Bangladesh factory owners threaten to cut off pay to protesting workers

DHAKA, Jan 13 (Reuters) - The head of Bangladesh's garment manufacturers association on Sunday called on protesting workers to return to work by Monday or companies will cut off their pay, after demonstrations calling for higher salaries that have lasted for a week.

The workers' protests, which have broken down into clashes between police and protesters that killed one worker on Tuesday and wounded dozens more last week, pushed the Bangladesh government to consider the demand for higher pay. The country is the world's second-biggest garment exporter behind China.

Seeking to end the turmoil, Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) threatened to cut off the workers' pay at a news conference after further clashes on Sunday.

"If you don't return to your work by tomorrow, you will not be paid any wages and we will shut down factories for an indefinite period," he said. "Despite repeated assurance of meeting the demands, the workers are being incited to create unrest. We will not allow this anymore."

At least 20 people were hurt after police used teargas and water cannons to disperse workers, who blocked a major highway in the Ashulia garment manufacturing hub, said Saminur Rahman, a director for the Industrial Police, which patrols the country's business hubs.

The Ashulia hub, on the outskirts of the capital, Dhaka, accounts for nearly 20 percent of Bangladesh's total garment exports.

The protests are a test for the government of Prime Minister Sheikh Hasina, who won a third straight term in elections on Dec. 30, which were marred by violence amid allegations of widespread rigging and voter intimidation.

The government said in September that the minimum wage for garment workers would increase by up to 51 percent to 8,000 taka ($95) a month, payable in January, the first increase since 2013.

But union leaders say that increase will benefit only a small percentage of workers in the garment sector, which employs 4 million out of the country's 165 million people.

The government has formed a panel of factory owners, union leaders and officials to investigate the pay demands, Commerce Minister Tipu Munshi said on Tuesday, adding he hoped a resolution could be reached in a month.

"The panel will meet this afternoon. The workers will have to accept their decision," BGMEA's Rahman said.

Low wages and trade deals with Western countries have made the sector a $30 billion industry accounting for 80 percent of Bangladesh's exports.