Some Where in Life

Overview of Garments Industry in Bangladesh

2011-04-29T08:41:00.000-07:00

Overview

We are launching the London chapter of DP with the theme of workers and their life in the garments industry of Bangladesh. Many British companies, including major brand names, buy from Bangladesh and are increasingly having to deal with a consumer backlash against sweatshop conditions. Bangladesh faces increasing pressure in saving its most important export oriented industry from possible pull out from the buyers. Here are some questions and answers about our event and its purpose.

Why the theme of garment workers?
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The garment industry is by far the country’s most important manufacturer, earning around $5 billion annually and accounting for about two thirds of all exports. Bangladesh has about 2,500 garment factories with upto 10 million livelihoods dependent on it directly or indirectly. About 80 per cent of garment workers are women. The Ready Made Garments sector has more potential than any other sector to contribute to the reduction of of poverty. Despite the phenomenal success of the RMG sector the working conditions and wages of workers in the industry are cause for serious concern. Bangladesh’s current position as a leading garments exporting nation needs to be consolidated. The economy-wide reverberations of failure would be disastrous. We believe it is in everybody’s interest to sustain this industry – an industry which changed the lives of so many people, particularly women, in Bangladesh.

What are the some of the problems?
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The problems in the industry pre-date the riots which took place just over a month ago and which were attended by deaths, injuries and the destruction of property. Over the years, hazardous working conditions have resulted in the deaths of many workers through factory fires and collapses.The Spectrum Factory building collapse of April 2005 killed 64 people, injured over 70 and left hundreds jobless. In February 2006 a fire destroyed the four-story KTS Textile Industries in Bangladesh’s port city of Chittagong again killing scores of mostly young and female workers. Workers, who are mostly young women, also face an acutely difficult working environment – wages are low, hours are long, forced labour is practised, child labour exists, sexual harassment exists, freedom is curtailed, whether it be locked doors or rights of association, and there are a multititude of other practices which go against international labour standards and codes of conduct (= non-compliance). At the level of legislation and business dealings, lack of implementation of laws, restrictive laws and unfair buying practices by buyers compound the issue of non-compliance.

What is to be done?
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What has emerged quite emphatically is that for the Bangladesh industry to survive it has to take on board the issue of “compliance” with internationally recognised social, labour and environmental standards. There are many initiatives underway – buyers have their corporate social responsibility initiatives, the government has set up task forces and fora, there are the Memoranda of Understanding with the trade unions and the manufacturers’ and exporters’ associations. There are many stakeholders, and dialogue is imperative and all important. There needs to be the capacity and will amongst all the stakeholders, and particularly the government, to take forward and develop “compliance” and create an industry with an enhanced global image and global recognition of performance.

Anything else?
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The Spectrum disaster of 2005 was supposed to have generated an impetus for change in the industry. The riots of May 2006 have again brought to the fore the need for urgent and meaningful change. The apparel industry in Bangladesh will face difficult challenges in 2008 when it enters a new trading environment. Aside from compliance, which is difficult enough, there are other issues of buyer practices, turnaround time, infrastructural development, trade development etc. Given this context, the urgency for change in this key and pivotal industry is considerable. This is not an option. It is a must in order to save the future of millions of Jamila’s. The story of one such Jamila, for whom its a choice between joblessness and poverty on the one hand and unfair and unsafe work on the other, is what you will hear through the dance drama today. Everyone wins by having a strong industry.. The garments industry in Bangladesh needs to be sustained for the benefit of all.

History of the Ready-made Garments Sector in Bangladesh

2011-04-29T08:38:00.001-07:00

History

The history of the Ready-made Garments Sector in Bangladesh is a fairly recent one. Nonetheless it is a rich and varied tale. The recent struggle to realize Workers' Rights adds an important episode to the story.
Below, we present a detailed narration of the evolution of the RMG sector from its humble origins to the present day.

1. INTRODUCTION

The shift from a rural, agrarian economy to an urban, industrial economy is integral to the process of economic development (Kaldor, 1966, 1967). Although policymakers in the least developed countries (LDCs) have, at various times, attempted to make agriculture the primary engine of economic growth and employment generation, this approach has not worked, not least because of the contributions of the Green Revolution, which has had the dual effect of increasing agricultural productivity in the LDCs and displacing the rural labour force at the same time. Led by the example of the East Asian economies, most LDCs now accept the need for greater industrialization as the fastest path to economic growth. In particular, countries such as Japan, Taiwan and South Korea have demonstrated that an export-oriented industrial strategy can not only raise per capita income and living standards in a relatively short time; it can also play a vital role in modernizing the economy and integrating it with the global economic system.
Bangladesh, one of the archetypal LDCs, has also been following the same route for the last 25 years. Once derided as a “basket-case” by Henry Kissinger (The Economist, 1996), the country stumbled across an economic opportunity in the late 1970s. New rules had come to govern the international trade in textiles and apparel, allowing low-cost suppliers to gain a foothold in American and European markets. Assisted by foreign partners, and largely unaided by the government, entrepreneurs seized the opportunity and exploited it to the fullest. Over a period of 25 years, the garments export sector has grown into a $6 billion industry that employs over a million people. In the process, it has boosted the overall economic growth of the country and raised the viability of other export-oriented sectors.
This essay analyzes the processes by which global trading rules came to help out a poor country like Bangladesh. It demonstrates the impact of the rule changes on the garments sector, and the response of the sector to multiple challenges and obstacles. It also discusses what steps Bangladesh should take in order to deal with the full liberalization of the international garments trade, which occurred in January 2005 and which could potentially threaten the country’s growth prospects. Finally, it details some of the recent developments that have occurred since liberalization took effect.
1.1 OVERVIEW OF THE BANGLADESHI ECONOMY

