Bangladesh clothing industry struggles with less pliable workforce

By Anbarasan Ethirajan

 

Majeda Akter Toma had many dreams when she started working in a garment factory near the Bangladeshi capital Dhaka about five years ago.

Recent protests by labourers in Bangladesh turned violent and damaged some factories

Though her wages were low, she thought the job gave her an opportunity to escape from grinding poverty in her village in north-western Bangladesh. A family of five depended on her earnings.

Now she's decided to go back to her village.

"In the last two years, food prices have doubled and our house rent has been hiked by more than 50%," she tells the BBC.

"But our salary did not go up. We are struggling to make our ends meet.

"At least, in our village we can live in our house and don't have to pay any rent. If we work as a farm labourer, we can have three decent meals a day," she adds.

Growing discontent

Ms Toma is one among a growing number of workers who are either leaving their jobs and going back to their villages or trying for employment opportunities to work in the Middle East or Southeast Asia.

Though the number is still small, there is little doubt that the frustration and discontent has been growing among millions of workers.

In Bangladesh, the minimum monthly wage for garment workers is around $38 (£24), at current exchange rates. Trade unions claim its the lowest wage in the world for this type of work.

However, factory owners are in no mood to increase workers' salaries immediately. They point out that just two years ago they had agreed to raise the minimum wage by almost 80%.

They say if they match the union's demand, then they will go out of business.

"Look at the world economic situation. The demand for apparel is not increasing and at the same time our production cost has gone up by 12% last year," says Shafiul Islam Mohiuddin, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"But we are not getting better prices from the buyers."

Biggest employer
The rising discontent among workers is a big cause of concern, not least because of the importance of the sector to Bangladesh's overall economy.

The garment manufacturing sectors is the biggest employer in Bangladesh

Availability of cheap labour has been one of the key reasons the industry has flourished over the past 30 years. It is now the biggest industrial employer in this impoverished nation.
More than 3.5 million people, most of them women, work in around 4,500 factories around Dhaka and in other parts of the country.

Last year, the country exported around $18bn dollars worth of ready-to-wear clothes, mostly to the European Union and the United States.

International retailers and brands such Wal-Mart, Marks & Spencer, JC Penney and Carrefour source their clothes from Bangladesh.

And as labour costs in other parts of the region, such as China, increase, more global brands are turning to Dhaka to get their products made.

Analysts say that for sustained growth of the sector, manufacturers need to share more of their success with the workers.

"The garments industry in Bangladesh is a success story. But workers think despite being part of the success, they are not feeling the benefits adequately," Dr Debapriya Bhattacharya, a senior economist at the Dhaka-based think tank, Centre for Policy Dialogue, tells the BBC.

"The industry is in the process of getting more new high-value products into new markets. In order to meet the productivity growth, we need to pay the workers better."
'Unprecedented and worrisome'
The calls to sort out the issue with workers have increased even more after the recent labour unrest in the industrial suburb of Ashulia, near the capital Dhaka, which came as a rude shock to the sector.

A number of factories were damaged when tens of thousands of workers, demanding better pay and conditions, clashed with security forces.

More than 300 garment factories were shut down for a few days following the unrest. They were reopened after the government promised them security.
Industry watchers say the violent nature of the protest was "unprecedented and worrisome".

The recent abduction and killing of a trade union activist has only added to the insecurity of the workers. The activist, Aminul Islam, was campaigning for better pay and wages.
His colleagues say his murder in April this year was a warning to those protesting against the low wages and working conditions in the industry.

The government says it is willing to mediate between workers and factory owners but admits that continuing workers' protests will harm the image of the industry abroad.
"There is no doubt protests of this magnitude will definitely send a wrong message," says Khandaker Mosharraf Hossain, the Bangladeshi Labour Minister.

Consultancy firm McKinsey & Company has said that Bangladesh can double its garments exports in the next 10 years and that the country has the potential to become a sourcing hotspot.

But the growing labour discontent is posing a serious challenge to the Bangladeshi clothing industry's attempts to gain ground and analysts warn that it may do irreparable damage to the sector.

