Post-independence, Bangladesh has quickly transformed itself into a manufacturing powerhouse in readymade garments (RMG), the country’s highest export income earner. Despite the impressive economic growth, devastating fires and building collapses have become all too common in Bangladesh. Is the RMG sector at a crossroads? What strategies can the country adopt for long-term RMG sustainability?
RMG contribution to total exports stood at 3.89 percent in 1983-84, which in over three decades shot up to 82.01 percent in 2015-16. This has helped make Bangladesh one of the fastest growing economies of Asia. The RMG sector employs around 4.2 million workers, of them about 80% are women. The sector significantly contributes to the empowerment of women in traditional Bangladeshi society and indirectly supports around 40 million people, approximately a quarter of the population. While the RMG sector has undoubtedly contributed to the economic growth of the country, the Covid-19 pandemic highlighted some fundamental vulnerabilities of this development model. At the beginning of the pandemic there was a global drop in demand for RMG, which impacted thousands of ‘informal sector’ workers who have no work contracts, pensions, social protection or a notice period for termination. This made the workers vulnerable to being thrown back into poverty. Without a work contract, garment workers find it extremely difficult to make a claim, particularly in cases of workplace accidents such as the Tazreen Fashions fire or the Rana Plaza building collapse. In large parts, corruption and slack law enforcement have been responsible for many of the deaths over the years, where political connections have offered indemnity to many of the accused instead of holding them responsible for negligence. Any serious action taken after an industrial disaster usually occurs when international brands who sub-contract tens of thousands of low-paid workers put pressure on the RMG sector to improve factory and safety conditions.
First steps into RMG
Before the establishment of Desh Garments Ltd in 1978, a handful of Bangladeshi RMG companies competed in the sector, but struggled to export garments. This changed in 1979 when Bangladesh tentatively took its first steps into the global apparel trade when it sent a small consignment worth 13 million Francs to a Paris-based company. Soon after, South Korean company, Daewoo, reluctant to invest in Bangladesh, nevertheless, forged a technical partnership with Desh and agreed to train 126 Desh employees in South Korea for 18 months. There Desh employees learned how to conduct an assembly-line process. In 1980, Desh’s Chittagong garment factory was the largest in Bangladesh with 450 machines and 500 employees. As Desh prospered, numerous companies entered into the RMG sector. Many of them were started either by ex-Desh employees who were trained in South Korea, or by new start-ups that poached Desh employees for their knowledge and expertise. Although the Bangladesh government did not realise the potential of the RMG sector in its early stages, in 1982 the government began to provide several incentives such as the duty-free import of plant and machinery, cash inducements, and bonded warehouse facilities. By 1988, the number of garment producers reached 664. At present, there are over 4,000 RMG factories exporting numerous garment products to all major international markets. For fiscal year 2018-2019, Bangladesh exported $40.53 billion worth of RMG or 6.4 percent of the global apparel market share. Domestically the RMG sector represents 84 percent of Bangladesh’s exports. The Bangladesh government has recently fixed merchandise export for the current fiscal year (2022-23) at $58 billion.
Although not exclusive to Bangladesh, large numbers of people die in labour intensive sectors such as RMG due to a combination of negligence, corruption, and weak enforcement by government departments. Following an accident, the government forms a probe to investigate which makes recommendations on how to prevent a repeat, however, this does not necessarily lead to positive changes in the sector, which leads to the question why not? If any such industrial incidents happened in an advanced democracy, then it would have resulted in significant government shake up and action. But in Bangladesh, apart from some rhetoric about an inquiry, a show of political sympathy, and compensation for the victims’ families, no meaningful or lasting changes follow. The inevitability of major accidents appears to be embedded in the emerging social structure of the sector which does not pay enough attention to the safety of workers, but instead protects business interests. It highlights the lack of democratic accountability and the lowly state of national law and order. For example, inquiries into accidents can last for years whereby those found to be responsible are often never brought to book, depriving justice for ill-treated workers. According to Transparency Internationals Corruption Perception Index, Bangladesh is ranked 147 out of 180 countries – significantly worse than India’s 85th ranking. Due to corruption, issues are usually swept under the carpet thanks to money, political influence, patronage, and high-level connections between business and politics.
