Topic of Assignment:

In order to attract Foreign Direct Investment (FDI), Bangladesh like many other

developing countries decided to set up Export Processing Zone (EPZ) in various

parts of the country. Accordingly many EPZ’s were established in some areas of

the country. The trade unions in those EPZ’s were not allowed as a condition to

various business entities (foreign and local) including the joint ventures. Few

years ago workers started agitation in all EPZ’s to allow trade unionism.

Government was in a big problem to allow unionism in EPZ’s. What are your

considered views on this? Do you think trade union should be allowed in EPZ’s

also? Or do you think government should not allow it as it will be a breach of

trust to foreign investors?

Economic supremacy is the foremost feature of the current world. In order to

survive, Bangladesh has no other options but to attain economic development.

Foreign Direct Investment (FDI) is recognized as a key component for

economic growth for Bangladesh. Being one of the Least Developed Countries

(LDC) with insufficient domestic savings rate for investment after fulfilling its

basic needs, the importance of foreign investment is

unquestionable. Foreign Direct Investment (FDI) will create employment, incre

aseefficiency of labor, encourage technology transfer and develop new

exportable sector.

To attract more and more FDI the government of Bangladesh has been trying

to establish private investment friendly environment.  

A number of opportunities have been given by the Government of Bangladesh

(GOB) to attract foreign investors to invest in the country in some prospective

sectors. Sponsoring agencies responsible for private sector

industrialdevelopment are Board of Investment (BOI), Bangladesh Export Proce

ssing ZonesAuthority (BEPZA), Bangladesh Small and Cottage Industries

Corporation (BSCIC),

Financial Institutions (FI) and Commercial Banks (CB) including Developmen

tFinancing Institutions (DFI) and Nationalized Commercial Banks (NCB) etc. In

late 70’s when individual ownership economy revived in our country, EPZ was

created to attract capital investment, employment generation and rapid

industrialization. As a matter of fact, the main objective of setting up EPZ is to

create individual industrial entrepreneurs and thereby to achieve the other

objectives. The economy of Bangladesh is basically agro-

based. The habitants of agro-based economy are generally remainshabituated

in a risk less life. In other way, business investment particularly

industrial investment brings solvency and dynamism in human life but

it is risky and hazardous. Therefore, to create industrial entrepreneurs

some institutional support must be extended to the individual

businessmen. EPZ ensures this institutional support to the

potential business entrepreneurs in Bangladesh.

A brief Economic review of Bangladesh:

Bangladesh separated itself from Pakistan and embarked on a Liberation War

43 years ago.  A valid question may arise: Does our present economic

performance justify the decision of our great leaders to be separated from

Pakistan in 1971?  While independence is always a basic right and has no

alternative, this question may be answered from a purely economic point of

view. Today, Bangladesh has a rising economy. It is no more a basket

case .Because, economic growth of Bangladesh has been estimated to be

impressive at 6.12 per cent in the current financial year (FY) 2013-14 despite

having some internal and external shocks. The per capita income (Gross

National Income) of the country has also risen remarkably to US$ 1190 which

was $1044 in the last FY 2012-13, in the current fiscal year. In the past decade,

the economy has grown at nearly 6 percent per year, and human development

went hand-in-hand with economic growth. Poverty dropped by nearly a third,

coupled with increased life expectancy, literacy, and per capita food intake.

More than 15 million Bangladeshis have moved out of poverty since 1992.While

poverty reduction in both urban and rural areas has been remarkable. The

expectation is that the country will be graduated to a middle-income country by

2021. Behind these all achievements EPZs of Bangladesh have greate

contribution.

In addition, over the past 5 years, revenue collection has increased from 10.7

percent to 13.3 percent of GDP. At the same time, the size of public spending

has increased from 15.7 percent to 18.3 percent of GDP. The target over the

next 5-years would be to augment resource mobilization to 17 percent and

increase the size of the budget to 22 percent of GDP. Governments core

objective to transform Bangladesh into a middle-income country by 2021

through structural and other reforms, especially in the areas of strengthening

local government, land management, institutional development and good

governance.

