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A study on the correlation among Wages and Payments,

Working hours and Leaves and Recent unrests in the RMG


(Readymade Garments) sector of Bangladesh.
In context of Bangladesh Labor Code, 2006

A study on the correlation among Wages and Payments, Working hours


and Leaves and Recent unrests in the RMG (Readymade Garments)
sector of Bangladesh.
In context of Bangladesh Labor Code, 2006

Course Name: Legal Environment in Business (L501)

Prepared for
Mr. Shakil Huda
Professor
Institute of Business Administration
University of Dhaka

Prepared by
A B M Asifuzzaman (Roll: 10)
MBA, Batch 48D

Institute of Business Administration


University of Dhaka

Date of Submission: December 10, 2012

December 10, 2012


Mr. Shakil Huda
Professor
Institute of Business Administration
University of Dhaka
Subject: Submission of the term paper on A study on the correlation among Wages and
Payments, Working hours and Leaves and Recent unrests in the RMG (Readymade
Garments) sector of Bangladesh, in context of Bangladesh Labor Code 2006.

Dear Sir
I am very much pleased to present to you the term paper on A study on the correlation
among Wages and Payments, Working hours and Leaves and Recent unrests in the RMG
(Readymade Garments) sector of Bangladesh, in context of Bangladesh Labor Code 2006.

Working for this term paper has been an interesting and informative experience for me.
Through this I have come to know that the employment and service condition including
working hour and wages and payments of workers in Readymade Garments sector those
are regulated by various labor codes like The Bangladesh Labour Code, 2006. I have
learned many unidentified facts, which I believe will be supportive to my professional career
and life.

I have enjoyed working on this report and hope that this work will meet the level of your
expectations. Your advice and continuous support helped me a lot to accomplish the desired
goal. In case of any further query, please feel free to contact me. I will be available anytime
at your convenience.

Sincerely
A B M Asifuzzaman
Roll: 10
MBA, Batch 48D.

Acknowledgements
At first all praises belong to the Almighty Allah, the most Merciful, the most beneficent to
men and his action, which provided me the chance to conduct this study.

This report is an integration of different types of tasks the accomplishment of which would
not have been possible without the wholehearted assistance of many people whose debt I
wont be able to express in mere words. I feel honored for being a student of the Institute of
Business Administration, University of Dhaka.

This study is carried under the direct guidance and supervision of course teacher of
L501: Legal Environment of Business, Mr. Shakil Huda, Professor, Institute of Business
Administration, University of Dhaka. His constant supervision, continuous guidance, helpful
criticism, invaluable suggestions and unfailing encouragement throughout the work helped
us to reach a successful completion.

I am also indebted to Alternative Movement for Resources and Freedom (AMRF) Society for
providing me the primary survey report on Minimum Wage Implementation in Bangladeshs
Garment Sector that they did in June 2012.

The report is dedicated to Bangladeshi readymade garment workers who continuously stitch
the finest garment for the national economy and brings positive changes despite all the
constraints. The report is also dedicated to the fire burnt garments factory workers of Tajrin
Fashion. May they rest in peace!

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Executive Summary
The Readymade garment (RMG) industry of Bangladesh has become the backbone of the
national economy. It is the highest foreign exchange earner, it employs largest number of
people and it generates vibration for other sectors. Despite the impressive performance, the
RMG industry has several problems especially in its labor management practices. The
Ready Made Garment (RMG) sector in Bangladesh accounts for more than 75 per cent of
the total income from export and the largest employer of women in the industrial sector. In
this study, I examined the implications of the rules of Working hours and Leaves, Wages and
Payments, and recent unrests in RMG sector due to the violation of these rules in
Bangladesh using data both from primary (a sample survey) and national and international
newspapers, media reports, journals and annual reviews of international development
organizations. I mostly depended on the secondary information as it was a bit hard to
access to the confidential information of the companies concerned. I found that majority of
the RMG workers earn below minimum wage of Tk. 3000.00 per month that was set by
Government in December 2010 and cannot save any money after covering expenditures for
food and accommodation. Most of the workers work overtime and get only 20 per cent more
despite the provision of double payments for overtime hours. I also found that a vast majority
of the workers jobs are not permanent.
In addition, almost half of the workers are either verbally or physically abused by the
management. RMG workers are compelled to work long hours with no access to sick leave,
weekend holiday, annual vacation, pension, bonus, festival allowance, and trade union in the
one hand and constant pressure to increase their productivity on the other. For these
reasons, the RMG sector has been marked by fierce worker movement since 2006. To
ensure stability in the RMG sector, both the Government and RMG owners should take
necessary initiatives to ensure reasonable wage structure and very good work environment
for the workers.
Policy implications of the worker movement in the context of Bangladesh are discussed.
Bangladesh has the potential to increase its respect of international labour standards in its
relations with its workers. Leaders of RMG employer groups and representatives of
Government understand the importance of being perceived as seeking to be compliant with
codes of conduct, but in reality both their capacity and their commitment to these codes are
suspect. Despite employing the rhetoric of compliance, Bangladeshs RMG industry
continues to remain focused on lowest-wage, lowest-cost strategies to compete
internationally against its more efficient competitors such as China, Vietnam, and Cambodia.
Both employer associations and the Government continue to seek to blame others for

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violence and worker unrest that plagues the RMG sector while resisting calls to investigate
and correct the abuses of core labour rights that continue to provoke workers protests.
Without recognizing and acting positively to reform the RMG industrys labour relations in
line with the growing link between labour standards, codes of conduct, and trade/export
opportunities, the RMG sector in Bangladesh risks becoming a major loser in the growing
competitive atmosphere characterizing the global garment trade.
To overcome these problems I recommended establishing the minimum wage standard and
implementing that without any discrimination. Also, labour force should not vandalize their
way of income. Factory owners should hear the demands of the workers and fulfill those as
much as they can. Formerly, many investigations have been taken place. Recommendations
of those investigations should be taken into consideration. Currently, there are lacks of faith
of the workers on their employers. Here, level of mutual trust, communication and
cooperation between the owners and workers need to be developed.

vi

Table of Contents
Acknowledgements ...........................................................................................................................iv
Executive Summary ........................................................................................................................... v
1.

