I. Background on Bangladesh

Bangladesh is one of the poorest and most densely populated countries in the world. Poverty is widespread, affecting almost 50 percent of the population. Despite the government's commitment to eliminating poverty, the absolute number of people in poverty continues to rise. According to United Nations Development Program (UNDP) figures, more than 82 percent of the population was living below US$2 a day in 2001. In the UNDP Human Development Indicators ranking, Bangladesh is ranked 139th.¹ The International Monetary Fund (IMF) and World Bank predict that Bangladesh' gross domestic product (GDP) will grow over the next 5 years at about 4.5 percent each year. This growth rate is well below the 7-8 percent rate that is considered necessary to lift Bangladesh out of severe poverty.²

Bangladesh has a large apparel industry, which, along with its smaller textile industry, generated 86 percent of total exports in 2001. Bangladesh's major trading partners in textiles and apparel are the European Union and the United States.³ Its apparel industry is mainly privately owned and export oriented, while its textile industry is divided almost equally between state-owned and private enterprises. The textile and apparel sector consists of 3,600 firms with a total workforce of 1.6 to 1.8 million workers, 90 percent of whom are women.⁴ There is a concentration of manufacturing activity in and around the capital city of Dhaka and a growing garment manufacturing presence in the country's two export processing zones (EPZs). (Click here to learn more about freedom of association in Bangladesh's EPZs.)

Between 1991 and 2001, the United States was the largest foreign direct investor in Bangladesh with US$5.5 billion invested, followed by the United Kingdom at US$1.6 billion, Malaysia at US$1.3 billion, and Japan at US$1.1 billion. Most foreign direct investment in Bangladesh's textile and apparel sector has come from investors attracted by its low labor costs and access to European and US markets. Despite the influence of foreign direct investment, most garment factories are owned by Bangladeshi companies or families.

The ready-made-garment industry faces the loss of guaranteed markets in the United States and elsewhere when quotas are abolished in January 2005 with the end of the MFA. According to experts, Bangladesh will have to improve productivity and quality and cut lead times considerably if it is to remain competitive in the world market after 2005.⁵

II. Freedom of Association in Bangladesh

Bangladesh has ratified seven of the eight fundamental International Labor Organization (ILO) conventions. In 1972 Bangladesh ratified both fundamental ILO Conventions concerning freedom of association: Freedom of Association and Protection of the Right to Organize (Convention No. 87, and Right to Organize and Collective Bargaining (Convention 98). When Bangladesh ratified the International Covenant on Economic, Social and Cultural Rights (ICESCR), it entered a reservation on articles 7 and 8, which guarantee the right of everyone to form trade unions and join the trade union of their choice.⁶ The reservation indicated that there would be some limitations placed on workers' freedom of association.

The Constitution of Bangladesh provides for the right to form associations or unions, subject to any "reasonable" restrictions imposed by law in the interests of morality or public order. Bangladeshi labor law requires a workplace to have 30-percent union participation before a union can be registered, and a union may be dissolved if membership falls below this level. Prior to official registration, which signifies state recognition of the trade union, a union may not function. The ILO's Committee of Experts on the Application of Conventions and Recommendations (CEACR) considers that such requirements severely restrict workers' ability to form organizations of their own choosing and has requested that the government amend these provisions.⁷

According to the International Confederation of Free Trade Unions (ICFTU), workers who try to establish a trade union are not protected by law before they have registered their union. In this environment, employers persecute organizers of fledgling unions, sometimes by violent means or with the help of the police. Moreover, the government takes measures to ensure that the number of participating workers does not increase to the 30-percent minimum level. In many cases, particularly in the textile sector, the government passes the names of workers who apply for union registration on to employers, who dismiss the workers.

In 2002, Bangladesh's total workforce consisted of approximately 58 million workers. Only 1.8 million belonged to unions, most of which were affiliated with political parties. There are no reliable labor statistics for the large informal sector, in which the vast majority (75 to 80 percent) of economically active people work.⁸

	Current Bangladeshi Labor Law Dealing with Freedom of Association Bangladesh Export Processing Zones Authority Act No. XXXVI of 1980, amended by Ordinance No. XLIX, of 1984 and Ordinance NO. LII of 1988. Bangladesh Private Export Processing Zones Act 1996 (Act No. XX of 1996) The Industrial Relations Ordinance, 1969 (XXIII of 1969)

III. Right to Bargain Collectively

In Bangladesh, collective bargaining by workers is legal on the condition that their unions are legally registered as collective bargaining agents. Collective bargaining occurs occasionally in large private enterprises, but in areas of high unemployment, workers often do not practice collective bargaining, due to concerns over job security. Collective bargaining in small private enterprises generally does not occur.⁹

IV. Right to Strike

Strikes are common in Bangladesh and are recognized in the Industrial Relations Ordinance of 1969 as a legitimate avenue for addressing unresolved grievances.

