How does a nation participate in the digital creative economy centered on individual entrepreneurship while acknowledging its legacy in collectives of women producing crafts? This column explores the experience of Bangladesh, where despite the digitization of the craft industry, digital participation remains limited to a small number of entrepreneurs who already have an online presence. Strong and enforced labor laws, social security for workers, fair wages, competitive pricing, improving the skill of women workers, and robust inter-industry linkages are needed to support rural artisanal communities and build sustainable apps geared towards women working in the sector.
Greater inclusion in the technology sector – specifically ensuring that women and other under-represented groups can find gainful employment within it and make meaningful contributions to the sector – is predicated on building computing capacity of these demographics. Teaching coding skills, and broadening individuals’ exposure to digital industries writ large is a critical first step to achieving this reality.
Achia Nila is the founder of Women in Digital, a hybrid coding academy and digital agency based in Bangladesh, with operations throughout the country. WiD is 100% female owned and run. The academy exclusively trains female coders in Bangladesh and has also built a small presence in Nepal. Nila founded the company in 2013 in response to the large underrepresentation of females pursuing computer engineering jobs in the country. An engineer herself, Nila worked in the industry for nine years and during this time observed a dearth of women entering this field, a lingering challenge in the journey towards gender equity in the country, as well as a missed opportunity to cultivate talent and generate returns from it. As she ventured down her own career path, time and again she sought to employ female engineers, but often found the talent pool minimal.
Thus, Nila and her team at WiD endeavor to empower women with computer engineering training and give them an opportunity to command better salaries as well as more senior, influential positions in their companies.
WiD has a multi-pronged strategy that goes beyond simply building skill sets and helping women find jobs in the technology sector. In addition to its core mission, WiD is also an advisor and mentor for universities and employers, helping to raise awareness on both the need to educate women in the computer science space, as well as the business sense it makes to hire them. “When I started my computer engineering degree my mother had no idea what this career track could look like, so she was not able to guide me in my university,” Nila says. She hopes that as a byproduct of the training, women who have completed the courses can help guide their own daughters down the road to become engineers as well.
Here is how the model works: Women receive training in a wide range of digital and technological areas and then can join WiD’s adjacent digital agency, which carries out outsourced projects for various clients both in and outside of Bangladesh. All training until 2018 was given for free, and the trainings were financed through WiD’s digital agency (which serves as a digital outsourcing hub for companies), as well as grant funding. After 2018 Nila created a policy wherein students who could pay may do so, but those who couldn’t pay were enrolled for free. WiD has its own curriculum, which begins with soft skills training, digital skills training and English language training. From there, they progress into more advanced teaching, focusing on Java, Python, and other programming languages. WiD then gives the students internships, and can also help guide them negotiate the freelance market.
After the training, most graduates want to work in the large cities, though Nila wants to decentralize their graduate network so that women can work throughout the country, and thus WiD can expand its impact nationally. To help in this decentralization process, WiD has established five different training locations throughout Bangladesh. Each area offers different types of employment opportunities once students finish their training. For instance, in Dhaka, many graduates go on to work in digital agencies, including WiD’s, and are often in roles that require higher English proficiency levels. However, in rural areas jobs require less English language skills, and often focus on the e-commerce industry. Nila says that e-commerce has been particularly popular in rural areas because graduates living outside of urban areas (while often being less aware of the possibilities of work in the tech sector) have an easier time understanding the value of the e-commerce vertical in general, and thus are more open to enrolling in training programs, with the belief that it will lead to tangible job opportunities.
Many women join WiD’s digital agency following completion of the coding program. Nila cites their motto “empowerment through technology” and explains that women in urban areas have been most receptive to embracing this motto, as they are often more aware of career paths in tech industries. Contrastingly, women in rural areas tend to be less aware of the value, as well as pathway, to finding jobs in this sector. Additionally, other reasons including few role models for women in the tech sector and general cultural norms that limit females’ role in the labour market have also been found to contribute to such barriers in similar contexts. Given this confluence of challenges, Nila and her team have to allocate more time to simply educating potential students and employees in rural areas on the benefits of pursuing this line of work.
WiD’s impact to date is significant. Nila and her team have facilitated access to 7,000 jobs (both full-time and part-time, as well as with WiD’s agency and external employers), opened up five training centers that have trained more than 10,000 women. The company has helped to place women in roles ranging from software and web and mobile app developers and are now expanding into game creation as well. They have also trained 500 women and girls in Nepal. And Nila is far from finished. She is keen to build on the progress of the Nepal training program and to bring WiD’s services to more countries, while also continuing to promote women’s empowerment through technology training in her home country.
