bangladeshi labor and the attraction of the textile industry

8/13/2019 Bangladeshi Labor and the Attraction of the Textile Industry

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Bangladeshi Labor and the Attraction of the Textile Industry

“Bangladeshi Labor and the Att raction of t he Te xtile Industry”

Authors: Eduardo Gonzalez

&Elizabeth Lugo

Florida International University, USA

Introduction:

The world economy is constantly changing and shift ing from location to location, in search of the next

most efficient location that can produce goods. This has been true since the “Silver Century” when

Europeans traveled the world in search fo r goods that would bring them prof it in return fo r things that they

had in abundance (Brook). The race to the bot to m is characterized by this mot ive. It is a way of attaining

ef f iciency and in certain places, avoiding the markets (Rivoli). However this race has become natural in the

quest f or the success of businesses and the development of countries. The race to the bot tom searches

f or cheap labor, cheap investments, and f lexible regulations. When there are no more of these things in agiven area, the race moves on in search of a place that will grant producers f lexibility and cos t ef f iciency. All

of this is for not if a sizeable workfo rce is not f ound. We pose the question “What aspects o f Bangladeshi

labor att ract the textile indust ry?” We will analyze labor in Bangladesh and why it is so att ractive to f oreign

companies. It is important to understand that labor is not only the people, but the living and f inancial

conditions of people as well as the social dependencies that these people have. Labor provides the gears

f or which production can become ef f icient. The wages of workers, the f acilities o f workers, and the

regulations of workers can become obstacles to producers that can make or break their investments. It is

necessary to have a workforce that can be content with receiving jobs f rom f oreign producers to be able to

operate with cost ef f icient investments. Bangladesh satisf ies the af orementioned criteria. It is a count ry

that is rising in the world arena and is cons idered one of the next places f or t he race to the bot tom.

Background t o Bangladeshi Labor:

Bangladesh has a population of more than 127.5 million people (globalfootprints.org). It is one of the most

densely populated count ries in the world. Mos t people live below the living standard, f orcing the majority of

people to seek jobs that will provide them with more prof it. The Bangladeshis that live in rural areas move

to the cities where there are supposed to be jobs and better living conditions. However, there are fewer

obs and homes than there are people moving to the cities, thus producing a string of shantytowns where

people live in terrible conditions (globalfootprints.org). These conditions have led people to welcome the

coming of textile factories and the development of the industry in Bangladesh. Textile manufacturers are

always looking for the next location that will give them an edge in efficiency and cost. They need to find

places that will provide them with an ef f icient labor f orce and that will render their investments more

valuable than anywhere else. Bangladesh seems to be t he place where the textile industry has shif ted to in

response t o the multitude of Bangladeshis t hat need consistent and substantial wages.

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Labor in Garment Industry

primarily comprised o f women. The

garment sector alone has a workfo rce

that is 85 percent women. This has

been the result of the type of work that

women must tend to in rural areas. This

work typically requires s trength and long

periods of time outdoors. Women are

thus poorer and at a disadvantagewhen it comes to the work a man can

typically accomplish in rural areas

(nationsencyclopedia.com). Like the

Chinese women in textile f actories f rom

PietraRivoli’s boo k, “The Travels o f a T-

Shirt in the Global Econo my”,

Bangladeshi women experience the

same issues in rural areas. Their

aspirations and living conditions force them to seek jobs that will get them away from the harsh work and

at the same time provide them with an opport unity to escape the poverty they experience in rural areas.

The economic and social history of Bangladesh can be traced to 1971 when the country gained its

independence. Since then it has increased its real per capita by 130 percent and has been able to cut

poverty levels by 50 percent (ruralpovertyportal.org). To understand the drastic transformations the country

has undergone, one must perceive it as a most ly rural count ry with agriculture being its o riginal and primary

form of revenue. Urbanization has changed this and emphasized on industrial development instead of

agricultural development (ruralpovertyportal.org). Rural Bangladeshis have been lef t with little land and have

been fo rced to rethink their lifes tyles. The process of urbanization and the rise of f actories have required

more land, specif ically land that has belonged to rural Bangladeshis. The count ry still employs 44 percent o f

its labor in the agricultural sector (ruralpovertyport al.org). Aside f rom this stat istic, Bangladesh can be

considered the current country in the race to the bottom as t extile manufacturers seek workers that willwork for lower wages.