Bangladesh is a tropical country in South Asia that is situated in the delta of two major rivers that flow down from the Himalayas (the Ganges and the Jamuna). The country’s land surface is therefore largely composed of alluvial silt, rendering the soil highly fertile. Historically, this has made Bangladesh an agricultural nation; although agriculture contributes only about a fifth of the national GDP, it employs three-fifths of the labour force (ADB, 2005).
Bangladesh has an estimated population of 140 million (circa 2005), living in an area of about 55,000 square miles. It thus has the unwanted distinction of being the world’s most densely populated country, and this overpopulation is at the root of many of Bangladesh’s socioeconomic problems. However, the population is largely homogeneous in terms of ethnicity, language, and religion, and this provides a valuable element of national cohesion.
In spite of numerous constraints, the economy has been on a steady growth path for the last 15 years, mainly due to private sector dynamism. The constraints include pervasive political instability and violence, endemic corruption and disregard for the law, frequent natural disasters, inefficient state-owned enterprises that are hotbeds of trade unionism, lack of political will to carry through necessary economic reform, inadequate infrastructure at all levels (power generation, roads and highways, port facilities), etc.
Nevertheless, the economy has proved to be resilient. Since 1990, it has grown at an average rate of 5% per year. The Asian Development Bank projects that real GDP growth will increase to 6% in 2006 and 2007 (ADB, 2005). Bangladesh’s total GDP stood at $275 billion in 2004, and per capita GDP was $2,000 (adjusted for purchasing power).

The table below lists some key macroeconomic indicators for the period 2004-2006:
Sectorally, services constitute the largest portion of GDP with 51.7%. Industry accounts for 27.1% and agriculture 21.2%. However, the distribution of the labour force is reversed, with most people still working in agriculture (61%), followed by services (27%) and finally industry (12%). This imbalance between output and employment is indicative of a large amount of “disguised” unemployment and underemployment. Unemployment (including underemployment) is estimated to be about 40%. The poverty rate, as of 2004, is about 45%.
As shown by the above table, merchandise exports have been growing strongly in recent years and this trend is set to continue. While imports also exhibit strong growth, it should be noted that the bulk of imports consists of inputs into the production process, e.g. machinery and equipment, fuel and petroleum products, chemicals, iron and steel, cement, fabric and accessories (for garments production), etc. The breakdown of various exports by sector is given in the table overleaf (Bangladesh Bank, 2005). The figures are for the 2003-2004 fiscal year.

As can be seen from Table 2, garments and textile items are the dominant export product, accounting for 77% of the country’s total export receipts. This is a relatively new phenomenon. For centuries, the chief export of the Bengal economy was jute, a natural fibre which is used in making carpets, sacks and hessian, but whose economic value went into precipitous decline after the advent of plastic bags and synthetic packaging material in the 1960s and 1970s.

The garments crisis in Bangladesh : Who did it?

2011-04-29T08:37:00.000-07:00

LABOUR protests that spread from a sweater factory in Gazipur on 11 May to Savar EPZ, Ashulia and Dhaka on 22 May, erupted in state violence and vandalism by 23 and 24 May. Police action against workers resulted in three deaths, many injured and even more arrested; the vandalism led to breakages, looting, closures and possible lay offs. Violence is never a satisfactory method of dispute resolution nor indeed does it indicate healthy labour relations.The industry’s immediate response was to allege instigation by political conspiracy or international competition. But to cry wolf evades an honest examination of industrial management in the knitwear and sweater components of the garment industry. Since the episode, many questions have been raised about the identity of the perpetrators of the carnage. The answer does not lie in merely apportioning blame to external actors or seeking hidden clues as in a thriller. The Home Minister has said that he had information, so he and his intelligence agencies should speak out and tell us who did what, and why the state agencies were not able to prevent the arson. It would be more credible, of course, to hold an open, public inquiry with representatives of the Labor Directorate, BGMEA and BKMEA, workers and even organizations who support workers’ rights. The report should be made public as soon as possible to put an end to unnecessary rumors and allegations.

Understandably the factory management is shocked, because it is not used to seeing labor unrest turn so violent. It did not expect such an outburst from a docile, expendable labor force. Another reason given is that the factories where the trouble occurred were relatively well run, “model factories” where workers were fairly well paid. The comparative advantage of some factories is of course no guarantee that workers will not agitate against glowing disparities between management and labor. On the contrary increasing awareness of inequalities is a direct provocation. We should remember how a few years ago, well paid workers in South Korea launched a massive protest against their company bosses.

For the industry it is more important to come to terms with its systemic problems of which there are many. For the moment it has weathered the international competition and in fact received a glut of knitwear and sweater orders which it finds difficult to deal with. Many of the problems such as delays caused by lead time delays, late deliveries of imported raw materials, licencing or production, due to outage failures, port obstruction, etc. are caused by government inefficiency and poor planning. These may appear intractable, but are not beyond solution.

But what is of the industry’s own making is its refusal to reconcile its commercial success with poor labor relations, and its tendency to dismiss labor demands with unkept promises. For several years now workers have repeated vital demands pertaining to their terms of work and their conditions of work. Their major points of discontent have included the lack of an employment letter or contractual agreements, a stagnant minimum wage set in 1994 at Tk 930.00, arbitrary fixing of overtime payments, delayed payments, absence of weekly holidays, and non-enforcement of safety and health protection.

