At the Precipice: Bangladesh’s Garment Industry

I sat in a jail so dark, I could not see my own hands, said Mr. Alam awaiting the judgment of the court. Joining him in this prison were dozens of others arrested by the police, as well as several others charged with inciting public unrest but eluding arrest. The1500 luckier ones had not lost their liberty of movement; just their means to earn.

In an irony that perfectly encapsulates the paradoxes that face developing countries, protestors across Dhaka had been arrested, fired and otherwise repressed when they stood up against repression. If an objective observer was to base their judgments of Bangladesh’s Ready-Made Garments (RMG) sector on these scenes from December, they would be terribly wrong in their conclusions.

Since gaining independence from West Pakistan in 1971, the Republic of Bangladesh has emerged as an economic success story in South Asia, owing largely to its garment industry, the second largest in the world. It accounts for $28billion of the country’s exports, and is estimated to rise almost twofold to $50 billion by 2021. The industry houses 2500 factories which employ 4 million workers, 80% of them women, standing boldly against the gender discriminatory employment trends which entrench inequality in developing countries. But as often happens, greater growth comes with greater expectations – and Bangladesh’s workers are disappointed.

After mass protests erupted on the streets in the aftermath of the Rana Plaza disaster that killed 1,100 people, the government moved swiftly towards imposing reforms in the labor sector. One of these reforms was to institute a new minimum wage after discussions with labor organizations, bringing it up to 5,300 takas ($67). This seemed to quell the conflict and rage against alleged mistreatment of Bangladesh’s labor, for the time being.

 In December, the protests in Azhulia, an Industrial zone in Dhaka, sought to raise the minimum wage to 15,000 takas ($187).  Although deemed by several policy experts as an unrealistic expectation, it was still symptomatic of the larger problem workers faced in the industry of not being adequately compensated for their work.  In 2016, the Fair Labor Association found that the purchasing power of a Bangladesh factory worker’s average compensation was below the World Bank poverty line.

Appeals to review to the Bangladesh Garment Manufacturing and Export Association for a wage review have been rejected.  Combined with the brutal crackdown on the protests that raged from December 11 to December 19, the picture seems to be that of a kleptocratic state vying to keep power and money in the hands of the few. Of course, as with most issues of economy, the problem is much more complex than that.

One major stakeholder in this issue is the group of global brand retailers who buy these garments from Bangladesh’s warehouses.  20 of these retailers - including Primark, Gap and others – sent a joint statement to the Bangladesh Prime Minister’s office, expressing concern at the recent events with regards to labor rights. Then last week, H&M, Next and other retailers pulled out of the Dhaka Apparel Summit, an important congregation of leaders from the global textile industry.

These retailers however are perhaps guilty of not ‘walking the walk’ when it comes to labor wages. Those in charge of local factory outlets complain that global brands are not ready to pay higher wages and bargain hard, putting downward pressure on the costs manufacturers can accrue, consequently keeping wages stagnant. Although Bangladesh still prides itself on having second largest such industry in the world, it's encountering strong competition from textile firms in India and Vietnam. Some companies are seeking to reduce costs further by sourcing from low-cost countries. Southeast Asia and Sub-Saharan regions are under their consideration.

Also important stakeholders in these discussions are the protestors themselves. The protests that raged in December took place without any communication with the national union federations, and this gave the government ample pretext to not just ignore the protestors’ claims but also stamp down on the dissent in a fashion they see fit.

However, as Human Rights Watch reported this month, “Workers say that strikes are often the only means for them to raise their grievances, in part because the government and local employers retaliate against union organizers and workers trying to organize. As a result, workers are unable to bargain collectively with employers and use formal channels for addressing grievances” The victims of the Rana Plaza tragedy did not belong to any unions. That alone should give the opposition pause.

Ultimately, this is an interesting case study on the economic transitions of a developing country. The government can no longer rely on cheap, docile labor desperate for employment to sustain itself. Nor can brands any longer operate on a pro-worker’s rights publicity campaign while not opening up new negotiations in terms of prices. To ensure that both these parties adhere to their words, a media campaign at the grassroots is essential.

On the other side, manufacturers need to recognize the acceleration in change of the global textile industry. Profit and worker wages are not mutually exclusive – if they can invest in safety and technological upgradation they can also divert funds towards remunerating workers more fairly. Technological change is going to take away significant numbers of jobs from the industry, which is why investing in workers in terms of training and resource development has only become more essential.

In the beginning of 2012, the World Bank launched the NARI (Northern Areas Reduction of Poverty Initiative) to provide over 10,000 women with employment, housing, and training. Initiatives such as these have created a generation of skilled workers who can only lend to the economic growth of this integral facet of the economy. Perhaps Bangladesh should take page out of the World Bank’s book and harmonize this conflict through increased cooperation. If it succeeds, the Bangladesh’s garment industry will itself serve as a lesson to the rest of the developing world.