COVID-19 has generated an economic crisis for the garment industry in Bangladesh. With wages still being paid primarily in cash and with factories shuttered, many employers have found it difficult to pay their employees. As crises exacerbate existing inequalities, this situation is particularly damaging to women. Very few female workers in Bangladesh earn enough money to have accumulated a financial safety net, and the impact of the loss of income goes beyond the workers themselves, with women usually spending their income on their families and communities.

To respond to the pressing wage issue, the Bangladeshi government began accelerating industry-wide moves to digitize wages and give workers access to their financial capital, keeping transparency and physical distancing in mind. In March 2020, the government of Bangladesh declared a US $590 million bailout package for the export-oriented industry. The package covers workers’ April, May, and June salaries, and includes a key stipulation that factories use bank accounts or Mobile Financial Service (MFS) accounts to pay workers. In just a few weeks since the announcement was made, over one million new accounts have been opened and set up for payment.  

At HERproject we strongly welcome this initiative, as our HERfinance Digital Wages Program has shown that digitization of wages can have manifold benefits for women. From 2015 to 2019 the Digital Wages Program, supported by The Bill & Melinda Gates Foundation and three implementing partners (Change Associates, Mamata and YPSA), helped 64 factories and more than 100,000 workers transition to digital wages. Results from the program showed that:

• Women feel safer and more secure with digital wages than with cash: Female garment workers reported feeling safer receiving their wages in a mobile money account than in cash, and also felt that their money was more secure in an account.
• Women expressed an increase in confidence to meet expected expenses: At the program’s conclusion, women were 17 percentage points more likely to report that they are confident they will be able to meet their family’s expected future expenses in the next two years.
• Women started making joint decisions about the use of their salary: There was a 19 percentage point increase in the share of women reporting engagement in joint financial decisions, with fewer instances of men deciding on their own and of women being pressured by family members.

Each of these benefits has even more significance in a time of economic insecurity and physical distancing, when accessing wages and carefully managing finances is crucial. However, the full benefits of wage digitization will be realized only if the specific barriers and challenges that women face are taken into consideration and addressed. Important considerations for women workers in Bangladesh, as revealed through our programs and as detailed in our new HERfinance brief, include:

• Low levels of education: 36 percent of female workers in HERfinance baselines had completed secondary level of education or higher, compared to 57 percent of male workers. As a result, women need more support and time to build confidence with and use the new digital payroll systems.
• Lack of access to the technology and resources needed to open digital payroll accounts: Because of regressive gender norms, there is a significant gender gap in phone and SIM card ownership. Frequently families are not supportive of women owning phones, creating issues of privacy and control. These factors mean that women are less likely to be able to manage their money in a private and secure manner.
• Risk of economic and/or domestic violence: Societal pressure and traditional gender norms can cause women to feel the need to hide a portion of their wages for their own use or to send to their families in their villages. Hiding money is risky for women and can lead to conflict or domestic violence if their families find out. Female workers are vulnerable populations that already face a high prevalence of violence at home; a transition like wage digitization, which exposes the hiding of cash wages, can exacerbate these risks.

The rapid wage digitization efforts being driven by the Bangladeshi government have the potential to deliver major long-term benefits. However, at a time when economic, social, and health difficulties are being exacerbated by the pandemic crisis, it is critical for all stakeholders involved in developing and implementing wage digitization—including suppliers, buyers, and financial service providers—to consider women’s unique needs when it comes to accessing, using, and benefiting from payroll accounts.

HERproject is contributing to this effort by sharing our HERfinance Digital Wages open-source materials and tools for workers and managers. The HERproject team is also developing a “HERessentials” package, which brings together the most critical resources from HERproject to build workers’ adaptive capacity and resilience in the face of the COVID-19 crisis.

If you would like more information on how HERproject can help you as a brand, supplier, or partner organization to ensure that the rapid transition to digital wages in Bangladesh benefits women workers, please reach out to our HERfinance team.