Bangladesh Clothing Industry, The Largest Business Hub

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The term ‘Made in Bangladesh’ is a sign of pride for workers, businesses, and consumers in the textile-clothing sector. Bangladesh is the second largest clothing exporter in the world. The contribution of this sector accounts for 80% of the country’s export earnings. This sector accounts for 23% of the country’s gross domestic product (GDP). The economy has grown nearly 6% per year since the mid-1990s. This growth has contributed to a young workforce. Since the arrival of the garment sector in the late 1970s, the country’s poverty rate has fallen from 70% to less than 25% in 2015. There seems to be a strong positive correlation between clothing export growth and poverty reduction. All these contributions are, more or less, linked to the country’s clothing industry.

The country’s RMG industry grew by more than 15 per cent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit rates from year to year. Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 per cent of those firms are locally owned with the exception of a few foreign firms located in export processing zones. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country. The share of knit garment products has been increasing since the early 1990s; such products currently account for more than 40 per -cent of the country’s total RMG export earnings (BGMEA website). Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website; and Nath, 2001). Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration.
Rise from Disaster
AFTER the Rana Plaza clothing factory near Dhaka collapsed in April, killing at least 1,100 people, the big Western clothing companies that have their garments run up in Bangladesh came under pressure to intervene more forcefully to improve safety and working conditions in the workshops they buy from. Two groups of retailers and fashion brands, one mainly North American and one mainly European, have begun implementing new monitoring schemes. On October 24th Primark, a big British retailer, said it would extend for another three months the aid it is giving to families affected by the disaster, while it works on a long-term compensation scheme.
Meanwhile, the tragedies continue: earlier this month ten people died when another factory in the Bangladeshi capital, used by big foreign clothes retailers, went up in flames. Nevertheless, it has become clearer since Rana Plaza that the clothing firms have little option but to continue sending work to Bangladesh. It will remain Asia’s primary production base outside China for cheap clobber, with exports on track to rise by a fifth, to $24 billion, in the current fiscal year.
The country’s clothing industry has the advantage of scale: it has 5,000 factories, compared with 2,500 in Indonesia and 2,000 in Vietnam. Its labor costs less than any of its Asian rivals’: even a near tripling in the minimum wage, to $100 a month, as garment workers are demanding from the government, would not change this. And unlike clothes put together in China, India and Sri Lanka, those stitched in Bangladesh enjoy duty-free access to the European Union. Unless productivity rises sharply, millions more women will be drawn from their homes into the workplace, a drastic change in a conservative society.

Government Initiatives
The government has made considerable progress in implementing initiatives taken in the last one year. Major steps include amendment of EPZ law, 2013; appointment of panel lawyers to help workers in the labor tribunal, finalization of labor rules and preparation of guideline for sub-contract factories. It has also formed two taskforces to monitor inspections carried out by Accord and Alliance. Appointments of staff to enhance the capacity of Director General of Factory and Establishment and Fire Service have been completed. Moreover, decentralization process of Director General of Factory and Establishment and RAJUK has also been realized.
Initiatives taken by other Stakeholders
There has been considerable progress in a number of initiatives undertaken by other stakeholders as well. Around 95% factories started giving salaries as per wage board. Most of the compliance factories completed issuing identity cards to their workers. The BGMEA undertook “Center of Excellence” initiative with the help of Swedish brand H&M to enhance workers’ awareness on fire safety. European buyers’ forum ‘Accord on Fire Safety (Accord)’ and American buyers’ forum ‘Alliance for Bangladesh Workers Safety (Alliance)’ completed surveys on around 67% factories to ensure fire, electrical and structural safeties. Under Rana Plaza Trust Fund, 19 million US dollar against the promise of 30 million US dollar has been collected to support the victims of Rana Plaza accident. Interestingly, 9 international buyers who had no orders in the factories housed in Rana Plaza are among the contributors. Out of this amount, 12.52 million US dollar has been distributed among the victims. On the other hand, Primark that had order in a factory in Rana Plaza distributed 6.3 million dollar with its own arrangement. However, 14 other retail brands (like Li Copper, JC Penney, Carrefour, etc.,) that had orders in Rana Plaza factories have not made any contribution. Moreover, WalMart and Benetton made contribution of 1 million US dollar that was far below of the expectation. After Rana Plaza accident many government and non-government organizations and a good number of individuals made 16 million US dollar (approximate 127crore) donations to the Prime Minister Relief Fund. Payments made form this fund in the name of Prime Minster Welfare Fund was 2.48 million US dollar (approximately 19 crore). Amount supposed to be left in the fund was 14 million US dollar (approximately 108 crore) on which Rana Plaza victims should have their exclusive rights.
Factory owners and their association (BGMEA)
After increase of wages some factories force workers to work one hour extra without giving any payment. Most compliance factories are putting 60% additional production target to workers, terminating workers at helper level without any legal recourse, harassing workers engaged in collective bargain and unions and dismissing workers. On the other hand, 90% subcontract factories are not paying wages according to the wage board. Female workers are staying away working at night because of lack of safety arrangements. The BGMEA has been enjoying leverage over the policy level because of their influence over the government. Because of this influence they have managed to prevent gazette notification on fire fighting and protection guideline, extend overtime hours to 4 and prevent provision of keeping 25% roof structure vacant.
Workers Associations
It is observed that activities of trade union have increased in the last one year. At the same time, activities of “Pocket trade union” or “Yellow” trade union allegedly friendly to BGMEA have also increased. Major concern is that some non-registered trade unions and federations are being increasingly used for political and personal interests. Nevertheless RMG sector is growing very rapidly and contributing to country economy to fulfill ‘Vision 2021’.

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