Rapid Wage Digitization in the RMG Sector

---

About the project

The Mathematica-led study aims to investigate the implementation of wage digitization among factories that received government stimulus packages. The research focuses on understanding the factors influencing the decision of factories to digitize wages after the stimulus period and identifies barriers to wage digitization from both the factory and worker perspectives. The findings from this study will carry significant implications for the potential expansion of wage digitization and the development of gender-intentional design. As part of this initiative, the Research and Policy Integration for Development (RAPID) team collaborates with Mathematica Inc. to collect primary data. This involves engaging with key stakeholders, including representatives from the Ministry of Finance, Bangladesh Bank, BGMEA/BKMEA, as well as relevant individuals from major mobile financial service providers (bKash, Rocket, and Nagad) and commercial banks.

Publication

Brief Introduction:

RAPID and Mathematica collaborated on a study examining the rapid digitisation of women workers' wages in Bangladesh's RMG industry during the onset of the COVID-19 pandemic. This was prompted by the Government of Bangladesh's stimulus package, providing interest-free loans to factories for covering workers' back pay during a four-month lockdown (May to August 2020), with the condition of digital wage payments. The policy led to the rapid creation of over 2.2 million mobile financial services (MFS) accounts and digital wage payments to 3.8 million workers in nearly 2,000 factories. Although factories didn't directly digitize payrolls for stimulus disbursement, the policy spurred subsequent digitization. This shift provides a unique opportunity to study the impact of rapid wage digitization for historically financially excluded women RMG workers.

Some of the major findings:

• Several key policy changes leading up to the pandemic made digital financial inclusion for women and the poor a government priority
• Policy changes around documentation of identification made digital account onboarding easier and more accessible.
• The DFS infrastructure rapidly expanded and became more inclusive through the proliferation of MFSPs, cash-in-cash-out (CICO) points, and agents, but cash-out fees remained prohibitive for many.
• A public-private commitment to (and coordination around) wage digitization was brokered between global brands, trade and labor organizations, and the GoB.
• Mid-level factory management remained reluctant to digitize wages, likely due to concerns around transparency.
• Report and brief: Rapid Wage Digitization in the Bangladesh Ready-Made Garment Sector During COVID-19: A Mixed-Methods Study of the Barriers and Facilitators of Wage Digitization for Women Workers here.


• Blog post: Wage Digitization as an On-Ramp to Financial Inclusion: The Essential Role of Deepening Account Usage here.