Labor violence in Bangladesh

Three people have been killed and more than 250 others injured in Chittagong, Bangladesh, as tens of thousands of workers launched a violent demonstration at the plant of Youngone Sports Shoes Ltd., Korea’s top maker of outdoor wear. Bangladeshi workers are classified into grades 1-7 and are paid different salaries according to their skill levels. The Bangladeshi government introduced the minimum wage this year to require companies to raise pay for those classified as Grade 7. Workers of grades one to six also demanded pay raises and launched strikes.

Demonstrators also attacked other Korean companies operating in the Chittagong region, and the fear is that the workers’ revolt will spawn anti-Korean sentiment there. Youngone advanced to Bangladesh in 1987 and has made products through original equipment manufacturing. A characteristic of the needlework and sowing industries is the raising of export competitiveness only through low cost production in countries with cheaper labor. As workers increasingly demand higher pay, more labor disputes have followed. Since Bangladesh bans unions, worker demands could directly lead to violent strikes without mitigating measures in place.

Earlier this year, 13 workers committed suicide in succession at a plant in China of Taiwanese electronics giant Foxconn Technology. Workers had complained of low wages and long working hours. In June, massive strikes occurred at the Chinese plant of the Japanese automaker Honda, which brought the factory’s operations to a halt. More Korean companies are relocating their plants to Vietnam and other countries with lower wages as the salary levels of Chinese workers have increased. Workers have staged demonstrations to seek higher pay but violent protests scare away foreign-invested companies, which could in turn deprive workers of jobs and worsen their economic situation.

Many Korean companies operating in advanced economies including the U.S. and Europe face protests by workers due to unfamiliar issues including racial discrimination, sexual harassment and religious customs. Korean companies have staged a globalization drive through a strategy of using cheap labor costs and by catching up and even overtaking companies in advanced economies. The Bangladesh incident suggests that such efforts are inadequate and that global personnel affairs should become a priority for business management of overseas affiliates. Localization is a critical factor in globalization in determining the success or failure of a company’s global business.

Editorial Writer Chung Sung-hee (shchung@donga.com)