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Sunday, August 20, 2006

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RMG exporters likely to raise product-price to compensate for hike in workers' wages
Shakhawat Hossain
8/20/2006
 

          Bangladesh's garment manufacturers and buying houses have alerted foreign retailers about a possible 10-20 per cent hike in prices of their products.
"We have already sent messages to our international buyers to be prepared for the possible price enhancement of the Bangladesh made RMG products," Bangladesh Garments Buying Association (BGBA) Vice President Iftekhar Hossain told the FE.
The move aims at scuttling the effect of wages rise for the readymade garment (RMG) workers on this vital sector that accounts for nearly 80 per cent of Bangladesh's annual export earnings.
The garment producers are under pressure from both the government and the international buyers to raise the wages and improve the living condition of the workers, who have been waging a campaign, for a hike in their salaries and benefits.
The government has decided to increase the minimum wages of the RMG workers following a recent unprecedented labour unrest in Savar and Gazipur -- the country's main RMG zone.
The price hike of readymade garments will help the country fetch at least additional $ 1.0 billion income in export in the current fiscal year.
In the last fiscal, RMG export was recorded at more than $ 8.0 billion.
The price hike will not affect the competitiveness of the locally RMG products much as the exporters are still providing the products at cheaper rates than those charged by India, Pakistan and Vietnam, Hossain said.
Abundant supply of un-killed and semi-skilled labourers at cheaper prices has been providing crucial edge of the local RMG exporters over that of others in the international markets.
Hossain said: "The price hike in salaries of those un-skilled and semi-skilled labourers and other issues are yet to be resolved," said Iftekhar Hossain.
The government has formed a wages board in last June and asked it to fix minimum wages by this August. But the board that has already met 17 times without substantial progress has sought two more months.
The big gap between the rates of wages hike suggested by the representatives of labourers and garments owners has raised a doubt about fixing of minimum wages by the deadline of August 31, sources said.
Sources said the garment owners want the fixation of minimum wages at Tk 1300 from existing Tk 950, but the labour representatives have demanded Tk 4800.
If the board agrees to the garment owners' demand it will cost an additional Tk 180 million per month in wages, but it will jump to Tk 1.93 billion if workers' demand is met.
There are roughly 0.5 million unskilled RMG workers in the country, who have been paid Tk 470 million monthly at existing the rate of Tk 950, according to labour ministry officials.
The hike in RMG workers' wages in Bangladesh is just matter of time, said officials at the liaison offices of the reputed international retail houses in Dhaka.
The number of such offices is more than 70 in Dhaka. They have asked their central offices to act as per the changing situation.
An official of a French retailer in Dhaka told the FE that his company had already taken note of an additional cost for the summer products, which will be in the market by October.
The liaison offices of foreign companies and some 2000 local buying houses are playing a major role in the booming local RMG business. They are involved in 75-80 per cent of Bangladesh's annual garment export business.

 

 
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