Labor has specif ically attracted the textile industry to Bangladesh because of the huge workforce and the

relatively low wages that Bangladeshis are willing to accept. The current average wage is f ive thousand

takas per month (Kiron). Eighty takas are equivalent to one dollar. This makes the monthly wage of a

worker to be around sixty-two dollars. There are also several ot her reasons why companies have chosen

to target Bangladesh f or investment. In regards to labor, the country has a large segment o f the population

that is young and takes part in the labor f orce. 57 percent o f the population is under 25 years o ld. They are

also highly literate, having a 72 percent literacy rate (leopardas ia.com). This part o f the population can

provide more work efficiency than a labor force that is older. Companies address efficiency concerns byinvesting in countries that will obviously provide them with more output at a lower cost. 78 percent of the

country’ export earnings come from the textile sector. This sector accounts f or 5 percent of the country’s

to tal national income (Malhorta). This gradual ascendency has turned Bangladesh into the prime candidate

f or the next country in the race to the bottom. Cheap labor that is educated and plentiful makes f or a very

lucrative opportunity f or textile companies. Despite all of these at tractive characterist ics of the country’s

labor, unemployment persists and people cont inue to live in below standard condit ions.

Considering the youthful labor force is significant, when comparing Bangladesh’s current economic state to

its condition in the 1980s. During the 1960s and the 1970s there was a vast growth in people being born

and this has predominantly led to the current wave of young workers in the 1990s and the 2000s. The

Bangladeshi labor f orce has gone f rom 30.9 million in 1985-1986 to 56 million in 1995-1996

(nationsencyclopedia.com). This increase is a product of the rise in population and the search for a better

lifes tyle in cities. A signif icant po rtion of the labor f orce is employed in rural areas. Work in rural areas is

very harsh and drives people to f inding jobs that will be relatively more comf ortable and that will pay better

(nationaencyclopedia.com).



Our research led us to a textile engineering student in Bangladesh named Mazharul Islam Kiron. He

operates his o wn blogging site specif ically based on textiles. He relayed to us the current predicament o f

the labor f orce in Bangladesh. Kiron said that mos t people live below the living standard in Bangladesh.

Unemployment is a common pro blem in this count ry and the garment sector seems to alleviate this issue.

Kiron said that it is the largest f ield in terms o f providing employment to peo ple. He tells that around 50 lakh

people are involved in the garment industry alone. This is equivalent t o 5 million people. The sheer amount

of people working on textiles alone is evidence to what a growing sector textiles has become for

Bangladesh. The country has the potential to outmaneuver many other count ries home to textile factoriesbecause of the evident devotion to textiles and the continued employment growth in the sector. The textile

industry has benef ited f rom the conditions in Bangladesh because o f the need f or employment, the

migration of rural Bangladeshis to cities, and because of the low wages being paid to the workers when

compared to the developed countries where these f irms come f rom.

The MFA and Bangladesh:

Despite t hese f avorable conditions f or the development o f the textile indust ry, Bangladesh has only

recently been targeted by companies to produce textiles. January 1, 2005 marked the end of the MFA, or

Multi Fiber Agreement, which had led the world of text iles and garments s ince 1974. The MFA imposed

quotas on the amount developing countries could export to developed countries (Saxena). The quotas

posed a problem for developing countries. However the EU did not impose such restrictions on these

count ries, one of which was Bangladesh. This gave way to a massive expansion of the RMG sector, the

Ready-Made Garments secto r in the country. Altho ugh Bangladesh was expected to suf f er in comparison

to other competitors such as China, orders f or textile goo ds kept coming aft er the MFA expired and

reached an expert overturn of about $10.7 U.S. dollars in the year 2007 (Saxena).

