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Problem : Prospect : Challenges

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16th-May-2018       
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Contd from page 42 :
During the stay in Bangladesh, Accord had to struggle to complete the inspection and remediation works in the factories as many did not cooperate. The agency also faced court cases in Dhaka and Amsterdam as the garment factory owners challenged its legality to inspect and suggest remediation activities in Bangladesh.
The garment manufacturers have been complaining that Accord signatories were not giving money for remediation works although they promised it in the guidelines. The relation between the Accord and the BGMEA was not warm enough because of its lack of representation initially in the steering committee of the Accord. After the meeting a signatory of the Accord, said the retailers are here to do business, not to remediate the factory buildings. We are satisfied with the progress of the workplace safety and we have decided to leave the country, 'Talking from the brands' point of view, our business is selling garment. Our business is not to remediate the buildings in Bangladesh, mentioned the representative of the signatory.
Ensure of gas and electricity supply
Gas is one of the essential inputs required to run a garment factory. Since RMG is our leading export item, the factories need uninterrupted gas supply 24/7. But, unfortunately, production in most of the factories is being hampered in the recent days because of  acute shortage of gas, which is forcing factory owners to miss production schedule and shipment deadlines. This is a serious concern as failure to meet shipment dates may lead to loss in terms of millions of dollars for both the importers and the manufacturers.
According to BGMEA, gas supply in 350 RMG factories in and around Gazipur, Ashulia, Savar, Kasimpur and Konabari is dwindling. The garment leaders are of the opinion that through the government had assured with all sincerity to keep the supply position of gas in garment factories uninterrupted, in reality it is not happening. They want the government to tae necessary measures without further delay in the import and supply of LNG as per schedule so that it can give some relief. The diversion of gas from a local fertilizer factory to the RMG factories was another possibility that remains unresolved till date.
All said and done, there can be no argument that the RMG sector needs all the support from the government and other stakeholders in keeping its manufacturing and export schedules unaffected. Gas and electricity supply must be ensured for the smooth running of factories. We may recall that in 2016 BGMEA had announced their target of reaching $50 billion export target by 2021. And during the announcement they had reminded all that they would require smooth supply of gas and electricity in order to reach the target. Definitely $50 billion is a lucrative target and we strongly feel they would be able to go there. But what they need is full support and cooperation from the government and their buyers.
We hope the gas supply problem would be resolved soon and BGMEA would be able to increase its production to reach the coveted target.
Denim sector highly potential
That Bangladesh emerged as a major hub for sourcing denim products for international retailers is a very good piece of news and those who made it possible deserve to be celebrated. The overwhelming presence of foreign and local exhibitors and visitors at the seventh edition of Bangladesh Denim Expo smacks of the fact that the country has made great strides in the denim sector.
Bangladesh has an enormous opportunity to increase its share of global market in RMG export markets. The contribution of denim products in the overall RMG exports is also increasing rapidly. Now it remains to be seen whether the country's garment exports can reach the US$ 50 billion mark by 2021 as is being projected.
However, the fact is that the rising wages of garment workers in China, the largest textile exporter, has opened a window of opportunity for countries like Bangladesh where production cost is still relatively low.
But, there are challenges as well for Bangladesh to capture more global market share. Lackluster infrastructure and port facilities, and shortages of utility services are some of the obstacles the readymade garment industry is facing. It is, however, reassuring that the government is trying its best to overcome these shortcomings.
Second largest exporter
The apparel and garment sector has to modernize and focus more on quality than quantity. They must keep a tab on the ever changing global fashion trends and invest more on promotion and patronization of research, development and innovation to manufacture high quality products.
Bangladesh is currently the second largest exporter of textile in the world. With the increase in production cost in China, Bangladesh gained a competitive edge in terms of production cost. But we must remember that several other countries including India and Vietnam also hold the same advantage and are vigorously trying to cash in on the opportunity.
Amid this global competitive environment, it is disheartening that the country has gone one notch down in the World Bank's ranking of ease of doing business mainly due to the hurdle businesses face here at the start of their operations.
 Whereas India made significant progress by jumping 30 spots to 100th in this year's ranking.
Some visionary and forward-looking steps from the government for the sake of the entire business sector and the country's economy would be much welcome. There is much Bangladesh can gain by removing the hurdles of running business in the country.