However, the two largest mountains that Nila and WiD still have to climb concern the need to educate local populations and employers of the value of WiD’s work, as well as build a financially sustainable model. Regarding the first priority area, Nila says “Often I feel that what I am doing in Bangladesh is still underestimated by people in the country.” International clients tend to understand WiD’s mission and value-add better than locals. The market still might not be ready to absorb the female engineers. We have not gotten any local or government support, but we have received a lot of international support.”
While she does not face much, if any, interference locally either, simply convincing the market e.g. women, their families, employers and universities that WiD’s mission and vision are a worthwhile endeavor, is an ongoing hurdle. Achieving financial sustainability, another lingering challenge to date, can also help in this capacity, as building a profitable business model can contribute to building both legitimacy and long-term prospects for WiD. In doing so, women may also see that the “the stigma surrounding women working as engineers” as Nila puts it, is no longer an issue as this field can lead to enriching job prospects. Perhaps most importantly, by breaking down this stigma WiD is helping to lay a foundation from which the women who enroll in its programs receive relevant training that provides them with a skill set that they can use to immediately acquire, as well as sustain, gainful employment. Successful completion of the program can empower the women, enabling them to play an active role in their local economies, while also setting a precedent for others to follow in their footsteps. By giving Bangladesh’s women a versatile, in-demand expertise, WiD plays a key role in gradually shifting the landscape, as well as conversation, around gender equity and economic empowerment in the country.
Jamil Wyne is a fellow in New America’s International Security program. Wyne was previously a Senior Advisor at 17 Asset Management, an asset management company supporting the achievement of the Sustainable Development Goals. Throughout his career he has specialized in emerging market development and investment, with a concentration on tech startups and social enterprises. Wyne has worked with the World Bank, International Finance Corporation, Ashoka, and Mercy Corps and has advised multiple governments, impact investment funds, and tech startups on strategy, partnerships, and research. He also founded the Wamda Research Lab, a research program for entrepreneurship in MENA, and a part of Wamda Capital, the region’s largest VC fund. He served as a Fulbright Fellow in Syria and Jordan, is currently a Truman National Security Fellow, and is on the advisory committees for several tech startups and social enterprises. He publishes often on the topics of emerging market entrepreneurship, social innovation, and impact investment, which have been featured or cited in in SSIR, WEF, McKinsey, World Bank and Wharton publications, as well as university curricula. He has an MA from Johns Hopkins SAIS, an MBA from INSEAD, and a BA from Bowdoin College.
Alaya Akter, a first-generation garment worker in Bangladesh, began her apparel career as an operator assistant in the early 90s. She lost her job at the age of 48 due to automation at her factory last year. She is no exception; several thousands of Readymade Garment (RMG) workers across Bangladesh lost their job since the automation started after the Rana Plaza collapse in 2013 that caused 1,132 deaths and more than 2,500 injured. The increasing automation is also partly a realization of the “Digital Bangladesh” vision the Bangladesh Awami League party outlined in 2008 for the year 2021 – the country’s 50th anniversary. But it is coming at a price.
The losers of automation are mainly women like Aliya, who have migrated from the village with little or no education to work in the garments sector, primarily situated in the city areas. A study by the private think-tank Centre for Policy Dialogue (CPD) in 2018 found that the automation of manufacturing reduced the female workers’ participation ratio in the garment sector to 60.8% in 2016 from 64 % in 2015. The current male-to-female worker ratio in the garment industry is 41.7 to 58.3, according to a BRAC university study. The report of 2020 claims that the main reason for decreasing female workers’ participation is that the factory owners consider female workers illiterate and unable to handle modern machinery properly.
In Bangladesh, around 4.2 million workers in 4,825 factories produce goods for export to the global market, principally Europe and North America. To meet foreign retailers’ strict lead-time requirements, 47.37% of large businesses and 25% of medium companies use automation and other advanced technologies. The sector has been in a severe crisis of a lack of overseas buyers’ orders due to the global COVID-19 outbreak, However, the country has recovered thanks to a Tk. 10,500 crore ($ 1,221 million) bailout fund (Stimulus package) from Bangladesh’s government and a rise in retailers’ orders from overseas buyers. Yet, how automation will impact women in this garment industry and whether new technological interventions and the future of decent work for women are compatible remain open questions.
