• Saturday, May 28, 2022
  • Last Update : 04:24 pm

EU to provide €113m as wages for 1m RMG workers in Bangladesh

  • Published at 04:55 pm June 2nd, 2020
Photo: Mahmud Hossain Opu/Dhaka Tribune

Workers who have lost their jobs due to the Covid-19 pandemic are eligible for the case support

The European Union (EU), the largest export destination for the country’s apparel goods, will provide Bangladesh with a €113 million grant to pay three months of wages to one million workers laid off by readymade garment factories amid the Covid-19 pandemic.

Under the grant, a worker will get Tk3,000 a month for  June, July, and August.

Workers who were laid off due to the closure of factories, after the government decided to shut down all businesses in March, and did not join another factory and are still unemployed, will be eligible for the cash support.

Paying a worker Tk3,000 a month translates to about Tk300 crore for payments to be made to one million workers.

In its ongoing development cooperation programs in Bangladesh, the EU is already addressing many areas crucial in the Covid-19 response and the recovery of the economy. On top of that, the EU has been pleased to announce that €334 million have been allocated to help fight the pandemic and that more funds may be mobilised in the near future, said a statement from the EU’s Bangladesh mission issued on May 20.

Of the allocation, €263 million will help mitigate the economic and social impacts of the pandemic. Of the allocation, €93 million — alongside a €20 million grant from Germany — will help the government to provide cash assistance to workers in the export-oriented industries adversely affected by the fallout of the pandemic, and contribute to boosting the resilience of the national social protection system, it added.

Gauranga Chandra Mohanta, additional secretary and Europe wing chief of the Economic Relations Division (ERD), said: “It is being negotiated and we are working on it. After signing the agreement, we will be able to provide detailed information about the fund and procedures.”

Trade bodies thankful

Trade union leaders and leading figures of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have confirmed to Dhaka Tribune that the EU has discussed these issues with them.

“The EU agreed to pay one million workers for three months and the amount would be Tk3,000 a month. This money will be given through mobile financial services (MFSs),” said Nazma Akhter, president of Sammilito Garments Sramik Federation.

The disbursement of the cash support was supposed to start from June, but it is now uncertain due to bureaucratic difficulties and may start from July, she said.

She urged the government to expedite the process of signing the agreement and other procedures as the workers were going through hard days due to the financial crisis.

“The EU is front-loading €93 million to support the export sector and the rest goes to the social safety net. The EU is currently still in discussion with the ERD about the modalities of this fund utilization. We will keep you updated after the government finishes the negotiations and loops us, the private sector, in, as the fund will be disbursed through our database,” said BGMEA President Rubana Huq.

“We have been in discussion with the EU about the process and are happy to be a part of such a grand and kind gesture,” she added.

Meanwhile, industry sources said the tenure of the compensation might be extended to six months from three months.

“In the first phase, the EU agreed to pay Tk3,000 every month for three months to one million workers who lost their jobs and are now unemployed. They will get the cash support,” said Mohammad Hatem, first vice president of BKMEA.

He also said that the tenure might get extended by another three months.

Why workers need the compensation

According to data from BGMEA and BKMEA, over 400 RMG factories laid off workers due to cancellations of orders by global apparel brands and retailers and lack of new orders from foreign buyers amid the novel coronavirus pandemic.

Global buyers and retailers have so far cancelled work orders worth over $3 billion, leaving these factory owners in a fund crisis and forcing them to lay off workers.

These factories employed over one million workers, mostly women.

According to BGMEA, 46 factories have retrenched a total of 12,510 workers. But this number will continue to rise everyday as factories have started to cut down on costs since there are not enough work orders.

The BKMEA is yet to compile the data it is still receiving from factory owners.

“Many of them had no option but to lay off factory workers as the buyers cancelled existing orders, and there are no new orders,” Hatem said.

On top of that, global retailers held back orders and delayed payments for already shipped goods because of the pandemic, he added.

The EU grant will be a big support for the workers as well as the industry, Hatem said.

The Bangladesh government has also announced a low rate loan package of Tk20,000 crore for the export-oriented industry to pay workers’ wages.

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