Introduction .............................................................................................................................. 2

1.1.

Origin of the study ................................................................................................................. 3

1.2.

Objectives of the study .......................................................................................................... 3

1.3.

Scope of this study ................................................................................................................. 4

1.4.

Limitations of this study ......................................................................................................... 4

2.

Literature Review ...................................................................................................................... 5

3.

Methodology ............................................................................................................................. 8

3.1.

Data Requirement.................................................................................................................. 8

3.2.

Data Analysis and Interpretation ............................................................................................ 9

3.3.

Report Writing ....................................................................................................................... 9

4.

Labour Laws in Bangladesh ...................................................................................................... 10

4.1.

Working hours and Leaves ................................................................................................... 10

4.2.

Wages and Payments ........................................................................................................... 13

5.

Applications and Practices of Working hours and Leaves law implementation ......................... 15

6.

Applications and Practices of Wages law implementation ........................................................ 16

6.1.

Wage structure in Bangladesh.............................................................................................. 16

6.2.

Pay structure manipulation .................................................................................................. 16

6.3.

Implementation of the new minimum wage......................................................................... 17

6.4.

Pay Grade Manipulation ...................................................................................................... 17

6.5.

Wage, benefits and leaves ................................................................................................... 18

6.6.

Bonuses and Allowances ...................................................................................................... 18

6.7.

Reasons behind the low wages ............................................................................................ 19

6.8.

Consequences...................................................................................................................... 19

7. Recent Labour Unrest for Insufficient Wages in Readymade Garments (RMG) sector of
Bangladesh...................................................................................................................................... 20
8.

Conclusions and Recommendations ......................................................................................... 24

8.1.

Conclusions.......................................................................................................................... 24

8.2.

Recommendations ............................................................................................................... 25

References ...................................................................................................................................... 26
Bibliography .................................................................................................................................... 26

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Introduction

The Readymade Garment (RMG) industry of Bangladesh tells an impressive story of the
countrys successful transition towards a major export-oriented economy. Starting its journey
in the late 1970s with a relatively small investment, the industry flourished in 1980s and
1990s and has become the largest industry in Bangladesh. The contributory factors of the
RMG industry in Bangladesh are global trading agreements, cheap labour cost, government
policy support and dynamic private entrepreneurship. All these things have helped
Bangladesh to gain a handsome share in the global garment business. From early 1990s
onwards the RMG industry has become the largest foreign exchange earning sector in the
economy. In 2005-06, Bangladesh earned nearly $8 billion by exporting garment products
and RMG covers over 75 percent of the total export of the country, having the lion's share of
the country's foreign exchange. Contribution of RMG is very positive in Bangladesh
economy, sharing 13 percent of the total national GDP .Moreover the industry has become a
vehicle for further industrialization of the country. After the end of the Multi-Fiber Agreement
at the beginning of 2005 and the changeover to the New World Trade regime, it was feared
that the Bangladesh's successful RMG industry would suffer, as it would lose business to
countries like China and India. But fortunately for Bangladesh, so far this prediction has been
proved wrong. In fact, the industry has continued to grow at a healthy rate of approximately
20 percent. Now in Bangladesh, more than 10 million peoples livelihoods directly and
indirectly depend on this single industry and it accounts 40 percent of industrial employment.
More than 2 million garment workers are working in approximately 4250 RMG units; of them
over 85 percent are women.

Despite the impressive performance, the RMG industry has several problems especially in
terms of labor rights. There is a growing concern that labour rights are often violated in
Bangladeshi RMG industry. The empirical evidence suggests that labour rights have not yet
been established in the RMG industry. Labour rights work as the safeguards against
discriminatory labour practices and are the prerequisites for sound business and have been
ratified by Human Rights Convention. Bangladesh is committed to secure labour rights for
the well-being of laborers by virtue of ILO membership. But the outcome observed in the
RMG industry is simply unsatisfactory. Instead of formal sector arrangements, an informal
nature of employment persists in the RMG industry with negative consequences ranging
from poor working conditions, to low wages, to repression. Garment workers have been
demanding rights to establish their logical entitlements but garment owners systemically
overlook those legal provisions. Against the longstanding deprivation there was a wave of
resistance across the RMG industry in May, 2006 that caused a loss of around US $70
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million. Researchers, journalists, and labour right activists claim that the damage would not
happen if government can formulate and implement a comprehensive and effective labor law
that incorporates labour rights in the RMG industry. These critics also indicate the global
prevailing business system which largely benefits business sectors in developed countries
creates barriers in implementing labour rights not only in Bangladesh, but also in most
developing countries. Thus the realities on the ground call for a fresh analysis and solution to
the existing problems. National labor laws do not apply in the EPZs, leaving BEPZA in full
control over work conditions, wages and benefits. Garment factories in Bangladesh provide
employment to 40 percent of industrial workers. But without the proper laws the worker are
demanding their various wants and as a result conflict is began with the industry. Low
working salary is the vital fact which makes the labor conflict. Worker made strike, layout to
capture their demand. Some time bonus and the overtime salary are the important cause of
crisis. Insufficient government policy about this sector is a great problem in Garments
Company.

1.1.

Origin of the study

A business graduate should have a sound knowledge about the labor law including workers
rights and benefits. Violation of maximum working hours and providing minimum wage to the
workers are the common phenomenon in RMG industry. To work in any organizations a
manager must be aware of the consequences, which may sometimes be unrest, about
depriving any employee from the rights and benefits. Along with this a business executive
should also know the amount of the wages and payments and the proper working hour of a
labor and the relevant procedure to resist one from violating the law. For these reasons the
manager should be aware of the real scenario of the provision of Working hours and Wages.
This study is conducted to fulfill the course requirement under the supervision of the course
instructor.

1.2.

Objectives of the study

This study is carried out focusing on the following objectives:


a) To complete the course curriculum of the course, L501: Legal Environment of
Business.
b) To study the Working hours and Wages and Payments: Bangladesh Labor Code
2006 and different provisions under this act.
c) To analyze the applications and practices of the act in RMG (Readymade Garments)
sector of Bangladesh.

