Recent unrest in garment industries
July 7, 2009
RISING incidents of violence continues to hit the apparel sector in the country. Over the last few weeks, agitation among the readymade garments (RMG) workers flared up in Ashulia, Savar, Gazipur and surrounding areas. Many garment units were burnt and damaged by the unruly mob resulting in colossal damage to properties. Some people were killed and hundreds injured in these incidences of vandalism. Two RMG units of famous Hameem Group were set ablaze.
Why are these happening so frequently? Why are RMG units being targeted? Some experts say rising prices of essentials, unpaid salaries, government’s inaction and absence of responsible trade unions are some of the reason responsible for the rising violence in the sector. There are many other reasons cited by them. Absence of good relations between workers and owners, misbehaviour of mid-level officials and deferred payments to workers are some other problems that dog the embattled sector.
However, a number of RMG entrepreneurs claimed that administrative failures of the government, ‘conspiracy’ from outside and lax implementation of law and order were to blame for the violence. They demanded exemplary punishment to the ‘real culprits’ and introduction of industrial police to back bring normalcy to the sector. They said unrest must be stopped at any cost as the sector is considered one of the main pillars of the economy.
Reports say recent unrest in sweater factories in Ashulia originated from anomalies in the count of sweater items made by workers and the records of some mid-level officials. Officials attempted to pay less by forging the actual production list of items produced over the month. On the most recent violence that took place at Konabari in Gazipur, reports say hundreds of workers took to the streets when they heard that the police had arrested some workers of a particular garments factory for their alleged involvement in vandalism. The police fired several rounds of teargas shells and rubber bullets in Konabari to tame the demonstrating workers who reacted violently to the news of the arrests of workers. The unrest spread like forest fire to other factories.
There are allegations that a vested group is behind the violence in the garments industry. Proper investigation into such allegations should reveal the truth. Very often, the agitating workers are being aided by some unknown outsiders. Who are they? Nobody knows for sure. Statistics say 147 of the 4,500 garment factories across the country had been affected from January to August 19 last year. In most cases, groups of outsiders vandalised the factories — sometimes in the presence of law enforcers — in the name of workers.
Addressing a recent meeting, Industries Minister Dilip Barua said there is no alternative to introducing participatory committee in every factory to avert violence. If every industry introduces participatory committee or bargaining association in line with the existing laws, there will be better interactions between workers and owners, which would help reduce problems regarding wages and working hours, he added. The minister also called for developing social corporate responsibility to ensure a win-win situation for workers and owners. Moreover, there is a need for recruiting more educated and trained people at mid-management level to solve problems.
The apparel sector, for the last couple of decades, have been the lifeline of Bangladesh’s economy. At the last count, the sector accounted for nearly 80 per cent of export earnings. Consequently, it provides profits for the currently surging consumer class that drives the economy further forward and jobs for hundreds of thousands of semi-skilled workers, mostly women, who in turn provide livelihood for millions.
Many studies during the fag end of Multi Fibre Arrangement (MFA) concluded that Bangladesh would suffer massive job losses and depletion of foreign exchange earnings as a result of enhanced competition in the international market. One of the studies revealed that the sector had not been able to bring about any substantial improvement and modernisation of its work force worth noticing. It was observed that many factories in Dhaka and Chittagong have neither canteen facilities nor day-care facilities for the children of their female workers in particular. Many of the factories do not have common room facilities for the workers. On the other hand, a mere 40 to 50 per cent of the workers of comparatively larger factories are issued with formal employment letters while nearly 70 per cent of workers in the entire RMG sector do not have any employment letter.
However, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) opposed such views and contended that conditions had much improved from 2007 and onwards. However, there is no denying the fact that a widespread undercurrent of discontent does exist now amongst the workers. Unfortunately, there have been no concerted efforts by all concerned, particularly the owners of the industry, in addressing an issue that is central to the current turmoil in the RMG sector. Alleged government’s inertia in tackling such problem is also seen responsible.
In terms of labour costs, Bangladesh is well positioned and compares favourably with other Asian countries. The per hour cost of labour in Bangladesh is $0.25, compared to $0.27 in Indonesia, $0.34 in Pakistan, $0.46 in Sri Lanka, $0.48 in China, and $0.57 in India. However, wages are currently being revised to bring them more in line with the escalating cost of living and expectations of workers, as a result of which labour costs will increase. But there is much more to productivity than the cost of labour.
The challenges facing the Bangladesh garment industry are enormous. In order to thrive, the industry will need to get regular orders from international buyers. These buyers are primarily interested in three factors: price, lead time, and quality. But other factors are also important, such as financial capacity of manufacturers, labour compliance standards, customer base, vertical setup, design and product development capability, advanced production facilities, dependability, and long-term business relationship.
Many exporters have reasons to believe in ‘conspiracy theories’ where the image of Bangladesh is being deliberately tarnished for some competitors’ gains. Some media outlets abroad are frequently reporting on Bangladeshi garment sector’s non-compliance with international standards, by selectively exhibiting the sick industries in and outside Dhaka. In fact, more than 70 per cent of the factories are compliant, yet the media outlets are only showing the problem factories.
The lead-time on delivery issues matters most in the RMG export trade. In the beginning, the lead-time was 120-150 days but in 2008, this was reduced to 40 to 60 days. China requires only 30 days due to their textile and other backward linkage facilities as well as export-friendly policy. There is a need to set up a central bonded warehouse for woven and grey fabrics in order to help the manufacturers collect the fabrics within seven days from the issuance of LCs and thus reduce lead-time.
The country earned $14.110 billion in exports in fiscal 2007-08, registering growth of 15.87 percent over the previous fiscal year. Exports were boosted mainly by a rebound in readymade garment sales. Of the total export earnings, only woven and knitwear, the two sub-sectors of RMG, fetched $10.699 billion during the last fiscal year. In 2007-08, woven garments fetched $5.167 billion, registering growth of 10.94 percent over the same period of 2006-07. A relatively peaceful political environment, appreciation of currencies in many countries against the dollar and aggressive marketing drives helped the RMG sector maintain the export boom.
In order to survive and flourish in the increasingly competitive global garment trade, reforms need to be undertaken and the main actors need to join forces to build a competitive RMG sector in Bangladesh. It is crucial for the different actors of the sector to hold dialogues amongst themselves with the purpose of identifying the main issues that constrain the industry and reaching agreement on activities that need to be carried out in order to improve the sector’s competitiveness.
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