Conditions are even harder in the sweater and knitwear components because seasonal demand makes for insecurity of employment, to long hours of work without leave, which practically leads to compulsory overtime; piece rated work leads to uncertainties as to how much each worker will receive, since the rates are not fixed until the completion of the consignment. When the owners proudly say that piece rate payment brings in higher returns at an average of Tk 7,000.00, the highest range being Tk 18,000.00, this conceals considerable disparity in payments between one worker and another, with a few reaching the ceiling but many more falling way below a living wage. Workers’ earnings have failed to keep pace with the index of prices, and most live in a state of continuous debt, in order to support their families.

Media attention on the recent episode has led to much breast beating interspersed with some rational debate on the state of the industry. Newspaper reports and statements by business leaders suggest that they may now be willing to recognize genuine labour problems: for example at a sitting with the commerce ministry and workers’ representatives last week, BGMEA and BKMEA are reported to have conceded the need to revise pay scales, to issue employment letters, not to enforce overtime. The question of safety conditions was also raised. A few leaders have also admitted the logic of introducing negotiating mechanisms, whether through trade unions or some other arrangement is not clear. The absence of a grievance redress mechanism is precisely what allows the fuse to blow.

If these concessions are to be more than a reflex to shock therapy, serious attention has to be paid right away to setting up a Wage Board to assess living wage in each sector, contractual terms for overtime, hours of work, maternity leave. Safety has become an important consideration particularly after the disasters of Spectrum and KTS, and it is no longer sufficient for BGMEA or BKMEA to make vague promises without introducing strict regulatory mechanisms. They must make their reports on defaulting industries public, for both the workers and the public have a right to know the risks they take. The government regulatory agencies have been even more culpable because time and again they have defaulted on their responsibilities to supervise and regulate violations of the laws. This has happened in spite of directions by the Appellate Division.

Garment manufacturers claim they are now compliant with buyers’ conditions. This may go some way towards improving working conditions, but only to the extent that it satisfies buyers. Last year, at a UNDP sponsored meeting two task forces were set up by the government, the first to ensure proper labor conditions and the second to ensure safety conditions. What has become of the decisions taken by these task forces? Workers have a right to know the time line for their implementation.

Rather than piece meal measures it is important at this stage to move towards a more effective industrial management based on progressive labor relations and labor participation in management. The culture of military management, where security guards have little hesitation at drawing their guns on workers (as happened in Chowdhury Garments, or in Opex Garments a year or two ago), or managers have no compunction at slapping their workers in full public view is now passe. It will not lead to a healthy industry, on the contrary it will provoke spontaneous, unorganized and, therefore, chaotic protests. Many experts suggest that the time is right for the garments to institutionalization a corporate structure with corporate social responsibility that can allow for a grievance redress mechanism. Suggestions have also been made for workers to be given a stake in the industry, in its management, through participation in trade unions.

Perhaps this shock therapy will enable the garment owners to sit across with industrial economists, with lawyers, with workers and other experts to recommend reform of archaic laws or revise policies and practices that belong to a past world. It is time we stopped our detective search for “who done it” to a rational appraisal of how we can establish acceptable labor standards in the industry.

Courtesy: Hameeda Hossain, Convener of the Shromik Nirapotta Forum.

RMG workers' minimum wage fixed at Tk 1,662.00 only

2011-04-29T08:31:00.000-07:00

The Minimum Wage Board yesterday announced the final pay structure for the workers in the readymade garment (RMG) sector fixing Tk 1,662.50 as the minimum monthly wage including basic salary, house rent and other allowances for the entry-level workers.

All the six members of the board signed the final recommendation, which will be sent to the government on the next working day.

The board yesterday announced two separate pay structures for the garment workers and the employees.

There are seven grades for the workers and four grades for the employees. Minimum wage for grade one workers will be a total of Tk 5,140 including basic salary, house rent and allowances, Tk 3,840 for grade two, Tk 2,449 for grade three and Tk 2,250 for grade four, Tk 2,046 for grade five and Tk 1,851 for grade six.

Total monthly wage for apprentice workers will be Tk 1,200.

Minimum wage for grade one employees will be Tk 3,580 including basic salary, house rent and allowances, Tk 2,800 for grade two, Tk 2,449 for grade three and Tk 1,851 for grade four.

The board announced a three-tier draft proposal on September 12 but finally backtracked in the face of severe opposition from the garment owners.

"This time we have reached a consensus for the minimum wages for the garment workers and employees. We considered the final pay structure as reasonable in view of the workers' demand and the owners' ability," said Anwarul Haque, chairman of the government-formed Minimum Wage Board, at the end of six-hour meeting at its office yesterday.

After announcing the draft proposal, the board received more than 400 opinions and objections and prepared the final recommendation taking those into account, he added.

"It will be very difficult for the owners to pay Tk 1,662.50 for the seventh grade and minimum wages in other grades for the workers. We have agreed despite all limitations," said Annisul Huq, representative of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on the board, after finalising the draft.

Around 95 per cent leaders of different workers' organisations in the RMG sector expressed their opinions favouring a minimum wage that would range between Tk 1,650 and Tk 1,800 although they were demanding Tk 3,000 earlier, he said.

Asked, whether BGMEA leaders managed the leaders of different organisations through bribing, Huq said it is just a rumour.

"The final recommendation did not protect the interest of the workers. But as there would be uncertainty about the wages for the workers, I accepted the final draft after a hard negotiation," Zafrul Hasan, permanent representative of the workers on the board, said.

The owners are relatively in an advantageous position, he said, adding that if the board failed to make a final recommendation the workers' interest would have been seriously affected in the long run.

Nazma Akhtar, representative of the garment workers on the board, who had earlier declined to sign the draft proposal on September 12, said around 40 organisations including several big ones supported the minimum salary ranging between Tk 1,650 and Tk 1,800 and that is why she did not have any option.

Neutral member Iqbal Ahmed and permanent member of the employers on the board Kazi Saifuddin Ahmed also took part in yesterday's meeting.

