bangladeshi laborers operating ‘the world’s sewing machine’ in dismal labor conditions with meager wages. In turn, much effort is being implemented in a variety of ways to improve the situation; the Accord, the Alliance, and the ILO’s technical assistance to the Bangladeshi government to revise the labor law in accordance with international standards are amongst these efforts. However, testimonies from workers and activists in Bangladesh indicate that global brands and international bodies purporting to solve the issues do not pay attention to the numerous fundamental problems that need to be corrected. The most serious of these problems is the practice of subcontracting. Clothing factories directly receive massive orders from international buyers, only to subcontract the work to factories – which do not abide by safety standards – in order to meet shipping deadlines. This practice is widespread, and the subcontracted factories are outside the reach of supervisory inspection. When subcontracting repeats at multiple levels, margins decrease, discouraging employers from investing in safety facilities. Also problematic are the custom of unrestricted dismissal and the weak employment protection throughout the RMG industry. Workers are easily discharged for expressing discontent to managers or attempting to form a labor union. In addition, multi-layered violence and state authority involving local gangsters, industrial police, anti-terrorist troops, EPZ Authority Police, and security personnel hired by employers interfere in industrial relations without restrictions. This is a serious element of the violation of the freedom of association; without the elimination of this custom of violence, it is almost impossible for workers to organize and raise collective voices even if the law is revised to allow the free establishment of labor unions. The January 2014 incident at a Youngone Corporation subsidiary – in which a female employee died and 12 workers were injured – was provoked by unreasonable changes to the minimum wage scheme and Youngone’s decision to reduce wage allowances. Under the Bangladesh Labor Act, it is debatable whether the allowance reduction abided by minimum wage regulations; but with the issue of legality aside, it is undeniable that Youngone failed to do the least of initiating a conversation with workers regarding the complexities of 2013 minimum wage scheme and effective cuts to wage increases. Therefore, the fundamental responsibility of the strike and worker death lies with Youngone Corporation. Based on the field investigation, we make the following recommendations to the Bangladeshi government, the Korean civil society and labor unions, and Youngone Corporation: The Bangladeshi government must first revise the minimum wage scheme to correspond to the minimum cost of living, and amend related statutes in accordance with international standards so that the three basic labor rights of workers in Bangladesh – including those in EPZs – may be protected, as well as expanding the number of labor courts in order to make effective judicial

remedies possible. Moreover, the government should discourage the involvement of police and state force in industrial relations, and prepare policies including human rights education and guidelines to protect the rights of workers where it is unavoidable for governmental forces to get involved. The Korean civil society and labor unions ought to contribute to expanding the international movement demanding global brands to take appropriate responsibility for profiting from a manufacturing/distribution structure in the global fashion industry that forces hazardous working conditions and low wages upon Bangladeshi workers. Moreover, they should watch and pressure multinational enterprises to abide by international standards including the OECD Multinational Enterprise Guidelines at all levels of the supply chain. In order to counter the ‘race to the bottom’ that seeks to move manufacturing bases to areas of low wages, there needs to be international solidarity to promote wage increases throughout all the countries engaged in RMG manufacturing, like the ‘Asia Floor Wage’ Campaign. The Korean civil society and labor unions should also contribute to securing the ‘freedom of association’ in Bangladesh by strengthening ties with democratic trade unions in Bangladesh, standing in solidarity with and supporting labor struggles. As for Youngone Corporation, the company must compensate for all the physical and mental damage of workers dead and injured from the strike, and re-employ the laborers who were dismissed for participating in the strike. Most importantly, Youngone should acknowledge the gravity of the situation develop concrete measures to prevent any similar occurrence in the future; in order to do so, Youngone must first guarantee the three basic labor rights and prepare a channel through which workers may communicate with the company.