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d) To capture views and perspectives of garment workers on issues relating to rights


and living wage levels.
e) To enlighten the causes of recent unrests in this sector.

1.3.

Scope of this study

The following scopes are targeted to complete this study:


a) To cover the various provisions and conditions those are necessary to understand
the Working hours, Leaves and Wages procedure.
b) To compare the act and its practices in RMG sector of Bangladesh.
c) To compare the recent scenario with different section of Labour Code 2006.

1.4.

Limitations of this study

This study was completed based on the analysis of different reports, journal
publications and some sample surveys with profound focus on the labour code.
There were complexities to obtain the survey reports from the sample organizations
as the companies were averse to share the real condition of following labor law.
Many of the workers approached by the interviewers, in particular female workers, were
reluctant to participate in the survey. Commonly reported difficulties included:

Time pressures related to running households

Reluctance to spend limited free time discussing work issues

Fear that interviewers will report negative comments to factory managers or garment
companies and that their jobs would be at risk if negative comments were made.

Moreover, many workers either do not receive or do not fully understand their pay slips.
These, combined with a reluctance to disclose information to strangers, poses challenges in
collecting data, and made the survey process more time-consuming than expected.

L 501: Legal Environment of Business

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Literature Review

As garment industry is a leading sector in Bangladesh economy and labor unrest is a critical
issue at present, a good number of books, reports, articles and publications of different
organizations are available. In course of conducting this term paper, a number of literatures
in this regard have been reviewed.
(Siddiqi, 2004) in his book The Readymade Garment Industry of Bangladesh discusses the
importance of RMG industry in the national economy and notes, the RMG industry has
become so important that the future of the economy of Bangladesh is greatly dependent on
this single sector. Any slowdown in this sector will slow down the economic progress of
Bangladesh. He analyses the strength and weakness of RMG industry of Bangladesh and
suggests how to ensure its better future in the context of changing global apparel market. He
explains why the problems caused by the phasing out of MFA will continue to be a matter of
great concern. He argues that the industry would survive and be able to thrive in the postMFA era if appropriate strategies on capacity building through backward and forward
linkages, cost reduction, market diversification, product differentiation, infrastructural
development, reduction of lead time etc are implemented. To substantiate his position, he
draws insights from the experience of many countries. However, issue of labor unrest in this
sector has not been discussed.

(Jakir, 2010) observes long-standing deprivation of basic human needs often force the
garment workers to follow the path of violence. He states, the living condition of RMG
workers is worse than that of prisoners in Bangladesh. According to The Jail Code of 1920,
livelihood requirements are decided for the prisoners confined in different jails of
Bangladesh. According to the current TCB price index for Dhaka city, the minimum cost of
food items prescribed for a prisoner is Tk. 52.39 per day. The market price for the allocated
amount of food for the prisoner is Tk. 1,571.70 per month. If the daily allotment of food
amount is calculated for an average family in Bangladesh, it means the family would require
Tk. 7,544.16 to have access to the same level of food items that are allotted to be consumed
by every under-trial prisoner. This implies that the current minimum wage structure of the
RMG sector is still below the cost of food for prisoners in different jails, writes Jakir. He also
points that, in recent years, in the face of unusual price hike, the government initiated
special social security programs for rural workers. According to the program, considering the
standard of daily wages of day laborers at Tk. 150 per day, their monthly wage stands at Tk.
4,500. Furthermore, while the productivity of the garment workers is more than that of the
public-sector entry-level workers, the minimum wage of the workers of a similar level in
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state-owned industries denotes sheer inequality among the same group of people plying the
same type of job in the country.

(Sultan, 2010) says, from the total net profit, only 30 per cent is being spent on the workers
whereas around 50 per cent is spent on workers' wages in other countries. He further notes,
in our country, people do not pay heed to any movement unless you come out to the roads.
The same happened in the case of the garment workers. They were facing severe problems
and unless they came out on to the roads, no one would have taken their problems
seriously,

Fahmida and Moazzem (2007) suggest a number of factors need to be considered while
fixing the minimum wage of industrial workers. These are: i) workers minimum requirement
for decent living; ii) enterprises capacity to adjust with the additional cost originating from the
rise in wage; iii) consideration of the wage structure of similar types of industrial sectors; and
iv) adjustment of the wage with countrys economic development.
A CPD research Study on the Ongoing Restructuring Process notes, there is a need for a
continuing dialogue between workers and management, particularly in view of changing
employment composition and new types of demands. Management of RMG enterprises
should take necessary and prompt measures in case any misconduct with workers is
reported. There should be a proper mechanism for placement and addressing of workers
complaint at factory level. Enterprises, in a position to do so, should appoint a grievance
officer to deal with factory level misconducts. Labor relations is likely to become crucially
important in near future and RMG enterprises must accord due attention to this. (Report)

(Bhuiyan, 2010), notes in absence of an appropriate formal channel to air grievances and
seek redress, the only avenues open to the RMG workers are street protest, picketing, or
blocked of a manager's office or a factory. So far, the government has largely left the RMG
sector to such devices. Most garment factories do not follow the labor law and ILO
conventions. The Labor Act, 2006 clearly stipulates that the wages of a worker must be paid
within seven workings days of the completion of the stipulated wage period. This is not
followed in practice. In addition, some of the factories do not provide appointment letters,
identity cards and service books.

Based on a survey conducted by BIDS, Majumder and Begum (2006) show the gender
differentiated socio-economic impacts in the export-oriented garment industry of

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Bangladesh. They found that womens employment in the export-oriented garment industry
of Bangladesh has narrowed down the gender gap in many spheres like employment,
income, social prestige, control over income, decision-making etc. At the same time,
womens employment has widened the gender gap in other spheres such as health, social
security etc. Tension and ambivalence are also more prevalent among female workers than
their male counterpart. They also found that occupational segregation and gender
discrimination in wage rate was wide. Women cannot reap the full potential of their
employment if the gender imbalances are not addressed, they observed. (Ali, 2010)
observes the adverse impact of labor unrest in national economy of Bangladesh. He states,
during last three years, ownership of about 40 large scale garment factories has been
handed over to the foreigners and ownership of about 100 factories is under process of
handing over. This is happening under intensive supervision of high officials of factories who
are responsible for widening the gap between the owners and workers.

