Dearth of skilled workers to hit garment growth
June 14, 2008
The ready-made garment industry, the sector that accounts for 75 percent of the country’s exports, is facing an acute shortage of skilled labour, with industry leaders warning the problem will seriously hamper future growth.
According to figures from two of the country’s major trade associations the sector is now facing a 25 percent shortfall of skilled workers and it will take several years to set up courses and institutions to provide the necessary human resources.
The alarming figure was revealed in a study by the Bangladesh Knitwear Manufactures and Exporters Association (BKMEA) and backed up by the Bangladesh Garment Manufactures and Exporters Association (BGMEA).
According to factory owners the dearth of skilled workers is due to several factors. They many experienced women workers quit the factories after they marry in order to raise their families. Women make up 80 percent of the RMG workforce.
Skilled men on the other hand often use their solid employment records as a springboard to work abroad.
Labour leader said the willingness of skilled workers to leave the trade reflected the lack of social recognition of garment jobs, low wages and poor working conditions.
Another factor causing the shortage has been the rapid growth of the industry. In the 10 months to April 30th exports of RMG products were up 15 percent as opposed to what it has been a year earlier and factory owners are reporting continued robust orders.
Recently, owners of Noman Group, Standard Group, Nassa Group and Viyellatex Group, few of the country’s largest RMG exporters, announced major recruitment drives in order to hit export targets. All have complained that they are not getting skilled manpower for running their factories.
Nurul Islam, Managing Director and Chairman of Noman Group, said the company was seeking to employ an additional 8,000 staff. Although many of these position are for non-skilled and semi-skilled workers many of the key roles need to be filled by skilled workers.
“I am really feeling the shortage of skilled manpower in the local labour market,” Nurul Islam said.
“I have had to hire highly skilled workers from Pakistan and the Philippines to run my factories,” he said.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Anwar-Ul-Alam Chowdhury Parvez said the dropout rate of garment workers is 35 percent a year.
He said the dropout rate is higher in the case of female workers as they go back to their family life after marriage. At present, of the total number of 2.4 million garment workers 80 percent are women workers, he said.
Against this backdrop both BGMEA and BKMEA have set up several training centres
The BGMEA runs 6 training centres in Dhaka, Gaibandha, Bogra and other districts to train up to 120 workers per month in each centre.
“We are going to set up three more training centres in Mymensingh, Sirajganj and Tangail this month to train more workers for the factories,” Parvez said.
Parvez said they have a target of exporting RMG products worth US$25 billion a year by 2013, but this will only be possible if skilled manpower, political stability and smooth supply of gas and power in the factories can be secured.
BKMEA opened a centre in Rangpur last March to train up 120 workers a month and is looking to set up additional centres at Savar.
Falling prices, higher costs hit RMG sector
June 14, 2008
The continuing downward pressure by international buyers on clothing prices is hitting profitability in the Ready Made Garment sector and undermining efforts to improve working conditions, industry leaders have warned.
Despite increases in costs of around 15 per cent in the last year intense competition in the sector has meant producers have been unable to pass the higher costs on to buyers.
In fact unit garment prices have fallen by between 1-2 percent in the past 12 months according Mustafizur Rahman, an economist at the Centre for Policy Dialogue.
In order to try and stem falling prices leading Bangladeshi garment manufacturers have launched a campaign and will press the major international buyers at a meeting later this month.
However economists said in such a fragmented industry it will be difficult for suppliers to force increases.
Fazlul Hoque president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said the issue would be addressed at a two-day meeting involving international buyers to be held in Dhaka June 28 and 29.
The meeting of the MFA Forum brings together public institutions, labour and civil society organizations and businesses. It was set up following the end of quotas under the Multi-Fibre Arrangement in 2005.
Executives from the major buyers including Wal-Mart, JC Penny, GAP, H&M, and Tesco are expected to attend.
