Violent Factory Strikes Threaten Bangladesh Ambitions

June 24, 2010
The violent protests threaten to undo the benefits the global economic recovery has brought Bangladesh -- a 15% year-on-year increase in exports for April and May 2010.

Hundreds of Bangladeshi clothing factories hit by violent protests this week by workers demanding higher pay are set for further industrial unrest unless conditions improve, experts say.

Tens of thousands of workers who stitch clothes for Western brands vandalized factory equipment and torched delivery vans this week, forcing riot police to respond with rubber bullets, water cannon and tear gas.

The hundreds of garment factories in the vast Ashulia industrial zone outside Dhaka closed temporarily, and now are rushing to meet orders for retailers such as Tesco, Wal-Mart and H&M.

But experts warn more violence is not far off.

"Unless the wages are increased, protests, riots and stoppages will persist," said Ifty Islam, an investment banker at Dhaka-based Asian Tiger Capital, advising factory owners and Western buyers to give ground in the escalating dispute.

"It would be worth it for them in the long term," he said. "Bangladesh has a huge opportunity to capitalize on rising costs in China but it is difficult to get more foreign firms to come if we can't prevent labor unrest."

The violent protests threaten to undo the benefits the global economic recovery has brought Bangladesh -- a 15% year-on-year increase in exports for April and May 2010, said Dhaka-based economist Mustafizur Rahman.

"The violence is a bad omen and we need to sort it out quickly -- we've just started to see signs of global recovery through new orders but unrest threatens this," said Rahman, who heads the Center for Policy Dialogue think-tank.

"This is such a good time for Bangladesh -- we could really boost our exports as China gets more expensive and buyers start to diversify their sourcing, but if this unrest continues, we'll miss out," he said.

The minimum wage in Bangladesh is one of the lowest in the world -- just 1,662 taka (US$24) a month. Workers are demanding at least 5,000 taka and also want holiday time, sick pay and official union recognition.

In 2009, garments accounted for 80% of Bangladesh's exports, making the sector key to the deeply impoverished nation's economic future.

"This is the most urgent issue facing Bangladesh right now -- the government, workers and manufacturers have to reach a consensus on fair wages," said Syed Sulean Ammed of the Bangladesh Institute of Labor Studies. "If they can't agree, the government has to set a minimum wage by itself, as they did in 2006 when the manufacturers wouldn't agree," he said, referring to the last time a minimum wage was set by the government.

Domestic manufacturers refuse to negotiate with workers or unions -- which are illegal in factories -- and blame cost-cutting Western buyers such as Wal-Mart, H&M, Carrefour, Tesco and Levi Strauss for the unrest.

"Since the global recession began two years back, buyers have cut order prices left, right and center," said Fazlul Haque, the head of the Bangladesh Knitwear Manufacturers and Exporters Association. "A raise of the minimum wage to 5,000 taka is just too much for the industry to bear," he said.

But union leader Mosherefa Mishu argues that Bangladeshi manufacturers make plenty of money on the backs of an army of "slaves" who toil for 10 hours a day, six days a week and cannot even afford to eat properly. "In the three decades that Bangladesh has had a garment industry, it has made thousands of businessmen into millionaires," Mishu, who heads the Garment Workers Unity Forum, said. "But it also condemned millions of workers to perpetual poverty."

Copyright Agence France-Presse, 2010

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