Six new denim mills in 2 years
At least six new denim mills come into operation in Bangladesh in the next two years with an investment of $100 million. The increasing demand for denim fabrics from garment makers has encouraged the investors to establish new factories here, the response we are getting from both the local millers and foreigners is huge, Mostafiz Uddin, organizer of Bangladesh Denim Expo.
Currently, Bangladesh has 30 denim mills with a capacity to produce 435 million yards of fabrics a year. Local suppliers can meet only 40 per cent of Bangladesh's annual demand for denim fabrics and the rest is met through imports from China, India and Pakistan. Last fiscal year, Bangladesh exported denim goods worth $2 billion. Existing investment in the denim sector is more than $1 billion and every year more people are showing interest to invest in the sector. We are already strong in basic denim products. Now what we need is very fine fabrics to produce very high-end denim products. However, investors may be requested not to make new investments in basic denim fabrics. The prices of fabrics declined in Bangladesh due to the price war among the local fabrics producers. Six months ago, a yard of denim fabrics was sold in Bangladesh at $2.5, which came down to $2 now.
New hub for denim
As a new hub for denim products, many foreign companies are now coming to open offices or factories in Bangladesh. Lands, a German denim accessories maker, is the latest on the list to start production in its new factory in Savar on November 1,'17. The company has already invested $500,000 in the new factory that has 30 employees. But the end of next year, the total workforce in that new plat will be 120 as they are going for new recruitments. Lades has a target to annually produce 500 million pieces of leather patches-an accessory for making denim trousers-at its Savar plant. Such accessories will be supplied to the whole Asian region. All big brands like H&M, VF and Walmart are their customers.
Similarly, Nezahat Boni, Senior Accounts Manager of Orta, a Turkish denim maker said her company now supplies three million meters of denim fabrics to Bangladesh every year, which was only 800 meters in 2011. We opened an office in Bangladesh in 2011 as we cannot ignore the importance of this country as a denim hub.
Md Mujibul Hoque, sales director for Bangladesh at China's Prosperity Textile, said his company opened an office in Dhaka last year and the company sells four million yards of denim fabrics a year in Bangladesh and targets to increase the amount to 40 million yards.
With the higher demand for denim, Bangladesh has overtaken china to become the largest denim supplier to the European Union - a development that would give confidence to the country's garment sector as it looks to hit $50 billion in exports by 2021.
In the January-June period of 2016, Bangladesh exported 567.97 million Euro worth of denim products to the 28-nation bloc with a 21.18 per cent market share. Bangladeshi entrepreneurs supply denim products to major global retailers, including Levi's, Diesel, G-Star RAW, H&M, Uniqio, Tesco, Wrangler, S.Oliver, Hugo Boss, Wallmart, and Gap.
Annually 2.1 billion pieces of denim are sold globally. In 2014, the size of the global denim market stood at $56.20 billion. By 2020, the global dnim market will reach $64.1 billion, while Bangladesh's denim export is forecasted to reach $7 billion by the end of 2021.
Minimum wage for workers
The move initiated by the Bangladesh Garment Manufacturers and Exporters' Association (BGMEA) for institutionalizing wage board for the garment workers is no tiny blip to be overlooked. It is a major pro-industry move that might bring overall improvement in the work culture of the country's largest manufacturing sector that also fetches most of its foreign exchange earnings through export.
Indeed, there were pressures from different quarters. The pressure was in the form of the workers going violent quite frequently, various rights groups from within and outside demanding it for long, as part of a package of labour welfare in the country's garment sectors.
It has been reported in the media that the BGMEA requested the Ministry of Labour early this month to from a wage broad to review the existing wages of the garment workers in order to reach a consensus on minimum wages. It need not be reiterated that without addressing the wage issue in a sensible manner there are potential risks that might cost the entire industry too dearly.
Demand for wage hike
Factory unrest, mainly from demands for wage hike to a reasonable level, has become almost a recurrent phenomenon in the garment sector. Carrying the baggage of cheap labour is no longer a gainful proposition, on the contrary, it is a grim reality that the industry must address as early as possible.