Nevertheless, the ILO Committee of Experts has asked the government to amend several provisions of the Industrial Relations Ordinance that restrict workers' right to defend their economic interests through strikes. These provisions include:

• the necessity for three-quarters of the members of a workers' organization to consent to a strike;
• the government's power to prohibit a strike if it lasts more than 30 days or to prohibit a strike at any time if it is considered prejudicial to the national interest; and
• the penalties (which include imprisonment) that may be imposed if workers participate in an industrial action that is deemed by the government to be unlawful.

V. Freedom of Association in Export Processing Zones in Bangladesh

A. The BEPZA

In 1980, the Bangladesh Export Processing Zones Authority Act¹⁰ was enacted. It provided for the establishment of the Bangladesh Export Processing Zones Authority, (BEPZA), which is the official arm of the government responsible for the creation, development, operation, management, and control of export processing zones (EPZs). In accordance with this act, the two EPZs operating in Bangladesh were established: Chittagong, which was established in 1983; and Dhaka, which was established in 1993. In response to the demand of local and foreign investors, three additional export processing zones, Comilla, Mongla, and Ishurdi, are under construction at the time of writing this report.

The BEPZA Act provides that the government may exempt an EPZ from as many as 16 laws,¹¹ including the Industrial Relations Ordinance (IRO).¹² In 1986, the government declared, in accordance with the BEPZA Act, that the IRO was not applicable in the EPZs. The declaration effectively suspended the rights of workers in EPZs to freedom of association and collective bargaining.

	Labor Relations in Bangladesh's EPZs The suspension of Bangladeshi labor law in the country's EPZs created a vacuum in industrial relations in these zones. In an effort to fill that void, the BEPZA enacted two "Instructions," which deal with the terms and conditions of employment and the fixing of minimum wages and other related benefits. The law allows companies operating in the zones to create more favorable conditions for workers than those laid out in the Instructions, but companies must, at a minimum, maintain the standards of the Instructions. The second of these Instructions, which provided for wage increases, has never been implemented. The Industrial Relations Department (IRD) in each EPZ supervises the Instructions' implementation, which includes the settlement of disputes and handling of grievances. The Bangladeshi government has introduced worker welfare committees to factories in an effort to find alternatives to unions in the EPZs. Many EPZ workers have reported that the IRD is not effective in its enforcement of standards and that worker welfare committees either do not function or are not effective mechanisms for meeting workers' needs or communicating issues to management. Since EPZ workers do not have legal recourse to courts of law regarding violations of workplace rights, they have little or no means by which to redress serious issues that arise in the EPZs.

The ILO supervisory bodies have reiterated¹³ that workers may not be denied the fundamental right to organize, since it constitutes a serious violation of the Conventions. Therefore, the ILO has urged the government of Bangladesh to take measures to ensure that workers in EPZs are able to exercise their legal rights to organize and bargain collectively.

In turn, the Bangladeshi government claims that the restrictions on trade unions in EPZs "are temporary measures" that are necessary to protect investment and employment. The government justifies its policy by pointing out that workers in these zones enjoy better facilities and service conditions than workers in other industrial sectors.¹⁴ Some Southeast Asian countries have argued that such temporary restrictions are part of a gradual process to develop conditions in which trade unions can operate freely, but the ILO's Committee of Experts has stated that the right to organize may not be denied even temporarily. Furthermore, in the case of Bangladesh, the ILO argues that the suspension of the right of association cannot be considered a "temporary measure" in view of the fact that it was adopted in 1980.

B. International Influence on Freedom of Association in the Zones

Bangladesh and the United States signed a generalized system of preferences (GSP) agreement in 1991. After it ended in 2001, the United States extended it for another three years on the condition that Bangladesh allow trade unions to operate in the zones. The US government said that if Bangladesh did not end its suspension of labor laws in the EPZs and guarantee freedom of association, it would lose its eligibility for GSP benefits. The Bangladeshi government issued a declaration¹⁵ in 2001 announcing the withdrawal, from January 1, 2004, of restrictions imposed on trade union rights in the EPZs.

The implementation of this policy has been delayed by the opposition of the largest foreign investors in the Bangladeshi EPZs, who declared that they will pull out if labor unions are allowed to operate in the zones. They voiced concerns about the potential for unions to be corrupt and or unable to adequately represent the interests of the workers in the zone. Some cited statements by EPZ workers who said that they were not interested in joining a union. This policy stalemate led to negotiations between the AFL-CIO and the zone investors that eventually produced a compromise that is currently pending in the Parliament, with strong indications that it will be adopted. That would provide some clarity as to what EPZ enterprises are required to do in the transition period to freedom of association.

Click here to read case studies about FLA Third Party Complaints that deal with freedom of association

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