The premier bourse is leaving no stone unturned to exercise the culture of banks that is to be treated as a non-labour-oriented business
Dhaka Stock Exchange (DSE) is craving for an exemption from the Labour Act provision that stipulates a 5% sharing of annual profits with own employees.
Absorbing 28% drop in revenue and 72% slide in profits in Fiscal Year 2019-20, the premier bourse of the country is leaving no stone unturned to exercise the culture of banks that is to be treated as a non-labour-oriented business.
Meanwhile, more than 350 of the stock exchange employees, already going through a series of dissatisfaction, are feeling deprived and demotivated during the ongoing remarkable phase of the capital market development.
Initially, the stock exchange company wrote to the Ministry of Labour and Employment in early October for its opinion on whether DSE should remain bound to maintain Workers' Profit Participation Fund (WPPF) and at the same time contribute to Workers' Welfare Fund (WWF).
Having no response from the labour ministry, at the end of November, the stock exchange sought assistance and intervention from the Bangladesh Securities and Exchange Commission (BSEC).
DSE also wrote to the Ministry of Finance for a recommendation to the labour ministry so the latter exempts the premier bourse from complying with the Labour Act's profit-sharing provision.
In a letter to the finance ministry's senior secretary on 10 December, the DSE argued that the premier bourse is not a typical labour-oriented company, and its employees avail themselves of all regular allowances, increment, gratuity and provident fund, car loans and other benefits.
And that is why the stock exchange company should be exempted from WPPF like the country's banks and non-bank financial institutions (NBFI) that are enjoying the freedom since the finance ministry's recommendation to the labour ministry in early 2017.
Auditor did not help
Sources said the DSE board ordered its management not to set aside a portion of its profits during preparation of the last annual financial statement. However, the finance department and the auditor did not cooperate later.
Meanwhile, the DSE also asked for the auditor's perspective on whether the stock exchange needs to share profits with its employees.
A Qasem and Company, the DSE's statutory auditor for the last fiscal year, refrained from making any opinion or issuing any advice, citing limitations of its jurisdiction.
But citing the Labour Act provisions, the auditor reminded DSE that any company having not less than Tk 1 crore in paid-up capital and Tk2 lakh in assets needs to comply with WPPF and WWF while DSE is not an exception.
However, the auditor in its 3 December letter to the DSE also mentioned the example of how banks got exemption from contribution to WFFP and WWF.
"Banks and NBFIs share a portion of their profits with their employees in the form of annual bonuses on top of regular festive bonuses while the DSE does not," said a DSE official while talking to The Business Standard recently.
He feels aggrieved on the grounds that his employer is depriving more than 350 of its employees, citing "partial similarity" of the organisation with banks in terms of nature.
He, however, sought anonymity to avoid confrontation with the board which ordered DSE management to explore ways to stop WPPF and WWF after one of its meetings in August.
DSE Chairman Md Eunusur Rahman told The Business Standard, "The board believes that now it is hard for DSE to afford the WPPF and WWF and that is why the stock exchange sought the government opinion while there is a precedent of cases like banks and other private companies."
"DSE is a for-profit company and also has got foreign strategic investors onboard. Due to the market situation, the exchange's revenue, profit everything suffered slides over the years," he added.
In Bangladesh, like banks, firms and also private sector energy and power companies are not contributing to WPPF and WWF following their collective pleas earlier.
Also the Central Depository Bangladesh Ltd (CDBL) employees are not getting any share of the company profits over the last couple of years.
Chittagong Stock Exchange (CSE), the younger bourse at the port city, is going to disburse its 2019-20 WPPF and WWF fund despite its smaller share in everyday stock market turnover, confirmed its Managing Director Mamun-Ur-Rahsid.
More than 80 of the permanent CSE employees are waiting for the annual receipt.
According to the Chapter 15 of the Labour Act, eligible companies have to set aside 5% of their annual profit.
Feel of deprivation
Employees of the two stock exchange companies began receiving their annual WPPF bonus in 2014 following the demutualisation of the two bourses which separated the organisation's ownership and management, and transformed the Dhaka and Chattogram Stock Exchanges into for-profit companies.
Both the bourses had been paying around Tk1 lakh as a portion of profit to each of their permanent employees every year till Fiscal Year 2018-19.
The annual sum is not a big deal for top level executives, but entry level executives and lower-level employees like drivers, support staff seriously count on the figure that helps them get rid of some personal debts.
"Over the recent years I was paying my son and daughters' new-year school fees with the bonus and this year I have to borrow the sum," said a junior DSE employee.
He said DSE is not properly assessing and treating many employees like him for years and the suspension of profit-sharing now further deepens their feel of deprivation.
His frustration has also been reflected in a third-party consultant's report which recently said the DSE's remuneration and benefits for the mid-level employees is inadequate while others in top levels are being paid well.
Meanwhile, following internal steps for cost control, the DSE stopped paying overtime to its lower tier staff who are also frustrated not to receive the annual bonus for the first time since 2014.
The employee termed the exchange's desperation to save a sum less than Tk2 crore in the last fiscal "a reflection of inhuman corporate efficiency".
The DSE spent more than Tk20 crore for the maintenance of its Nikunja Building in the same year.
Exchange employees are one of the key players of the ongoing capital market development programmes and the demoralising developments like this will hurt their motivation, said a top-level executive at the DSE, who himself did not wait for the annual sum that much.