Following serious labour unrest in the country's premier export-earning garment sector, the government formed the wage board on May 31 and asked it to recommend a pay structure for the workers within three months. The minimum wage for workers in the RMG sector is now Tk 930, which was fixed about 12 years ago.

Meanwhile, Garments Sramik Sangram Parishad, an alliance of 11 organisations of garment workers, strongly opposed the final recommendation immediately after its announcement.

Terming the final recommendation 'unrealistic' and 'a betrayal' with the garment workers, Roy Ramesh Chandra, general secretary of Jatiya Sramik League, said it is a farce as the minimum wage for the workers of the state-owned enterprises is Tk 2,450 but export-oriented garment industry will give a basic salary of Tk 1,100 only.

Source> The Daily Star: Fri. October 06, 2006

Garments Industry : An Overview

2011-04-29T08:14:00.000-07:00

Although Bangladesh is not developed in industry, it has been enriched in Garment industries in the recent past years. In the field of Industrialization garment industry is a promising step. It has given the opportunity of employment to millions of unemployed, specially innumerable uneducated women of the country. It is making significant contribution in the field of our export income.

History of our cloth Industry: Once the cloth of Bangladesh achieved worldwide fame. Muslim and Jamdani cloth or our country were used as the luxurious garments of the royal figures in Europe and other countries. The British rulers in India didn’t develop our cloth industries at all. Rather they destroyed them and imported cloths from England.

Garment industries at present Bangladesh: After the emergence of Bangladesh radical change has come to our garment sector. Garment industries started working from the 10's of the late century. At present there are about 3000 garment industries in the country and 75 percent of them are in Dhaka. The rest are in Chittagong and Khulna. These Industries have employed fifty lacks of people and 85 percent of them are illiterate rural women. About 76 percent of our export earning comes from this sector.

Reason of Development: The prime reason why garment industries have come out to be the champion in the field of export is obviously the cheap labor. Labor is not as cheap anywhere in the world as it is in Bangladesh. Women contribute to the working force in these garment factories, as they are relatively cheaper than men. A worker works here long hour’s free or cheap meals. But this has not prevented thousands of women from work. It has given them a steady income, economic independence, self-reliance and dignity, because they are earning their own living and managing their family expenses.

Garments of Bangladesh in the world-market: Over the last twelve years or so the garments industries have emerged as the largest source of earning foreign currency. About half of the foreign currency from the ready-made garments is earned from European Union and the U.S.A. Besides, Canada, Japan, Australia, New Zealand; Russia etc. also are other garments importing countries. At present about 20 countries of the world are importers of our garments. Its market is being expanded in the Middle East, Russia, Japan, Australia and many other countries.

Export income of different fiscal years: In 1977-78 fiscal year Bangladesh exported forty thousand shirts in Germany and earned one million U.S. dollar. At the beginning of the 80's this industry flourished rapidly. In 1983-84 fiscal year the income from garments rose to 6 crores 50 lacs US dollar. In 1998-99 it became 420 crores U.S. dollar. By 2003-2004 the factories multiplied three times. Simultaneously the export has also increased. The amount of export income in 2003-2004 increased to 568 crores US dollar.Items of exportable garments: Among the garments of Bangladesh are shirt, pajama, jeans-pant, jacket, trouser, hats, laboratory coat, sweater, pullover, jumper, jacket, trousers, gloves, sports dress, nightdress etc.

Problem behind garments: This promising industry has some problems impeding its development. Bangladesh imports raw materials for garments like cotton, thread colour etc. This dependence on raw materials hampers the development of garments industry. Moreover, foreign suppliers often supply low quality materials, which result in low quality products. Most of the illiterate women workers employed in garments are unskilled and so their products often become lower in quality. Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of communication, problem in taxes etc. Often obstruct the industry. In the world market 115 to 120 items of dress are in demand where as Bangladesh supplies only ten to twelve items of garments. India, south Korea, Hong Kong, Singapore, Thailand, Taiwan etc, have made remarkable progress in garments industries. Bangladesh is going to challenge the garments of those countries in the world market.

Garments industries often pay dearly for political unrest, hartal and terrorism etc. The international market has withdrawn quota advantage over garments export form Bangladesh since December 2005.

Bangladesh has to advance cautiously for getting better position of her garments in the world market. Finally destruction of twin tower in 11 September 2001. invasion on Afghanistan and Iraq and depression in world Economy have seriously affected the export trade of Bangladesh.

Things to do: In spite of having a number of problems, prospects of garments industries in Bangladesh with her cheap labour and less capital are fair. In order to hold profitable position for garments in the world market we should keep in mind the following things.

1) Production of sufficient raw materials in the country i.e. setting up backward
linkage industry in Bangladesh.
2) Imparting training to make skilled workers.
3) Reduction of VAT and taxes
4) Assurance of safety, salary and other facilities of the workers
5) More advanced of EPZ
6) Proper advantage of water houses
7) Removal of export problems etc.

Garments Workers : The struggle of 2006

2011-04-29T08:07:00.000-07:00

In 2006, Bangladeshi garment workers launched a series of fierce struggles to improve their conditions and pay. These struggles were joined by other workers from industries such as jute, sugar and transport and at their height involved tens of thousands of workers. In May, workers from the garment factories launched a series of strikes at factories in the capital, Dhaka. The government responded by arresting workers and sending in police and army units to protect factories and blockade areas of the capital. Workers fought back by attacking police and the garment factories, many of which were burnt.

At the end of June, the strikes and demonstrations were brought to an end with an agreement between the government, the factory owners and the union, the National Garment Workers Federation (NGWF). This allowed workers to organise and in particular to have rights to join the union, to have one day off per week, to be entitled to maternity leave, to have binding letters of appointment and to create a Minimum Wage Board to set a minimum wage.