“In the past year the fall has been 1-2 percent but over the past five years we have seen a fall in prices of more than 10 percent in the knitwear sector and the price fall in woven products has been even higher,” Hoque said
Nazma Akthar, a founder of the Bangladesh Independent Garment Worker’ Union Federation said international buyers are reducing prices all the time.
“Then they say how important compliance is for them. It’s a mockery, you can’t take what they say seriously.”
She questioned how conditions could improve when a pair of jeans was now being sold at a major UK chain store for $6, when a few years ago they had been retailing for more than double the amount.
Hoque said manufacturers have been following social compliances as per the recommendations of the buyers, yet the buyers were now not increasing prices. “They should also follow ethical buying practices,” he said.
He said the price index of exportable apparel items declined by more than 1 percent over the last fiscal while the cost of doing business in Bangladesh particularly in ready-made garment sector increased by 15 percent.
According to the industry, the erratic gas and power supply, higher freight charges both in local and international markets, the yarn price hike, implementation of the minimum wage for workers, higher transport costs and higher prices of capital machinery were the main reasons for the higher cost of doing business over the last year.
Hoque said recently exporters have been considering fixing a baseline price for some basic items to avoid unhealthy price competition.
CPD’s Mustafizur Rahman said that in Bangladesh it is often a ‘race to the bottom’ and buyers are able to force prices down.
“The manufactures are trying to produce a united front but it is so difficult and there are so many exporters and producers, “ he said.
“If some of the big players can unite they may have a chance,” he added.
Other economists said the only way out for the industry was to focus on improving productivity.
RMG exports account for around 75 per cnet of the country exports. Knitwear, the largest export earned $3.913 billion during July-March period of the current fiscal, marking a 17.34 percent growth over the same period of the previous fiscal.
During this time, woven garments earned $3.770 billion, a 7.54 percent growth over the same period of the previous fiscal.
Manufactures have been able to increase export earnings despite falling prices by raising the volumes of exports.
Budget lacks direction relating to long-term plans: BGMEA
June 14, 2008
The country’s major exporters’ associations said the proposed budget lacks direction relating to long-term plans on improvement of nagging power situation and development of infrastructure and human resources.
“Development of infrastructure, human resources and improvement of power situation through initiating long-term plans should have been given importance in the next fiscal year for sustainable economic growth,” said Anwar Ul Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), after holding a discussion meeting on budget proposals with leaders of a number of exporters’ associations in the city Tuesday.
SM Shafiuzzaman, president of Bangladesh Association of Pharmaceuticals Industry, Saiful Islam, Leather goods & Footwear Manufacturers and Exporters Association of Bangladesh, Abul Quashem Haider, president of Bangladesh Sewing Thread Manufacturers and Exporters Association, Md Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association, Kazi Belayet Hossain, Bangladesh Frozen Foods Exporters Association, among others, took part in the meeting.
BGMEA president said: “Exporters observed that many industries will be forced to suspend operation unless the government takes measure to ensure undisrupted power supply.”
Answering a question, he said: “The meeting observed that the proposed budget is not at all export friendly.”
BGMEA president said it was observed in the meeting that interests of a number of major export earning sectors including silk, handloom, readymade garment, plastic, leather and frozen foods and pharmaceuticals were not properly protected through fiscal measures.
BGMEA president said exporters think that the government can engage private sector businessmen to develop infrastructure under Build Operate Transfer (BOT) basis.
“We can develop easily our infrastructure without money of World Bank and IMF if there is a will of the government to engage private sector businessmen under BOT system,” he quoted exporters as saying in the meeting.
Exporters think that there could be a fund in the budget allocation to help them get loan at the rate of 5-6 per cent to set up effluent treatment plant (ETP), he said.
BGMEA president said exporter’ associations have demanded equal tax holiday facilities for units located inside and out side the export processing zones.
Referring to the huge budget deficit in the new fiscal, he said exporters expressed their worry that the flow of industrial credit might fall as the government’s borrowing from banks is set to rise.