BEPZA at a glance:

In order to stimulate rapid economic growth of the country, particularly through

industrialization, the government has adopted an 'Open Door Policy' to attract

foreign investment to Bangladesh. The Bangladesh Export Processing Zones

Authority (BEPZA) is the official organ of the government to promote, attract

and facilitate foreign investment in the Export Processing Zones. The primary

objective of an EPZ is to provide special areas where potential investors would

find a congenial investment climate, free from cumbersome procedures.

Vision

To build a stronger and economically prosperous Bangladesh

Mission

Promotion of Investment

Diversification of Export

Generation of Employment

Bangladesh EPZ's:

An export processing zone (EPZ) is defined as a territorial or economic enclave

in which goods may be imported and manufactured and reshipped with a

reduction in duties / and/or minimal intervention by custom officials (World Bank

1999). There are eight EPZs in Bangladesh. They are -

1. Chittagong EPZ2. Dhaka EPZ3. Mongla EPZ4. Ishwardi EPZ5. Comilla EPZ6. Uttara EPZ7. Adamjee EPZ8. Karnaphuli EPZ

EPZs Provide -

Plots/factory buildings in custom bonded area Infrastructural facilities Administrative facilities Fiscal & non-fiscal incentives EPZ attracts: foreign & local investment

Objectives of EPZs:

(i) To foster and generate economic development of Bangladesh by

encouraging and promoting foreign investments in a zones. 

(ii) To diversity the sources of foreign exchange earnings by increasing

export of  Bangladesh through a zone

(iii) To encourage and foster the establishment and development of 

industries and commercial enterprises in a zone in order to widen and

strengthen the economic base of Bangladesh

(iv) To generate productive employment opportunity and to upgrade labor

and management skills through acquisition of advanced technology

The reasons the foreign investors are attracted to our country

to invest -

Infrastructure facilities

Reduction of lead time

Cost of doing business

Friendly policy of government

Incentives

Signatory of MGA, ICSID, WIPO, OPIC

Asia’s low cost production base

Lower labor cost

Nationwide transportation facilities as well as access to the sea ports

etc.

Reason for setting EPZs in Bangladesh

EPZ set up in Bangladesh due to various reasons Major reason among them is

expedites export activities and stimulates rapid economic growth.

These reasons are:

  Stimulate rapid economic growth

  Enhance industrialization

  Adopted with Open door policy i.e. Globalization

  Attract foreign investment

  Provide special areas where potential investor would get

congenial investment climate.

  Smooth export procedure, free from cumbersome procedures

  Development export promotion strategy

  More employment generation

  Development of export oriented industries

  Proper use of domestic available raw materials

Contribution of EPZs to the national Economy of Bangladesh:

After independence, the stagnant economy of the war-ravaged country was

desperately seeking private capital and technical know-how to facilitate the

industrialization process to achieve economic growth. Unfortunately, this

could not be achieved in the initial years. In late 70’s Bangladesh EPZ has

emerged to attract capital investment in EPZ and made a remarkable

progress in multiple sector of social, political, cultural and economic

development of the country. Number of steps has also been taken to attract

Foreign Direct Investment (FDI) and facilitate further industrialization in order

to boost up economic development.

EPZs have been making significant contribution to the gradual empowerment

of women which supports the objective of Millennium Development Goal

(MDG).This financial and social empowerment of women has far reaching

effect on the country’s poverty reduction initiatives as the increasing number

of young girls and woman are joining the productive workforce of EPZs

migrating from poverty prone remote rural areas of Bangladesh linking the

rural economy with industrialization process. BEPZA has also accelerated the

privatization effort of the government successfully by converting two loss

making State Own Enterprises (SOEs) of the country namely Chittagong Steel

Mills and Adamjee Jute Mills Ltd in to EPZs. Once abandoned projects are now

vibrating with activities. Mention may also be made that investors from thirty

three countries have already invested in the EPZs of Bangladesh. The leading

nations among them include South Korea, Japan, China and the host

Bangladesh.

