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

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Workers who've lost their jobs as a result of Covid-19 pandemic meet the criteria for the case support

EUROPE (EU), the most significant export destination for the country’s apparel goods, will provide Bangladesh with a €113 million grant to pay three months of wages to 1 million workers let go by readymade garment factories amid the Covid-19 pandemic.

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

Workers who were laid off as a result of closure of factories, following the government decided to turn off all businesses in March, and didn't join another factory and so are still unemployed, will be eligible for the cash support.

Paying an employee Tk3,000 per month translates to about Tk300 crore for payments to be produced to 1 million workers.

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

Of the allocation, €263 million can help mitigate the monetary and social impacts of the pandemic. Of the allocation, €93 million - alongside a €20 million grant from Germany - can help the government to supply cash assistance to workers in the export-oriented industries adversely damaged 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 really is being negotiated and we will work on it. After signing the agreement, we are in a position 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 employees for three months and the amount will be Tk3,000 per month. This money will get through mobile financial services (MFSs),” said Nazma Akhter, president of Sammilito Garments Sramik Federation.

The disbursement of the money support was supposed to get started on from June, nonetheless it is now uncertain because of bureaucratic difficulties and may start from July, she said.

She urged the federal government to expedite the process of signing the agreement and other procedures as the staff were going right through hard days as a result of financial crisis.

“The EU is front-loading €93 million to aid the export sector and the others would go to the social back-up. The EU happens to be still in discussion with the ERD about the modalities of the fund utilization. We could keep you updated following 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've been in discussion with the EU about the procedure and are pleased to become a part of such a grand and kind gesture,” she added.

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Meanwhile, industry sources said the tenure of the compensation could possibly be extended to half a year from three months.

“In the first phase, the EU decided to pay Tk3,000 on a monthly basis for three months to 1 million personnel who lost their jobs and so are now unemployed. They'll get the money support,” said Mohammad Hatem, first vice president of BKMEA.

He also said that the tenure could easily get extended by another 90 days.

Why workers need the compensation

According to data from BGMEA and BKMEA, over 400 RMG factories laid off workers because of 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 up to now 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 complete of 12,510 workers. But this number will continue steadily to rise everyday as factories have began to lessen costs since there aren't enough work orders.

The BKMEA is yet to compile the info it is still acquiring from factory owners.

“Most 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.

In addition, global retailers held back orders and delayed payments for already shipped goods as a result of the pandemic, he added.

The EU grant will be a major support for the personnel and also the industry, Hatem said.

The Bangladesh government in addition has announced a minimal rate loan package of Tk20,000 crore for the export-oriented industry to pay workers’ wages.
Source: https://www.dhakatribune.com

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