Tracing the incidents of violence and mayhem over wage makes a long list spanning over the past decade. Beside loss of lives and damage to property, the incidents did cast a dark shadow on the growth prospect of the garment industry and there were occasions when the industry faced threats of boycott from some of the major Western buyers, under pressure from the rights groups. The industry didn't experience any noticeable labour unrest during its infancy or in its maturing stage, say a decade back. But as it began to grow meteorically and is still in the process of growth with more than four million workers pushing it up to become the second largest manufacturing hub in the world, there is no way to skirt around the practices that govern labour welfare wage weighs heavily.
It may be recalled the government way back in December 2013 fixed minimum wages for garment workers at Tk 5,300, but it has been alleged that the amount so fixed had loopholes and some factory owners have been taking advantage of that, much to the misery of the workers. Besides, it is expected that while fixing the minimum wages, the wage structures in other countries, especially those of the competing ones, should also form a basis.
Now that the government is to start working on minimum wages, it is important that past mistakes are taken into account so that it is meaningfully done. Consultation with all stakeholders, including the workers' representatives, is crucial to reaching a decision in this regard. For a healthy workplace with well motivated workforce, the prime need is to ensure fair wages, or else the burgeoning industry runs the risk of facing the perils of labour unrest as has been the case for quite sometime now.
Tk 16,000 minimum wage
Workers and union leaders demanded trebling of minimum wage to Tk 16,000 for the country's 3.6 million apparel workers given the abnormal spiral in the costs of basic commodities, accommodation and healthcare. At present, the minimum wage for garment workers is Tk 5,300.
NazmaAkter, President of the Sommilto Garments Sramik Federation Federation, a garment workers' right group said, 'although we do not fully agree with the concept of living wage, we want a big hike of the salary this time.'The group has already sent a letter to the minimum wage board, which was formed recently by the government, demanding Tk 16,000 as the wage.
SimaAkter and Rasheda Begum, two operators of a garment factory at Gazipur, echoed the views of Akter. If the salary is hiked the factory owners will also raise the production targets proportionately. Please also keep our physical conditions in mind when you fix the minimum wage,
Simamentioned, the trebling of wages is warranted as the prices of basic commodities have increased along with the house rent. The garment workers have to buy rice at Tk 58 to Tk 60 a kilogram as the prices of the staple have shot up. But our incomes did not increase. The prices of basic commodities and house rent are higher than in Dhaka at Gazipur, the hub for garment factories. We cannot save money even after sharing a room and having less nutrient food.
Khondaker Golam Moazzem, research director of the CPD, suggested specifying the legal aspects of the wage and workers' rights while fixing the minimum wage as sometimes due to ambiguities in the labour law. For instance, there is an apprentice grade for which the minimum wage is Tk 4, 200, but the factory owners often pay the entry level workers this wage instead of correct amount of Tk 5,300. Every time the issue of wage hike is discussed the factory management brings up the argument that they would go out of business if the workers' salaries are raised. Actually, this is not right - we should find out how many factories have shuttered for salary hike. Factories may close down for other reasons. Ideally, the minimum wage should be close to the living wage. As per the Asia Floor Wage, the living wage for garment workers is Tk 37,661 given the conditions of 2017. The current minimum wage of Tk 5,300 is just 19 per cent of the living wage.
Minimum wage not enough
Salim Raihan, a Professor of Dhaka University's Economics Department said, the existing minimum wage is not enough to maintain the minimum standard of living for a worker. A minimum standard living comprises food, clothing, house rent, education, health, entertainment, savings and so on. Fixing Tk 5,300 as the minimum wage for workers in 2013 was not adequate for maintaining a decent life. So, this time the minimum wage for garment workers should be fixed-following the living wage concept.
Prices are going up daily but not our wages. We are now buying lower quality food and grains from local shops. This is going to affect our health in the long- run but we have no choice. Between 0.5 and 3 per cent of the cost of manufacturing of a clothing item goes to the worker who made it. This means, on anEuro 8 t-shirt, the most a worker will get paid is 24 cents.
Qazi Khalikuzzaman Ahmed, Chairman of the Palli Karma-Sahayak Foundation, urged the government and factory owners to introduce a rationing system to lead a decent rates. Four important factories - food, accommodation, education and health of workers should be considered while fixing wage.
