project (modified)

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Chapter- 1: Introduction

Introduction:The garment industry is one of the most globally dispersed of all industries across both

developed and developing countries, with some garment companies having their goods

produced simultaneously in as many as forty countries around the world. It is an

organizationally complex industry, containing elements of both very new and very old

organizational practices, and changing constantly in its organization and geography. As

noted already garment manufacturing has been employed by many LDCs as an engine for

export oriented industrialization and employment creation. The sector has received more

systematic and persistent protection than any other and has been the subject of trade

tensions between developing and developed nations. Trade barriers continue to have a

profound impact on the geography of production and distribution and the possibilities for

incorporation and advancement of LDCs in global chains. Given the relevance of the

specific characteristics and the industrial relations of the industry to our research

problem, these will be discussed broadly.

Origin of the report:This report is prepared as partial requirement of the three week collect information. In thereport we have mainly given concentrate on Garments Sector and Global Impact, whichis to be submitted on March 12, 2011. Information has taken from companys Website,Internal papers and different Garment oriented books.

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Objective of the studyThe purpose of this report was to gather and present information regarding Bangladesh

Garments Sector and Global Impact. It give us batter opportunity to apply and verify the

knowledge in International Business by learning the theories and methods practically

applied in the Garment Sector.

Methodology

The analysis draws on a combination of existing surveys, empirical research and

documented literature on export and no export industries in Bangladesh. Most of the data

have been collected from the following surveys. This report was prepared using both

primary and secondary data. Our report is based equally both on primary and secondary

sources of data. The details of these methods are highlighted below:

Collect information through a survey in BGMEA.

By searching in the Internet.

Bangladesh Labor Code.

Interview from the garments owner.

Various reports on this purpose.

Newspaper report.

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Limitation of study

The main constraint of the study was inadequate access to information, which has

significantly hampered the scope of the analysis that is required for the study.

Every organization has their own secrecy, which is not relevant to others. While

collecting data (i.e. questioning the employees), they did not disclose much

information for keeping the organization confidential.

As the officials were busy with their own duty, they could give me little time forthe consultation.

Time restriction is another important/ dominant limitation of the study.

I carried out such kind of study for the first time. So my inexperience was also a

large limitation for the study.

The limited source of primary information and the controlled accessibility of internal

information caused difficulty in reporting facts and giving evidences in this report.

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Chapter -2: The Conceptual Framework of Garments Sector

Industrial Relations:The field of industrial relations (also called labor relations) looks at the relationship

between management and workers, particularly groups of workers represented by a

union.Labor relations is an important factor in analyzing "varieties ofcapitalism", such as

neocorporatism (or corporatism), social democracy, and neoliberalism (or

liberalism).Labor relations can take place on many levels, such as the "shop-floor", the

regional level, and the national level. The distribution of power amongst these levels can

greatly shape the way an economy functions.Another key question when considering

systems of labor relations is their ability to adapt to change. This change can be

technological (e.g., "What do we do when an industry employing half the population

becomes obsolete?"), economic (e.g., "How do we respond to globalization?"), or

political (e.g., "How dependent is the system on a certain party or coalition holding

power?").Governments set the framework for labor relations through legislation and

regulation. Usually, employment law covers issues such as minimum wages and

wrongful dismissal.

According to

Dunlop, Industrial relations may be defined as the complex of interrelations amongworkers, managers and government

Encyclopedia Britannica, Industrial Relations include individual relations and jointconsultation between employees and work people at the place of work, collective

relations among employers, the organizations, the trade unions and the part played by the

state in regulating these relations.

Biswanath Ghosh, Industrial Relations is an art, the art of living together for thepurpose of production.

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From the above dicussion and defination, we find following features of Industrialrelations:

The relation between employers and employees at the plant level.

The relation among the various unions.

The relations between employers or their organizations and trade unions at variouslevels ( Level of plant, Industry and national level).

The relations between the employers and the government.

The relations between the government and the unions.

Objectives of Industrial Relations:

To establish and maintain congenial labour management relations.To enhance economic status of the workers.

To avoid industrial conflict and their consequences.

To establish and maintain industrial democracy.

To provide good working conditions to the workers.

To treat workers as total workers.

To develop and encourage trade unions.

To encourage collective bargaining as a means of self-regulation.

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To maintain discipline among workers.

Factors of Industrial Relations

Governmental factor

Labor Laws- Government provide labour laws in 1006

Government policies- Government provide different policies (export and

import policies) which have an impact on IRs.

