A roadmap to reform our labour market

The July Revolution marked the end of the 15-year rule of Sheikh Hasina and her party Bangladesh Awami League.

The regime was marred by accusations of economic challenges like high inflation and institutional failures like corruption. The revolution was a result of widespread discontent from these injustices and inequality.

The final straw that broke the camel's back was the disproportionate response of law  enforcement against protesting citizens. 

However, the ousting of the Hasina government has opened the door to necessary reforms, especially in the labour market. Workers in the past faced discrimination and systemic failures, including unfair wage settlements, unsafe working conditions, and violations of basic rights. 

The key failure in the labour market comes in the form of hiring practice. In fact, the  match that ignited the fire of the revolution was an unfair hiring mechanism, the quota system inherent in the government hiring process.

Awami League's ousting revealed cases where qualified candidates were not allowed to join government jobs due to their political allegiance. This type of injustice also spilt into the private sector, where nepotism and partiality in hiring has been extensive.

Now, the interim government should completely overhaul the recruitment process. Systems like BCS, which were put in place by the British as a discriminatory practice and way of oppression towards the local people, need to be abolished or at least modernised.

A dynamic, need-based hiring system should be established for government jobs. Following the practices of more institutionally stable democracies, like those in the west, where skills and qualifications of the individual, commensurate with the position, are prioritised.

The government could take inspiration from the private sector in this regard, where experience and qualifications are given priority. Departments of the government  would, independently or with the assistance of a hiring entity, recruit candidates according to  their specialisation and relevant knowledge on the subject matter.  

An important factor of our labour market is that most of the jobs are informal. This  practice allows the owners to exploit the workers by denying them the rights that a formal contract would allow.

On the other hand, the blue-collar jobs that actually allow formal contracts  sometimes do not abide by relevant laws. So, these employees also face exploitation. Since government jobs strictly adhere to the formalities of a contract, for many, it is the only suitable option, even if they are able to get higher pay in private jobs.

In this regard formal contracts should be mandated, incorporating fundamental agreements between workers and employers. Such contracts should include compensation for damages, overtime pay, health insurance, and post-employment benefits like pensions.

While workers are  entitled to casual and sick leave, as well as maternity benefits, these rights are frequently violated. If formal contracts cannot be mandated, it should be the case that the rights of the workers are universally accepted and enforced. 

Wage settlements remain one of the most contentious issues in the labour market.

In December  2023, the minimum wage for the garment industry, the largest employer in the manufacturing  sector, was adjusted to Tk12,500— with a 56% increase, but far short of the 188% demanded by  workers' unions. Similarly, the minimum wage for tea workers was set at just Tk170 per day,  against a demand for Tk300.

Given the current economic environment, these wages are grossly inadequate and reflect a systemic bias favouring owners over workers. 

The Minimum Wage Board currently revises wages every five years. It is comprised of a Chairman, a neutral member, one member representing the owners and one  member representing the workers.

For the purpose of carrying out the duties mentioned in section 139, the wage board should also include the following members— one member  representing the proprietors of the industry concerned and one member representing the workers engaged in the industry concerned.  

Currently, the board comprises a judge as a chairman, a government secretary who represents the owners, a labour representative loyal to the recently ousted, and a professor from Dhaka University.

To ensure fairness, a reform is needed to establish a wage commission that includes  all the relevant stakeholders from different industries. Instead of a generalised body, this commission could adopt a modular system tailored to different industries.

It should employ permanent specialists and part-time consultants with industry-specific knowledge. 

Safe working conditions are a fundamental right of a worker. But in Bangladesh, they are often overlooked. Although the Rana Plaza disaster in 2013 prompted some safety improvements in the garment sector, other industries continue to experience such accidents.

The construction and shipbuilding sectors are particularly hazardous, with respectively 126 and 13 worker deaths per year on average, between the years of 2013 and 2023. 

The existing safety measures in the 2006 Bangladesh Labor Act need to be strictly enforced. Existing labour laws in Bangladesh offer a framework for protecting workers' rights, but they are not enforced uniformly. 

Regular safety inspections and penalties for non compliance would compel management to adhere to safety standards. A comprehensive safety guideline, tailored to the unique demands of various industries, should be formulated. Moreover, a formal compensation mechanism for work-related accidents is essential to replace  the current ad-hoc system. 

In 2023, during the garment workers' strike for fair wages, between 1,000 to 5,000 workers were laid off, despite legal protections on paper. Section 195 of the 2006 Labor Act prohibits new hires during a strike unless it's necessary to prevent serious damage to machinery.

Section 211 enshrines the right to strike, while Section 20 outlines the right to notification and compensation for dismissal. However, these laws are often disregarded, especially in the informal sector, where workers are dismissed without notice or compensation.

Reforms should clarify the definition of  a legal strike to avoid ambiguity.  

Factories as well as other offices, often lack childcare facilities, forcing parents to spend a significant portion of their earnings on sub-standard daycare, despite Section 94(1) mandating such provisions in establishments employing 40 or more female  workers. 

Effective reform requires the stringent enforcement of existing laws. Favouritism toward industry owners must be curbed, and the rights of both blue-collar and white-collar workers must be protected.

While unionisation and labour activities should not infringe on the rights of business  owners, the current imbalance that disproportionately favours employers must be addressed to create an equitable workplace. 

By addressing wage disparities, ensuring worker safety, and strictly enforcing labour laws, Bangladesh can establish a fairer and more just labour market that serves the interests of all its citizens. 

Sheikh Tausif Ahmed is a Research Associate at SANEM. Email: [email protected]. Eshrat Sharmin is a Senior Research Associate at SANEM. Email: [email protected] 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard