Main Page «
Front Page «
Metro «
Business «
International «
Sports «
National «
Op-Ed «
Home «
Timeout «
Letters «

Archive «
Launch Supplement «
Special Supplements «

Elections to four city corporations and nine municipalities are over. The results have been published. In all 1,600 candidates contested. Of them 992 for the city corporations including 46 for mayoral posts, 752 for the posts of councillor and 194 women candidates for the posts councillor in the reserved seats. This is an election which both the Awami League and the BNP had rejected earlier but later secured the engagement of the former after a climb-down in its stated position. At any rate, whether officially or unofficially, the elections were fought politically, enabled by a High Court order issued at the eleventh hour. What is particularly significant is that winners to all the mayoral posts and most posts of councillor are leaders and activists of political parties, and the same is true, in most cases, of the other credible contenders. Non-partisan election has been proved a chimera. People only recognise and follow the political parties, warts and all; the relationship is organic, built over the years.
   Another significant aspect of this election is that many of the winners and contenders of this election have corruption charges lying against them and some are in jail waiting to be tried. The chief election commissioner urged voters to vote for ‘honest’ candidates. Wish the world were as it should be and not as it is! The people have voted for candidates who were always close to them, in varying degrees though, in their weal and woe. For the people traditional politics and election are almost synonymous. This does not mean that voters have ignored or condoned corruption. It only means they had no better alternative, proving thereby that, to them, political forces are no substitute for the political class.
   Here is a lesson for the military-controlled interim government. Political engineering does not withstand the test of election. If the country’s political culture has to change, it must change from within, over time. No result should be expected overnight. After holding the local government elections in the face of opposition from political parties the incumbents should be able to read the lessons derived. The only viable course for them is to lift the emergency and open up the political process so that the country can get back on the right and legitimate track, and fight for a positive political alternative.
   However, while congratulating the winners we would also call upon them to draw their own lessons from the election. As political leaders they have fallen on evil days but the people did not let them down. Neither should the leaders let the people down in future. The leaders’ bad time is transitory; the people’s sufferings are perpetual, at least in this country. As stated above, electoral support is not an endorsement of corruption. As far as crime and corruption are concerned, many of these leaders have a smeared dossier. They have much to live down and under a compelling moral obligation to repay their debt to the local people. Finally, in the case of winners charged with corruption, their victory should not interfere with the investigation and trial and the law must take its own course.

A good move

We commend the government’s move begin production of compost fertilisers. The target to produce 10 tonnes of compost at the union level under every sub-assistant agriculture officer or block supervisor will, we believe, prove to be beneficial for the farmers, especially given the chronic unavailability of fertilisers and their soaring prices.
   Different quarters including grassroots activists and environmentalists have been calling for increased use of compost and organic fertilisers in order to retain soil fertility which, according to official reports of the soil research department, is decreasing due to excessive use of chemical fertilisers. The report also quotes officials from the agriculture department taking a similar stance in favour of compost production.
   The recent decision has also been sensible because despite the military-controlled interim government’s repeated pledge to boost agricultural production and provide farmers with all its support, fertiliser distribution has been extremely poor either due to a lack of coordination or because the government’s stocks were not sufficient in the first place. Either way there appears to have been an absence of concerted planning in an area that the government has severally vowed to prioritise. Farmers, therefore, with no prior knowledge of these matters have found themselves helpless and frustrated. There has not been a single crop season over the last year and a half where there was no protest or demonstration by the farmers demanding adequate supply of fertiliser.
   Now that the incumbents have decided to promote and encourage compost production, there are a few points to consider. First, the amount of 10 tonnes appears to have been arbitrarily decided upon. Since it is only at an initial stage, the block supervisors could be consulted to ascertain the necessary amount of compost required to attain an optimum level of agricultural production. Second, there are no indications whether this compost production initiative would depend on individual farmers’ cooperation and who would be able to make use of this stock, nor is there any indication whether this compost production would be on a commercial basis and then sold to individual farmers.
   Given the increasing lack of community initiatives, the incumbents could look into the possibility of a community-led compost production coordinated by the local agricultural extension office, which would also be responsible for providing all the information and know-how for the project. The agricultural extension office could consult with the local communities to devise means of how this community good would be distributed to farmers. Such an initiative, like the integrated press management clubs set up by the extension office, would also act as a tool to bring farmers together to a common platform whereby they would secure a stronger bargaining power.

WHEN fuel prices increased on July 1, so did the costs of businesses. As the price of diesel went from Tk 40 to Tk 55 per litre, the cost of running a diesel-run generator increased exactly 37.5 per cent. The cost of carrying foods or goods from one place to another by trucks also shot up exactly 37.5 per cent. When import taxes of capital machinery are raised, it raises the cost of businesses that use them. If banks decide to charge a higher interest rate, cost of funds necessarily go up. Every time that the cost of these inputs increase, so does the cost of operations by exactly the same margin that they constitute of the entire operation expenditure. Although the spirit applies to all sectors, this discussion focuses on the thriving apparel manufacturing sector and examples are applicable to that particular context.
   When asked about a recent decision of the Chinese government to increase its assistance for the readymade garment manufacturers there, Anwarul Islam Chowdhury Parvez, president of the Bangladesh Garment Manufacturers and Exporters Association, told Reuters on August 3 that the rising costs would make it more difficult for apparel manufacturers in Bangladesh. He made several comparisons regarding cost of production in China to demonstrate that Bangladeshi apparel manufacturers were at a disadvantage. Reuters quoted Parvez as saying, ‘Moreover, cost of production increased up to 15 per cent after Bangladesh increased oil prices last month and also due to rising prices of other inputs. With poor infrastructure, especially the frequent power crisis, very high interest rates on bank loans and high transport costs, it is not possible to sustain against China and India.’ Parvez also said Bangladeshi manufacturers had ‘to pay up to 20 per cent interest rates for bank loans while Chinese exporters pay only 3 per cent’. Indeed there are a number of other problems that were not mentioned in the report that increases the cost of doing
   business in Bangladesh.
   However, there was no mention of labour costs increasing due to food price hike, which further increased the cost of operations. Labour, although a crucial input, is not really treated like other inputs in the sense that businesses do not expect ‘labour costs’ to increase substantially when food prices or cost of living increases. Wages do not increase proportionately, if they increase at all, in comparison to the proportional increase that other inputs register when their cost increases in the market, the cost of running a generator for instance. If food prices have increased by a 100 per cent, for instance, since September 2006 or, in other words, if food prices have doubled since then, labour costs are not really expected to register a corresponding increase. These costs do not function as they would in case of other inputs, when it is a question of the labourers’ sustenance.
   But labour is indeed treated like other inputs when it is a question of its price. Dictums of the free market economy, which advocate the omnipotence of the self-regulating market, are often favoured by manufacturers. They would prefer to let market forces, namely supply and demand, play out against each other and eventually decide upon the cost of labour which in economic terms is bound to be marginal. This marginal cost, in a populous country like Bangladesh with high poverty incidence and unemployment, would be rather low. Presumably lower than that necessary to sustain a healthy family or perhaps even a person.
   However, the employers, manufacturers or processors, who choose to be ardent advocates of the free market, vehemently refuse to recognise that as free agents in a free market, labourers have the right to organise themselves in order to negotiate or bargain for higher wages or better working conditions. Most factories actively prevent these free agents from organising themselves and bargaining for a better wage whereas the manufacturers themselves are organised in various groups of manufacturers and exporters associations. Thus the workers find themselves in a strange situation. They are made to sell their labour in a captive environment where free market does not function, but the price of that labour is decided upon by market forces, whereas when the workers themselves become consumers the free market takes full effect.
   When the diesel generator costs more to run due to higher fuel prices or the operation of certain piece of machinery becomes more expensive due to increases of the power tariff, factory owners do not expect them to run for the same time at the same capacity at the same costs. Furthermore, any piece of machinery or equipment would require certain maintenance in order for it to function efficiently and satisfactorily for the longest time possible. One would tend to agree that it is not a matter of debate, nor a matter of negotiation as to how much the generator would cost or how long a machine would perform optimally without the required maintenance or with less fuel or power. Any businessman or manufacturer would readily acknowledge that and they do, which is evident from the point Parvez raised with Reuters.
   Now in order to make the matter more comprehensible in terms that manufacturers would perhaps understand better, one could liken maintenance with living expenditure or the diesel required to run a generator with food requirement of a labour. This analogy, crude and debasing as it is to human dignity, presumably provides a strong indication that labour wages must be such that they are sufficient to sustain a healthy life. In other words, the wages should be such that they meet all the ‘maintenance’ requirements of the labourer. This ‘maintenance’ cost of labour, it might be posited, is a living wage.
   Although minimum wages should be equivalent to living wages, the one fixed at a monthly Tk 1,662.50 for the apparel sector was essentially a settlement between the labourers and manufacturers. It was a result of negotiations between what the labourers claimed they required to survive and demanded, and what the manufacturers claimed they could afford and offered. There was never any indication whether this amount was sufficient to feed one person for a month or an entire family, whether this was sufficient to meet other basic needs such as shelter, clothing, health and children’s education. In other words, the minimum wage was not based on any benchmark.
