Govt plans to privatise jute mills, axe 25K workers

The government has decided to send the existing 24,886 workers of 25 jute mills into retirement through golden handshake after liquidation.

The mills under the state-owned Bangladesh Jute Mills Corporation (BJMC), which have been incurring losses for years, would be either modernised or privatised, said Textiles and Jute Minister Golam Dastagir Gazi on Sunday in an online briefing on review of activities of the BJMC.

"The government will pay due arrears to retired workers (8,954) since 2014, due wages to existing workers (24,886), and workers' provident fund deposit and gratuity with a maximum of 27 percent of gratuity. About Tk5,000 crore will be provided from the government fund for this," Dastagair said.

"After the liquidation, the mills will be run under PPP/JVG/G2G/lease model under government control," he said.

The minister said the workers who have been terminated will get job opportunities on a priority basis, and new employment will also be created in the re-launched mills.

"The basic monthly wage is Tk2,700 in the private sector. On the contrary, it has increased to Tk8,300 in BJMC's jute mills after the implementation of the Productivity and Wages Commission 2015."

The minister said the share of wages in per unit production cost in the government mills is 60-63 percent, which is almost three times that of the private sector. "For this, the BJMC has to sell products at reduced prices to survive in the market due to high production costs."

India, one of the major markets, has already imposed anti-dumping duties on imports of jute goods from Bangladesh for selling goods below production costs. As a result, not only the BJMC, but also private sector exporters are in trouble.

"The BJMC's contribution to jute production is only 8.21 percent, while the export rate is even lower, 4.45 percent," the minister said, adding that the continuation of these mills' operations in the current structure with huge subsidies for nominal production and insignificant exports is in conflict with the economic policy.

Recently, in the Second Committee of the 74th General Assembly of the United Nations, a proposal titled "Vegetable and Sustainable Development of Natural Fibres" was adopted for the use of natural fibres, including jute.

The demand for various and versatile jute products has also been increasing across the world over the last two decades.

But BJMC's jute mills, which were set up with 60/70-year-old equipment, do not have the capacity to produce suitable raw materials for versatile jute products.

Additionally, BJMC's old management structure is not suitable for the modern technology-dependent production systems.

Due to the Covid-19 crisis, growth has slowed down in the last two months. As of May 2020, the sector has achieved a 5.74 percent growth as compared to negative growth in all other sectors.

However, in the first 11 months of the current financial year, exports in this sector increased by 23.49 percent. Exports ($817.97 million) in the 11 months exceeded the total in the last fiscal year ($816.27 million).