Cablegate: Worker Unrest in Bangladesh's Garment Sector During

VZCZCXRO3617
RR RUEHCI
DE RUEHKA #0980/01 2600804
ZNR UUUUU ZZH
R 160804Z SEP 08
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC 7393
INFO RHEHAAA/WHITE HOUSE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHLM/AMEMBASSY COLOMBO 8599
RUEHIL/AMEMBASSY ISLAMABAD 2329
RUEHKT/AMEMBASSY KATHMANDU 9843
RUEHNE/AMEMBASSY NEW DELHI 0815
RUEHCI/AMCONSUL KOLKATA 1442

UNCLAS SECTION 01 OF 02 DHAKA 000980

SENSITIVE
SIPDIS

WH PLEASE PASS USTR AROSENBERG, AADLER, VKADER
DEPARTMENT OF LABOR FOR TWEDDING
DEPT FOR USAID, G, DRL, SCA/PB

E.O. 12958: N/A
TAGS: ELAB ETRD SOCI PGOV KWMN KTEX BG
SUBJECT: WORKER UNREST IN BANGLADESH'S GARMENT SECTOR DURING
RAMADAN

SUMMARY
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1. (SBU) Before and during the fasting month of Ramadan, workers in
Bangladesh's highly-profitable apparel sector have staged
demonstrations, agitating for wage increases to ease the hardship of
high food prices, which traditionally rise around the time of
Ramadan. Business leaders have responded in a mixed fashion to the
workers, with one garment-manufacturing association pledging to
increase wages. Labor activists, however, maintain that the minimum
wage should be increased across the board and that government
restrictions on trade union activity under the country's current
State of Emergency prevent peaceful resolution of disputes.

WORKERS FEAR HIGHER PRICES DURING RAMADAN
-----------------------------------------

2. (U) Workers in Bangladesh's lucrative ready-made garment (RMG)
sector have staged numerous strikes in recent weeks, calling on
factory owners to increase wages and give Ramadan bonuses.
Thousands of workers at more than 50 factories staged demonstrations
in the last month, according to media reports. Virtually all the
demonstrations resulted in damage to apparel factories, while some
blocked highways and resulted in injuries to striking workers and
police called in to contain the demonstrators.

3. (SBU) Rumors of worker mistreatment or death have sparked many
of the recent strikes. In most cases the allegations of injury or
death prove to be unfounded, and observers report the underlying
reason for unrest in the RMG sector is inadequate salaries. Some
press reports have also sought to blame NGOs for inciting the
unrest. RMG workers, who earn on average USD 25-35 per month, have
been hard hit by high food prices; according to the World Bank, the
price of rice alone has increased by 60 percent in the last year.
(NOTE: Wages are higher in Bangladesh's export processing zones
(EPZs), and virtually all of the recent unrest has occurred outside
the EPZs. END NOTE.) An apparel manufacturer admitted privately
that workers spend as much as 80 percent of their wages on food and
that inflation of food prices over the last year has meant most
workers cannot afford sufficient food for their families.

BUSINESS AND GOVERNMENT RESPOND
-------------------------------

4. (SBU) The Bangladesh Knitwear Manufacturers and Exporters
Association (BKMEA), which represents some 1,500 factories that
employ more than 800,000 workers, has proposed a 20 percent raise in
base pay in response to the workers' plight. The Bangladesh Garment
Manufacturers and Exporters Association (BGMEA), which represents
some 4,000 factories that employ many of the country's 2.5 million
garment workers, initially rejected this proposal, but eventually
signed on. According to BKMEA and BGMEA, they are working with the
Government of Bangladesh to finalize the deal; business leaders said
the GOB would announce the wage increase in a matter of days.
Business leaders criticized the GOB for failing to contain
protestors and prevent damage to their factories. In the aftermath
of recent unrest, some owners have threatened to close their
factories if the GOB proved incapable of protecting them from worker
unrest.

5. (SBU) In response to worker concerns about price hikes during
Ramadan, the apparel associations have set up kiosks to sell
subsidized rice and pulses to workers. Once a week workers with
their factory ID can purchase rice and pulses for about 25 percent
less than the market price. BKMEA leaders said this initiative was
an important gesture to workers; BKMEA offered discounted rice to
workers last year during Ramadan and earlier this year between rice
harvests. While BGMEA is doing the same for its workers during
Ramadan this year, its leaders grumbled that "we are in the garment
business, not the food business."

LABOR GROUPS SAY IT'S NOT ENOUGH
--------------------------------

6. (SBU) Labor activists told us the unrest was a result of low
wages and a ban on trade union activities. Since the imposition of
a State of Emergency in January 2007, Bangladesh's Caretaker
Government has banned all labor union activities, which labor groups
maintain has prevented constructive resolution of disputes. (NOTE:
The GOB on September 8 announced a partial relaxation of the ban;

DHAKA 00000980 002 OF 002

more details on this development will be provided septel. END
NOTE.)

7. (SBU) Labor leaders said the pay hike proposed by BKMEA will
bring negligible benefits to the workers; they said any pay increase
should be based on gross pay not base pay. They also pointed out
the proposed increase would not change the minimum wage, which has
been 1,663 taka (about USD 25) since 2006. They also claimed the
subsidized rice program was merely a publicity stunt that would not
truly benefit the workers.

COMMENT
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8. (SBU) Wages for garment workers in Bangladesh are among the
lowest in Asia. Low labor costs are the key to the sector's
competitiveness, and business leaders are reluctant to increase
wages in the face of high energy and transport costs and pressure
from buyers to keep costs down. That said, there is no question
that garment workers are struggling to make ends meet in an
inflationary environment.

9. (SBU) Worker agitation around Ramadan is not unusual, and local
experts agree the current levels of unrest do not yet exceed
previous years' activity. However, if government and business fail
to address worker concerns, unrest could continue and increase.
Political parties in the past have channeled worker discontent into
protests against the government. The Caretaker Government is likely
to be mindful of this history as it continues its negotiations with
political parties in the run-up to elections scheduled for December.

Moriarty

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