   Such a set of benchmarks is becoming increasingly important as a basis for ascertaining a living wage against the backdrop of high inflation, and price hike of fuel and food on the international markets. According to the studies of a number of research organisations and institutes and even that of the Bangladesh Bank, poverty is rising in Bangladesh. According to one study by the Centre for Policy Dialogue, poverty has increased by 8.5 per cent over that of 2005, which was 40 per cent, meaning that currently the proportion of population living in poverty is 48.5 per cent. The research organisation stated that inflation, particularly triggered by food price hike, has eroded Bangladesh’s gains of the last eight years, since the country’s poverty figures have reverted back to those of 2000.
   The CPD study also stated that people living below the poverty line saw their income erode by 36.7 per cent between January 2007 and March 2008. According to the study, real wages of garment workers earning Tk 1,662.50 in September 2006 had decreased to Tk 1,052 by March 2008. During this time price of rice, which constitutes a large portion of people’s diet, had increased by over 100 per cent. Even according to two-year old estimates, in a study published in June 2006 by the Bangladesh Institute of Labour Studies and Unnayan Onneshan, another research organisation, monthly food costs would be a Tk 1,100 to ensure 2,122 kilocalories for one individual. In real terms then, the current minimum wages paid to a garment worker would turn out to be hardly sufficient for one person’s food requirement for the month. Far from being a living wage, Tk 1662.50 or Tk 1,052, presuming real wages have not eroded further, does not even meet the minimum requirements of an individual, let alone that of an entire family.
   According to a widely accepted definition of living wage, it must be the barest minimum necessary to provide an individual with ‘the ability to support families, to maintain self-respect, and to have both the means and the leisure to participate in the civic life of the nation’. Although rather broad and vague, the concept of living wages is typically taken to be the minimum needed to ensure labourers’ healthy survival. This does not contradict with the general interest of capital or industries since such a wage structure ensures a continuous supply of cheap labour needed for mass production. While ensuring on one hand that labourers’ capacity to work or their efficiency does not decrease, a living wage on the other hand does not allow for the labourer to attain a higher standard of living. Thus, it is in the interest of industrialists that labourers settle for living wages which are not really sufficient to provide them with opportunities, or expand their realm of choices, that they might attain development. But in the context of apparel manufacturing sector, and surely a number of other sectors, the minimum wages would prove to be insufficient.
   The benchmarks constituting a living wage should ideally take into consideration the amount of money needed for a typical family to meet its basic needs. These could include, as a minimum, food, clothing, shelter, children’s education and health. Alternatively, this benchmark could be taken to be the national poverty line estimated by the government on the basis of ‘Cost Basic Needs’ method, once it is appropriately deflated. In this regard, the government should initiate a move and constitute a body to decide upon such a benchmark that might be considered ideal. Since this benchmark would be applicable to industries and manufacturers, and in this particular instance, to apparel manufacturers, their inputs would also be necessary so as to get an indication about their ability to pay which would further provide pointers as to the services that the state must deliver to the working classes. This benchmark should undergo periodic and regular reviews depending on inflation and general living expenditures.
   Given that the apparel manufacturers in Bangladesh, retain a negligible margin compared to that retained by the large retailers in the developed countries, their ability to pay wages conforming to living wage standards would be limited and they would accordingly plead their limitations. The government would also need to consider whether a minimum wage, reflecting living expenses, is too high so as to create unemployment, which remains a contention of economists. The reasoning is simple enough to understand. If the stipulated minimum wage is too high, then there would be more people willing to sell their labour and less people willing to buy it at that price. In such a scenario the supply of labour at a certain price would outstrip the demand for labour. It would mean that there would be more people in the market as sellers than there would be buyers leading many who would sit idle, hence increasing unemployment. However, scholastic research has shown that the impact of minimum wage increases is not substantial and although it might lead to unemployment initially, the effect on public welfare and level of development far outweighs the losses.
   As for apparel manufacturers retaining a small portion of the profit generated from retail sales of garments, the government should seriously look for possible means to reconstitute the currently unequal distribution of profits. Efforts to this end should combine the government, private sector, activists, labour unions, media and citizens to mount a campaign so that international retailers instate ethical buying practices and thus their suppliers, the manufacturers here, are able to pay living wages. That the minimum wage negotiated two years ago needs to be reviewed cannot be overemphasised. Neither can it be doubted, based on estimates and studies, that this minimum wage is insufficient to meet the living expenses of a typical household.