To explore the impact of automation among female garment workers we interviewed entrepreneurs, union leaders, and think tank members. Moreover, we consulted some recent studies on the matter. Several reports have mapped critical tensions between the empowerment and disempowerment of RMG workers for automation of this industry.
The garment industry’s struggle for survival
The CPD survey, after inspection of 193 garment enterprises and 2,123 workers, has found that female workers are proportionately less knowledgeable about operating different machines than their male counterparts. The initiative, Mapped in Bangladesh (MiB), was launched in 2017, a BRAC university project in collaboration with the Netherlands’ Embassy in Bangladesh, the Bangladesh Garment Manufacturers, and Exporters Association (BGMEA). The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) mentioned that wage hikes and automation are the major factors behind the decline in the sector’s overall workforce.
The $ 30 billion export and 15% of the Bangladeshi economy’s GDP generation industry considered that automation is the cause of job loss. At the same time, there is hope that RMG businesses become more profitable and sustainable due to automation. For instance, Mostafiz Uddin, Managing Director of Denim Expert Limited, a leading RMG businessperson from Chattogram, regarding automation recently said, “Automation facilitated increased economic growth which ultimately led to job creation.” The World Economic Forum also forecasts that by the mid-2030s, one-third of all jobs could be automated, stating that the workforce most likely to be disrupted will be those who have low educational attainment. This is a strong argument for placing an increased focus on training and education alongside work in the RMG sector. This is something that the Bangladeshi government has thankfully begun to look more closely at in recent years, opines Mr Uddin.
According to Mr Uddin, the garment industry is very people-intensive and provides millions of jobs, but automation is minimal. So, the productivity rates and wage rates are still low. Falling behind in automation will put the business at risk in the future; mentioning this, Mr Uddin points out:
“If we want to move onto the next level of high production, profit and wages we must embrace automation. Our very survival will be under threat, given that all of our major competitors—Vietnam, India, China and so on—are now looking to automation in a big way.”
A similar voice was raised by Syed Nasir, Managing Director of QPail Ltd from Tongi, Gazipur, a big hub for Bangladesh’s apparel industry. He said, “Buyers prioritise error-free product, and automation ensures flawless products and also helps to boost production rate.” His factory started the automation process in 2016 and completed the transformation in late 2019 with a Taka 50 crore (US$ 5.81 million) bank loan. He opines that although 70% of his factory workers were women, it is less than a percent at the inspection level.
Mr Uddin admits that the adoption of automation from the very beginning jerks this low-cost, labour-intensive garment industry’s job security. “Countries like Vietnam, Pakistan, and Sri Lanka have already proved that new technologies and automation boost productivity growth, lower product prices, and ensure higher wages and much profit,” says Mr Uddin.
Inevitable automation – at whose cost?
“It is a day for quality and competent people, unskilled has gradually been replaced by skills. There is no way except adopting the automation to satisfy buyers,” said Syed Nasir. Following pressure from buyers, factories have to switch to automation with enormous costs, but buyers do not intend to pay more for a product. Thus, many factories face difficulties to repay loans, and some even shut their doors. Syed Nasir explains their approach:
“… as we grab orders, we can repay those loan from the profit. In fact, better price does not depend on automation, but boost up the priority to some extent in grabbing orders from other competitors.”
Dr Syed Basher, Professor of Economics at the East-West University, Bangladesh, and a leading researcher on the RMG sector, categorises the effects of automation at the RMG sector into two-fold, firstly for the short term; this move cuts jobs. Still, it benefits by boosting production and reliability on the quality of output for the long term. Automation is a long-time process and almost all factories have already automated the washing and knitting section. Two-third of big factories have adopted the swing, the most important section of RMG.
“I don’t think the job cut affect women labour because it takes several years to switch a full-fledged automation or robotic installation. The shift takes place gradually and for such, there is not any possibility of sudden job loss. I feel automation might cause a job loss of maximum 300-400 thousand illiterate RMG workers altogether and who can easily absorb other entrepreneurial opportunities like established home-made tailoring or work for small fashion design houses,”
said Dr Basher. In answering a question about the consequence of disempowered rural women after losing jobs from the apparel industry due to automation of factories, he elaborates:
“The number of job cuts is not very high, the cancellation of orders by foreign buyers in the wake of the COVID-19 crisis has instead jeopardised the RMG sector during 2020, leading job losses and affecting nearly 2.5 million people, primarily women.”