In September it became known that the Minimum Wage Board was setting the minimum wage at £13.50 per month and was introducing legislation to set the working day at 10 hours before any overtime would be due. This makes the minimum wage about 5 p per hour! These issues and the fact that most of the other concessions agreed in June had not been implemented caused the struggle to break out again in October. There were strikes and protests in Dhaka, which linked the atrocious conditions of the Bangladeshi workers to the profits of UK and US retailers. They were joined by other workers who blockaded roads, railways and waterways. In the confrontations with the police which followed these demonstrations, one worker was killed.

The demands made at these protests indicate not only that the agreements of May have not been implemented, but underline the atrocious conditions in which these workers are forced to work. Demands ranged from asking for wages, which are paid monthly, to be paid by the 7th of the following month (local media estimate that there are £300,000 of back pay owed to workers by employers), to the right to organize and the right to have one day off a week, instead of working a seven-day week. These demands were not met and more confrontation appears likely.
War on Want

In December “War on Want”, the anti-poverty campaign group, published a report called “Fashion Victims.” In this report they recorded the results of interviews with Bangladeshi workers at six garment factories employing in all about 5 000 workers. The factories they visited supply clothes to retailers such as Tesco, Asda and Primark. The report catalogued the appalling pay and conditions suffered by the workers in these factories and linked the low wages to the enormous profits made by these retailers on clothes. “War on Want” urged UK consumers to shop morally and not to buy clothes made in Bangladeshi sweatshops. The report was widely publicized in the liberal bourgeois press which shed the predictable crocodile tears over the vicious exploitation of these workers.

These arguments made by “War on Want” in their report exemplify the political outlook of today’s capitalist left. They believe that if only the few bad capitalists could be made to see the errors of their ways and act morally the present system would not “exploit” workers. If only, they tell us, capitalists could be less greedy then trade could be “fair.” In short, they argue that if the capitalist class could be persuaded to act more morally all the horrors of capitalism could be swept away. These arguments betray a complete failure to understand the basis of class society in general and capitalist exploitation in particular. They illustrate the feeble mindedness of today’s liberals.

In reality, under capitalism, the exploitation of the working class can never be ended since it is the life blood of the system. There is absolutely no way this exploitation can be made “fair” as today’s liberals demand. Capitalist society, like the slave society and feudal societies which came before it, is a system in which one class exploits the labor of another class. It is only with the creation of classless society that exploitation will cease. The liberals do not, of course, want classless society. They only want the hideous conditions we are seeing today in peripheral countries, such as Bangladesh, to be improved. However, the profits of capitalists in the central capitalist countries, such as the UK, are becoming more and more dependent on the exploitation of workers in the peripheral countries and the capitalist class as a whole has no intention of lessening that exploitation. The relocation of factories to areas of cheap labour shows that, far from wanting to alleviate the exploitation of these workers, they want to profit from it while they can. (1)
Bangladesh textile industry

Bangladesh is one of the poorest countries in Asia with an average income per person of approximately $410 per year. 30% of the country’s 149 million people live on less that $1 per day. It is in places like this, where labor is cheap and plentiful, that the labor intensive industries of capitalism try to locate themselves. In 2005, $1.55 bn of Foreign Direct Investment was made in Bangladesh. In the last 25 years the textile industry has grown from virtually nothing to become the country’s largest industry. In 1977, there were only eight garment factories in the country. Today, there are at least 4000, employing two million workers and bringing in 76% of the total export earnings. Sales in 2005 amounted to $8 bn. Multifiber Agreement in 2005, led to a reduction in wages as the local bourgeoisie tried to maintain their position in the world textile market. Today, the industry remains highly profitable.

The two million workers in the industry have, for the most part, come from rural peasant backgrounds and migrated to the large cities, such as Dhaka, Chitagong, Narayangonj, Savar and Tongi-Gazipur. They are generally the first generation of proletarians and, despite being paid such a pittance, they often send money back to their families in the rural areas. The position of these new workers reflects the gradual ruin of the peasantry. As in the textile mills in Lancashire and Yorkshire in the 19th century, the factory owners prefer female or child workers and more than 80% of these workers are young women between the ages of 14 and 29 years.

The pay and conditions of textile workers in Bangladesh are the worst in the world and the pay has actually halved in the last ten years. Wages in Bangladesh relative to other countries are shown below:
Country Minimum Wage (Pence per hour)
Bangladesh 5.2
China 6.6
India 13.8
USA 263.2
UK 492.1
France 544.0

In fact this minimum is not enforced and unskilled workers, such as sewing helpers, sometimes get as little as 3 p/hour. (2) In addition workers often receive their wages two or three months late as can be seen for the demand for payment by 7th of the next month. Overtime is often not paid and workers are swindled by a system of fines for late arrival and mistakes in the work. The average working week is 80 hours, according to the “War on Want” report, and many women are regularly forced to work between 14 and 16 hours daily. Sanitation is poor and workers are often locked in the factories during the shift. This has led to workers being killed in fires or structural failures of buildings. In February and March of 2006, 100 workers were killed from fires and collapses of poorly constructed factory buildings.
International capitalism

It is clear from Table 1 why international capital sets up its factories in Bangladesh rather than the central countries. Wage rates in the UK are 95 times those of Bangladesh and in addition weekly working hours are approximately half those of Bangladesh3. Competition in areas like garment making is virtually impossible for the central capitalist countries. The number of workers in textiles in the UK is now only about 200 0004, and these are in the more skilled areas such as man-made fibres, dyeing, printing, etc. Foreign ownership of Bangladeshi factories and foreign purchase of the products ensure that, most of the surplus value produced in this industry goes to the sections of the capitalist class outside the country. It is estimated by the Bangladeshi media, that 70% of the profits which are generated from the garment industry leave the country. The vice president of the Bangladeshi Garment Manufacturers and Exporters Association bemoaned the fact that so much of the profit was taken by European and US buyers. He, like “War on Want” blamed the greed of the US and EU buyers for the poor wages and conditions of Bangladeshi workers. This is how he explained the situation:

