RMG factories owe $844m in wages to workers

As much as $844 million is owed in wages and severance pay to garment workers in Bangladesh since the beginning of the pandemic, a new report of the Clean Clothes Campaign (CCC) said.

The labour rights group arrived at the number by collating the findings of various organisations over the past year, including the Centre for Policy Dialogue, the International Labour Organisation, the Worker Rights Consortium, and the Mapped in Bangladesh (MiB).

“This wage gap arose from several factors affecting garment manufacturers, including brands cancelling orders and withholding payments, raw material shortages, and national lockdowns in some garment-producing countries,” said the report.

The report presents CCC’s latest projection of the economic toll of the Covid-19 pandemic on garment workers.

Based on the estimated wage gaps in seven production countries, namely Bangladesh, Cambodia, India, Indonesia, Myanmar, Pakistan and Sri Lanka, the Campaign estimates that garment workers lost a combined $11.85 billion from March 2020 through March 2021.

The estimated wage gap for the workers in Cambodia was $343 million, for India $1.02 billion, for Indonesia $721 million, for Myanmar $422 million, for Pakistan $404 million, and for Sri Lanka $313 million.

The first “Un(der)Paid in the Pandemic” report of the CCC estimated a wage gap of $501 million for Bangladesh from March to May 2020. This was a period when up to 89 per cent of factories were temporarily closed2

After the initial shock of the pandemic in Bangladesh, 79 per cent of the factories that had closed down reopened with 92 per cent of their workforce, according to research of the MiB, an initiative of the Brac University’s Centre for Entrepreneurship Development.

This suggests that approximately 1.2 million workers were furloughed in June 2020, said the report.

Data from the ILO Briefing Report indicates factories, on average, were operating at a significantly reduced capacity of 57 per cent of the workforce by July 2020, which corresponds to 1.89 million workers being furloughed in July last year.

According to the rules of retrenchment, the workers were given 60 per cent of their wages.

The CCC estimated the furloughed workers faced a wage gap of at least $117 million from June to July in 2020.

After July, employers were officially allowed to terminate workers.

The report cites another study by the MiB that states that 3.5 lakh garment workers lost their jobs.

MiB’s database covers three-quarters of the garment industry in Bangladesh, so the number of jobs lost was extrapolated to be 4.76 lakh for the whole sector.

A separate study by the Bangladesh Institute for Labour Studies, in September 2020, estimated that around 4 lakh garment workers might have lost their jobs, said the report.

The CCC averaged the numbers and concluded that 4.38 lakh garment workers lost their jobs last year.

The MiB’s survey in October 2020 found that that only 3.6 per cent of factories paid the full severance owed to terminated workers, and these were small and medium-sized factories.

All large factories and 86 per cent of medium-sized factories reported withholding legally owed compensation and allowances and paying only the salary owed.

“Allowing for higher worker numbers in large factories, we estimate that 95 per cent of workers dismissed during the pandemic were not paid their legally owed severance,” said the report, putting the severance pay gap at $151 million.

The CCC also took into consideration the non-payment of wages and Eid bonuses.

The Bangladesh Industrial Police reported 756 garment factories had not paid in June 2020, and 177 factories had not paid July wages and Eid bonuses.

“With an average of 790 workers per factory, we estimate that 7.37 lakh workers lost withheld wages of $74.2 million,” said the report.

Considering the wage gap for furloughed workers in the five months up to July 2020, the amounts owed to workers who were terminated but not paid their legal entitlements, and the widespread non-payment of wages to employed workers during the pandemic, the total estimated wage gap for workers in Bangladesh is $844 million, the CCC said.

“Global brands, retailers and e-tailers remain responsible, under international standards and their own codes of conduct, for ensuring that workers employed in their supply chains are paid at least their legally mandated or regular wages – whichever is higher,” said the report.

“They must take direct responsibility for the workers in their supply chains.”