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Viewing cable 08DHAKA980, WORKER UNREST IN BANGLADESH'S GARMENT SECTOR DURING

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Reference ID Created Released Classification Origin
08DHAKA980 2008-09-16 08:04 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Dhaka
VZCZCXRO3617
RR RUEHCI
DE RUEHKA #0980/01 2600804
ZNR UUUUU ZZH
R 160804Z SEP 08
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC 7393
INFO RHEHAAA/WHITE HOUSE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHLM/AMEMBASSY COLOMBO 8599
RUEHIL/AMEMBASSY ISLAMABAD 2329
RUEHKT/AMEMBASSY KATHMANDU 9843
RUEHNE/AMEMBASSY NEW DELHI 0815
RUEHCI/AMCONSUL KOLKATA 1442
UNCLAS SECTION 01 OF 02 DHAKA 000980 
 
SENSITIVE 
SIPDIS 
 
WH PLEASE PASS USTR AROSENBERG, AADLER, VKADER 
DEPARTMENT OF LABOR FOR TWEDDING 
DEPT FOR USAID, G, DRL, SCA/PB 
 
E.O. 12958: N/A 
TAGS: ELAB ETRD SOCI PGOV KWMN KTEX BG
SUBJECT: WORKER UNREST IN BANGLADESH'S GARMENT SECTOR DURING 
RAMADAN 
 
SUMMARY 
------- 
 
1. (SBU) Before and during the fasting month of Ramadan, workers in 
Bangladesh's highly-profitable apparel sector have staged 
demonstrations, agitating for wage increases to ease the hardship of 
high food prices, which traditionally rise around the time of 
Ramadan.  Business leaders have responded in a mixed fashion to the 
workers, with one garment-manufacturing association pledging to 
increase wages.  Labor activists, however, maintain that the minimum 
wage should be increased across the board and that government 
restrictions on trade union activity under the country's current 
State of Emergency prevent peaceful resolution of disputes. 
 
WORKERS FEAR HIGHER PRICES DURING RAMADAN 
----------------------------------------- 
 
2.  (U) Workers in Bangladesh's lucrative ready-made garment (RMG) 
sector have staged numerous strikes in recent weeks, calling on 
factory owners to increase wages and give Ramadan bonuses. 
Thousands of workers at more than 50 factories staged demonstrations 
in the last month, according to media reports.  Virtually all the 
demonstrations resulted in damage to apparel factories, while some 
blocked highways and resulted in injuries to striking workers and 
police called in to contain the demonstrators. 
 
3.  (SBU) Rumors of worker mistreatment or death have sparked many 
of the recent strikes.  In most cases the allegations of injury or 
death prove to be unfounded, and observers report the underlying 
reason for unrest in the RMG sector is inadequate salaries.  Some 
press reports have also sought to blame NGOs for inciting the 
unrest.  RMG workers, who earn on average USD 25-35 per month, have 
been hard hit by high food prices; according to the World Bank, the 
price of rice alone has increased by 60 percent in the last year. 
(NOTE: Wages are higher in Bangladesh's export processing zones 
(EPZs), and virtually all of the recent unrest has occurred outside 
the EPZs.  END NOTE.)  An apparel manufacturer admitted privately 
that workers spend as much as 80 percent of their wages on food and 
that inflation of food prices over the last year has meant most 
workers cannot afford sufficient food for their families. 
 
BUSINESS AND GOVERNMENT RESPOND 
------------------------------- 
 
4.  (SBU) The Bangladesh Knitwear Manufacturers and Exporters 
Association (BKMEA), which represents some 1,500 factories that 
employ more than 800,000 workers, has proposed a 20 percent raise in 
base pay in response to the workers' plight.  The Bangladesh Garment 
Manufacturers and Exporters Association (BGMEA), which represents 
some 4,000 factories that employ many of the country's 2.5 million 
garment workers, initially rejected this proposal, but eventually 
signed on.  According to BKMEA and BGMEA, they are working with the 
Government of Bangladesh to finalize the deal; business leaders said 
the GOB would announce the wage increase in a matter of days. 
Business leaders criticized the GOB for failing to contain 
protestors and prevent damage to their factories.  In the aftermath 
of recent unrest, some owners have threatened to close their 
factories if the GOB proved incapable of protecting them from worker 
unrest. 
 
5.  (SBU) In response to worker concerns about price hikes during 
Ramadan, the apparel associations have set up kiosks to sell 
subsidized rice and pulses to workers.  Once a week workers with 
their factory ID can purchase rice and pulses for about 25 percent 
less than the market price.  BKMEA leaders said this initiative was 
an important gesture to workers; BKMEA offered discounted rice to 
workers last year during Ramadan and earlier this year between rice 
harvests.  While BGMEA is doing the same for its workers during 
Ramadan this year, its leaders grumbled that "we are in the garment 
business, not the food business." 
 
LABOR GROUPS SAY IT'S NOT ENOUGH 
-------------------------------- 
 
6.  (SBU) Labor activists told us the unrest was a result of low 
wages and a ban on trade union activities.  Since the imposition of 
a State of Emergency in January 2007, Bangladesh's Caretaker 
Government has banned all labor union activities, which labor groups 
maintain has prevented constructive resolution of disputes.  (NOTE: 
The GOB on September 8 announced a partial relaxation of the ban; 
 
DHAKA 00000980  002 OF 002 
 
 
more details on this development will be provided septel.  END 
NOTE.) 
 
7.  (SBU) Labor leaders said the pay hike proposed by BKMEA will 
bring negligible benefits to the workers; they said any pay increase 
should be based on gross pay not base pay.  They also pointed out 
the proposed increase would not change the minimum wage, which has 
been 1,663 taka (about USD 25) since 2006.  They also claimed the 
subsidized rice program was merely a publicity stunt that would not 
truly benefit the workers. 
 
COMMENT 
------- 
 
8.  (SBU) Wages for garment workers in Bangladesh are among the 
lowest in Asia.  Low labor costs are the key to the sector's 
competitiveness, and business leaders are reluctant to increase 
wages in the face of high energy and transport costs and pressure 
from buyers to keep costs down.  That said, there is no question 
that garment workers are struggling to make ends meet in an 
inflationary environment. 
 
9.  (SBU) Worker agitation around Ramadan is not unusual, and local 
experts agree the current levels of unrest do not yet exceed 
previous years' activity.  However, if government and business fail 
to address worker concerns, unrest could continue and increase. 
Political parties in the past have channeled worker discontent into 
protests against the government.  The Caretaker Government is likely 
to be mindful of this history as it continues its negotiations with 
political parties in the run-up to elections scheduled for December. 
 
 
Moriarty