I am asked about how many light bulbs we use and where is our toilet. But who pays for these things? The buyers’ profits are going up but if I ask for more money they say China is very cheap. It’s a threat to move work somewhere else. (5)

For the capitalist of the metropolitan countries the cheapness of the commodities produced in countries such as Bangladesh is an essential source of profit. It is reported, for example, that a tee shirt for which the US buyer pays $2 in Bangladesh will be sold for $20 to $25 in the US. The commodities are produced at prices massively below those of the world market, and the stream of profit coming from this trade is helping to offset the tendency of profit rates to decline globally. In general, the lowering of wages will always result in greater profits for the capitalist class. The example of the clothing industry also shows how the lowering of the cost of labor power in Bangladesh produces a reduction in the cost of labor power world wide as factories in the higher labor cost countries close or relocate. This produces a global increase in profit rates which will last until the global average cost of production falls to reflect the cheaper average value of labor power. It remains the exploitation of labor power and nothing else which creates profits for capitalists. It is for this reason that the international capitalist class has no intention of alleviating the conditions of the Bangladeshi garment workers, in the way that “War on Want” demands. The fact that the likes of Tesco, Asda and Primark have signed up to something called an “Ethical Trade Initiative” simply illustrates their hypocrisy.
Trade unions

The fact that the Bangladesh ruling class immediately mobilized the armed forces of the state against the strikes of the garment workers shows their inexperience. In the older capitalist countries such as the EU or the US these workers would have been confronted first by the trade unions who would have tried to defuse and head off the struggle. (6) Much of the Bangladesh capitalist class sees no reason to use the unions to control the struggle at the present stage. The reasons for this are that the unions are both inexperienced and weak. The National Federation of Garment Workers (NGWF) which is the main union federation in the industry has 28 separate unions affiliated to it. Despite this, it only claims to have 20 000 members in an industry of two million. Some of the employers do, however, see the need to use the unions as they are used in the central capitalist countries, namely to control the sale of labour power and to control disputes. It was for this reason that the June 2006 agreement did recognize the right to unionize.

The situation can be compared to that in South Africa in the 1970’s, where the setting up of unions was presented as a great victory for the working class, even though the leading sectors of the capitalist class supported this. These were, of course, the same sectors who understood the need to bring the African Nationalists to power and to move to an organization of production based solely on class and not in any way based on race. The unions proved key allies in bringing this about and are now in alliance with the bourgeois ANC government which is supervising capitalist exploitation of their members so efficiently that the economy is experiencing a massive boom. The condition of the South African working class as a whole has not improved and unemployment remains at 26%.

This should be a warning to Bangladeshi workers that the trade unions will, in the long term, only serve the bosses’ interests. Already, the Bangladesh unions, such as the NGWF, are showing that they view things from the same perspective as the employers. They repeat, for example, the bosses’ demands for “free access of Bangladeshi garments to US and EU markets and an end to quota systems”. They demand that, “international companies conduct fair trade with Bangladesh garment factories” which, of course, means that the Bangladeshi capitalists get a larger slice of the profits as demanded by the Garment Manufacturers Association. (7) They support successful national capitalism which inevitably involves the exploitation of their members. The interests of workers are not in the success of the national capital. They are in international resistance to capitalism and the establishment of classless society worldwide.

The way forward for Bangladeshi workers is to run their struggles through strike committees, elected by mass meetings which involve the maximum numbers of workers. The key to success is to keep the control of the struggle with the mass meetings and follow tactics such as generalizing the struggle to other workers.
Conclusion
The struggles of the Bangladeshi garment workers are very important for two main reasons. Firstly they point to the enormous increase in the numbers of proletarians in countries such as Bangladesh and the beginnings of resistance to horrific conditions of exploitation. (8) Secondly they show the ability of an inexperienced working class to find ways of struggle which unite workers. Garment workers were joined by workers from the jute and sugar mills and transport workers. What is needed is a political content to the struggle to orient it towards an opposition to the whole capitalist system, of which Bangladesh is only a small part. What is needed is the formation of a political organization to link the experiences of the international proletariat and the lessons they have learned in the last 150 years of struggle to the struggles which are emerging in Bangladesh and elsewhere. It is only through an international struggle by the world’s workers that a classless society can be built.

Garments Industry in Bangladesh

2011-04-29T07:56:00.000-07:00

Large-scale production of readymade garments (RMG) in organised factories is a relatively new phenomenon in Bangladesh. Until early sixties, individual tailors made garments as per specifications provided by individual customers who supplied the fabrics. The domestic market for readymade garment, excepting children wears and men's knit underwear (genji) was virtually non-existent in Bangladesh until the sixties.
Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although, the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded.

In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers.

