Labour welfare largely neglected as few companies share profit

Highlights:

• There are over one lakh registered companies in the country 
• Some 300 companies donated Tk700cr to workers' welfare foundation fund since 2006
• Among over 300 listed firms, around 100 either have not formed the funds or are not managing and distributing them properly
• Some companies have set aside funds for workers' welfare but are not distributing them
• 2,800 people are going to get Tk17cr in financial assistance from the workers' welfare foundation fund

Workers' well-being is still greatly ignored in the country as most companies are, reportedly, reluctant to comply with the legal obligation to contribute 5% of their profits to the welfare of their employees.

Bangladesh Labour Act 2006 states that a company with a minimum paid-up capital of Tk1 crore or immoveable assets of Tk2 crore must pay the required share of its net profit to the Workers Profit Participation Fund, Welfare Fund, and Bangladesh Workers' Welfare Foundation Fund at the ratio of 80:10:10 within nine months of the end of every accounting year.

However, the vast majority of registered companies that meet the conditions are not complying with this obligation.

Even most of the profit-making listed companies have refrained from forming and distributing funds for the welfare of their workers and are not donating money to the workers' welfare foundation, according to sources at the Dhaka Stock Exchange. There are over 300 listed companies in the country and the majority of them are in profit.

Moreover, some companies have set aside funds for workers' welfare but are not distributing those.

For instance, Dacca Dyeing Company has allocated Tk8.12 crore to Workers Profit Participation Fund in the last few years but neither distributed the fund nor gave it to the Welfare Foundation.

Likewise, Jute Spinners Company has Tk1.37 crore in its Workers Profit Participation Fund but it has not used and distributed the money as per the labour law.

Companies must establish a Workers' Profit Participation Fund and a Welfare Fund as per section 234 of the Bangladesh Labour Act. While the Bangladesh Labour Welfare Foundation Fund, set up in 2010 by way of the Labour Welfare Foundation Act 2006 to give financial assistance to workers and their families in times of emergencies such as injury or serious diseases, is supervised by the Ministry of Labour and Expatriate Welfare.

The profit participation fund and welfare fund will be managed under separate bank accounts through trustees.

There are about 100,000 registered companies in the country and about 40,000 factories are registered with the Directorate of Inspection of Factories and Establishments (DIFE) under the labour ministry.

But, according to the sources at Bangladesh Workers Welfare Foundation, only about 300 companies have donated money to the foundation since 2006. About Tk700 crore has been deposited in this fund so far.

Auditors unearth anomalies

Auditors have found various irregularities in the management and distribution of the participation and welfare funds. They have also uncovered that many companies are not donating to the welfare foundation fund at the fixed rate, in defiance of the law.

After auditing the financial statements of the companies for the financial year 2021-22, the auditors have also suggested settling the issue of the violation of labour laws by the companies.

According to auditors' statements, listed company Aramit Limited has not deposited Tk3.22 lakh to the Workers' Welfare Foundation, violating the law.

Sonali Aansh Industries deposited Tk70.97 lakh in its profit participation fund but did not distribute this money.

Queen South Textile Mills has not yet formed this fund, while Savlo Chemicals has set up a profit participation fund but it does not have a separate bank account and is depositing this money in the bank account of the company.

Pacific Denim, 100% export-oriented, regularly allocates 5% of profits for workers' welfare but has not yet distributed a single penny among the workers.

None of these companies has donated any money to the Workers' Welfare Foundation.

Saif Powertec formed the fund but did not have a separate bank account. Fu-Wang Foods Company also did not make any allocation to the Workers Profit Participation Fund, nor did it distribute among the workers.

BSEC asks firms to abide by the law

Last year, the labour ministry wrote to the Bangladesh Securities and Exchange Commission about listed companies not complying with the labour laws.

In view of the letter, the securities regulator sent separate letters to all listed companies in April last year, seeking information about the formation of the workers' profit participation fund and workers' welfare fund.

BSEC officials said that the commission has received information about 100 companies which either have not formed the funds or are not managing and distributing them properly. Some companies said their funds were in the process of disbursement, they added.

The officials continued to say that listed companies have been directed to comply with labour laws in view of the ministry's letter, even if they are not covered by securities laws. If the law is violated, the relevant ministry or directorate can take action as per the law.

BSEC chairman Professor Shibli Rubayet-Ul Islam told TBS that companies that are not complying with the labour law in terms of workers' welfare funds have been instructed to create and manage the funds as per the rules.

Why workers' welfare foundation can't take action against law violators

Since most of the registered companies are not depositing money to the foundation, the foundation is writing to the companies every month, said Dr Mollah Jalal Uddin, director general (Additional Secretary) of the foundation, many of them are not paying any heed to the letters.

He also said that the foundation cannot take any measures against companies that are violating the law as it does not have the necessary manpower.

But the foundation has sought assistance from the Directorate of Inspection of Factories and Establishments in this regard, requesting the directorate, during their inspection of factories at different times, to look into whether the companies are donating money to the foundation regularly, he added.

2,800 workers to get financial assistance

Mollah Jalal told TBS that the foundation has selected some 2,800 people for financial assistance from the workers' welfare fund after scrutinising their applications.

A total of Tk17 crore will be distributed through the factories inspection directorate among the selected workers, he added.

A worker who is suffering from serious illness will get a maximum of Tk1 lakh, while the family of one who has died at one's workplace will get a maximum of Tk2 lakh.

Newly listed firms coming forward

Meanwhile, according to sources at the labour ministry, four companies that got listed in the capital market last August have deposited Tk7 crore in the workers' welfare foundation.

The companies are Meghna Petroleum, Lafarge Holcim, BSRM, and Linde. Among them, Lafarge Holcim donated Tk2.25 crore, BSRM Tk1.99 crore, Meghna Petroleum Tk1.91 crore and Linde Bangladesh Tk78.65 lakh.