7 May 2020

Research Team Presentation Outline

• Background

• Objectives & Methodology

• TU Assessment of COVID-19 Crisis

• TU Perspectives on Stimulus Package

• Recommendations

• Maheen Sultan

• Md Shanawez Hossain

• Sirajul Islam

• Kabita Chowdhury

• Jannatun Naim

• Farah Huq

Background

RMG Sector

• 83% of exports and 20%

of GDP

• 4.1 million RMG workforce

and increasing visibility of

RMG trade unions

COVID-19 Crisis

• $3.18 billion worth of orders were

cancelled from 1150 factories from

mid-March till 29 April 20201

• Affecting approximately 2.28

million workers

• Factory closures, lay-off/

retrenchment, uncertainty about

wage-payment and worker unrest

• High risk of COVID-19 exposure

Impact

• 84% reduction of exports

of garment products in

April 20020 compared to

April 20192

• Poverty rate x 2 and 70%

drop in income

• BD GDP growth to fall to

below 4%3

1. BGMEA Data

2. Prothom Alo 3.5.2020

3. Economist Intelligence Unit

Study Objectives

To examine perspectives of TU leaders in:

Occupational health and safety of workers in factories still operating during COVID 19

Job security and lay-offs and termination according to the Labour Law

Smooth, swift and equitable distribution of the GOB stimulus package benefits to factories and workers

And analyse TU roles in addressing these issues

Methodology

A part of BIGD's Rapid Research Response to COVID-19 initiative

Principles followed: Rapid, Reliable, Relevant

Interview Type and Duration• In-depth qualitative interviews with 20 trade union (TU) leaders:

10 female and 10 male

• Representatives from plant based unions as well as national federations

• Between April 11 and 18, 2020

Secondary data collected from research reports, newspapers and

other printed & digital sources

Review of announcement and guidelines for financial stimulus

package

TU Assessment of Covid-19 Crisis and factory owners’ role

TU Perceptions of high risk for RMG workers

Exposure to Covid-19

Unpaid wages

Psychological stress

Financial suffering

Job insecurity

RMG Workers

TU Assessment of Covid-19 Crisis

TU played an active role in negotiating with owners, associations, and the

government to ensure workers’ salaries and job security and OHS.

Experiencing difficulties in communicating, mobilising and carrying out protests in lockdown circumstance but adjusting to mobilising digitally

Tk 5000Cr Novel Coronavirus Financial Stimulus Package for Export-Orientated Industries

• Wages and Benefits of workers for three Months (April to June)

• Interest-free loan (but 2% service charge payable to bank)

• Scheduled banks will disburse wages directly to workers through MFS / Bank account

• Employers to submit application with full workers lists

• Employers eligibility criteria and obligations

80% manufactured products need to be exported

Be active – 3 months salary sheets (Dec to Feb)

An established relationship with bank for 3 months

Ensure all workers have MFS / Bank account

Authenticate workers’ lists with NID or Birth certificate

• Repayment: 6 months grace period; full repayment within 2 years from last date of disbursement

Prime Minister

On 25 Mar: PM announced BDT 5000 Crore Stimulus package

Bangladesh Bank

On 2 Apr: BB published circular with details of the package

Flowchart for Stimulus Package

Factory Owners

By 20 Apr:

Submit Loan Applications to Scheduled Banks

• Acquire certificate from BGMEA/BKMEA

• Compile workers’ info & ensure they have

MFS or Bank A/C**

**Deadline for MFS & Bank setup extended to 26 April

By 30 Apr: BB sanctions loans

Scheduled Banks

By 20 Apr: SBs send loan applications for approval to Bangladesh Bank

By 30 Apr: SBs receive one-third loan amount and disburse wages

UpdateOn 3 May: SB’s cleared to disburse Tk 2,000 Cr over

3 months to RMG workers of 643 employersBy 30 Apr: Receive their salary via MFS

or Bank A/C

RMG Workers

PM = Prime Minister | BB = Bangladesh Bank | SB = Scheduled Bank

TU’s Assessment of Stimulus Package

A timely initiative to lessen uncertainty about workers’ wage payments; but

Workers’ Inclusion at owner’s discretion: Loan vs Lay-Off

Is the amount adequate: Minimum monthly wage required 3,380 Crores estimated using

minimum wages and BGMEA claims of 4,000 crores wage bill /month

Owners’ dependency on govt. stimulus also questioned:

Not designed on the principle of greatest need: Members enlisted with associations & large

companies will have better access to package

No explicit role of TU behind formulation & declaration of stimulus package

Possible Loopholes in Implementation

Certain categories of workers may be left out

• Contractual workers or workers on probation • workers without bank or MFS accounts• workers at small factories & at bankrupt owners’ factories

Lack of Transparency• Non-disclosure of information about receipt of stimulus by

owners and workers

Possibility of using stimulus package funding for non-

intended purposes

• include factory staff as workers; overstate number of workers, creating fake workers’ lists and fake MFS accounts

Lack of an oversight and monitoring mechanism

• No formal role kept for TUs in implementation of package. But, TUs argue:

Recommendation 1

Ensure maximum inclusiveness by targeting workers and factories who need the stimulus most

Implement existing package on the principle of greatest need

Conduct a rapid comprehensive assessment of wage supports needed through the

engagement of the Ministry of Labour & Employment (DIFE), Ministry of Commerce,

owners’ association, and trade unions.

Assess applications to BB made so far to identify who is being left out – is it by choice or because of procedures and identify barriers so as to develop a remedial plan

Revise the stimulus package to improve inclusiveness and include all workers engaged in forward- and backward-linkage enterprises.

a

b

c

d

Recommendation 2

Ensure speedy disbursement of stimulus packages and wages

Revise operational guidelines to ensure prompt disbursement and inclusivity (principle of greatest need) through consultation with relevant stakeholders;

Build up a working partnership among key stakeholders namely, the MoL&E, banks, representatives of owners’ and TU’s for the entire process

a

b

Recommendation 3

Increase transparency to strengthen mutual trust between owners and workers

Proactive public disclosure of information (e.g. fortnightly reports) regarding number and identities of recipients of factories and workers, and disbursements made by disbursement banks, Bangladesh Bank, MoL&E, and trade associations

This would be consistent with provisions of RTI Act 2009

A web portal may be set up by BGMEA to publicly provide information on wage disbursements by factories which would allow workers and trade unions to ask for necessary information if there are any disputes by uploading their relevant documents

a

b

c

Recommendation 4

Develop an effective monitoring mechanism

Activate the Tripartite Consultative Council (TCC) for the RMG sector (established in March 2017 with worker, employer and government representation). It can facilitate coordination and decision making in the present crisis situation by bringing together the relevant stakeholders

TCC to take on the temporary function of a crisis-period monitoring committee to supplement Bangladesh Bank procedures to ensure effective utilization of the stimulus package (worker outreach, selection of factories, repayment of loans, etc)

BB to put up the disbursements by factory on their website. The SBs should report the factory wise disbursements by them every week. The DIFE and MoC should be tasked to monitor this and provide a weekly assessment on their websites.

Develop a grievance redressal mechanism

a

b

c

d

Recommendation 5

Institutionalise TU’s role in design and monitoring of such packages

Enhance TU role in design, monitoring and documentation of implementation of various government provisions such as the present financial stimulus package.

Using the urgency of the present COVID crisis to strengthen solidarity and unity among trade unions to address the priority health and livelihood concerns of workers

a

b

7 May 2020