Mentioning a report in The Economist, Dr Basher said that the recent rise in global trade protectionism poses further challenges if it combines with technological advances in automation to shift manufacturing back to developed countries – the primary market for apparel produced in Bangladesh. The Economist Intelligence Unit’s core forecast is that automation and the “reshoring” of manufacturing to developed nations will have a marginal impact on Bangladesh’s apparel export industry in 2019‑23 because the industry stands on a strong bailout fund.
Lalin Salauddin, working as an administrator at a garment industry of Nasirabad Industrial Area in Chottagram, informed that many female workers left their jobs during this COVID-crisis leading either from pregnancy or their unwillingness to continue in automated factories. He said:
“We still value the female workers who have been working in our factory more than ten years as they are competent enough after having minimal training. More so educated male and female youths have got an appointment in recent past. In that sense, we create spaces for the new generation of the skilled labour force through automation.”
As mentioned about Alaya’s case, Lalin said, “Alaya has left, but we hire her young son Gani Arman with more salary, and therefore her leaving might not affect her position in the family.” He also said, “Bangladesh is moving towards Digital Bangladesh, so in honour of that move, we must change our attitudes, I mean adopt new technology.”
According to BGMEA, the apex body of the RMG sector, every year, about 100 new factories opens their doors, using advanced technology in the entire apparel manufacturing process. It believes that advanced technology helps cut down production costs significantly (30-40%) and has spill-over benefits in terms of higher productivity and cut down on lead time.
Ms Zakia Sultana, a veteran RMG worker union activist, associated with Bangladesh Centre for Workers Solidarity, Dhaka, admits that robot technology in manufacturing is growing, and factory-based employment is dropping for this. She said, “Workers unions are not against automation. However, an honourable departure from the job should be the rights, and we must honour that for the sake of harmonious leaving from the job.” After serving 10-15 years for a factory, workers expect some honour from their factory owners and worker unions – at least recognition. But as Ms Sultana explains, division within the unions and their leaders in the end effects those they are supposed protect – the workers.
Bangladesh has indeed made significant strides during nearly four decades to bring about gender equality, particularly in women’s participation in the RMG sector. The industry has been a source of economic opportunity and pride for some of Bangladesh’s poorest and most disadvantaged women – those from uneducated, rural families. However, they are also likely to be the first to be disposed of when technological advancements become commonplace. This falls in line with research showing that factory workers largely regard the female garment worker as a cheap and disposable labour source. However, the silent departure of Alaya from her job and the inclusion of her son ascertain that males will once again reap the benefits of the RMG industry in Bangladesh.
Haji Razzaque, an artisanal broker of around 50 years, shares his struggles of selling the products from Bangladesh’s Jamdani weavers, purveyors of a largely female-driven craft. He speaks of how, as a young boy, he would spend three to four hours every Friday morning at the Jamdani haat (bazaar). Right after the traditional Muslim Fazar prayer, he would head to the marketplace where over 500 Jamdani weavers, brokers, and customers from different areas would gather, some 20 km from the Bangladeshi capital Dhaka. Since the Corona lockdown, the attendance at the market has dwindled to barely half that number. Consequently, Haji too, has lost his earnings.
Tahura, a weaver of Jamdani sharees, has been forced to shut down her home-based handloom unit due to a significant decline in demand over the past six months. The sharee is among the most labour-intensive forms of handloom-weaving, practiced in this region for centuries, and constitutes part of Bangladesh’s rich textile heritage. UNESCO recognized Jamdani as an intangible cultural heritage in 2013.
Festivals like Pohela Boishak (Bengali New Year celebrated on April 14th), Eid (important Muslim religious festival), and Durga puja (a Hindu religious festival) are the key seasons for sales of these fabrics and garments in Bangladesh. Most middle-class women city dwellers dream of having a Jamdani sharee – as a festival gift. However, this year weavers and sellers missed these three festive events for the first time due to the Covid lockdown.
The latest Handloom Census 2018 (preliminary report) of the Bangladesh Bureau of Statistics (BBS) estimates that weavers produce about 2,000 Jamdani sharees per week. Several villages on the eastern side of the river Shitalakkhya, including Noapara, Rupshi, Moikuli, Khadun, Pobonkul, Murgakul, and Borab in Rupganj under Narayanganj district are known as the hub of Jamdani weaving and supply to markets both at home and abroad.