“We think that cash incentive for developing backward linkage industry should be increased,” he said.
BGMEA president said business leaders demanded that duty on import of spare parts should be waived, as there is no duty on import of capital machinery.
“Plastic industry should be allowed to import raw materials without bank guarantee.”
Budget receives mixed reaction from textile sector & exporters
June 14, 2008
The budget for 2008-09 released yesterday received mixed reactions from the recipient industries. Mr Mirza Azizul Islam, Finance and Planning Adviser proposed a further reduction in the present concessionary rate of duty on import of capital machinery and spare parts from 5 to 3 percent.
Mr Mirza also proposed a reduction of import duty on basic raw materials from 10 to 7 percent and an additional 3 percent decrease on intermediate raw materials bringing it from 15 to 12 percent. Besides, the Finance Minister also provided for bonded warehouse facilities to all 100 percent export oriented industries along with an allocation of Tk1,050 crore as export subsidy.
However, the duty on finished products which was considerably high at 25 percent remained unchanged for the budget 2008-09. Industrialists in readymade garment and machinery sector were particularly appreciative of the new budget.
Rising knitwear exports on track to exceed targets
June 11, 2008
The sharp rebound in knitwear exports shows no signs of letting up, with the weak dollar, peaceful political environment and aggressive marketing helping the sector to exceed export targets.
In April exports of knitwear reached $479 million, shot up 47 percent on the same month a year earlier. In the period July-April knitwear exports totaled $4.393 billion, up 20 percent on a year earlier, according to figures from the Export Promotion Bureau.
Knitwear is the country’s largest single export item and together with woven products accounts for more than 75 percent of the country’s export earnings.
The surge comes following a relatively weak 2006-7 when Ready Made Garment exports failed to reach targets partly as a result of prolonged periods of political and industrial unrest. Things got worse in July, the first month of the 2007-8 fiscal year when the impact of the political disruption earlier in 2007 started to be felt by exporters.
Exports started picking up again from September 2007 due to the restoration of political calm and a sharp reduction in the levels of labour unrest following the implementation of the minimum wage for the garment workers, said a major exporter yesterday.
Another manufacturer pointed to the success in marketing Bangladeshi products to buyers from the US, but also to the new markets that are developing such as Poland, Russia and Uzbekistan.
But key to the success has been the weakness of the US dollar against the currencies of many of Bangladesh’s main rivals, China, India and Vietnam.
The export of woven products has also shown a strong improvement since September and in April reached $415m, up 34 percent on the same month a year earlier.
However woven exports now lag knitwear as the latter is able to take advantage of domestically produced inputs such as local yarn. This cuts lead times and makes producers more attractive to international buyers.
In July-April period woven garment products worth $4186 million were exported, up 10 percent on a year earlier.
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Anwar-Ul-Alam Chowdhury Parvez said buyers were coming back to Bangladesh to import low priced basic garment items.
The restoration of the political stability had allowed foreign buyers to regain confidence in Bangladesh, he said.
“Another thing is that there was no lean period of sweater production for Bangladesh last year. Generally December-March is a lean period, but this year there was no such lean period due to the lengthy winter season,” Parvez said.
He said the country will maintain 20 percent export growth of RMG products up to 2013 provided that there is no political unrest and that a smooth supply of gas and power are provided.
Reefat@thedailystar.netpply of gas and power in the industrial sector.
At the end of the fiscal the woven sector may hardly have a shortfall by 1.5 percent against the government set woven export target, as the sector is regaining vibrantly.
US envoy visits Ctg garment factory
June 11, 2008
CHITTAGONG, June 07: With a view to ascertaining opinions on formation of trade union, Referendum-2008 was held at Familytex (BD) Limited, a one hundred per cent export-oriented joint venture garments factory at Chittagong Export Processing Zone (CEPZ) Monday.