In addition to its economic contribution, the expansion of the RMG industry has caused noticeable social changes by bringing more than 1.12 million women into labour force. The economic empowerment of these working girls/women has changed their status in the family. The attractive opportunity of employment has changed the traditional patriarchal hegemony of the fathers, brothers and husbands. Most working women/girls can now chose when to get married or become mothers. The number of early marriages is decreasing; so is the birth rate; and the working girls tend to send their little bothers and sisters to school, as a result, the literacy rate is increasing. They can participate in family decision-making. Most importantly, the growth of RMG sector produced a group of entrepreneurs who have created a strong private sector. Of these entrepreneurs, a sizeable number is female. A woman entrepreneur established one of the oldest export-oriented garment factories, the Baishakhi Garment in 1977. Many women hold top executive positions in RMG industry.
The RMG industry is highly dependent on imported raw materials and accessories because Bangladesh does not have enough capacity to produce export quality fabrics and accessories. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export. The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors were required to import the fabrics. However, situation has improved. At present, there are many large firms, which do their own sourcing.
The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 15 or so years. In 1978, there were only 9 export-oriented garment manufacturing units, which generated export earnings of hardly one million dollar. Some of these units were very small and produced garments for both domestic and export markets. Four such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named Reaz Store in dhaka. It served only domestic markets for about 15 years. In 1973 it changed its name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling 10,000 pieces of men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first non-equity joint-venture in the garment industry was established in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. It had about 120 operators including 3 women trained in South Korea, and with these trained workers it started its production in early 1980. Another South Korean Firm, Youngones Corporation formed the first equity joint-venture garment factory with a Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of thee new firm, named Youngones Bangladesh. It exported its first consignment of padded and non-padded jackets to Sweden in December 1980.
Within a short period, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They acquired the expertise of mobilising resources to export-oriented RMG industries. Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital. The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw material of the industry. The government assigned high priority to the development of RMG industry.
Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. The number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12 largest apparel exporters of the world, the sixth largest supplier in the US market and the fifth largest supplier of T-shirts in the EU market. The industry has grown during the 1990s roughly at the rate of 22%. In the past, until 1980, jute and jute goods topped the list of merchandises exported from Bangladesh and contributed more than 50% of the total export earnings. By late 1980s, RMG exports replaced jute and jute goods and became the number one in terms of exports.
In 1983-84, RMG exports earned only $0.9 billion, which was 3.89% of the total export earnings of Bangladesh. In 1998-99, the export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total export earnings of the country. The net foreign exchange earnings were, however, only about 30% of the figures quoted above because approximately 70% of foreign exchanges earned were spent in importing the raw materials and accessories to produce the garments exported.
Both external and internal factors contributed to the phenomenal growth of RMG sector. One external factor was the application of the GATT-approved Multifibre Arrangement (MFA) which accelerated international relocation of garment production. Under MFA, large importers of RMG like USA and Canada imposed quota restrictions, which limited export of apparels from countries like Hong Kong, South Korea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka and India to USA and Canada. On the other hand, application of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh received preferential treatment from the USA and European Union (EU). Initially Bangladesh was granted quota-free status. To maintain competitive edge in the world markets, the traditionally large suppliers/producers of apparels followed a strategy of relocating RMG factories in countries, which were free from quota restrictions and at the same time had enough trainable cheap labour. They found Bangladesh as a promising country. So RMG industry grew in Bangladesh.
By 1985, Bangladesh emerged as a strong apparel supplier and became a powerful competitor for traditional suppliers in the US, Canadian and European markets. Since 1986, Bangladesh has been increasingly subjected to quota restrictions by USA and Canada. RMG industry suffered setback in a number of countries in the 1980s. Some countries had internal problems, for example, Sri Lanka; and some other countries of Southeast Asia experienced rapid increase in labour cost. Buyers looked for alternative sources. Bangladesh was an ideal one as it had both cheap labour and large export quotas. The EU continued to grant Bangladesh quota-free status and GSP privileges. In addition, USA and Canada allocated substantially large quotas to Bangladesh. These privileges guaranteed Bangladesh assured markets for its garments in USA, Canada and EU. The domestic factor that contributed to the growth of RMG industry was the comparative advantage Bangladesh enjoyed in garment production because of low labour cost and availability of almost unlimited number of trainable cheap labour. The domestic policies of the government contributed to the rapid growth of this sector. The government provided various kinds of incentives such as duty-free import of fabrics under back-to-back L/C, bonded warehouse facilities, concessionary rates of interest, cash export incentive, export processing zone facilities, etc. The government also took a number of pragmatic steps to streamline export-import formalities.
There are several weaknesses of the RMG industry of Bangladesh. Labour productivity in the RMG sector of Bangladesh is lower than many of its competitors. Bangladeshi workers are not as efficient as those of Hong Kong, South Korea and some other countries and in most factories, technologies used are not the latest.
In addition to the fact that the industry is vulnerable because it is highly dependent on the imported raw materials, the infrastructure in the country is deplorably underdeveloped. Problems in power supply, transportation and communication create serious bottlenecks. Inadequate port facilities result in frequent port congestion, which delays shipment. All these increase the lead-time to process an order, i.e. the time from the date of receiving an order to the date of shipment.
The application of MFA had negative impact on many garments exporting countries. The countries, which were adversely affected by quotas under MFA, created pressure to discontinue MFA by integrating textile and clothing industries into GATT system. As a result, the Uruguay Round negotiations envisaged the phasing out of MFA by the end of 2004. With the phasing out of MFA, the position of Bangladesh in the world market will change as all countries including those under quota restrictions, will enjoy quota free status. Bangladesh will have to compete with a larger number of established and powerful suppliers of readymade garments. Bangladesh has taken some steps to face the new challenges. Such steps include removing infrastuctural bottlenecks, building additional supply capacity, use of cost reduction strategy, and increase in value-addition through backward integration.