(Haider, 2007) notes that low wage and sub-standard living condition are major causes of
labor unrest in the readymade garment industry of Bangladesh. He states, those who can
take proper food and live in better environment can contribute more to the production than
those are deprived of these. In respect of wage and living standard, the garment workers of
Bangladesh lag far behind of those of China, Sri Lanka and Vietnam. Yet production is high
in Bangladesh. The owners of garment factories should take it into consideration. He further
points out another cause of labor unrest in the readymade garment industry of Bangladesh
which is workers lack of feeling of ownership. How can they feel an organization where they
are valued only for their work, where their job is not secure, where they have no right to say
anything in any matter?

Gender discrimination, working environment, conspiracy, wage, owner-worker relations, lifestandard and socio-economic condition of the garment workers especially of women workers
are the major issue of study in the field of RMG industry of Bangladesh. However, causes of
labor unrest and its impact on national economy have been focused in many studies.

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Methodology

Well defined methodology is the pre-requisite of every research work which ultimately
contributes to the successful completion of work. For the sake of this study, a step wise
methodology has been followed in this regard.

3.1.

Data Requirement

In order to assess the legal matters concerning wages payments, some secondary and
primary data has been collected using various sources.

The survey data that this report is based upon was collected by staffs from the Dhaka-based
Alternative Movement for Resources and Freedom (AMRF) Society. AMRF has extensive
experience in conducting off-site worker interviews. An eight-member team from AMRF,
composed of female and male interviewers, was responsible for worker interviews and data
collection and analysis.
Following a well-established methodology, interviewers approached workers outside of
factories, at cafes, kiosks, shops, and other locales where workers commonly gather after
work. Most interviews were conducted in the workers homes in the evening, or during the
weekend. The primary data sources for this report are worker interviews based on a
structured questionnaire. Interviews were conducted in both one-on-one and group settings.
Further informal discussions, covering topics beyond the structured questionnaire, provided
an additional level of insight into the experiences and concerns of workers.

Secondary data collected through national and international newspapers, media reports, and
annual reviews of international development organizations. The objective of the study has
been met by analyzing and interpreting this data.

The Bangladesh Labor Code, 2006 has been reviewed to gain knowledge on different
sections and sub-sections regarding the working hour and wages provision.

Some discussions with different personals have been done to acquire an overview of the
condition of working hour and wages payment in Readymade garments sector of
Bangladesh.

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3.2.

Term Paper

Data Analysis and Interpretation

The data obtained from the previous step has been analyzed and interpreted to compare the
features of Labor Code with the current scenario.

3.3.

Report Writing

The collections of data along with the analysis and interpretation have been presented in a
report with detail insight and explanation.

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4. Labour Laws in Bangladesh


Labour Law, as in The Bangladesh Labour Code 2006, is designed to control and govern the
continuous process by which workers and management decide the terms and conditions of
employment. It is based almost entirely on statutes enacted by the parliament during last
seventy years. Finally, it was passed by the Jatiya Sangshad(Parliament) and assented to
by the President on the 11th day of October, 2006 A.D. Corresponding to 26th Ashwin, 1413
B.S.
Labour Law regulates matters such as employment of worker, relation between the owner
and the worker, determination of minimum wage, payment of wage, fixation of working hours
and leaves, condition of works, compensation due to accidental injury during working period,
formation of trade unions, institution of industrial dispute and its settlement. It also indicates
that the rules and regulations which cope with employees right to join trade union, In
particular, benefits of workers, conditions of level, especially maternity leave for women
workers, social security for workers, and social security for workers.
The main object of this law is to recover the laws for the workers from a ramified system that
complicates the understanding of specific law for the specific purpose. Now a day the aim of
the labour laws is to establish a harmonious relationship between the capital and labour.

Specific laws relating to this term paper are given below in brief:

4.1.

Working hours and Leaves

The working hour of the worker depicts the total working hour by week or day and the
provision of overtime working hour. The leave generally involves various leaves that the
workers are entitled to.
Sec 100. Daily hours: No adult worker shall ordinarily be required or allowed to work in an
establishment for more than eight hours in any day:
Provided that, subject to the provisions of section 108, any such worker may work in an
establishment not exceeding ten hours in any day.
Sec 102. Weekly hours: (1) No adult worker shall ordinarily be required or allowed to work
in an establishment for more than forty-eight hours in any week.
(2) Subject to the provisions of section 108, an adult worker may work for more than fortyeight hours in a week:
Provided that the total hours of work of an adult worker shall not exceed sixty hours in any
week and on the average fifty-six hours per week in any year:

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Provided further that in the case of a worker employed in an establishment which is a road
transport service, the total hours or overtime work in any year shall not exceed one hundred
and fifty hours.

Provided further that the government, if satisfied that in public interest or in the interest of
economic development such exemption or relaxation is necessary, in certain industries, by
order in writing under specific terms and conditions, may relax the provision of this section or
exempt, for a maximum period of six months, from the provision of this section at a time.

Sec 103. Weekly holiday: An adult worker employed in an establishment


(a) Which is a shop or commercial establishment, or industrial establishment, shall be
allowed in each week one and half days holiday and in factory and establishment one day in
a week;
(b) Which is a road transport service, shall be allowed in each week one days holiday of
twenty four consecutive hours; and no deduction on account of such holidays shall be made
from the wages of any such worker.
Sec 108. Extra-allowance for overtime:
(a) Where a worker works in an establishment on any day or week for more than the hours
fixed under this Act, he shall, in respect of overtime work, be entitled to allowance at the rate
of twice his ordinary rate of basic wage and dearness allowance and ad-hoc or interim pay, if
any.
(b) Where any worker in an establishment is paid on a piece rate basis the employer, in
consolation with the representatives of the workers, may, for the purposes of this section, fix
time rates as nearly as possible equivalent to the average rates of earnings of those
workers, and the rates so fixed shall be deemed to be the ordinary rates of wages of those
workers.
(3) The government may prescribe registers to be maintained in an establishment for the
purpose of securing compliance with the provisions of this section.
Sec 117. Annual leave with wages: (1) Every adult worker, who has completed one year of
continuous service in an establishment, shall be allowed during the subsequent period of
twelve months leave with wages for a number of days calculated at the rate of one day(a) in the case of a shop or commercial or industrial establishment or factory or road
transport service, for every eighteen days of work;
(b) in the case of tea plantation, for every twenty two days of work;

