Stimulus eludes 42pc apparel workers: TIB study reveals; BGMEA refutes the findings

The Daily Star  December 18, 2020
Star Business Report

More than 42 per cent garment workers did not benefit from the stimulus package despite being one of the poorest segments of the population and hardest hit by the coronavirus pandemic, according to a new survey.

This means about 14 lakh apparel workers out of a total of 33 lakh did not receive the support, said the Transparency International Bangladesh (TIB) yesterday.

“The stimulus package was given from the public money, but the interests of the workers were not considered as a priority,” Dr Iftekharuzzaman, executive director of the TIB, said in a virtual press conference yesterday.

The TIB study—RMG sector in Covid-19 crisis: governance challenges and way forward—was carried out between May and November.

The total allocation of the stimulus packages for the garment sector was Tk 62,879 crore, out of which Tk 59,090 crore came as a soft loan from the government and Tk 3,789 crore as financial assistance from development agencies, brands, the European Union and countries such as Germany.

“The workers who did not receive the benefits from the stimulus packages mainly work in micro, small and medium-sized factories,” said Iftekharuzzaman.

A majority of the micro, small and medium-sized factories are engaged in subcontracting, he said.

“It will not be right to say that factory owners have taken away the money from the fund. If fact, the overall allocation was poor for the workers in the stimulus package.”

A significant delay in the disbursement of fund to the micro, small and medium enterprises is the main reason for the 42 per cent workers not being able to benefit from the assistance, Iftekharuzzaman said.

The deprived workers lost jobs or joined other factories, or the factory owners managed to pay them from their own pockets.

Garment factories have to foot a bill of Tk 3,500 crore a month in salaries and allowances, the TIB found.

So far, banks and other financial institutions could disburse only 29 per cent of the Tk 20,000 crore allocated for the cottage, micro, small and medium enterprises (CMSMEs).

Many could not avail the fund because of stringent conditions, lack of interest from banks, and absence of strong bank-client relationship, the TIB said.

Banks are more interested in disbursing loans to large units because of their repayment capacity. Banks think the small companies do not have the capacity to pay back loans on time. As a result, small factories did not get an adequate amount of loan from the package on time.

Political power, lobbying, and power of factory owners were significantly considered during the allocation and disbursement of funds from the stimulus package, Iftekharuzzaman said.

Some 21,000 workers lost jobs from 64 garment factories during the crisis as owners shut factories because of fewer work orders, order cancellation, or deferment of orders and payments by international retailers and brands on the excuse of severe fallouts of Covid-19.

Workers were laid off without following the labour law of the country, the TIB said.

The international retailers and brands have not behaved responsibly as they demanded 5 per cent to 15 per cent discount on the items sold and unusual deferral payment of 180 days instead of 90 days, it said.

Brands and retailers either cancelled or put work orders worth $3.18 billion on hold. Around 90 per cent of the orders have been reinstated, however.

According to the TIB chief, the stimulus package was biased as most of the fund was given to the readymade garment sector, which accounts for 85 per cent of national exports.

“Other export-oriented sectors did not get the priority like the garment sector,” he said.

The disbursement of the stimulus packages also indicates that factory owners are too much dependent on the government for funds, he said.

“After a journey of four decades, the garment sector has not been able to be self-reliant,” Iftekharuzzaman said.

The study showed that 20 per cent of the workers who could not complete the required one-year term to be eligible for compensation did not receive any benefit when they were terminated.

The TIB suggested amendment to the labour law so that such workers could receive the service benefits in case of termination or job losses in the future.

Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), strongly protested the TIB report, saying the findings were not clear in many cases.

For instance, the information about the non-payment to 42 per cent workers is not accurate, Huq said in an audio message on WhatsApp after the press conference of the TIB.

On the TIB statement that factory owners did not follow the rules while reopening factories after the ease of the lockdown, Huq said if they had not reopened the factories following health guidelines, international retailers and brands would not have placed work orders.

She suggested the TIB come up with authentic findings if it wanted to correct anything in the sector. Otherwise, the TIB would be criticised strongly.

The BGMEA will formally protest to the TIB report next week, she also said.

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