US Ambassador in Bangladesh James F Moriarty, during his three-day visit to Chittagong, observed the poll.
BEPZA Executive Chairman Brigadier General Jamil Ahmad Khan and other high officials of CEPZ and the US embassy accompanied the US envoy. Familytex Managing Director Abdul Hamid and Executive Director Subrata Biswas greeted the guests at the factory.
They visited the factory and witnessed the process of casting of votes.
The US envoy was delighted to see the enthusiasm of the workers of the factory, factory sources said.
Budget lacks direction relating to long-term plans: BGMEA
June 11, 2008
The country’s major exporters’ associations said the proposed budget lacks direction relating to long-term plans on improvement of nagging power situation and development of infrastructure and human resources.
“Development of infrastructure, human resources and improvement of power situation through initiating long-term plans should have been given importance in the next fiscal year for sustainable economic growth,” said Anwar Ul Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), after holding a discussion meeting on budget proposals with leaders of a number of exporters’ associations in the city Tuesday.
SM Shafiuzzaman, president of Bangladesh Association of Pharmaceuticals Industry, Saiful Islam, Leather goods & Footwear Manufacturers and Exporters Association of Bangladesh, Abul Quashem Haider, president of Bangladesh Sewing Thread Manufacturers and Exporters Association, Md Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association, Kazi Belayet Hossain, Bangladesh Frozen Foods Exporters Association, among others, took part in the meeting.
BGMEA president said: “Exporters observed that many industries will be forced to suspend operation unless the government takes measure to ensure undisrupted power supply.”
Answering a question, he said: “The meeting observed that the proposed budget is not at all export friendly.”
BGMEA president said it was observed in the meeting that interests of a number of major export earning sectors including silk, handloom, readymade garment, plastic, leather and frozen foods and pharmaceuticals were not properly protected through fiscal measures.
BGMEA president said exporters think that the government can engage private sector businessmen to develop infrastructure under Build Operate Transfer (BOT) basis.
“We can develop easily our infrastructure without money of World Bank and IMF if there is a will of the government to engage private sector businessmen under BOT system,” he quoted exporters as saying in the meeting.
Exporters think that there could be a fund in the budget allocation to help them get loan at the rate of 5-6 per cent to set up effluent treatment plant (ETP), he said.
BGMEA president said exporter’ associations have demanded equal tax holiday facilities for units located inside and out side the export processing zones.
Referring to the huge budget deficit in the new fiscal, he said exporters expressed their worry that the flow of industrial credit might fall as the government’s borrowing from banks is set to rise.
“We think that cash incentive for developing backward linkage industry should be increased,” he said.
BGMEA president said business leaders demanded that duty on import of spare parts should be waived, as there is no duty on import of capital machinery.
“Plastic industry should be allowed to import raw materials without bank guarantee.”
Analysis : Bangladeshi garment workers get low wages
June 11, 2008
Indian workers employed in the garment manufacturing sector get the highest wage, while Bangladeshi workers are at the bottom of the heap among South Asians, a study says. Among the South Asians, Indian garment industry gets the highest at 51 US cents per hour.
In comparison, at 22 US cents per hour, a Bangladeshi worker gets a fourth of the 86 US cents that his Chinese counterpart takes home.
Two Tiger economies pay much more. The average wage of a garment worker is $1.07 in the Philippines and $1.18 in Malaysia, says Global Apparel Manufacturing Labour Cost Update 2008, prepared by US-based consulting house Jassin-O’Rourke Group.
The study shows that the average hourly wage of a garment worker is $0.51 in India, $0.44 in Indonesia, $0.43 in Sri Lanka, $0.38 in Vietnam, $0.37 in Pakistan and $0.33 in Cambodia.
Readymade garments and knitwear manufacturers are Bangladesh’s highest foreign exchange earners, but the working conditions and low wages have led to frequent violence, causing deaths, injuries and damage to factories.
