Power outages risk thousands of jobs in the manufacturing sectors

April 14, 2010

Unabated power shortage is risking thousands of jobs in small and medium sized manufacturing factories in Bangladesh as factory owners are forced to apply the manpower downsize option to make up their losses.Manufacturers in major cities like Dhaka, Chittagong, Sylhet, Jessore and Bogra are struggling to meet the growing operational costs and losses due to non-availability of electricity by halving the daily working hours.
They said overall production costs had gone up significantly to due to running diesel fired electricity generators amid random failure of the national power grid, which is forcing them to downsize manpower to make up their production losses.
Nearly 40,000 light engineering factories have been affected badly like other manufacturing sectors like plastic, leather, iron and readymade garment industries, said Bangladesh Light Engineering Owners Association president Abdur Rzzak.
Many factories had already been closed down because of heavy losses while those were in operation have been forced to cut manpower to keep down production costs, he told New Age.
Experts and chamber bodies termed the scenario ominous for the county where the rate of unemployment is very high with some 2.7 million young people becoming eligible for jobs every passing year although only 0.7 million of them can be absorbed.
International Labour Organisation (ILO) in a report last year pointed out that Bangladesh was at the twelfth position among the top twenty countries in the world where unemployment was rising.
Job cuts would lead to social problems when the creation of new jobs remained almost suspended in last two years because of sluggish foreign and local private investment, they said.
Foreign direct investment has nosedived to only US$ 197 million for the period of July-December of 2009-10 fiscal year against US$ 603 million during the same period of the last fiscal year, declining by 64 per cent.
Excess liquidity in the banks has been more than Tk 25,000 crore because of lack of investment by local private investors.
Metropolitan Chamber of Commerce and Industries, the country’s oldest chamber body, has already expressed concern, saying the surging unemployment could create social problems.
The country’s leading economist and trade experts on Monday in a pre-budget discussion with finance minister AMA Muhith suggested for stimulus package in favour of the manufacturers to help them make up their production losses.
Center for Policy Dialogue executive director Mustafizur Rahman pointed out that the small and medium enterprises were facing tough competition because of energy shortage. They are facing unequal competition from imported products, he said, adding that additional financial support was essential for them.
An official of the Sun Rise Engineering in the capital calculated that a factory owner had to bear additional cost of Tk 1,000 per day on diesel to run the generators for at least five hours a day.
The additional electricity cost is equivalent to wages of at least four employees, he said, adding that they had been hard pressed with the rising production cost.
Leaders of export oriented readymade garment sector last week asked the finance minister for interest free loans for installation of electricity generators and diesel at subsidised rate until the improvement of power situation.
The acute power shortage has slowed down the country’s manufacturing sectors including RMG which accounted for 80 per cent of the country’s US$ 15.5 billion exports income during last fiscal.
The international Monetary Fund on Monday projected that Bangladesh’s economic growth would be around 5 per cent, lowest in last seven years, in the backdrop of sluggish export growth caused due to energy shortage.

Power outages risk thousands of jobs in the manufacturing sectors

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