"If this is not resolved soon, there's the threat that because of the very nature of this industry, the orders and demands may shift to other countries," warns Dr Bhattacharya of Centre for Policy Dialogue.

- BBC News, Dhaka, 17 July 2012

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Old Dhaka’s Cloth Merchants Finance Highway Robberies

Unscrupulous cloth merchants in Old Dhaka are allegedly financing the robbers to hijack trucks and covered vans laden with fabrics imported by RMG units from highways, detectives revealed it Friday after arresting a gang of criminals.

The plainclothes police said several organised gangs in Chittagong Port provide specific information about such heavy vehicles to highway robbers continuously over phone helping them to commit the crimes, which cost the garment makers high.

Detective Branch (DB) of Police in separate drives raided various parts in Keraniganj, Nawabganj and Islampur of the capital Thursday and arrested seven alleged members of inter-district robbers. They also recovered a covered van laden with imported fabrics worth about Tk 25 million from their possession.

The criminals hijacked the vehicle of Rio Fashion and Rio Design Ltd from the city's Agargaon area in the early hours of December 19 on its way to the garment factory located at Mirpur from the port city.

"After hijacking the vehicle the robbers sold the looted fabrics to cloth merchants in Old Dhaka for Tk 1.5 million," said senior assistant police commissioner of DB Mashiur Rahman, who led the drives.

The police official said a section of cloth merchants in old town were the main customers of the looted items. The police could detain two of such merchants.

"We need to further interrogate the arrestees to extract more information, which will help us to track down the ringleaders of the robbers," he added.

Arrested cloth trader Ebnul, who has a fabric shop at Islampur, told the FE that most of the traders in the older part of the city are interested to purchase the illegal products at cheaper rates to earn more profits.

"We've already paid Tk 1.10 million to the hijackers.

Islampur, Sadarghat and Keraniganj are the places where demand for such items is high," he said, adding that the robbers negotiate with the traders before going for a new operation.

Chairman of Rio Fashion and Rio Design Haruk Ahmed said they imported 68,000 metre fabrics to manufacture 50,000 pieces of shirts for the US brand Ecko.

"The incident forced us to seek more time for consignments as we're supposed to make delivery of Tk 250 million worth of orders in this week," he said, adding that the18-billion apparel industry will lose its image to the international buyers if government fails to stop such robberies immediately.

About 3,000 workers of the factory make clothing for top retailers like Wal-mart, Li and Fung, Target and Top Grade.

Expressing concern over the growing highway robberies, President of Exporters Association of Bangladesh Abdus Salam Murshedy said the government should step up police petrol on the highways to stem the robberies.

He said highway robberies has emerged as yet another hurdle for the sector, which has already been facing a tough time due to energy crisis and ongoing economic recession in the EU (European Union) countries.

"We need to amend the country's existing laws as the criminals come out from jails due to the legal loopholes and engage themselves in the same crime again and again," he added.

Law enforcers in 2010 arrested a gang and recovered a large amount of fabrics worth $0.3 million of Standard Group from the city's Banasri area. But the alleged robbers secured bail and came out from the prison.

Mr Murshedy, also managing director of one of the country's leading apparel groups - Envoy Group, said the exporters face difficulties in maintaining timely shipments due to such crime. "It is damaging the image of the country among the overseas business community."

According to the data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the RMG unit had to suffer immensely due to at least 25 major highway robberies over the last three years.

Garments accounted for nearly 80 per cent of the country's $22.93 billion exports in 2011-2011 financial year. The industry employs more than three million people. Most of the workers of garment factories are women.

News: 

 The Financial Express, Sat, 04/02/2012

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Bangladeshi apparel gains from China’s rising costs

Western brands such as H&M, Wall Mart, Gap and Next buy their clothes from Bangladesh

Even after 25 years, Faruque Hassan, still remembers the humiliation and embarrassment he faced when he ventured into garment exports, an unchartered territory in an impoverished country like Bangladesh.

Very few western nations would give him a business visa. On many occasions, he missed out on international trade fairs and key meetings with his western buyers as his visa didn't come through on time.