More than a decade ago, on 24 November 2012, a devastating fire broke out in Tazreen Fashions Ltd, an eight-story garments factory on the outskirts of Dhaka. The fire started on the ground floor walkway that was illegally used as a warehouse. The factory did not have any fire exits despite a provision of labour law that stipulates that there must be at least two fire exits in every factory. As the fire alarm was ringing and smoke was rising from the ground floor, in a panic workers tried to rush out before the fire could spread to other floors, but their managers and the security guards told workers it was part of a regular drill and that workers should carry on as it was nothing serious. Gates were locked from the outside as fire engulfed the building contributing to further unnecessary deaths. At least 112 workers, mostly women died in the fire and a further 200 sustained different injuries. Delwar Hossain, owner of Tuba Group, the parent company of Tazreen Fashions Ltd told a newspaper, “I reported losses of Tk 63 crore to the five-member committee that was formed by the home ministry to probe the incident”. Although the fire resulted in monetary loss due to burnt stocks, cancelled orders and missed opportunities of making profit for the owner, for the victims the losses have been immeasurable. Delwar Hossain and his wife along with 13 others were eventually charged with homicide. This was the first time that Bangladesh opened prosecutions against an RMG owner for a factory fire.
Only five months after the Tazreen factory fire, on 24 April 2013, Rana Plaza in Savar was the scene of a building collapse. Originally developed as a shopping complex, the four-storied building housed five export-quality garments factories, and without a permit, the owner Sohel Rana developed four more stories to house extra garment factories. Literally on shaky ground as the building’s foundation stood on a pond and with the load of the extra four stories as well as the heavy machinery, Rana Plaza was an accident waiting to happen. The land it stood on was illegally grabbed and all rules and regulations related to the Bangladesh Building Code 2006 were contravened. On the day of the collapse when workers learnt of the news that cracks appeared in the building, management told them to still come into work. Following a power outage, the generators started up on the top floor and that is when the whole structure imploded and in a matter of minutes the building came tumbling down, floor by floor. 1,135 workers lost their lives and 2,500 workers were injured, most of them women. Sohel Rana was arrested at the Bangladesh-Indian border where he was attempting to evade the police. Initial investigation findings specified that the accused violated building code through the construction of four additional floors using substandard materials as well as the building having structural flaws. Sohel Rana along with 41 others were charged with murder instead of culpable homicide because factory workers were forced to enter the building against their will, despite the building developing major cracks the day before.
Both the Tazreen and Rana Plaza tragedies serve as a reminder that there is a relation between the demand for cheaper quality clothes and the working conditions of workers in the outsourced manufacturing factories. It also raises serious questions on the corporate social responsibility of the apparel brands and companies that are outsourcing manufacturing to less developed or underdeveloped countries. One of Tazreen’s factories in the manufacturing hub in Ashulia produced clothes for brands such as H&M, Gap, Walmart, C&A, Abercrombie & Fitch, and Tommy Hilfiger. Production documents recovered after the Tazreen fire indicated that 55 percent of the factory’s production two months prior to the fire on 24 November 2012, were for contractors of the US retail giant Walmart. A year after the fire, a $6 million compensation programme was set up for Tazreen survivors, including those with life changing injuries and affected families, however, American retailers failed to provide any compensation. Walmart stated it would not participate in the compensation programme because Tazreen was not one of its authorised suppliers. According to Samantha Maher, campaign coordinator for the British branch of the Clean Clothes Campaign, “Wal-Mart is one company that is showing an astonishing lack of responsibility, considering that so much of their product was being made at the Tazreen factory”.
Although Bangladesh was able to successfully solve the issue of child labour in the mid-1990s, up until the Tazreen Fashion fire and Rana Plaza collapse, the country’s performance in improving factory working environment remained inadequate. Both disasters highlighted the lack of compliance when it came to safety. As global attention focused on the garment production process, the social dimensions of the Bangladesh’s RMG sector received more attention from consumers and brand name international buyers, which made safety compliance vital for the long-term sustainable growth of the sector. Many international buyers demanded compliance with their ‘code of conduct’ before placing any garment import orders. Many significant compliance measures have been undertaken to ensure the safety of workers as well as factories. These include the Accord on Fire and Building Safety in Bangladesh, a platform of predominantly EU-based retailers and its American counterpart, the Alliance of Bangladesh Worker Safety. For instance, Accord inspected 1,600 factories and recommended the closure of two, while the Alliance inspected 587 factories and closed one. To improve compliance across the RMG sector would require initial investments in fire safety and physical infrastructure and the much-needed funding for operational costs to maintain high levels of compliance year upon year. Safety compliance in the RMG sector would provide multiple benefits. These include, reduced probability of accidents, increase in production, lower employee turnover, and greater opportunities for export to both existing and new buyers.
