A recent study has identified financial constraints, job insecurity, fear of premium loss and uncertainty over continued premium payments as the primary factors hindering readymade garment (RMG) workers from participating in the Universal Pension Scheme (UPS).

The survey revealed that nearly 99 per cent of RMG workers showed little interest in the UPS, with 90.6 per cent citing financial constraints as the key barrier.

Additionally, 6.7 per cent of respondents expressed concerns about the long-term sustainability of the scheme.

Some 2.7 per cent of the surveyed workers were found unaware of the UPS, it showed.

The study, however, found that only 1.3 per cent of the surveyed workers have so far enrolled in the scheme for garment workers namely Progoti which was introduced in August 2023.

Md Monirul Islam, Deputy Director of the Bangladesh Institute of Labour Studies (BILS), shared the findings of a study conducted on 200 garment workers at an event held on Monday at Srama Bhaban in the city.

With support from the Netherlands-based organisation Mondiaal FNV, BILS is implementing the project titled ‘Ensuring Decent Work in the Ready-Made Garment (RMG) Sector through Social Dialogue’.

As part of this initiative, BILS carried out the study between September and December 2024, titled ‘Universal Pension Scheme: Exploration of Potential Scopes for RMG Workers’ Social Protection in Bangladesh’.

Explaining the challenges, Monirul highlighted the gap in education when faced with a fully automated and digitalised pension system.

He also pointed out that the minimum premium of Tk 2000 is considered too high for private sector workers. Furthermore, there is no safety net to protect against income shocks, such as job loss, factory lay-offs, industrial injuries, deaths, occupational sickness, or dismissal.

It also identified the requirement of 10-year long continuation of premium as challenging as the study found only 8.0 per cent workers work in a factory for 10 years.

The government has introduced four types of Universal Pension Schemes, with the Progoti scheme allowing for the inclusion of RMG workers. Under this scheme, contributions are shared equally, with 50 per cent paid by workers and 50 per cent by employers.

The study primarily focused on the RMG sector and had several key objectives aimed at evaluating the government-declared UPS in Bangladesh.

It analysed the potential benefits, structure, processes, and mechanisms of the UPS to ensure social protection for RMG workers, while also identifying existing gaps.

The study reviewed national and international policies and initiatives, highlighting best practices regarding employer contributions to social protection for RMG workers.

Several proposals were made, including reducing the minimum premium amount to align with the Surokkha scheme, mandating institutional participation and employer contributions, and suggesting that 30 per cent of respondents favoured a mandatory government contribution.

The study recommended that the government match contributions, with higher benefit levels potentially subsidised via minimum contributions.

It also proposed redistributing benefits between higher and lower earners, allowing for alternatives such as the option to withdraw funds or access loans during income shocks, temporarily suspending contributions during such shocks, and enabling job changes without affecting pensions.

Speaking at the event, AKM Ashraf Uddin, Executive Director of the Bangladesh Labour Foundation, highlighted that gaining the trust of all stakeholders, especially workers, is a major challenge for the successful operation of the scheme.

He emphasised that job insecurity makes workers reluctant to participate.

Syed Saad Hussain Gilani, Chief Technical Adviser of the ILO Employment Injury Scheme (EIS) in Bangladesh, said that an informal assessment by the ILO found several gaps in the Universal Pension Scheme (UPS).

He noted that the scheme had been developed without consultation with relevant stakeholders, despite its good intentions.

Gilani recommended conducting a proper diagnostic study, with a strong emphasis on social dialogue.

Razequzzman Ratan, a member of the Labour Reform Commission, highlighted financial capacity as the main issue, as workers are currently struggling and have little time to consider their future.

AKM Nasim, also a member of the Labour Reform Commission, stressed the importance of a transparent management process, stating that without it, only fund managers would benefit, not the workers.

He raised concerns about how much workers would be willing to contribute to the fund, suggesting that in some cases, contributions could amount to about one-fifth of their wages.

Nasim proposed that the scheme could initially be funded by contributions from the government and employers to help build workers’ confidence.

The event was moderated by BILS Secretary Shakil Akhter Chowdhury, with BILS Vice Chairman Anwar Hossain chairing.

Bangladesh Employers’ Federation Secretary General and CEO Farooq Ahmed also spoke at the event.

The findings of the study were later handed over to Labour Reform Commission Chairman Syed Sultan Uddin Ahmed.