Though the Jamdani artisans are scattered in different places in the country and a small portion in West Bengal in India, most of them live in the Rupganj and Narayanganj regions, and nearly 15,000 people from 3,000 families are engaged in the trade. The price of sharees ranges between Tk 5,000 and Tk 40,000 (ca. 59-472 USD). Specially made sharees can cost as much as Tk 150,000 (ca. 1799 USD).
Bangladesh Handloom Board (2018) data shows that the industry has witnessed a drastic fall in recent years, and the number of handlooms has declined by about 45% in 15 years. The total number of workers also fell to 301,757 (133,444 male and 168,313 female workers) from 888,115 workers in 2003. In 1990, the number was over one million.
Faria Sharmin and Sharif Tousif Hossain (2020), scholars from Stamford University Bangladesh and Sonia Ashmore (2018), an expert in handloom weaving industry and author of ‘Muslin,’ have documented that there are around 500 master weavers actively involved in Jamdani production activities. These master weavers have 6,500 working looms in total and the same number of weavers working as labourers.
Both studies indicate that this craft is facing extinction. Many of the artisans are abandoning this profession due to numerous obstacles, including being paid barely minimum wages (usually less than Tk 500 – ca. 5.90 USD – for a Tk 2,000 sharee) despite the back-breaking labour of their unique craftsmanship. These weavers had no direct or limited contact with the customers because they often work as bonded labourers under the traditional Jamdani weaving system. Fashion designers also depended on mahajans or wholesalers to buy their products. The COVID-19 crisis has made matters worse.
Income loss to weavers, production, and drop in sales of garments and textiles due to the crisis have resulted in a sharp rise in unemployment among weavers. To keep sales alive, many of these small entrepreneurs and weavers have started to sell these products online. According to the Women and E-commerce Forum (WE), more than 500 women have started small and home-based entrepreneurial businesses selling sharees, and other Jamdani yarn made garments like fatua and Panjabi (for men), and kamij (for women)via online platforms.
WE insiders confirmed to us that during September and the first half of October, Jamdani items sold Tk 5 million (close to 60.000 USD) worth across the country through such platforms. WE started in 2018, and within two years, members and followers on Facebook have already reached around a million customers. WE founding member Kakloy Russell Talokder, now a moderator and owner of Kakoly’s Attire, an online fashion platform solely dedicated to selling Jamdani, admits that there has been a five to ten-fold increase in sales through WE. When we interviewed her she stated: “The main reason is that during COVID-19 middle-class people started to depend on local Bangladeshi products through online sales”.
Although artisans and their agents (buyers) missed the sales events for the first time in Bangladesh history due to the pandemic, Ms. Talukder says:
“Online sales of Jamdani have soared recently, creating a new window of opportunities for the traders. […] Jamdani weavers have got a new life in recent years as entrepreneurs who sell Jamdani online. It helped them survive amid the COVID-19 pandemic.”
The boost received from online sales has helped revive Jamdani sales and the production as well. Mr. Kamal Hossain, the owner of a Dhakaiaa Jamdani, Lalkhanbazar, Chottogram branch, explained to us that online sales have increased recently. His centre sells around 20-30 sharees every week – in contrast to only 5-10 until last September. Earlier, he sourced the Jamdani collection through brokers from Rupganj but now he purchases these goods directly from handloom owners.
Kakoly Russell Talokder points out that online sales can be an excellent tool for promoting Jamdani, adding that Facebook plays a significant role here as about 33 million Facebook users exist in Bangladesh. She notes that there is very little information on the craft online, and as more and more individuals and organizations talk about Jamdani in these online forums, the more it will spread. According to her, the Jamdani sharee is not adequately promoted in the global market. There are over 30 million Bangla speaking people living overseas. “We could not reach our cultural treasure to them,” she laments.
“indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.”
Many entrepreneurs (WE members) hint that these recognitions will lead to further direct investment in production alongside ecommerce, creating a new turn in Jamdani waving. Adding to this, Ms. Talokder believes that “many people are used to the comfort and benefit of ordering online. This trend will continue and even expand in parts of Bangladesh. Thus, women, weavers do not need to be worried about their low pay.”
Haji Razzaque is also hopeful that increasing demand through sales can boost weavers’ income. However, Tahura, who was trained in Jamdani weaving by her father at a young age, does not want to engage her 12-year daughter in this hard, low-paid work. She doubts that increased online sales may be sufficient to motivate weavers to stick with the craft.
