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EU fund for retrenched workers caught in uncertainty

  • Published at 10:00 pm July 1st, 2020
RMG workers protest mass layoffs in Gazipur
Workers of Tanaz Fashion Ltd protest against mass layoff in front of their factory in Gazipur on Monday, June 1, 2020 Dhaka Tribune

The EU pledged a €113 million grant for as high as one million retrenched workers, to be paid at Tk3,000 for three months

Arman Talukdar, a sacked apparel worker, saw a ray of hope in March when he came to know that the European Union (EU) was going to provide partial wages for the country’s dismissed workers in its export-oriented establishments for three months.

His hope, however, began to fade as he saw no implementation of the programme despite three months having gone since the pledge made by the EU on March 20.

The EU pledged a €113 million grant for as high as one million retrenched workers, to be paid at Tk3,000 for three months.

Like Arman, uncertainty has gripped tens of thousands of hapless retrenched workers, mostly from the apparel sector.

The uncertainty has been caused by the government’s unwillingness to develop a model for the wage disbursement as it is more interested in creating a welfare fund for the workers with the grant.

 “In April, I lost my job as the owner downsized the work force due to a lack of work orders. When I learnt about the EU compensation for three months, it was my hope that it would  help me till I found a new job,” Arman, an operator at a garment factory located in Gazipur, told Dhaka Tribune.  

“If it takes too long to disburse the fund , the ill fated workers will have to leave the city soon and will not be able to find another job,” he adds.

Why the procrastination?

Though the EU has offered the grant to fight the Covid-19 pandemic related crisis over the non-payment of retrenched workers in the export oriented industry, especially the RMG sector, the government instead wants to create a welfare fund with the grant.

In addition, the government fears that anarchy could result in the industrial sector if the terminated workers are compensated with partial wages.

 Gauranga Chandra Mohanta, additional secretary and European Union wing chief of the Economic Relations Division (ERD), has acknowledged that a letter had been sent to the EU, seeking to create a welfare fund for the sacked industrial workers.

“The government is considering the issue from a broader perspective. It believes creating a welfare fund will be better than distributing the handouts among jobless workers ,” a senior ERD official said.

Export oriented industries have already been given Tk5,000 crore at a low interest rate from the government’s stimulus package to pay workers’ wages for three months, says the official. 

The government has made a proposal to the EU on the formation of a welfare fund for workers with the EU grant, adds the official.

Besides, the government also thinks factory owners will feel encouraged to go for more retrenchment once the money distribution begins, sources at the Ministry of Labour and Employment have said.

However, the EU is yet to respond to the government proposal, it is learnt.

The EU has offered the fund for jobless workers of all export oriented sectors, instead of only the apparel sector.

Lingering decision creates uncertainty

Stakeholders, including trade union leaders, exporters and people connected with the EU mission, have said procrastination in making decisions and the bid to create a welfare fund will make things uncertain for the workers. 

“With workers' resentment growing, caused by work order cancellations in the RMG sector by global buyers, we wrote to the EU for financial help to pay the laid-off workers,”  China Rahman, General Secretary of IndustriAll Bangladesh Council (IBC), a global trade union, told Dhaka Tribune.    

At the end of March, the EU came up with the grant but it is yet to start the process of compensation, says Rahman . 

On the other hand, an expert on EU funding says the delay may make matters uncertain. He says it is a pilot project and it could be extended if there is need for more.

“But unexpected delays will make losers of both the government and workers. “

“Workers are facing severe cash shortages as they try to lead life since they have not had jobs for the last two months,” said Nazma Akhter, president of Sammilito Garments Sramik Federation.

“If they do not get money during the crisis, what will they do with the funds,” she questioned. 

It is unexpected that even after three months the workers are yet to see progress in getting the benefits of the grant, adds Nazma Akhter, urging an expeditious working out of the process. 

When contacted, leaders of the BGMEA declined to make any comments on the issue.