Productivity and competitiveness have been the major issues that Bangladesh has f aced since the f all of

the MFA. Internat ional t rade st rategies, international garment buyers, and international NGOs combined with

coalition building among stakeholders in the sector has resulted in significant and favorable changes at

bot h the government and f actory levels. This has allowed Bangladesh to remain competitive and has

resulted in an unprecedented cooperat ive movement. Although Bangladesh is predicted to do well in theRMG sector , in order to expand it needs to make investments in human capital and technology, rather than

ust reduce costs. These investments will stimulate the creation of positive working environments and will

provide the needed st imulation f or the industry to innovate and prosper.

In an interview fo r the Asia Foundat ion’s Econo mic Reform and Development Program, BGMEA (Bangladesh

Knitwear Manuf acturers and Exporters Association) president Falzul Haq stated, “Bangladesh is do ing well

af ter the end of the MFA, but we are not satisf ied. We have the potential to grow more… [the question is]

do we want to do 25 million do llars o f business, or stay at 10.5 million?” The year 2008 proved to be

import ant f or the garment indust ry. Vietnam entered the WTO in 2008, which made the count ry one of the

largest competito rs f or Bangladesh and the recession in the U.S. and EU markets gave way to a decline inimport s f rom the Bangladeshi market (Saxena).

In a st udy conducted in Dhaka in January and November of 2008 by the Asia Foundation f or Economic

Reform and Development, various groups of people were interviewed and asked their notion of

competitiveness and what they thought were the key facto rs f or success at the f actory level and state

level. These four groups were international buyers, government officials, factory owners and middle

managers. Some factory workers were also interviewed. Although these groups had different opinions, they

all ultimately agreed that productivity was the most important factor in ensuring competitiveness for the

Bangladeshi market. These groups also agreed that productivity was the area that needed the most

improvement (Saxena). When asked, factory workers stated that the quality of products, wages, good

working conditions, healthcare, and training were f actors that af f ected a f actory’s competitiveness(Saxena).

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Perception o f what constitutes good working conditions has changed over time amongst f actory workers.

In previous years, workers wanted their basic needs such as increased wages, healthcare and saf ety to be

met, but in more recent years, demands f or respect and the yearning to be heard have risen among the

workers. This has led many in the garment sector to emphasize on establishing a positive work and factory

culture, motivating workers, and communicating with them (Saxena). In 2008 workers st ill linked productivity

and increased wages. A worker stated, “If wages are increased, the quality o f work will improve and more

buyers will come” (Saxena).

Internat ional retailers agreed that it is cost , along with productivity, that makes a factory competitive.Reliability and pre-production ass istance are also f actors that were identified as pre-conditions f or an

international buyer to trust a factory. National labor laws and international labor standards were also

mentioned as conditions f or export to t he U.S. and EU. Compliance to these is now cons idered necessary,

but not suf f icient, f or a f actory to maintain its competitiveness. Buyers mentioned an appreciation f or

Bangladesh’s quality amongst its entrepreneurs and its work force (Saxena).

Government assistance has become necessary in order f or competitiveness in the Bangladeshi textile

secto r to thrive. Factory managers and international buyers agree with such aid. Both groups expressed a

need for more inf rastructure, trade facilitation and cost of production (Saxena). Workfo rce and productivity

are amongst the most important factors that make Bangladesh a competitive country in the garment sector,

but the poor infrast ructure and working conditions are amongst its weaknesses.

Bangladesh has proved its ability to be a low cos t producer of quality goods af ter the phasing out of the

MFA. If investments in training, labor conditions, and inf rast ructure are made, along with producing quality

items, Bangladesh will remain among the top sources for international buyers and secure its position as a

top competitor in the textile industry.

Labor Laws and Conditions:

The f lexibility of labor in Bangladesh is also prot ected by laws. Even though companies have taken

advantage of the lax restrictions in Bangladesh, there have recently been laws implemented that pro tect

workers. The recent, Labor Act 2006, and other similar policies have been est ablished to provide workerswith appropriate holidays, work hours , saf ety, minimum wages, and just if ication f or dismissals. This gives

workers a guarantee that their jobs are saf e and that they will work in a healthy environment