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(c) in the case of a newspaper worker, for every eleven days of work, performed by him
during the previous period of twelve months.
(2) Every worker, who is not an adult, who has completed one year of continuous service n
an establishment, shall be allowed during the subsequent period of twelve months leave with
wages for a number of days calculated at the rate of one day(a) in the case of a factory, for every fifteen days of work;
(b) in the case of a tea plantation, for every eighteen days of work;
(c) in the case of a shop or commercial or industrial establishment, for every fourteen days of
work performed by them during the previous period of twelve months.
(3) A period of leave allowed under this section shall be inclusive of any holiday which may
occur during such period.
(4) If a worker does not, in any period of twelve months, take the leave to which he is entitled
under sub-sections (1) or (2), either in whole or in part, any such leave not taken by him shall
be added to the leave to be allowed to him, in the succeeding period of twelve months.
(5) Notwithstanding anything contained in sub-section (4), an adult worker shall cease to
earn any leave under this section, when the earned leave due to him amounts to(a) in the case factory or road transport service, forty days;
(b) in the case of a tea plantation or shop or commercial or industrial establishment, sixty
days;
(6) Notwithstanding anything contained in subsection (4) an adolescent worker shall cease
to earn any leave under this section, when the earned leave
(a) in the case of a factory or tea plantation, sixty days;
(b) in the case of shop or commercial or industrial establishment, eighty days;
(7) Any leave applied for by a worker but refused by the employer for any reason, shall be
added to the credit of such worker beyond the aforesaid limit mentioned in sub-section (5)
and (6).
(8) For the purpose of this section a worker shall be deemed to have completed a period of
continuous service in an establishment notwithstanding any interruption in service during
that period due to(a) any holiday;
(b) any leave with wages;
(c) any leave with or without wages due to sickness or accident;
(d) any maternity leave not exceeding sixteen weeks;
(e) any period of lay-off;
(f) a strike which is legal or a lock-out which is not illegal.

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116. Sick leave : (1) Every worker other than a newspaper worker, shall be entitled to sick
leave with full wages for fourteen days in a calendar year.
(2) Every newspaper worker shall be entitled to sick leave with half wages for not less than
one eighteenth of the period of services.
(3) No such leave shall be allowed unless a registered medical practitioner appointed by the
employer or, if no such medical practitioner is appointed by the employer, any other
registered medical practitioner, after examination, certifies that the worker is ill and requires
sick leave for cure or treatment for such period as may be specified by him.
(4) Such leave shall not be accumulated and carried forward to the succeeding year.

4.2.

Wages and Payments

The wage and payment of the worker describes the minimum wage for any service and the
procedure of payment.

Sec 120. Special definition of wages: In this Chapter, unless there is anything repugnant
in the subject or context, wages, means wages as defined in section 2 (XLV), and includes(a) any bonus or other additional remuneration payable under the terms of employment;
(b) any remuneration payable in respect of overtime work, holiday or leave;
(c) any remuneration payable under any award or settlement between the parties or under
order of any Court;
(d) any sum payable under this Act or any agreement by reason of termination of
employment whether by way of retrenchment, discharge, removal, resignation, retirement,
dismissal or otherwise; and
(e) any sum payable due to lay-off or suspension.
Sec 121. Responsibility for payment of wages: Every employer shall be responsible for
the payment to workers employed by him of all wages required to be paid under this act:
Provided that, except in the case of a worker employed by a contractor, the chief executive
officer, the manager or any other person responsible to the employer for the supervision and
control of an establishment shall also be responsible for such payment.
Provided further that when the wages of a worker employed by the contractor is not paid by
the contractor, the wages shall be paid by the employer of the establishment and the same
shall be adjusted from the contractor.
Sec 123. Time of payment of wages: (1) The wages of every worker shall be paid before
the expiry of the seventh day after the last day of the wage period in respect of which the
wages are payable.
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(2) Where the employment of any worker is terminated by retirement or by the employer,
whether by way of retrenchment, discharge, removal, dismissal or otherwise, the wages
payable to him shall be paid before the expiry of the seventh working day from the day on
which his employment is so terminated.
(3) All payment of wages shall be made on a working day.

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5. Applications and Practices of Working hours and Leaves law


In our country, workers usually work 10-16 hours a day, six days a week for the lowest
garment sector wages in the world.
When garments workers were asked whether the daily working hour prevailing in their
respected factories is more than eight hours, more or less 75% strongly agreed, whereas
20% agreed, and 5% were neutral in their comments. Therefore, about 95% agreed with this
statement. But, according to Labour Code 2006, No adult worker shall ordinarily be required
or allowed to work in an establishment for more than eight hours in any day. (Sec 100)

When garments workers were asked about their overtime payment rate, a very little portion
of them demonstrated neutrally whether the overtime payment rate is twice as much as the
normal payment rated, whereas most of them were strongly disagreed. So, it is clear that
most of the companies do not follow appropriate overtime payment system. But, according to
Labour Code 2006, a worker works in an establishment on any day or week for more than
the hours fixed under this Act, he shall, in respect of overtime work, be entitled to allowance
at the rate of twice his ordinary rate of basic wage and dearness allowance and ad-hoc or
interim pay, if any. (Sec 108, Subsection 1)

The overtime hours are paid with the regular salary, sometimes on different days or varied
amounts in a number of days.
44% of the workers do not know how their overtime is calculated. Some think it is double the
rate of the basic pay. The overtime rate ranges from 1338 BDT per hour.
Many workers keep their own overtime records; 23% of those keeping their own records
report that employer calculations did not match their own. Generally, workers report that
there is no functional process to reconcile complaints about underreporting of overtime hours
worked. 18% of workers reported that they were not fully paid for recorded hours.
Most of the interviewed workers reported that the overtime work was required by employers.
Workers who refused overtime reported scolding or other verbal abuse. 1
When they were asked about their sick leave policy as per Bangladesh Labor Code 2006,
most of them strongly disagreed with this statement. But, according to Labour Code 2006,
every worker, other than a newspaper worker, shall be entitled to sick leave with full wages
for fourteen days in a calendar year. (Sec 116, Subsection 1)

. Data collected from the survey of Alternative Movement for Resources and Freedom (AMRF) society

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6. Applications and Practices of Wages law implementation


Though there are some strong recommendation of wages payment in Bangladesh Labour
Code 2006, implementation of those rules are very poor in our Readymade garments sector.
Below, I discussed the recent condition of wages structure and wages payment.