The RMG sector reached a milestone in September 2022, when 171 factories in Bangladesh, the highest number in the world, were certified green by the US Green Building Council’s (USBGC), Leadership in Energy and Environmental Design (LEED). According to the Bangladesh Garment Manufacturers and Exporters Association, green factories typically reduce energy use by up to 40% and water consumption by 30%. Not only does this bring down operational costs, but it also improves indoor air quality. There are more than 500 factories in Bangladesh that have registered for LEED certification with the USGBC, the highest number in the world. Nevertheless, the domestic textile industry continues to face the massive challenge of dealing with the problem of effluent discharge, particularly in small and medium sized factories that do not have the cash to invest in the latest effluent treatment technology. For example, garment factories in Bangladesh use 250 litres of water to wash every kg of apparel whereas the global standard is between 60-70 litres of water for a pair of jeans weighing 1kg. To reduce usage, around 200 RMG factories in collaboration with the Partnership for Cleaner Textile (PaCT) programme of the International Finance Corporation (IFC), have saved approximately 21.6 million cubic metres of water annually. Reducing water consumption could pave the way to save $16 million a year. Experts claim that by changing chemical usage and streamlining certain processes in apparel production, water can further be reduced to 13.5 litres per kg of apparel. The prevalence of green factories in Bangladesh add vibrancy to the idea of sustainable industrialisation, and PaCT and the IFC further compliment this by aiming to lower the environmental impact and resource consumption in the sector.
Competition and Emerging Markets
In order to continue its success story, Bangladesh needs to focus on how to retain its comparative advantage. Previously, between 1974 and 2004, the Multi-Fibre Arrangement (MFA) regulated and restricted trade in textiles and garments between the developing and developed countries. For instance, the MFA imposed non-tariff quotas on the amount of apparel, which developing countries could export to developed countries. MFA quotas favoured less competitive countries such as Bangladesh, Cambodia and Vietnam, but not so much the major established exporters such as China and India. In 2001, China joined the World Trade Organisation, which rapidly increased the competition in the exports of apparel. Since 2005, when the MFA was completely abolished, Chinese exports further accelerated since there were no quota restrictions. Logic would dictate that ‘vulnerable exporters’ like Bangladesh, Cambodia and Vietnam would lose their ‘competitiveness’ as well as their market share largely to the likes of China and India. However, in the case of Bangladesh, post-MFA, it managed to increase its apparel exports as well as sustain its position and establish itself as a top apparel exporter. Bangladesh’s comparative advantage in the apparel industry is primarily static and, in the future, will be highly challenged, given increased competition from other countries and stringent compliance issues. Therefore, the sector should enhance labour productivity, produce higher value-added products, introduce new technology in the production process, and reduce the cost of doing business to enhance Bangladesh’s competitiveness.
While global demand for apparel products is expected to surge in the coming years, China’s output has declined in the global market, especially in the cheap and medium clothing categories. Bangladesh’s RMG sector must not only continue to progress and evolve, but it should take advantage and concentrate on producing high-value products in line with international standards. Furthermore, to accelerate export growth and build a wider export base, Bangladesh needs to expand its linkages with neighbouring countries such as China and India as well as other Southeast Asian countries like Japan and South Korea to access underexploited markets instead of being dependent on the North American and European markets, which together receive three quarters of the exports. The most pressing issues for the RMG sector at present include poor safety compliance, inadequate infrastructure, and uninterrupted power capacities, all of which hamper overall competitiveness. Reliance on only a mass pool of unskilled labour does not appear to be sufficient. Bangladesh’s Asian neighbours and competitors such as China, India, Pakistan, and Sri Lanka also have large pools of unskilled labour, despite this, to date, Bangladesh has been able to retain its comparative advantage and continues to enjoy export growth. While abundant cheap labour has been the single most important advantage of Bangladesh, the local sector has been transformed and flourished despite numerous challenges such as weak governance, high cost of doing business, weak infrastructure and labour unrests.