For RMG sector, the backward linkages are weaving the fabric, spinning the yarn, and dyeing, printing and finishing operations. These operations can be combined into one composite mill or they can be established as separate units. Currently, Bangladeshi apparel exporters import fabrics at international prices using back-to-back letter of credit. While procuring through back-to-back L/C, the importers (Bangladeshi exporters of apparels) pay high interest and other charges, commissions, fees for the services of the middlemen involved. The establishment of composite mills or individual units of weaving, spinning and processing will reduce lead time and increase value addition and employment, in addition to improving the cost advantages.
In the Fifth Five-Year Plan (1997-2002), the government of Bangladesh envisages the attainment of self-sufficiency in yarn production by establishing new spinning capacities. The production capacity of this sector increased substantially though not as much as was required. There are 1,126 weaving and spinning mills including 142 ring spinning mills and 15 open-end spinning units in Bangladesh. These units produce mostly for the domestic markets. Of the total production of fabric, only 25% are supplied by the modern mills, the rest of the domestically produced fabrics are supplied by the specialised units, power looms and handloom sub-sectors. The RMG industry uses a small quantity of fabric woven in the handloom sub-sector. The domestic capacity meets less than 8% of the demand for woven fabrics of the export-oriented RMG industry. The domestic production can meet about 40% of the demand for export quality knit fabrics.
The current requirement of yarn for both domestic and export-oriented RMG industry is about 590 million kg and this will increase to about 818 million kg by the year 2005. The current requirement for fabrics is 4,400 million meters and by 2005 it will increase to 6,000 million metres. It is estimated that by 2005 Bangladesh will need 156 spinning mills each with 25,000 spindles, 371 weaving mills each with 125 looms, and 371 dyeing and finishing units each with capacity of processing 10 million meters of fabrics per annum.
The government of Bangladesh has specified some goals in the latest national development plan for backward linkage industries. To achieve the goals set in the Fifth Five-Year Plan, Bangladesh offers attractive incentives to attract both local and foreign direct investment in RMG sector. The Export Promotion Bureau, in collaboration with the Bangladesh Garment Manufacturers and Exporters Association (bgmea), undertakes various activities to promote Bangladeshi garments in foreign markets. They also organise annual Exhibition in Dhaka in which hundreds of foreign buyers participate.
Bangladesh exports a very limited categories of products. The factories in Bangladesh produce shirts, jackets, trousers, and other garments, with high concentration (about 60% of the total apparel exports) in the export of shirts of low price. Bangladesh is the largest exporter of men's and boys' cotton shirts in the US market. In this market, it competes with India, Sri Lanka, Mexico and other Central American countries in the lower price segment. The average price of Bangladesh-made shirts was $62.74 per dozen in 1998. This price was the second lowest. The Dominican Republic sold the lowest priced shirts of the same category at $54.79 per dozen. Prices of Indian, Mexican and Sri Lankan shirts were $81.04, $76.26 and $74.77 respectively. Against this, the prices of Hong Kong and Malaysia shirts were $107.34 and $134.08 respectively. Exporters from Bangladesh produce mostly those items on which quotas are available. However, there are a few exceptions. Some South Korean firms operating from Export Processing Zones of Dhaka and chittagong export padded jacket and trousers of higher value. Many firms now export some non-quota items as well. The share of such items in the total quantity, however, is very small. Recently, export of knitwear and sweaters has increased faster than that of woven wears. These indicate that Bangladesh is actively engaged in the process of product diversification.
Although Bangladesh exports garments to some 30 countries, its exports are highly concentrated in two major markets, the USA and EU. The USA as the largest importer country imported 43.24% of total garments exported from Bangladesh in 1998-99. Bangladesh was the sixth largest supplier of apparels in the US markets in the same year. However, if European Union is considered as a single market, the US market becomes the second largest. Bangladesh exported 52.38% of its apparel exports to the EU in 1998-99. The EU is the single most important destination of knitwear export from Bangladesh. Of the individual members of the EU, Germany is the largest importer of both woven RMG (15.6%) and knitwears (14.8%) from Bangladesh and it is followed by the UK and France. The EU as a bloc has been importing from Bangladesh an increasing quantity of apparels. In the last five years Bangladesh's exports to the EU have grown by 174%. The main reason for this phenomenal growth is the almost duty free (due to GSP privileges) and quota-free access to this market. Other export markets are small. Japan and ASEAN countries are potentially large markets. Bangladesh has not yet been able to export sizeable quantity of apparels to Japan, although it imports about 90% of the machinery from Japan to run the apparel industry. Similarly, Bangladesh has not been able to have market access to ASEAN, or Indian markets although it imports a huge quantity of fabrics and yarn from these countries. The main reasons for this are the tariff and non-tariff barriers Bangladesh faces in these markets. Recently, Bangladesh has started exporting to India, South Korea and other new markets. As a member of South Asian Association of Regional Cooperation (SAARC), Bangladesh has undertaken an elaborate programme to increase apparel exports to India and other member countries of SAARC.
Bangladesh responded positively to the international requirement of elimination of child labour from the garments sector. Under the Memorandum of Understanding jointly signed by BGMEA, ILO, UNICEF and US Embassy, Dhaka on 4 July 1994, Bangladesh pledged to eliminate child labour by November 1996. Accordingly, it took necessary measures to do so. The laid-off children were provided financial support so that they could attend schools until they attain the age of 15. BGMEA and some NGOs jointly operate a number of schools for these children. The factory owners are required to abide by the laws that regulate minimum wages, working conditions, eco-labeling, etc of the garment factory workers. The workers are allowed to form and/or join trade unions. There are many active trade unions with CBAs in the garment industry. But factories located in the Export Processing Zones do not have trade unions. However, the workers of those factories receive higher remuneration and better benefit packages. To meet the international standard, the industry with the help of BGMEA makes sure that the factories do not use any dyes including Azu dye that are hazardous to health. Bangladesh recognises the fact that its economic security depends on the future of its RMG industry. Therefore, it has undertaken an elaborate programme to meet the challenges it is likely to face in the post-MFA world market.