History of Trade Union in Bangladesh:

The British rulers introduced Trade Union Act, 1926. The main purpose of the

Act was to provide registration for trade unions and in certain respects. The

East Pakistan Trade Unions Act, 1965 was enacted repealing the Trade

Unions Act, 1926. The Labor Disputes Act, 1965 was enacted and Industrial

Relations Ordinance, 1969 was enacted integrating the above two Acts.

Government of Bangladesh declared a labor policy in 1972. The right to strike

and collective bargaining in the nationalized industries was prohibited for six

months by Presidential order no. 55 in May 1972.

In 1973, the right to strike and lockout, as granted by IRO, 1969 was

withdrawn.

In 1974 Act completely suspended the democratic rights of workers by

prohibiting trade union activities such as strikes, lock-outs, and collective

bargaining.

The military regime of 1975 imposed restrictions on the rights of collective

bargaining.

The Industrial Relations (Amendment) Ordinance, 1977 liberalized the Rights

of Freedom of Association.

The Labor Policy of 1980 restored the right to freedom of association to a

considerable extent.

In 1982 the military regime banned trade union activities, strikes, and right of

freedom of association.Full trade union activities were restored by the

democratic government in 1991.

In 2006, an updated, consolidated and unified version of labor laws was

enacted.

During the Emergency in 2007-2008 that lasted for 23 months, trade unions

and collective bargaining were prohibited and the determination of collective

bargaining agent could not be made. However, full trade union activities were

restored by the democratic government in 2009.

Bangladesh Labor Law 2006 chapter XIII completely describes how a trade

union will be formed and registered in Bangladesh. Any trade union in

Bangladesh must be registered and regulated under this law.

The functions of Labor Union

A trade union or labor union is an organization of workers who band together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labor. The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labor contracts with employers. This may include the negotiation of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies. The agreements negotiated by the union leaders are binding on the rank and file members and the employer and in some cases on other non-member workers.

These organizations may comprise individual workers, professionals, past workers, or the unemployed. The most common, but by no means only, purpose of these organizations is "maintaining or improving the conditions of their employment"

Over the last three hundred years, many trade unions have developed into a number of forms, influenced by differing political and economic regimes. The immediate objectives and activities of trade unions vary and include:

Provision of benefits to members: Early trade unions, like Friendly Societies, often provided a range of benefits to insure members against unemployment, ill health, old age and funeral expenses. In many developed countries, these functions have been assumed by the state; however, the provision of professional training, legal advice and representation for members is still an important benefit of trade union membership.

Collective bargaining: Where trade unions are able to operate openly and are recognized by employers, they may negotiate with employers over wages and working conditions.

Industrial action: Trade unions may enforce strikes or resistance to lockouts in furtherance of particular goals.

Political activity: Trade unions may promote legislation favorable to the interests of their members or workers as a whole. To this end they may pursue campaigns, undertake lobbying, or financially support individual candidates or parties (such as the Labour Party in Britain) for public office. (wikipedia)

Why Labor Union should be allowed in industries of EP in Bangladesh?

No Freedom of Association for Bangladesh's EPZ Workers. EPZ workers denied

their basic human rights. The ongoing battle between the Bangladesh Garment

Manufacturers and Exporters Association (BGMEA) and the Government of

Bangladesh over the rights of workers to form unions, organize and collectively

bargaining the Export Processing Zones (EPZ's) of Bangladesh will do nothing

to assist and advance the rights of workers in these zones. The Government of

Bangladesh is under increasing pressure from the Government of the USA to

allow workers to unionize in the EPZ's. While the Government of Bangladesh

and the BGMEA may disagree over the detail, neither is in favor of

unconditional Freedom of Association. The basic premise of the argument

advanced by the BGMEA is that unions should not exist in the Zones. Their

compromise is that a referendum should be held amongst workers of the EPZ's

in which Management, the employers, would explain to workers the idea of a

Workers Welfare Committee (WWC).