6.1.

Wage structure in Bangladesh

Wages in Bangladesh are comprised of a basic hourly wage which is augmented with a
variety of legally-required and optional allowances, bonuses and incremental payments.
Overtime wages form another part of most workers take-home pay. Wages are calculated
according to a seven-step grading system for each job classification, which is based on
seniority and experience. Taken together, these factors can make it difficult for workers to
know exactly how their wages are calculated.
There was no official increase in minimum wages in Bangladesh between 2006 and 2010.
The real incomes of many workers in Bangladesh were increased by use of a variety of
optional bonuses.

6.2.

Pay structure manipulation

One of the major problem areas identified by workers in the survey relates to the way
bonuses and other pay augmentations were translated into the new wage grading system
created by the 2010 law. Problems of this sort were reported by a majority of the survey
participants.
Under the old minimum wage law, workers received a basic salary + bonuses. Because
overtime payments are calculated based on the basic salary, many factories prefer to add
bonuses rather than increase basic salary levelsas these results in lower payments for
overtime work. Many workers reported that under the new law, basic salaries have
increased, however the bonuses have been taken away, rather than applied to the new
basic salaries. Real income has increased, but not as much as workers expected or believed
was fair, based on previous bonuses. Such practices do not appear to be illegal, however
they are widely considered to be unethical.

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Figure 1 illustrates a
situation reported by a
typical worker. Under
the old wage structure,
a

sewing

machine

operators
monthly

legal
minimum

wage was set at 2 400


BDT per month. By
October 2010 she was
receiving

3000

BDT

per month because of


yearly increments and
Figure 1

other

bonuses.

In

2010 the new minimum wage for the same person was set at 3 500 BDT, and she no longer
received the additional 600 BDT in bonuses and other payments. This workers wage
increase should have been 1100 BDT; but in practice it was 500 BDT. 2.

6.3.

Implementation of the new minimum wage

The new minimum wage has been implemented in all the factories covered by the survey,
according to the interviews. It is worth noting, however, that a few workers from one factory
claimed that they receive 75 BDT less than the minimum; workers of another factory claimed
that they receive 57 BDT less. Other workers from two factories reported that helpers and
ironmen did not receive increased wages according to the new minimum wages set for their
grades.

6.4.

Pay Grade Manipulation

24% of workers interviewed said they had been reassigned to a lower pay grade following
the 2010 wage increases. While these workers received net pay increases, reassigning them
to lower pay grades meant that they did not receive the full increase to which they were
entitled.3

2
3

. Data collected from the survey of Alternative Movement for Resources and Freedom (AMRF) society
. Data collected from the survey of Alternative Movement for Resources and Freedom (AMRF) society

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Additional problems were reported by workers who have been held at the same pay grade
for many years, and had not received reasonable promotions which would be expected
based on their skills and experience.

6.5.

Wage, benefits and leaves

Before the 2010 law, the monthly average pay of surveyed workers was 3,371 BDT. Under
the new minimum wage scheme, the average increased to 4,027 BDT. 80% of the workers
stated that pay slips are given to them.
Most of the workers said that they were paid within the first and second week of the month;
only 4% said that they were paid in the last week of the month.
Most of the workers stated they had 4 days leave in October, 4 days leave in November
and 5 days leave in December.
82% of the workers said that they are entitled to 4 months maternity leave with pay, 18%
say that either they get only 2 months pay or receive no benefit at all. 4

6.6.

Bonuses and Allowances


Figure 2 provides an
overview

of

the

reported bonus and


allowances received
by surveyed workers.
In addition, only 50%
of workers reported
that a provident fund
was made available
to them. The fund,

Figure 2

which is established
by the factory owner, is a type of long-term savings plan where roughly 50% of the fund is
contributed by workers and 50% is contributed by the employer. For example, upon leaving
the company, workers receive a payout from the fund. Provident funds are generally
regarded as an effective type of financial savings security scheme for workers.
Governmental, semi-governmental and other autonomous offices are mandated to offer
provident funds, and they are implemented in many private companies. Failure to provide
such a fund effectively deprives workers of another income component.

. Data collected from the survey of Alternative Movement for Resources and Freedom (AMRF) society

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6.7.

Term Paper

Reasons behind the low wages

There are at least three reasons why the declared wage for the RMG sector is low.
Number one is that it is less than the cost of living. According to a recently released study, if
an individual wants to give his or her family of four the minimum calorie intake, it will cost
7,740 BDT per month at the current market prices.
The second reason is that it is low compared to other industries as per a government report
released by the labour ministry.
Thirdly, it is low compared to wages of garment workers of Vietnam, Indonesia, India,
Pakistan or Sri Lanka.

6.8.

Consequences

1. Because of low wages workers will suffer from malnutrition as they will not be able to
afford enough calorie intakes, which will affect their health. Poor health is likely to
have a negative impact on the workers, who might become apathetic towards their
work. As a result we will get distressed workers, which will have a negative effect on
production.
2. On the other hand, if the management offers low salary they may be able to attract
unskilled or semi-skilled employees. In Bangladesh, it is easy to attract a large
number of workers with low wages because of high level of unemployment. Such
low-wage workers may not be good for the organization in the long run.
3. Because of poor nutritional and health conditions there is likely to be a high rate of
absenteeism. Low paid employees will look for better opportunities outside the
organization, which will lead to higher rate of employee turnover. High number of
absentees and high turnover will result in low productivity.
4. Poor

education

and

inadequate

training,

particularly

of

supervisory

level

management, will result in inefficient and ineffective management. They will make
more and more mistakes that will lead to many problems, including quarrels with the
workers. The result will be more mistrust, non-cooperation and loss of effort, energy
and resources
5. Distressed workers and ineffective management will create an environment where
trust, mutual understanding and empathy are likely to be lost. This kind of situation
can breed conflict and eventually violence.