"Finally, when I went with some samples many western buyers were sceptical," Mr Hassan, who started a garment factory in Dhaka in 1985, told the BBC.

"They wouldn't even meet me. They couldn't believe that a country like Bangladesh can export clothes to rich western nations."

Western brands

Today, Mr Hassan runs nine factories across Bangladesh and clothes made in his factory are exported to Germany, Switzerland, Austria and Canada.

There are more than 4,500 garment factories across Bangladesh employing more than 3.5 million people, most of them women.

Major western brands like H&M, Wall Mart, Gap, Next and Marks and Spencer buy their clothes from Bangladesh.

What started in some humble concrete buildings outside the capital Dhaka has now become the country's key foreign income earner.

In the current fiscal year, Bangladesh exported more than $18bn (£11bn) worth of ready-to-wear clothes, amounting to nearly 80% of the country's overseas sales.

Bangladeshi entrepreneurs say their country has now become the second biggest exporter of ready-made clothes in the world after China.

Mr Hassan says when he first started he had trouble even getting a visa

A recent report by the accounting firm KPMG said that, with increasing labour costs, rising inflation and a strengthening currency, China was losing its foothold as the world's lowest cost manufacturer of consumer goods, and countries like Indonesia and Bangladesh had been the biggest winners.

Low wages

The success of the Bangladeshi apparel industry is mainly attributed to its low production costs, in particular its cheap labour.

The average monthly wage for a garment factory worker is about $43, whereas in China it's more than a $100.

"The closest to the Bangladeshi wage is in Cambodia, where garment workers get around $61 per month," says Zahid Hussain a senior economist with the World Bank.

"That's almost 50% more than the Bangladeshi wages. So, the labour advantage for Bangladesh is quite huge."

With a population of more than 150 million, Bangladesh is one of the most densely populated countries in the world.

With most people depending on agriculture for their livelihood, garment factories offer the highest number of jobs in the industrial sector.

The KPMG report said countries such as Bangladesh had an advantage in terms of their young work force.
While the average Chinese citizen is 34 years old, the average Bangladeshi by contrast is almost 10 years younger, and nearly half of the population of the country is of working age.

"In addition to the cheap labour cost, there is no doubt that Bangladesh is also benefitting from various preferential trade agreements," says Golam Moazzem, a senior research fellow at the Centre for Policy Dialogue in Dhaka.

The workforce in the Bangladeshi garment industry is dominated by women

"For example, the EU allowed duty-free access to Bangladeshi clothes in January this year."

The Bangladesh Export Promotion Bureau estimates that at the present level of growth, garment exports would reach $30bn by 2015.

But it says the growth also depends on the impact of the global economic crisis on major western nations.

Child labour

In the early days, for factory owners like Mr Hassan, finding workers was not a problem, but finding skilled and knowledgeable people was a big challenge.

He says factory managers spent hours educating their workers in the basic skills of cutting, stitching and operating sewing machines.

"It's not only the physical training," remembers Mr Hassan. "We had to teach our workers on simple things like how colour matters in dresses.

"In one of our first orders we ended up stitching a large number of pink colour dress for the boys and blue colour frocks for girls."

As Bangladeshi clothes started travelling far and wide, its labour standards also came under closer scrutiny.
The factories were accused of exploiting poor workers to produce cheap clothes, and in some cases using child labour to keep their costs low.

Labour unions say salaries need to increase

In 1995, UNICEF struck a landmark deal with the Bangladesh Garment Manufacturers and Exporters Association to end child labour in the garment factories following international threats to boycott the industry.
By 1998 more than 10,000 children were removed from work under the programme, and nearly 80% of them were enrolled in community-based schools.

Workers' unions say that, despite assurances from factories, working conditions still do not meet those standards in many outlets, especially outside the special export promotion zones.

They say workers are also not happy with the minimum wage announced in late 2010.

"Given the inflation and rising cost of living, it is increasingly difficult for a garment factory worker to survive under the present salary," warns Muhammad Touhidur Rahman, a Bangladeshi union leader.

"If their concerns are not addressed, we can see more labour unrest in the coming years."

