Apparel sector: A 'laundry list' for next BGMEA leadership

thinking loud

Apparel sector: A 'laundry list' for next BGMEA leadership

Published : Tuesday, 05 March 2013, FE  

Mamun Rashid

Be it the issue of human resources or industrial relations or labour standards or minimum wage or productivity improvement or safety and security of workers, Bangladesh got to address all issues in its apparel sector in order to maintain its `edge' in the global apparel 'supply chain'.

The country entered the apparel export market in 1978 with only 9 units in operation. During the last three decades this sector has achieved a phenomenal growth, mainly due to dynamism of the private sector entrepreneurs receiving government's policy support. Now the number of RMG units is around 5,000 and the export earnings have exceeded USD 19 billion with 145 countries using 'made in Bangladesh' knit garments and 126 countries using `Bangladesh' woven products. Analysts at home and abroad are convinced- Bangladesh apparel export can be more than doubled by 2020.

RMG roughly covers 76 per cent of the total export of the country and it is the highest revenue earning industry in the economy. There are around 3.6 million workers, out of which 80 percent are women. Marketing 'Guru', Philip Kotler when asked on `Bangladesh Branding', didn't even spend one minute time to come back with `it got to be in and around its' ready-made garments'.

Despite all these achievements, we just cannot overlook the major issues and problems facing the industry, especially the RMG workers. The common identified problems facing the RMG workers are low wage, low productivity irregular payment, overtime under duress, poor working environment, physical and sexual harassment, termination; more importantly, accidents and deaths due to the safety and security related failures along with ` positioning of the manufacturing plants'.

Low wages have traditionally been a major strength of Bangladesh's labor-intensive apparel sector. The hourly wage rates in Bangladesh's apparel sector are lower than those in China, Vietnam and Sri Lanka. According to unofficial sources, only a few owners of garment factories pay the monthly wages and overtime bills to their workers in time and look after the welfare of the workers. In absence of weekly holiday the workers; their families and their children are all being severely affected both mentally and physically.

Most garment factories in Bangladesh have no minimum safety measures, including the required number of fire extinguishers, not to talk about the public address (PA) system. Most factories do not conduct the required monthly evacuation drills. The recent incidents in Ashulia have again proved most allegations about RMG unit owners true.

One may raise a valid question: why should there be frequent fire incidents in garment factories alone when there are hundreds of other factories across the country? The answer is not that difficult to find. Most of the garment factories are housed in rented premises at commercial or residential areas. These buildings have not been built to accommodate factories having all the safety measures. According to unofficial sources, most of the garment factories in Bangladesh lack proper industrial approval. Thousands of buildings escape scrutiny because the building inspection system is old and ineffective.

Many issues concerning the Bangladesh RMG surfaced from time to time, the first being the child labour issue. An influential US labour organization forced the government and the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) to address the child labour issue. They had to phase-out child labour from RMG units and create facilities for their rehabilitation and schooling.

There is no denying that employers do enjoy upper-hand (Competitive advantage)in Bangladesh labour market where every third person is either unemployed or under-employed. But for the sake of better and quality output, the owners themselves need to be more aware of keeping their workforce` happy' by providing them with reasonable pay and ensuring other basic necessities. It goes below the dignity of any nation if the outsiders force its factory owners to comply with their own demand relating to better wages, freedom of associations for the workers and improved working condition.

In perspective of all these, we have to evaluate the situation with clear responsibility and judiciously. There is no way that the leaders of the RMG industry ignore the grievances of the workers. They can no longer afford to refrain from investing in the welfare of their workers and workplace. They would have to immediately look into some critical issues. A barrier to bring in change in the Bangladesh RMG industry is the lack of understanding among the management of global pressures to improve labour standards. There is a need for rigorous training on industrial relations, human resource management, factory management, disaster management and continuity of business at the supervisory level to build more educated manpower instead of only 'skilled' ones. More emphasis on gender issues is needed, as RMG sector middle management is predominantly female. The absence of hard evidence about the links between implementing core labour standards and increased profitability makes it difficult to establish the business case in support of improved labour standards. Besides, concentration of 'global sourcing' in the hands of the few entities/buying houses/biggies ( A very important person) only have further aggravated the situation.

RMG sector in Bangladesh has come a long way in last two decades. The industry has crossed many hurdles to stay competitive. It has proved many predictions wrong, and competed fiercely even after the abolition of quota. The credit for that achievement goes to both the entrepreneurs and the labourers; may be to the government too. Taking that fighting spirit ahead, the RMG sector must formulate an equitable solution for all the parties involved and ensure a better future for all concerned. The near term reality for a country like Bangladesh is that it would continue to be competitive in terms of cheap labour, unless it can improve its infrastructure, reduce financing cost and fix the domestic economy dramatically as well as manage a shift to quality through better productivity and efficiency; more importantly by fixing the 'managerial gap' in this sector.

The largest `single industry based' trade body-BGMEA is all set to choose its' new leadership soon. Apart from the challenges mentioned above, the sector needs to attend emerging issues like- 1) reducing the financing or banking expenses by accessing foreign sources, 2) assist its' members to expand their 'foot print' in the neighboring countries by taking benefit of market reforms or liberalization 3) get the development partners more engaged in the `graduation' process of the industry, 4) come out as a respectable `stakeholder' in charting out a definitive goal for `private sector lead' growth and more importantly 5) combat all safety, security, negotiation with the big buyers/sourcing entities and emerging global issues as a `team'.

We wish the 'new leadership' all the very best, because `they are too big to be ignored' and a large part of our future is dependent on their performance.

Mamun Rashid is a banker and economic analyst.