(legalsteps.com.bd). In Bangladesh the weekly holidays are Friday and Saturday. Workers typically work 8

and a half hour a day and can stop f or a meal and prayer. The to tal work hours per week sum up to be 48

hours (boi.gov.bd). This f ramework helps create a st andard f rom which workers can compare with their own

obs . It can help them make demands f or f air treatment and avoid being exploited. Kiron made a point that

has relevance to this issue. He recalled that t here had been a series o f st rikes on behalf of the work

unions in response to poor wages and f acilities. This was a small occurrence and not hing out of the

ordinary, but it demonstrates that workers have a voice in determining how they work and reso lving issues

in the workplace. Worker unions in Bangladesh have a lot of say in working condit ions and privileges. Theyare usually aff iliated with a political party which gives them some so rt o f leverage in the government

(nationsencyclopedia.com). As a result of this collective action, workers can ask for better wages r better

f acilities as was the matter o f the af orementioned demands.

However, workers unions have not been as ef f ective in the private sector. These unions are banned f rom

Export Processing Zones, or EPZs, and these areas are even exempt f rom the labor laws. In 2004 worker

association was permitted, but in 2007 this was revoked by a state of emergency and restrictions were

implemented on unionizat ion (solidaritycenter.org). EPZs are even exempt f rom having to abide by certain

labor laws (nat ionsencyclopedia.com). Companies involved in the textile indust ry could take advantage of

the labor force without having to abide by certain labor laws that would otherwise limit their ability to control

cost ef f iciency. Having factories in Bangladesh allows them to be f lexible with wages and prerequisites .



These exemptions seem to be made to att ract f oreign investment. Companies will want to invest in a

location that can give them flexibility and a significant workforce. This particular aspect of labor combined

with t he current s ituation o f the workf orce in Bangladesh has generated the ideal scenario f or Bangladesh

to become the next large competitor for foreign investment in the world. A reliable and conscious workforce

is crucial to generate a positive output . Labor in Bangladesh has several aspects that make it more

attractive than labor in many other locations. Bangladesh has a large amount of workers that are educated

and these workers are in need of jobs. The currency is valued much lower than the do llar making it t he ideal

place for cost efficiency and competitiveness. The government even provides companies the ability to

waive certain labor laws in order to maximize production in EPZs and at tract ing even more f oreign

investment. Labor in Bangladesh seems to have all of the ideal characteristics f or f oreign investment and

the continued growth of the textile industry. Bangladesh produces quality goods that cost relatively less

than in other locations and has a labor f orce that acknowledges this type of work. This makes the country

the perfect candidate in the current race to the bottom.

Works Cited:

1. Board of Investment Bangladesh. "Creat ing a Workf orce." n.d. boi.gov.bd. Web. 2 December 2012.

2. Broo k, Tomothy. Vermeer's Hat. New York: Bloomsbury Press, 2009. Print.

3. Global Footprints . Bangladesh. n.d. Web. 2 Demcember 2012.

4. Mazharul Islam Kiron. Bangladeshi Labor Inf ormation Eduardo Gonzalez . 15 November 2012. Web.z

5. Legal Steps . "Labour or Employment Law." n.d. legals teps.com.bd. Web. 2 December 2012.

6. Leopard Asia. "Why Invest in Bangladesh." n.d. leopardas ia.com. Web. 2 December 2012.

7. Malhorta, T.C. "Bangladesh: A Growing Textile Economy." n.d. text ileworldas ia.com. Web. 2 December

2012.

8. Md. Amanur Rahman, David T. Parkes. "Bangladeshi Textile Industry Prof itable Despite Recession." 19

March 2009. f ibre2f ashion.com. Web. 2 December 2012.

9. Nations Encyclopedia. "Bangladesh- Working Condit ions ." n.d. nationsencyclopedia.com. Web. 2

December 2012.

10. Rivoli, Pietra. The Travels of a T-Shirt in the Global Econo my. Hobo ken: John Wiley & Sons , Inc.,

2009. Print.

11. Rural Poverty Portal. "Rural poverty in Bangladesh." n.d. ruralpovertyportal.org. Web. 2 December

2012.

12. Saxena, Dr. Sanchita Banerjee. "Competit iveness in the Garment and Textiles Indust ry: Creating a

supportive environment A Case Study o f Bangladesh." July 2010. asiaf oundat ion.org. Web. 2

December 2012.

13. Solidarity Center. "Bangladesh." n.d. solidaritycenter.org. Web. 2 December 2012.

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