However, if the numbers cited by WE are any indication, coupled with the push for more online engagement among Handloom owners and retailers, there is a glimmer of hope that these new digital forums can help sustain this craft and possibly encourage young people from weaving families to preserve their heritage. It remains to be seen whether the interest and momentum to go online, provided by the COVID-19 crisis, will be sustained in the long term.
COVID-19 has shown how some states, when motivated, can institute compassionate, sweeping and radical changes that remake society and its relations between workers and their organizations. However, integrating novel interventions into our everyday life demands that we think beyond the reactive impulse to address chronic problems. When technology is used as a short-term fix to address what appears to be an immediate problem, it can mask the need for more sustained institutional reforms. We see such a tension arising in the case of e-payments made to workers in the readymade garments (RMG) sector in Bangladesh, a measure that appears to be benevolent and timely, but on closer examination reveals a range of conflicts that have to do as much with issues of trust and perception as with technological readiness.
The fintech triumvirate to the rescue
In May and July 2020 the RMG sector in Bangladesh distributed Tk 10,500 crore [$ 1,221 million] as salaries to 2.6 million workers. These were online transactions from the bailout funds from the government to tide the labourers over during the economic hardship brought on by the global coronavirus pandemic during this period. The three key mobile financial services – bKash, Rocket and Nagad – have been credited with enabling the disbursal of these sizable funds.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the apex body of Bangladeshi apparel industry owners, the vast majority of factories (1,821 out of 1,898) paid workers an Eid festival bonus, and 94 % of them have paid the salary for July through digital transactions. Although a section of RMG workers stated dissatisfaction for losses of 2 % from their payment because of online transactions fees for withdrawal of salaries and bonuses, various national dailies reported that most workers expressed satisfaction with the new system of payment. Amirul Hoque Amin, President of the National Garments Workers Federation, speaking on behalf of labourers, confirmed this, given the deep dissatisfaction that had pervaded across the industry in the South Asian region in the months immediately following the start of the pandemic, when workers experienced significant wage losses.
BGMEA and the Ministry of Labour and Employment, with as many as 23 regional bodies of a national crisis management committee, worked together to monitor the progress of the payment to workers ahead of Eid-ul-Azha, the second largest religious festival in the country. They wanted to avoid labour unrest in the RMG sector especially before the religious festival.
Shift from the unbanked to mobile-banking
Before the Rana Plaza catastrophe, salaries were handed out in cash. Usually, during the first or in some cases within the second week of the month, they were distributed by the account department staff. It takes around 8-10 minutes to hand over cash for each worker according to Financial Inclusion Insights. Following the minimal wage movement by workers that was triggered by the disaster, BGMEA, and the Ministry of Labour and Employment of Government of Bangladesh along with the Garment Workers Federation decided to distribute salaries directly through bank accounts (the owner takes responsibility for disbursal of salaries). Although 50-60 % of factories started paying salaries through workers’ bank accounts, many unregistered factories (small and not affiliated with BGMEA) continued making cash payments.
Cancellation of orders by foreign buyers in the wake of the COVID-19 crisis has jeopardised the RMG sector, leading to the possibility of job losses affecting nearly 2.5 million people, mostly women. This crisis has led the BGMEA to seek assistance from the government for a bailout fund. To ensure transparency in fund distribution, the government sought a list of all workers and their bank accounts for transferring the salaries, but this time, directly to the workers—instead of going through the employers. Workers who did not have bank accounts, were asked to submit mobile money transfer accounts.
These varied demands clearly come with new challenges and require new strategies to reduce transaction costs. Where an intermediate agent is involved, a transaction fee of 2 % is charged, and this is borne by the recipient (the worker), whereas a direct transfer to the worker or a designated family member would not attract this fee. The issues go beyond this, including complete failures to deliver actual cash: In the case of mobile transfers, the recipient is required to show proof of the transaction to the agent who will then disburse cash, and if this message is accidentally deleted, or if the mobile is lost or stolen, it is impossible to collect the money. Some women workers may not even own a mobile phone, or not have control of their phones. There is also concern about the sustainability of such platforms given their narrow emergency focus. bKash, the largest mobile salary distributor, admits that workers showed interest in using mobile money if they could use it for more varied transactions than just money transfers.