International labour organizations have blamed it on the employers’ unwillingness to implement wage agreements.
The study quoted Dhaka’s labour leaders as observing that the Bangladeshi workers were being deprived while factory owners claimed they could not make much profit because of low payments from the importers.
“Tales of miserable wages for Bangladeshi garment workers are not fresh any more,’ said Nazma Akter, a Bangladeshi labour leader, who represents the Garment Workers Unity Forum, a combine of 21 labour organizations, New Age newspaper said.
Budget to Continue Cash Incentive for Knit Export.
June 11, 2008
Finance Adviser Dr Mirza Azizul Islam Wednesday assured knitwear exporters of continuing 5 per cent cash incentives for their exports in the next budget.
He gave the assurance to a delegation from Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), as they had a meeting with the Adviser at NEC conference room.
The Adviser has confirmed us that the 5 per cent cash incentive will continue in the next budget, BKMEA president Fazlul Haque told reporters after the meeting.
The cash incentive for the apparel exports was scheduled to be phased out in the outgoing fiscal year.
The BKMEA delegation, led by its president, requested the Finance Adviser to increase the incentive from the existing 5 per cent to 7.5 per cent, but the Adviser convinced the delegation of resource constraints.
“I’ll consider keeping the allocation for subsidy of 5 per cent,” Dr Aziz told reporters.
The Adviser also assured the knitwear exporters of his intervention to get the outstanding incentives of the outgoing fiscal year released as well as to consider any proposal through appropriate ministries to set up a knit village.
He would also intervene in a particular banks unwillingness to reschedule the default loan cases of the knit apparel sector as per Bangladesh Banks guidelines for rescheduling of loans.
Replying to a question, the Finance Adviser said he would like to see that the PCBs commitment to charge 14 per cent interest rate on term and working capital loans is implemented first.
“We’ll then consider lowering further the lending rate if the rate of inflation declines by this time,” he said, adding that the commercial banks would face difficulties in mobilising deposits due to the current inflation.
BGMEA seeks spl favour from SCBs for sick RMG units
June 9, 2008
The country’s apparel factory owners have requested four state-owned commercial banks (SCBs) to waive interests on overdue loans recoverable from sick readymade garment units.
They also urged the chief executives and managing directors of the SCBs to reschedule the principal amounts of loans taken by the sick factories without down payment for the next 10 years on a case-to-case basis.
However, the SCBs told the apparel sector’s leaders that the banks would consider waiving of such interests only if the RMG units concerned agreed to pay the cost of fund.
The appeal was made by the leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) at a meeting with the chief executive officers (CEOs) and managing directors of the SCBs held at its office Saturday with BGMEA President Anwar-ul-Alam Chowdhury in the chair.
During the meeting, the top executives of SCBs suggested the leaders of BGMEA to persuade the Bangladesh Bank and Ministry of Finance for issuing a specific order only for the readymade garment sector in this connection.
“We have requested the top executives of SCBs for taking measures to waive all interests of the sick RMG units,” BGMEA President Anwar-ul-Alam Chowdhury told the FE.
A total of 270 apparel units have been identified as sick. Of them, 88 sick units received loans from 29 private commercial banks.
The BGMEA chief also said the executives have assured them of looking into the matter on case-to-case basis.
“We may waive interest of the sick units after adjustment of the cost of fund on case-to-case basis,” Chief Executive Officer of the Agrani Bank Limited Syed Abu Naser Bukhtear Ahmed told the FE.
The BGMEA may create a fund with contribution by their members to revive their sick units, he suggested.
Among others, CEOs of Sonali Bank Limited SA Chowdhury, Janata Bank Limited SM Aminur Rahman and Managing Director of Rupali Bank Limited Abdul Hamid Mia were present at the meeting.
On May 18 last, the country’s PCBs decided to waive all interests of 88 out of 270 sick readymade garment units and reschedule their principal amounts within the next 10 years on a case-to-case basis.