According to a recent report of the International Labour Organisation, the textile, clothing and footwear sectors are at the highest risk of losing jobs in the fourth industrial revolution and the threat from automation, the machine intensive production process using automated equipment and technology. Bangladesh cannot escape this challenge, particularly as global brands demand higher productivity, cost efficiencies, lower carbon footprint, quicker turnaround time, and better working conditions. Whereas in the past, the entire manufacturing process was done using hand-operated machines and other simple technology, in recent times, advanced technology and modern equipment have been introduced into garments production. The introduction of smart sewing machines, jacquard machines, computer aided design, 3D printing, cutting and drawing patterns and the digitisation of administrative tasks will impact the sector. There is no doubt that automation will reduce the workload of factory employees at different points of the production process as well as increase efficiency and reduce overall labour and production costs. The advancement of apparel automation by Atlanta-based textile equipment manufacturer SoftWear Automation and Seattle-based Sewbo have been limited to producing towels and t-shirts and similar items, and analysts continue to debate whether robots can produce jeans as well as other complex items in the near future. The idea of ‘robotic fashion’ is still at the embryonic stage as it will be a long time before garments factories in Bangladesh adopt the technology. Although there is a real threat from automation, much of textile automation is related to ironing out supply chains and reducing environmental pressures rather than simply replacing abundant cheap labour.
Although many analysts are predicting that there will be huge job cuts in the RMG sector in the near future if the sector fully adopts automation, nothing so far indicates that automation has contributed to job cuts in Bangladesh’s RMG sector. While there is some merit in the view that resultant job loss rate may not match with the new job creation rate, the actual impact of automation is an empirical question. Moreover, because of the unpredictable formation of various fabrics, it is extremely difficult for a robot to keep track of what it is handling and where to apply itself. It is extraordinary that despite hand spinning being the first process to capitulate to industrial spinning in the early 19th century, textile and apparel manufacturing still remain hand guided. Although some processes of apparel-making can be automated such as cutting fabric or sewing buttons, it is difficult to make a machine where fabric is inputted and the output is finished garments. Therefore, how long can Bangladesh sustain its ‘low labour cost’ advantage? If Bangladesh is to accept automation in the RMG sector, then it should also aspire to raise the level of the price of its labour through the manufacture of higher value-added products and services that require higher skills and higher wages. All displaced workers as a result of automation should be retrained take up jobs which require higher skills. That way the pool of precious labour will not be dumbed down by staying in jobs with repetitive tasks that a machine can perform effortlessly and more productively.
With no sector looking as potent as the RMG sector, it has become the economic lifeline of Bangladesh and its future will be critical for socio-economic development for the next ten-fifteen years. There is no denying that the success story of RMG in Bangladesh has to do with the comparative advantage generating from the country’s large pool of labor which mostly consists of female workers that are either unskilled or semi-skilled. Despite the significant employment opportunities, wages remain low compared to regional competitors. The nature of the comparative advantage remains static and will be highly challenging in the future given the increased competition from other emerging countries. Furthermore, health and working conditions of workers remain a constant source of concern because the sustainability of the sector depend on how these issues are addressed. Added to these concerns is the market power of multinational apparel corporations and retailers who have hard pressed their production process to low income countries. The deaths in the Tazreen fire and Rana Plaza building collapse are closely intertwined with the lives of the more than four million that work in the RMG sector. Most of those who died in the collapse were aged between 13 and 30, with 58 percent of them between 18 and 25, and were on low monthly wages. Multiple challenges have risen following Tazreen and Rana Plaza, such as stringent compliance issues that have been made worse by the negative media coverage and the escalated negative international attention.
The RMG sector of Bangladesh is now at a crossroads. Robotics and automation are widely used in the sector and there is also development of productive robotics in the apparel industry. However, there is a very limited scope for the study on the application and impact robotics and automation are having in apparel production. As a result, robotic applications in the RMG sector have remained unchanged and are limited to cover mainly conventional handling, assembly, cutting, and welding. Therefore, RMG manufacturers in Bangladesh will need to invest in further research into the application of robotics in the sector and take on board the many necessary steps to implement further automation which is essential for increasing productivity and prosperity, otherwise, Bangladesh may fall behind in this competitive market and keep pace with competing countries. The sector should aim to generate a dynamic comparative advantage which would ensure the future sustainability of the sector. Furthermore, Bangladesh will need to enhance its competitiveness by reducing the cost and competitiveness of doing business. There is also a need to enhance labour productivity, produce higher value-added products via the introduction of new technology and production line innovation. All of these are ambitious goals and if they could be fulfilled would be a significant achievement for the country, however, none of this will be possible or sustainable without a properly motivated workforce or a real change for the workers in the sector.