The other big challenge for the garment industry is infrastructure bottlenecks.

Road and rail networks have become more congested in the last 20 years, and the country faces a daily shortage of about 2000MW of electricity - almost a third of its requirement.

"We are also worried about the global economic crisis," says Mr Hassan. "Since more than 80% of our exports go to the United States and the European Union, we are entirely dependent on them.

"If the crisis continues there, we will definitely be affected. So, our next challenge is to find new markets in countries like India, Japan and South American countries."

By Anbarasan Ethirajan
19 September 2011, BBC News, Dhaka

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Hamid Fabrics to go Public to raise Tk.150 crore fund for its Expansion Plan

Hamid Fabrics Ltd, a concern of Mahin Group, plans to go public to raise a fund of Tk 150 crore to implement its expansion plan as it is experiencing a surge in demand of its products from buyers' end.

The Narsingdi-based fabrics manufacturing factory will raise the fund to set up a yarn-dyeing unit having a capacity of producing 15 million yards of fabrics annually.

Construction of the new unit will start in Narsingdi in July or August, said Abdullah Al-Mahmud Mahin, managing director of Mahin Group.

Abdullah Al-Mahmud Mahin, MD of Mahin Group

Mahin said the group will float 4.2 crore ordinary shares at a face value of Tk 10 each and Tk 26 as premium per share. The Securities and Exchange Commission has already given the approval for private placement at Tk 36 per share on March. NDB is the issue manager of the company.

"We will go for private placement as soon as possible as the regulatory body has permitted us for it," Mahin added.

Total cost of the proposed unit will be Tk 125 crore and the group has a plan to pay off from the rest of the money that they receive from the market, Mahin said in an interview recently. The annual turnover from proposed project is expected to be around Tk 290 crore, he said.

"We strongly feel that a 50,000-spindle spinning facility worth around Tk 150-175 crore should be introduced soon after the yarn-dyeing project. This will enable Hamid Fabrics to be more self-sufficient."

The group's total turnover was Tk 350 crore in 2010-11 with a workforce of 2,000 people, he said.

Walmart, H&M, s.Oliver, Zara, M&S, Tesco, Uniqlo, Carrefour, Esprit, Gap, Next, Nike, Levis and Tommy Hilfiger are the major buyers for fabrics of Mahin Group.

"Gas pressure is not a problem in my plant. I haven't faced any gas crisis until now," he said. Currently, Hamid Fabrics has two units: weaving and dyeing and finishing. Moreover, the group also owns Hamid Weaving Knit Ltd and Mahin Apparels Ltd.

News Source: The Daily Star, Sun, 03/04/2011

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Half of New Investment Proposals for Textile, Chemicals Sectors

A total of 1184 industrial units for textile, 638 units for chemical and 525 units for engineering sectors were registered with the Board of Investment (BOI) over the last 26 months, an official of the BOI told the FE.

Such registered proposals accounted for more than 50 per cent of the aggregate amount involving private investment during the period, he added.

Proposed investments were also recorded in sectors like food and allied industries, printing, publishing and packaging, tannery and rubber products, glass and ceramics and service sector, he said.

"The investors are interested in the textile and service sectors, because these two areas are very much successful globally," another BOI official said, adding that nearly 0.350 million workforce would be employed according to the project proposals they received over the last 14 months.

He said most of the intending investors will set up their plants in Narayanganj and Manikganj as road, river and train communication will be available which are the key factors for industrialisation.

President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA) Shafiul Islam said the industry received a tremendous response from the local investors in recent time.

"It's a very good indicator for the country's industrial development. Immediate measures like uninterrupted supply of gas and power were needed to keep the momentum going," the newly elected president of the country's apex apparel body said.

Bangladeshi garment industry earned US$ 12899.21 in the period of June'09 to July'10, which accounted for nearly 80 per cent of the country's total export earnings.

It makes clothing for the world's top retailers like Wal-Mart, H & M, Tesco, Carrefour, Metro, Gap and JC Penney through its over 4,700 factories.

News Source: The Financial Expres, Tue, 29/03/2011

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