European Crisis resumes with French Financial Sector facing Ratings Cut over Balance Sheet Concerns
June 22, 2010Nokia's Indian Fortress crumbling fast as Samsung and Local Players capture Mobile marketshare;S&P cuts Ratings
June 23, 2010Bangladesh is one of the world’s poorest countries with a high population density.Carved out of erstwhile Pakistan,this predominantly Muslim country faces huge poverty like other countries in South Asia.It has very little natural resources and its human capital is also quite poor.The Textile industry is one of the biggest industries with $12 billion in annual exports to Wal-Mart and others.Wages in these factories are one of the lowest in the world much lower than countries like China.Note China itself has been facing labor problems with MNCs like Honda and Toyota facing strikes.These companies have been forced to revise their wages higher due to labor shortages.However Bangladeshi workers have had no such good fortune.High inflation in food and energy prices combined with stagnant wages have made the lot of these workers little better than destitute beggars
Global Labor Cost Arbitrage Fails to Improve the lot of Bangladeshi workers
As low value added activities moved from developed economies to developing countries like Vietnam and Bangladesh,it was supposed to have an uplifting effect on the workers of these countries.But the very nature of this low value add, unskillful work has not improved the live of the Bangladeshi workers.Unlike higher end services outsourcing which has given rise to a strong middle class in India,Bangladesh and other South Asian countries get the lowest end of manufacturing outsourcing work.The 2000 takas wages equates to $25 a month which makes them firmly below the poverty line (BPL) citizens.It is not enough to feed the families given the high prices of global food and energy.Its not surprising that these workers have attacked the factories they work in.It will be tough for the owners to raise wages as textile factories around the world face wafer thin margins due to stiff competition.However less than $1 a day wage is unsustainable also .
Bangladesh shuts garment factories over protests – AFP
Bangladeshi manufacturers shut all garment factories in a major industrial zone Tuesday as police fired tear gas and rubber bullets at tens of thousands of protesting workers.The Bangladesh Garment Manufacturers and Exporters Association, which represents the country’s factory owners, said days of violent protests had created “panic and anarchy” and forced factories to close indefinitely.
Thousands of workers turned up for work in the manufacturing hub of Ashulia Tuesday and, after learning of the closures, began protesting and attacking police, Dhaka district police chief Iqbal Bahar told AFP.
The latest series of protests over low wages erupted on Saturday when 50,000 workers clashed with police, turning Ashulia into a battlefield.Bangladeshi workers, who make clothes for major Western brands such as Wal-Mart and H&M, have been demanding wages of at least 5,000 taka (70 dollars) per month. The current minimum wage is just 25 dollars.
“The minimum wage in Bangladesh’s garment sector is the lowest in the world. The cost of living has increased 10 to 15 percent a year but salaries have not been adjusted,” said Ifty Islam of Asian Tiger Capital, an investment bank.
Better Infrastructure and Governance is the Solution
The only solution lies in better education and health of the citizens.This requires a strong government and democratic institutions which has been sadly lacking on most South Asian countries.Bangladesh’s politics have been marked by military rule and political deadlocks for a long time.This does not allow the development of human resources nor the development of critical infrastructure.Like China,better roads and electricity will help in lowering the cost of manufacturing and allow better wages for workers.The new government seems much better than the past but governance problems remain quite high.There was recently a major uprising of the paramilitary forces which led to killing of senior military officers.
Bangladesh becomes battle zone – BBC
A large plume of smoke billowed out of the barracks’ conference centre, where Bangladeshi news channels speculated that the men had held their commanding officers captive.For a while, regular army units tried to fight their way into the barracks from at least two directions.Later one of the men telephoned the BBC Bengali service in Dhaka.He complained that the BDR rank and file had been mistreated by their officers, who are seconded by the regular army, for generations.”We have taken up arms to save our souls,” the unnamed soldier said. “This is a clash between the army and the BDR because they have always exploited us. It has been the same thing for 200 years,” he said. “This is not political.”
Today’s extraordinary events certainly will have profound political implications.Bangladesh has a new government which only took office in January. It will now have the tricky task of deciding how to deal with the mutineers.
1 Comment
[…] }); }Bangladesh recently witnessed violent protests by textile workers who are being forced to work for wages below $1/day even as inflation rages at more than 10% in […]