Welfare fund fails workers as most eligible firms don’t contribute
The foundation was established under the Bangladesh Workers Welfare Foundation Act, 2006, to improve welfare for both formal and informal workers
Highlights:
- Only 525 of 8,000 eligible companies contribute funds
- Workers face cumbersome, bureaucratic processes to access benefits
- Foundation aided just 0.043% of national workforce
- Chronic mismanagement, staff shortages, and poor oversight hinder operations
- Government planning reforms, including online applications and stricter compliance
- RMG workers covered separately under Central Fund from export earnings
Nearly two decades after its establishment, the Bangladesh Labour Welfare Foundation is still struggling to deliver benefits, with most eligible companies failing to contribute to its fund and workers facing cumbersome procedures to access the money.
The foundation was established under the Bangladesh Workers Welfare Foundation Act, 2006, to improve welfare for both formal and informal workers. However, its journey has been beset by obstacles, including staffing shortages, poor management, and delayed administration.
As of June this year, only 525 of 8,000 eligible enterprises had contributed to the fund. By the end of that month, the foundation held Tk1,241.25 crore, including Tk29 crore deposited in June alone, according to the organisation.
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The foundation primarily relies on interest income from the fund to distribute grants, yet no grant distributed to workers that month.
Bangladesh Bureau of Statistics data estimates more than 7 crore people are employed nationwide, with over 80% in the informal sector.
Since its inception, the foundation has provided financial assistance worth Tk141.66 crore to just 30,285 workers – barely 0.043% of the country's workforce. Meanwhile, the ready-made garment (RMG) sector, with roughly 40 lakh workers, is covered by a separate Central Fund.
AHM Safiquzzaman, former labour secretary and vice-chairman of the foundation, acknowledged the institution has struggled to perform as intended.
"Initially, there was little initiative to manage the foundation effectively. Although we now have a permanent office, staffing remains inadequate," he told TBS.
He noted that many companies required to contribute dividends have yet to do so. "Less than 10% of eligible companies currently contribute, leaving millions of workers without support. The fund's shortage prevents necessary welfare initiatives."
He added that the interim government has begun taking steps to make the foundation fully functional.
Complex application process
Labour leaders said the application process itself deters workers. Formal sector applicants require recommendations from employers and labour organisations, or from local authorities.
Informal sector workers must secure endorsements from local administrative officers and labour or factory inspection authorities, they said.
Syed Sultan Uddin Ahmed, joint secretary general of the Bangladesh Institute of Labour Studies (BILS), said the fund primarily supports informal sector workers, but the process is cumbersome.
"The amount of assistance is small, and for years, the office's location inside the Secretariat delayed aid distribution. Recent measures have attempted to simplify the process," he said.
He noted a major difficulty is that workers must apply for funds that are, essentially, their own. He suggested direct disbursement methods, such as medical assistance or educational support for workers' children, to ensure the money reaches its intended recipients.
Structural challenges
Since its inception until January 2025, the foundation has seen 11 directors general, none of whom were full-time. Most performed duties alongside other responsibilities. Lack of proper office space discouraged regular attendance.
Until mid-2017, staff worked in a tin-shed behind the health ministry building in the secretariat. Only since January 2025 has staff enjoyed more adequate space.
Currently, the foundation has 18 approved staff positions, 12 of which are filled. It has no vehicle, and no regional offices. The current Director General Md Munir Hossain Khan now holds full-time responsibility for operations.
Munir Hossain told TBS that during the previous government, some ineligible individuals received support, often through networks exploiting hand-delivered applications.
"To prevent misuse in the future, we are introducing an online application system with technical support from Germany. The system is in its final stages and will be launched soon," he said.
Who contributes, who benefits
According to the law, companies with a paid-up capital of at least Tk1 crore or total assets of Tk2 crore are required to contribute 0.5% of their dividends to the Workers' Welfare Foundation fund.
Essentially, the fund is financed from the 5% of company dividends that labour law mandates be reserved for workers, meaning it is the workers' own money that is deposited into the fund.
According to the Office of the Registrar of Joint Stock Companies and Firms, over 8,000 companies are eligible to contribute.
The fund is intended for projects supporting workers' welfare, grants to disabled or incapacitated workers, medical treatment, financial aid to families of workers who die in accidents, scholarships for talented family members, life insurance schemes, and insurance premiums.
The foundation has provided some support, including aid to families of deceased workers, emergency medical assistance, educational support for children, maternity aid, transport and burial support, and training initiatives.
So far, the foundation has provided Tk8.36 crore to the families of 974 deceased workers, Tk126.22 crore in medical assistance to 27,479 workers, and Tk70.94 lakh in educational support to 1,832 workers.
Companies contributing include both multinationals and large domestic firms, such as Grameenphone, Robi, Unilever Bangladesh Limited, Marico, LafargeHolcim, Linde Bangladesh, Meghna and Jamuna Oil, ACI, BSRM, Beximco Pharmaceuticals and Nuvista Pharmaceuticals, Sampcorp North West Power, and the Transcom Group.
Initiatives to increase participation
Mismanagement of fund deposits has been a key obstacle, according to labour ministry officials.
They said around Tk200 crore had been stuck in troubled banks like Padma and First Security Islami Banks. After the government changed, the Bangladesh Bank governor intervened and recovered the funds.
The labour ministry is now working to secure broader participation. Meetings with sector associations are planned to encourage voluntary compliance. Authorities are considering requiring proof of fund contribution when renewing licences or participating in government projects.
Talks are planned with sectors including construction, pharmaceuticals, and agro-food, as well as the Roads and Highways Department and the Local Government Division to ensure compliance.
At a 10 August event, Labour Adviser Brigadier General (Retd) M Sakhawat Hossain noted that many eligible construction companies are not contributing.
He recommended to the cabinet division secretary that firms refusing to contribute should be barred from government projects.
The cabinet division has sent letters to ministries requesting opinions on companies failing to deposit dividends. Decisions will be made after all feedback is received, according to labour ministry officials.
The Central Fund
Workers in fully export-oriented industries do not benefit from the Workers' Welfare Foundation fund. They are covered by the Central Fund, which operates differently, with contributions deducted from export earnings by Bangladesh Bank. Workers can access this fund through their employers.
The Central Fund covers RMG workers in export-oriented sectors, providing financial aid for emergencies, educational support for children, and assistance to families affected by accidents or deaths.
Banks automatically deposit 0.03% of export earnings into the fund, independent of exporters' willingness.
By last June, Tk8.05 crore had been deposited, bringing the total to Tk304 crore. The fund also lends to institutions struggling to pay salaries, though repayment has been inconsistent.
Md Tauhudur Rahman, president of the Bangladesh Garment Workers Federation and member of the Central Fund Management Board, told TBS that the fund operates formally, with minimal complexity.
"Applications are routed through BGMEA or BKMEA and verified before funds are disbursed," he added.