Piloting the fintech experiment in times of crisis
To ensure the smooth payment of the wages, the government requested BGMEA to provide details of workers’ data early this year. Following the request, they handed over workers’ data of more than 3,000 factories across the country. The Bangladesh Bank (the country’s central bank) released money through 47 banks under a promotional package declared by the prime minister Sheikh Hasina for the RMG sector as part of the national COVID-19 bailout fund.
Reports from industry consortia as well as financial gateway operators suggest that a large number of workers indicated that they had received salaries through a digital money transfer, and the actual numbers reflected a big jump between April and May 2020—the time when the pandemic related lockdown began. However, this is curious, given that the World Bank’s Global Findex 2017 report indicates that only 50 % of Bangladeshis out of 164 million people had mobile banking and/or financial institution accounts as of 2017, of which only 21.2% have had mobile money accounts. Less than 2 % of RMG workers had such accounts. But the latest move has resulted in a sharp increase of mobile banking, with some estimating that around 95 % of the RMG workers have now either a bank account and/or a mobile account.
From emergency to sustainability
So what is the real issue at stake here? On the surface it appears that mobile money transfers have ensured some level of transparency and consistency in salary payments, and have moved a sizeable number of workers into the digital economy. But the 2 % transaction fee represents a burden on the worker and overall, a significant gain for the private corporations that enable the fund transfers. The National Garments Workers Federation, a left-wing workers’ union hold that the service fee cut from the wage is tantamount to the exploitation of poor workers through what they call ‘digital traps’. The Federation calculated a loss of around Tk 155 crore [$ 18.3 million] from the workers’ salary due to this digital transaction.
There is no doubt that digital transfers have the potential to enable greater transparency and control for low income workers, but perhaps they would be more attractive if bundled with other digitally accessed welfare services. Concerns around sustainability and trust are legitimate and need to be addressed through more open communication between workers and employers, and clear working guidelines for the intermediaries, such as those that enable the digital transfers. This experience with mobile digital transfers suggests that work needs to be done to ensure readiness and smooth functioning at multiple levels—workers (including a consideration of the fact that most are women, who may not own their mobile devices), agents and other intermediaries, employers, and most importantly, government institutions and regulators.
Industry insiders are concerned that without new orders and payments due for current orders, factories cannot pay their workers’ wages and cannot remain operational. The Government of Bangladesh has announced bailout packages to help factory owners overcome the crisis. However, most workers have yet to receive their month salary via Nagod (cash), an online-based wage payment system initiated last month. The World Justice Project, that works for the protection of fundamental labour rights expressed concern about the safety and non-payment of workers, mostly women working in more than 3,200 garments factories in two major hubs – Dhaka and Chittagong.
Even when workers are protected from physical risks, factory owners exploit lax labour regulation to skip paying benefits, design grueling production schedules with no rest days, and otherwise ignore the terms of employment contracts. The Sramik Karmachari Oikya Parishad (SKOP), a platform of 11 labour rights bodies, demanded that all industrial units in the country, including garment factories, ensure proper safety measures to protect workers from getting infected with COVID-19.
Though layoffs had been approved under section-11 of the Bangladesh EPZ Labor Act, there continues to be serious tensions in this deployment of layoffs given that trade unions prevail in 90 percent of factories and the communications between workers and industry management are currently fraught. Workers are thus seeking support from different stakeholders including the Ministry of Labour and Employment and BGMEA to pay dues from the Central Fund. The fund for the welfare of garment workers came into being in 2017 to which garment exporters have been contributing 0.03 percent of their export receipts.
This crisis in the garment sector has accelerated many disruptions: for instance, mobile payment platforms in Bangladesh are at last getting diversified, giving consumers choices. However, for this system to land on its feet, it needs to allow for fair competition. Nagad’s leveraging of the post-office makes sense and capitalizes on traditional and much used outlets, reducing costs in return; however, it also appears to bypass safeguards that other mobile payment systems are subjected to such as mandatory profiles of registrants to prevent money laundering. New technologies like blockchain are being repurposed to align with the self-organized labour protests and profile them and their interests within the larger global supply chain; however, it takes more than just digitization to encode the plight of the workers from “cogs in a broader supply chain” to ethical human-centered value chains. When it comes to the shameful abdication of responsibility of certain brands that can result in devastating disruption for the industry, there is hope that this can stir a global moral conscience and ride on a global outrage for redesigning of responsible business ecosystems that prioritize people over profit.