Living wages vs minimum wage
At a time the wage board formed by the government at the insistence of RMG factory owners is working on a wage structure for workers, the issue of living wage now comes to the fore. Thanks to a study titled, 'Moving towards living wage in the RMG sector in Bangladesh: What will it take?' by Care Bangladesh, some fresh lights have been shed on the issue. There is a tacit admission that under the prevailing circumstances, implementation of living wage in the RMG sector here is impossible. But at the same time there should be an unrelenting effect towards increasing the minimum wages to the level of living wage. The hard truth is that garments workers draw wages that are insufficient for allowing them to lead a decent life. When the minimum wage for a garments worker is Tk 5,300, it hardly allows one to lead a better life them what is called subhuman.
In this connection, the recent price rise of rice, staple food here, and other commodities should be taken into account. Also the emphatic increase in pay package for government employees must not be overlooked. When the minimum salary for a government employee is Tk 15,250, how can a garments worker make do with one-third of that amount when both purchase their essentials from the same market?
The owners of garments factories voluntarily took up the matter of fixing minimum wages for their workers is quite significant. But how far are they ready to raise the minimum wage? Already voice have been raised from concerned quarters for fixing the bottom slab at Tk 16,000. A living wage structure is unlikely to be lower than this.
Unable to afford wages
However, with rare expectations most garment factories will be unable to afford wages at this level. But then the nagging complaint that they will be out of business if the minimum wage is fixed in between Tk 8,000-10,000 cannot be entertained. The garments workers were deprived of reasonable wages at the outset. Since then factory owners have mostly expanded business and transformed their living standard beyond recognition but only at the cost of the workers. RMG workers could be given a better deal last time when in the face of movement a raise in wage was effected. This time the wage board should take into consideration this fact and keep open an avenue for taking the minimum wage to living wage within the shortest time.
In this task, though, trade diplomacy will have to be called into action. The Accord and Alliance, two RMG buying consortiums from the Amricas and Europe, have played a pivotal role in raising the safety standard in the country's garments factories. Now they should equally stand by the workers here. Now they should equally stand by the workers here. If they agree to increase the price of a garments article by just a cent, it can be enough to raise the minimum wage for a worker in Bangladesh to a reasonable level. The profit they make on purchase from Bangladesh and sale in their respective markets is unusually high. So, they have a moral obligation to play a role here.
Machines threaten workers
Rapid automation of production, closure of some noncompliant factories and the emergence of some other high-potential sectors have shrunk the total number of workers employed by the garment sector by 0.80 million over the last five years. In 2013, the total number of garment workers in Bangladesh stood at 4.4 million, which fell to 3.6 million now, mentioned by the executive director of the Bangladesh Institute of Labour Studies.
Automation is mainly responsible for the shedding of workers. One machine can make at least 10 workers in a factory redundant. Workers in sweater factories stand to lose their jobs as the owners are progressively moving towards full automation to save up production costs and reduce reliance on workers.
Srinivas Reddy, the immediate past country director of the International Labour Organisation, also agreed with the declining number of garment workers in Bangladesh. The machine has replaced the unskilled and semi-skilled workers, but the skilled workers are still employed in the factories. Apart from automation, the closure of nearly 400 small and medium factories is also responsible for the reduction of garment workers. The factories that could not pass the tough criteria of the Accord and Alliance, the two foreign inspection agencies, were shuttered and the employees lost jobs.
Research Director of the Centre for Policy Dialogue, echoed the same and mention that, yes, it is true that the demand for workers has declined due to automation and closure of some factories. The relocation of factories from Dhaka to Gazipur, Savar, Ashulia and Maona following the Rana Plaza building collapse is also to blame for the decline in numbers.
Industry insiders mentioned, the workers did not join the new places or shifted to other sectors. Increasing attention to value added garment items such as blazers, suits, lingerie and sportswear is another reason,For high-end garment items, a certain level of satisfaction is needed that cannot be achieved by way of manual labour. At present, value-added items account for 40 per cent of the total apparel shipments, up from about 30 per cent five years ago.
It is also true that the rise of other sectors like agro-processing, leather goods, IT and construction work for mega projects by the government also attracted workers away from the garment sector. But at the same time, new factories have also come up and the efficiency of workers have also improved a lot. In the near future, if the e-commerce gains like Amazon and Alibaba employ internet-based marketing tactics, there is a possibility of merchandisers losing jobs as well.
SiddiqurRahman, President of the Bangladesh Garment Manufacturers and Exporters Association, acknowledged the shedding of workers in sweater factories for automation. But the most damage was done by the shutdown of nearly 600 small factories.
Contd on page 42

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