Should workers vote in favor of such a committee, then, the Bangladesh

Export Processing Zone Authority would select workers to serve on these

committees. Workers would at no stage have the opportunity to elect

representatives to advocate for their rights. This proposal is seriously flawed

and seeks to manipulate and increase control over workers rather than allow

them their basic human rights. A similar system to the one proposed by the

BGMEA was introduced in SriLanka in 1992, this system has been a failure for

workers, who have now organized democratic and independent trade unions

in the Zones.

TIE-Asia urges the government to allow workers full freedom to form unions of

their choosing, organize and collectively bargain at the factory, Zone, Regional

and National Level, in accordance with ILO Conventions and the Constitution of

Bangladesh. The recent tragic series of fires in garment factories in

Bangladesh highlight this urgent need for workers to have assay in the

workplace and for their rights and lives to be protected.

The maintenance of a climate of good Industrial Relations in society depends

largely on the role-played lay the State as an ‘actor’ in the industrial relations

system. Because it is the duty of the State to formulate labor laws and policies,

to administer them and also to uphold justice so that neither the worker nor the

employers should suffer. Thus in any society the State acts both a planner and

an administrator in the industrial relations systems. The Development of

healthy labor – management – relations, Bangladesh government should allow

worker to form union in export processing zones (EPZ) in progress on improving

workers rights. Readymade garments, for the last couple of decades, have

been the lifeline of Bangladesh’s economy. At the last count, the sector

accounted for nearly 80 percent of export earning that drives the economy

further forward and it also provides jobs for hundreds of thousands of semi-

skilled workers, mostly, who in turn provide livelihood for millions. But the

alarming fact is that, Bangladesh’s garments exports were down as political

turmoil and labor unrest wreaked havoc on the sector, which is crucial to the

impoverished nation’s economy. The industry’s immediate response was to

allege instigation by political conspiracy or international competition. The

answer does not lie in merely apportioning blame to the external actors or

seeking hidden clues, but the reason may be deeply routed in the owner-labor

relations. It was assumed that the negotiating agents could not reduce the gaps

between the workers and the owners in most of the affected industries, as trade

unionism was virtually absent. None of the studies has been done so far about

the issue. So it is very important to find out the real fact behind the role of labor

union in the recent labor unrest to evaluate the necessity of labor union to

reduce the risk of labor unrest.

Prospects of trade unions in BangladeshThe experts discussed the problems and prospects of the trade unions in Bangladesh

Today there’re trade union activities of Bangladesh where the politicians, representatives of the state apparatus, MPs, the businessmen and journalists gathered under the auspices of the discussion.In Dhaka, there was the regular meeting of the discussion on the theme “Trade unions in Bangladesh: the role of the social modernization.”The panelists discussed the role that trade unions must belong to the effective model formation of the social and labor relations at the present stage. They  discuss the issues of trade union for the prevention of the social and labor conflicts, the role of unions in improving the labor law of the country, in particular the adoption of the New Law “About Trade Unions”, the subject to collective bargaining.The panelists also discussed the initiative of  on the establishment of Trade Unions Council. The Council is the standing advisory body to the fund, which aims are to facilitate the tasks implementation for the social partnership development and collective bargaining regulation of the social and labor relations for the group fund.The meeting of the trade union experts was attended by Chairman, Federation of Trade Unions of Bangladesh. After limited time duration a general meeting is held at different places. Here governing bodies of central trade union attend with president and general secretary as well as organizing secretary. Sometimes representatives of government attend the meeting and plays roles to maintain the worker’s right. Different online, print, and electric media’s journalists gather there.

References:

http://shailallb.blogspot.com/2010/02/trade-union-should-be-allowed-in.html

http://epzbangladesh.org.bd

http://en.wikipedia.org/wiki/Bangladesh_Export_Processing_Zone_Authority