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7. Recent Labour Unrest for Insufficient Wages in Readymade


Garments (RMG) sector of Bangladesh
Labor unrests have been a common phenomenon in the RMG industry of Bangladesh.
Workers are being embroiled in clashes frequently; they call strikes often to make their
demand home. It causes enormous loss to the owners, cripples the economy and tarnishes
the image of the country aboard. It also makes foreign buyers reluctant to render future
orders. In addition to the industry is losing competitive edge for this. In July 2009, due to
massive labor unrest, Hameem Group, a leading garment manufacturing factory incurred a
loss of around 100 crore taka and two workers died with resulting loss of 2000 jobs.5

Causes of labor unrest are many. First and foremost is the long-standing grievance of the
workers. The growth of RMG industry of Bangladesh much depends on hard work of the
labour force. But unfortunately they are deprived of minimum facilities. They are to live a
sub-standard life in city slums for years. The wage they get is low. Very often they do not get
their salary, overtime bills and bonus in time. Their recruitment system is hiring and firing as
they do not get any appointment letter and identity card of the factory and at any time they
can be dismissed by owners for any reason. They dont know anything about their job
contract. Being maltreated by owners and mid-level officers, working long hours in
congested environment without sufficient rest, lack of nutritious foods, medicine, right to
legitimate protest against ruthless exploitations etc are their daily destiny. They dont have
any access to the decision making process. Factory building collapse, fire accident,
stampede render many dead and injured. Nevertheless, if any worker protests against
owners or management, he/she is threatened by various types of harassment such as
dismissal, arrest or even physical assault by the hired hooligans of owners.

Common causes of labor unrest in the RMG sector in Bangladesh are discussed briefly
below. Most of the labor force of this sector are uneducated and unskilled and have come
from rural area simply in search of livelihood. They have to work hard in return for a very
poor salary.

Source: The Quarterly Wheel, OctDec 2010

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The detailed 4th wage structure for the garment workers is shown in the following table.
Grade with posts

Basic

Net Salary

6500 BDT

House rent (40% Medical


of basic)
Allowance
2600 BDT
200 BDT

Grade 1 : Pattern
Master, Chief Quality
Controller etc.
Grade 2 : Mechanic,
Electrician, Cutting
Master etc.
Grade 3 : Sample
Machinist,
Senior
Machine Operator etc
Grade 4 : Sewing
Machine Operator,
Quality Inspector,
Cutter, Packer, Line
Leader etc.
Grade 5 : Junior
Machine Operator,
Junior Cutter, Junior
Marker etc.
Grade 6 : Operator of
General Sewing/
Button Machine etc.
Grade 7 : Assistant
Sewing Machine
Operator, Assistant
Dry washing man, Line
Iron man etc

5000 BDT

2000 BDT

200 BDT

7200 BDT

2870 BDT

1148 BDT

200 BDT

4218 BDT

2615 BDT

1048 BDT

200 BDT

3863 BDT

2395 BDT

958 BDT

200 BDT

3553 BDT

2230 BDT

892 BDT

200 BDT

3322 BDT

2000 BDT

800 BDT

200 BDT

3000 BDT

9300 BDT

Table 1 : 4th minimum wage structure for the garment workers 6


The board recommended the minimum wages in light of 10 issues cost of living, living
standards, production cost, productivity, cost of the goods produced, inflation rate, job
pattern and associated risks, business capacity, socio-economic condition of the specific
industrial sector and the country as well as other relevant issues.

The minimum wage board asked for and gathered views of various social stakeholders on
the impact of inflation from the Bangladesh Bank (BB), Bangladesh Institute of Development
Studies (BIDS), Bangladesh Bureau of Statistics (BBS), Centre for Policy Dialogue (CPD),
Bangladesh Institute of Labor Studies (BILS), Consumer Association of Bangladesh (CAB)
and others. It has also asked for a report on the nutritional requirements of the apparel
workers from the Institute of Food and Nutrition of the University of Dhaka, Sramik
Karmachari Oikya Parishad (SKOP) and other garment workers association.
6

Minimum Wage Board, 2010

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While government institutions, like the BB, BIDS and BBS, reported that since 2006, the cost
of living increased by at least 35 per cent, the private think-tank, CPD reported that the
average cost of living has risen by around 70 per cent. CAB reported that the average cost
of selected food items and other major utilities, consumed by workers, had increased by 53
per cent on an average.

Institute of Food and Nutrition of University of Dhaka estimated that if a worker toils for eight
hours a day, as a stitching operator or helper, he needs 3,200 calories daily. If the worker
does two-hour overtime work every day, he requires 3,400 calories, said the study that was
submitted to the Minimum Wage Board. A female worker needs a slightly lesser amount of
calories.
The minimum wage fixed for a worker is not enough to live a standard life when compared
with the high cost of living, says Razekuzzaman Ratan, general secretary of Samjtantrik
Sramik Front. According to him, a garment worker needs about 3,030 calories a day,
accounting for a daily amount of 64.50 BDT. Thus a person will need about Tk. 1,935 a
month and to maintain a four member family, 7,740 BDT would have to be spent on food
alone. After adding utilities, house rent, transport cost, medicine and outfits, the total amount
will stand at about 14,240 BDT a month. If two members of a family are RMG workers, we
believe that the minimum wage should be 7,120 BDT per person, expressed Ratan. On the
other hand, according to the BILS survey, the minimum wage for a single worker has to be
5,277 BDT amounting to 8,452 BDT for a four member family to live a standard life.

