COVID-19 And The Uncertain Future of The Garment Workers Of Bangladesh

LightCastle Analytics Wing
May 13, 2020
COVID-19 And The Uncertain Future of The Garment Workers Of Bangladesh

The Garment Industry has been considered a lifeline for our economy for a few decades now. However, in recent years, it has not been seeing considerable growth. 

Figure: Number of New RMG Factories Since 2000
Figure: Number of New RMG Factories Since 2000 / Source: BGMEA

We can see that not only has the number of new RMG factories every year been increasing, it saw a significant drop during the 2013-14 period. This can be attributed to the decline in export as the graph below illustrates.

Figure: Decline in Bangladeshi RMG Exports
Figure: Decline in Bangladeshi RMG Exports / Source: BGMEA

Adding to these, once Bangladesh graduates from the Least Developed Country (LDC) Status, Bangladesh will have to pay a 6.7% additional tariff which will result in a loss of USD $2.7 billion every year.[1] 

Thus, it can be argued that Covid-19 has only been accelerating the inevitable demise of the garment industry. The main victims, if that were to happen, are the millions of workers employed in the garment industry.

The purpose of this article is to analyse what the future might hold for the hard-working people employed in this sector who have been the backbone of the economy of Bangladesh for over two decades.

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RMG Employees of Bangladesh: Who Are They?

Currently, the garment worker population of Bangladesh is 3.5 million of which 60.8% are female and 39.2% are male. However, when it comes to managerial positions, women are still lagging behind in managerial positions with only 0.5% of managers and 9.3% of HR managers being women.[2]

Regardless of their number in managerial positions, the RMG industry has been important in establishing women empowerment in lower-income households. 

98% of the garment factories are situated in four districts: Dhaka (38%), Gazipur (28.9%), Chittagong (16.1%), and Narayanganj (14.7%).[3]

A 2015 study of 90 respondents shows the following age distribution among workers.[4]

Figure: Garment Worker Division By Employee Age Group
Figure: Garment Worker Division By Employee Age Group / Source: EU Journal

As we can see, 92% of the Garment Employees belong to the ages 19-29. This could indicate that the garment industry usually looks for inexpensive and unskilled labour. The aforementioned survey was done in 2015 which was two decades since the Garment Industry in Bangladesh had started flourishing. This indicates high staff turnover, where the older workers are often replaced by younger ones.

The prioritization of the Garment Industry for inexpensive labour has resulted in the Bangladeshi Garment Industry being one of the most inefficient ones among its global competitors.[5]

Figure: % of Workers’ Capacity Utilization in the prominent Asian Garment Industries
Figure: % of Workers’ Capacity Utilization in the prominent Asian Garment Industries / Source: Emerging Credit Rating Ltd.

Employment in the garments sector has not only contributed to the livelihoods of workers but has had a significant contribution in improving their children’s lives. The 2015 survey shows 100% of garment workers contribute to the education and education materials of their children while 90% contribute to their clothing.[4]

Even if this is not reflected exactly in the entire population, it can definitely be inferred that the garment worker population is contributing to the education of millions of children.

The Plight Of The Garment Worker Population Amidst The Covid-19 Crisis

A research survey by Penn State Center For Global Workers’ Rights paints a grim picture of the garment industry. They have divided the crisis into three phases: Increased Raw Material Cost, Delayed Payments, and Cancellation of Orders.[6]

However, as the following chart shows, foreign buyers have given little support to the Garment Manufacturers to deal with this crisis. 

Question In The SurveyResponses
Did the buyers adjust prices to help cover the costs of raw materials increase?Yes, adequately-2.96%
Yes, but only a little-5.19%
Have the buyers delayed their payments to you for completed orders?Yes, by 1-10 days-10.87%
Yes, by 11 or more days-68.84%
When buyers have cancelled orders, have they agreed to pay for raw materials already purchased?Yes-13%
Some Cases-15%
When buyers have canceled orders, have they agreed to pay for production costs?Yes-3%
Some Cases-6%
Buyer Order Cancellations Impact On OperationsNo Major Impact For The Moment-19.9%
Partial Cut In Employment- 22.2%
Most Operations Are Shut Down-53.4%
Factory Closure-4.5%
Table: Survey On Impact of Covid-19 on Bangladeshi Garment Industry / Source: Penn State Center For Global Workers’ Right

These have caused the garment worker population to be in disarray. More than one million workers have either been fired or furloughed (sent home temporarily). Of them, 72.44% of the furloughed workers have no income while 80.40% of the workers have been paid no severance.[6] 

As seen in a recent survey, the impact is already being seen in the lives of garment workers. The biggest declines in spending have been in the education and transport sectors. While the decline in transportation is understandable during the lockdowns, the decline in educational spending is especially worrying and whether it will rebound post-lockdown remains to be seen. 

Ensuring A Safe and Sustainable Future For The Garment Workers 

The contribution of the Garment Industry has been more in providing employment to millions of Bangladeshis than earning foreign currency. Thus, a decline in this industry will hit them the most. The following suggestions can be considered to help this industry survive.

  • Government Stimuluses which would assist the garment factories have already been declared. These packages should be utilized to ensure that garment workers can get their fair share. However, the eligibility of these stimuli should be contingent on the manufacturers not laying off workers.
  • Once it is safe for the garment workers to return to work with proper precautions, the buyers should be given diplomatic pressure to buy their complete order. If necessary, a reduced price could be negotiated to ensure that the costs of production and the workers’ wages can be given.
  • Long-term plans must be made to ensure this industry sustains. China is losing its market share and those are mostly being taken by countries with more efficient manufacturing. The Bangladeshi industries should also concentrate on their efficiency instead of relying on low-cost workers. 
  • Regulations should be made to ensure that garment factory owners cannot replace the older and more experienced workers with younger and less costly workers. This shall compel garment owners to train their workers to be more skillful and valuable for them in the future. However, in such cases, the workers must also give commitments that they will not leave their workplace after it has invested in them without proper reason. 
  • Despite these, there is a possibility that a portion of the garment industry might not survive. The employees in those factories should be given proper training so that they can develop skills and transition into another employment easily.

To conclude, the future of the 3.6 million garment workers might look grim right now. But it is possible that with proper and pragmatic steps, a sustainable future for them can be salvaged.

Kidwa Arif, Content Writer at LightCastle Partners, has prepared the write-up. For further clarifications, contact here: [email protected].

The LightCastle team has been analyzing the macro and industry level picture and possible impacts wrought about by the Covid-19 crisis. Over the following days, we’ll be covering the major sectors shedding light on the possible short and long term ramifications of the global pandemic. Read all the articles in the series.


WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

For further clarifications, contact here: [email protected]

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