A roadmap to reform our labor market

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

The regime was marred by accusations of economic challenges such as high inflation and institutional failures such as corruption. The revolution was the result of widespread discontent over these injustices and inequalities.

The last straw was the disproportionate response of law enforcement against protesting citizens.

However, the overthrow of Hasina’s government has opened the door to necessary reforms, especially in the labor market. In the past, workers faced discrimination and systemic failures, including unfair wage agreements, unsafe working conditions, and violations of basic rights.

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

The overthrow of the Awami League revealed cases where qualified candidates were not allowed to join government jobs due to their political loyalty. This type of injustice also extended to the private sector, where nepotism and bias in hiring have been widespread.

Now, the interim government should completely reform the hiring process. Systems like the BCS, which were implemented by the British as a discriminatory practice and a form of oppression towards the local population, must be abolished or at least modernized.

A dynamic and needs-based recruitment system should be established for government jobs. Following the practices of more institutionally stable democracies, such as those in the West, where the skills and qualifications of the individual are prioritized, in line with the position.

In this regard, the government could take inspiration from the private sector, where experience and qualifications are prioritized. Government departments, independently or with the help of a hiring entity, would recruit candidates according to their specialization and relevant knowledge on the subject.

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

On the other hand, manual jobs that actually allow for formal contracts sometimes do not comply with relevant laws. Therefore, 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 can earn higher salaries in private jobs.

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

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

Wage agreements continue to be one of the most controversial issues in the labor market.

In December 2023, the minimum wage for the garment industry, the largest employer in the manufacturing sector, was adjusted to 12,500 taka, an increase of 56%, but far below the 188% demanded by workers’ unions. Similarly, the minimum wage for tea workers was fixed at only 170 taka per day, against a demand of 300 taka.

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

Currently, the Minimum Wage Board reviews wages every five years. It is made up of a President, a neutral member, a member representing the owners and a member representing the workers.

For the purposes of carrying out the functions mentioned in article 139, the wages board must also include the following members: one member representing the owners of the industry in question and one member representing the workers hired in the industry. industry in question.

Currently, the board consists of a judge who acts as president, a government secretary who represents the owners, a labor representative loyal to the recently ousted ones, and a professor from the University of Dhaka.

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

You 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 suffer similar accidents.

The construction and shipbuilding sectors are particularly dangerous, with an average of 126 and 13 worker deaths per year, respectively, between 2013 and 2023.

There is a need to strictly implement the existing safety measures in the Bangladesh Labor Act 2006. The existing labor laws in Bangladesh provide a framework to protect the rights of workers, but they are not applied uniformly.

Regular safety inspections and penalties for non-compliance would force management to comply with safety standards. A comprehensive security guideline must be formulated, tailored to the unique demands of various industries. Furthermore, a formal workplace accident compensation mechanism is essential to replace the current ad hoc system.

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

Article 211 enshrines the right to strike, while article 20 establishes the right to notification and compensation for dismissal. However, these laws are often not respected, especially in the informal sector, where workers are dismissed without notice or compensation.

The reforms should clarify the definition of a legal strike to avoid ambiguities.

Factories, as well as other offices, often lack childcare facilities, forcing parents to spend a significant portion of their income on poor-quality childcare, despite Article 94(1) requiring such provisions in establishments that employ 40 or more workers.

Effective reform requires strict application of existing laws. Favoritism towards industry owners must be stopped and the rights of both blue-collar and white-collar workers must be protected.

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

By addressing wage disparities, ensuring worker safety, and strictly enforcing labor laws, Bangladesh can establish a more fair and equitable labor 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 views and opinions of The Business Standard.