The minimum wage for workers of RMG sector, in any account, is very low in the face of
ever-increasing prices of daily necessaries. The following table shows a comparative study
of minimum wage of workers of RMG sector with other industries of Bangladesh.
Sl No.
Sector
01.
Oil-mills
02.
Re-rolling
03.
Foundry
04.
Ship breaking
05.
Ayurvedic unit
06.
Pharmaceutical
07.
Soap and cosmetic
08.
RMG
09.
Shrimp processing unit
10.
Tailoring shop
Table 2 : Sector-wise minimum wage for workers 7

Daily New Age, 13 Aug, 2010

22

Minimum wage in BDT


7420
6100
5100
4645
4350
3645
3300
3000
2645
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Second phase of labor unrest in the RMG sector in 2010 began with the implementation of
the new wage. Though reluctantly the workers accepted the new wage structure, many
factories are found not implementing the new scale under various excuses. There is severe
warning from government; yet many factories found to be going on their own way.

Sometimes, deferred payment of salary, bonus and overtime bill spread unrest among
labors. Rumor plays a crucial role in swelling unrest among the labors. Bonus will not be
given before Eid or A worker is beaten by the manager or A labor leader is arrested
these types of rumors ignite the workers and without knowing the fact, the workers
sometimes come to the street and involve in vandalism and run riot. Sudden closure of a
factory without prior notice to the workers which poses uncertainty and fear of losing job
among the workers works as a source of unrest.

The coercive role of law-enforcing agencies angers the labors. A common picture in time of
unrest is that the deployed police charge the workers and the agitating workers reiterate
causing injuries to both side. Filing cases or arresting the agitating workers is a common
means to subdue the workers. Nevertheless, the law enforcing agencies are often found to
play a biased role against the workers. As the owners are rich and influential, there is hardly
any instance of their arrest or polices taking case against them by the workers.

Theory of conspiracy regarding labor unrest cannot be ruled out. There may be two types of
conspiracy- 1) domestic and 2) external. There exists competition among the factories. The
owners or management of a factory may instigate the workforce of its rival factory with some
misinformation which results in unrest and disorder in that factory. Hamper of production of a
factory as a result of labor unrest may benefit its competitor.

Some NGOs financed by foreign donors are blamed to inducing the workers in the name of
working for the improvement of workers condition. This may be a blue print of some regional
competitors of Bangladesh in RMG business. If the RMG sector of Bangladesh can be
paralyzed causing labor unrest, foreign investors and buyers divert to another country.

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8.

Term Paper

Conclusions and Recommendations

8.1. Conclusions
The findings of this study indicate that the working environment in the RMG factories in
Bangladesh is neither worker friendly nor maintain the basic requirements of ILO
(International Labour Organization) conventions. Most of the RMG workers jobs are not
permanent which is further aggravated by the lowest wages compared to the global labour
market despite the lowest per unit cost of production in Bangladesh.

In this study, three major factors of the Bangladesh labor Act 2006 were taken into
consideration. The study reveals that the most significantly related factor of labor unrest is
the wages and payment. Most of the workers feel that they are not paid even as per wage
commission declared pay. It is also not paid within the stipulated time that is within seven
days of the following month. But, according to Bangladesh Labour Code 2006, the wages of
every worker shall be paid before the expiry of the seventh day after the last day of the wage
period in respect of which the wages are payable. (Sec 123, Subsection 1)
The workers felt that the factories they work for dont have any welfare fund for them. But,
the companies should have some welfare funds for their workers e.g. Provident Funds,
Gratuity funds etc. as par Sec 264 of Bangladesh Labour Code 2006.

Industrial relation is the second most significant variable which contributes to labor unrest.
Most of the workers feel that management does not listen to their complaints and problems.
Absence of trade union makes it more difficult.

Third significant factor is working hour and leave. They have to work more than eight hours a
day but are not paid over time at double the rate of their pay as per the provision of the law.
Most of the workers do not get sick leave as per law. Other factors that are service and
employment conditions, health and hygiene, safety and penalty procedure are not significant
factors for the workers. This may be because the workers are so much deprived and
dissatisfied with their most important and basic needs that they are unable to think about
other factors or higher level of needs.

Factory owners and garment workers are two most vital actors in RMG sector. They are
complementary to each other. The strength of the factory owners is that they are rich,
organized and influential in the society. On the other hand, the huge number and unity of the
garment workers are their power. Good relationship between the workers and owners is
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essential for the production as well as boost of the industry. Majority of the respondents
perceive that there exists a communication gap between the owners and workers of garment
factories. Tripartite committee is preferred by 48% respondents to bridge the gap between
the owners and workers.

8.2.

Recommendations
1. Minimum wage for the garment workers should be regularized and implemented
properly.
2. The labor-force needs to avoid the path of violence and vandalism. Rather, they can
place their rightful demands to the respective authority.
3. The factory owners can hear and address the problems of the labor-force.
4.

Incidents of labor unrest need to be investigated taking stakeholders from all


concerned sector.

5. Recommendations of investigation reports need to be implemented properly.


6. The real defaulters irrespective of their identity and status can be brought under
legal provisions.
7. Intelligence agency may work in garment industry area to prevent further unrest and
take preventive measures.
8. Level of mutual trust, communication and cooperation between the Owners and
Workers need to be developed.

The implementation of above-mentioned recommendations is supposed to help address


labor unrest in the readymade garment industry of Bangladesh. However, a number of
issues relating to labor unrest in the garment industry of Bangladesh like industrial
policy, labor relations, owner-worker relations, trust between public and private sector
and conspiracy deserve further attention.

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References
Ali, T. (2010). WTO Rules and the Readymade Garment Industry of Bangladesh. A paper presented at a
seminar organized by East West University, Dhaka and BGMEA.
Bhuiyan, M. I. (2010, Oct - Dec.). Labor unrest in the RMG industry, Need for effective HRM. The
Quarterly Wheel .
Haider, M. Z. (2007). Competitiveness of the Bangladesh RMG Industries in major. Asia Pacific Trade and
Investment Review , 3 (1).
Report, CPD. Dialogue. Coping with Post-MFA Challenges: Strategic Responses for Bangladesh RMG
Sector. Dhaka, Bangladesh.
Siddiqi, G. H. (2004). The Readymade Garment Industry of Bangladesh. Dhaka: The University Press
limited.

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