Economic factor

Employment condition- If there is unemployment then what would be he

wage

Inflation

Demand for the product

Political factor

Political system

Political parties and their ideology

What will be the nature o0f he industry depend on political factor

Technological factor

Automation Implementation of new machine many workers may loose

job

Change in technology

Social Factors

Population

Religion

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Custom

Three Actors of IRs

1) Workers & their Organizations

Total workers play an important role in IRs.

Total workers include psychological factors; age working age, educational

age, educational background, family background, and social background.

What will be the shape of the IRs depend on workers behavior.

The main purpose of trade unions is to protect the workers economic

interest through collective bargaining & by giving pressure on

management

2) Employers & their Organizations

Employer plays a crucial factor in industrial relations

They employs the worker& pays the wages

Regulates the working relations through various rules, regulations & by

enforcing labour laws

The difference between the demands of worker & employer results in

industrial conflicts

3) Government

Government plays a balancing role as a custodian of the nation

Influences industrial relations through labour laws & other policies

Regulates the activities & behavior of both employees organizations &

employers organizations

Principles of Sound Industrial Relations

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Recognition of the dignity of the individual & of his right to personal freedom &

equality of opportunity

Mutual respect, confidence, understanding, acceptance of responsibility on the

part of both employer & workers & their representatives.

Chapter- 3: The Industry Part

Readymade Garments Sector ( RMG) In Bangladesh:

Garment Industry Large-scale production of readymade garments (RMG) in organized

factories is a relatively new phenomenon in Bangladesh. Until early 60s, individual

tailors made garments as per specifications provided by individual customers who

supplied the fabrics. The domestic market for readymade garment, excepting children

wears and men's knit underwear(genji) was virtually non-existent in Bangladesh until the

60s. Since the late 1970s, the RMG industry started developing in Bangladesh primarily

as an export-oriented industry although; the domestic market for RMG has been

increasing fast due to increase in personal disposable income and change in life style. The

sector rapidly attained high importance in terms of employment, foreign exchange

earnings and its contribution to GDP. In 1999, the industry employed directly more than

1.4 million workers, about 80% of who were female. With the growth of RMG industry,

linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have

also expanded. In addition, demand for services like transportation, banking, shipping

and insurance has increased. All these have created additional employment. The total

indirect employment created by the RMG industry in Bangladesh is estimated to be some

200,000 workers. In additions to its economic contribution; the expansion of the RMG

industry has caused noticeable social changes by bringing more than 1.12 million women

into labour force. The economic empowerment of these working girls or women has

changed their status in the family. The attractive opportunity of employment has changed

the traditional patriarchal hegemony of the fathers, brothers and husbands. Most working

women or girls can now chose when to get married or become mothers. The number of

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early MARRIAGEs is decreasing; so is the birth rate; and the working girls tend to send their

little bothers and sisters to school, as a result, the literacy rate is increasing. They can

participate in family decision-making. Most importantly, the growth of RMG sector

produced a group of entrepreneurs who have created a strong private sector. Of theseentrepreneurs, a sizeable number is female. A woman entrepreneur established one of the

oldest export-oriented garment factories, the Baishakhi Garment in 1977. Many women

hold top executive positions in RMG industry. The RMG industry is highly dependent on

imported raw materials and accessories because Bangladesh does not have enough

capacity to produce export quality fabrics and accessories. About 90% of woven fabrics

and 60% of knit fabrics are imported to make garments for export. The industry is based

primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-

contractors of foreign buyers. It has grown by responding to orders placed by foreign

buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the

fabrics and accessories or recommended the sources of supply from which Bangladeshi

sub-contractors were required to import the fabrics. However, situation has improved. At

present, there are many large firms, which do their own sourcing. The hundred percent

export-oriented RMG industry experienced phenomenal growth during the last 15 or so

years. In 1978, there were only 9 export-oriented garment manufacturing units, which

generated export earnings of hardly one million dollar. Some of these units were very

small and produced garments for both domestic and export markets. Four such small and

old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments.

Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named

Reaz Store in DHAKA. It served only domestic markets for about 15 years. In 1973 it

changed its name to M/s Reaz Garments Ltd. and expanded its operations into export

market by selling 10,000 pieces of men's shirts worth French Franc 13 million to a Paris-

based firm in 1978. It was the first direct exporter of garments from Bangladesh. DeshGarments Ltd, the first non-equity joint venture in the garment industry was established

in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of

South Korea. It was also the first hundred percent export-oriented companies. It had

about 120 operators including 3 women trained in South Korea, and with these trained

workers it started its production in early 1980. Another South Korean Firm, Youngones

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Corporation formed the first equity joint-venture garment factory with a Bangladeshi

firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of thee

new firm, named Youngones Bangladesh. It exported its first consignment of padded and

non-padded jackets to Sweden in December 1980.Within a short period, Bangladeshientrepreneurs got familiar with the world apparel markets and marketing. They acquired

the expertise of mobilizing resources to export-oriented RMG industries. Foreign buyers

found Bangladesh an increasingly attractive sourcing place. To take advantage of this

cheap source, foreign buyers extended, in many cases, suppliers' credit under special

arrangements. In some cases, local banks provided part of the equity capital. The problem

of working capital was greatly solved with the introduction of back-to-back letter of

credit, which also facilitated import of quality fabric, the basic raw material of the

industry. The government assigned high priority to the development of RMG industry.

Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough

occurred in 1984-85, when the number of garment factories increased to 587. The

number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the

12 largest apparel exporters of the world, the sixth largest supplier in the US market and

the fifth largest supplier of T-shirts in the EU market. The industry has grown during the

1990s roughly at the rate of 22%. In the past, until 1980, jute and jute goods topped thelist of merchandises exported from Bangladesh and contributed more than 50% of the

total export earnings. By late 1980s, RMG exports replaced jute and jute goods and

became the number one in terms of exports. In 1983-84, RMG exports earned only $0.9

billion, which was 3.89% of the total export earnings of Bangladesh. In 1998-99, the

export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total

export earnings of the country. The net foreign exchange earnings were, however, only

about 30% of the figures quoted above because approximately 70% of foreign exchanges

earned were spent in importing the raw materials and accessories to produce the garments

exported. Both external and internal factors contributed to the phenomenal growth of

RMG sector. One external factor was the application of the GATT-approved Multifibre

Arrangement (MFA) which accelerated international relocation of garment production.

Under MFA, large importers of RMG like USA and Canada imposed quota restrictions,

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which limited export of apparels from countries like Hong Kong, South Korea,

Singapore, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka and India to USA and

Canada. On the other hand, application of MFA worked as a blessing for Bangladesh. As

a least developed country, Bangladesh received preferential treatment from the USA andEuropean Union (EU). Initially Bangladesh was granted quota-free status. To maintain

competitive edge in the world markets, the traditionally large suppliers/producers of

apparels followed a strategy of relocating RMG factories in countries, which were free

from quota restrictions and at the same time had enough trainable cheap labour. They

found Bangladesh as a promising country. So RMG industry grew in Bangladesh. By

1985, Bangladesh emerged as a strong apparel supplier and became a powerful

competitor for traditional suppliers in the US, Canadian and European markets. Since

1986, Bangladesh has been increasingly subjected to quota restrictions by USA and

Canada. RMG industry suffered setback in a number of countries in the 1980s. Some

countries had internal problems, for example, Sri Lanka; and some other countries of

Southeast Asia experienced rapid increase in labour cost. Buyers looked for alternative

sources. Bangladesh was an ideal one as it had both cheap labour and large export quotas.

The EU continued to grant Bangladesh quota-free status and GSP privileges. In addition,

USA and Canada allocated substantially large quotas to Bangladesh. These privileges

guaranteed Bangladesh assured markets for its garments in USA, Canada and EU. The

domestic factor that contributed to the growth of RMG industry was the comparative

advantage Bangladesh enjoyed in garment production because of low labour cost and

availability of almost unlimited number of trainable cheap labour. The domestic policies

of the government contributed to the rapid growth of this sector. The government

provided various kinds of incentives such as duty-free import of fabrics under back-to-

back L/C, bonded warehouse facilities, concessionary rates of interest, cash export

incentive, export processing zonefacilities, etc. The government also took a number ofpragmatic steps to streamline export-import formalities. There are several weaknesses of

the RMG industry of Bangladesh. Labour productivity in the RMG sector of Bangladesh

is lower than many of its competitors. Bangladeshi workers are not as efficient as those of

Hong Kong, South Korea and some other countries and in most factories, technologies

used are not the latest. In addition to the fact that the industry is vulnerable because it is

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highly dependent on the imported raw materials, the infrastructure in the country is

deplorably underdeveloped. Problems in power supply, transportation and

communication create serious bottlenecks. Inadequate port facilities result in frequent

port congestion, which delays shipment. All these increase the lead-time to process anorder, i.e. the time from the date of receiving an order to the date of shipment. The

application of MFA had negative impact on many garments exporting countries. The

countries, which were adversely affected by quotas under MFA, created pressure to

discontinue MFA by integrating textile and clothing industries into GATT system. As a

result, the Uruguay Round negotiations envisaged the phasing out of MFA by the end of

2004. With the phasing out of MFA, the position of Bangladesh in the world market will

change as all countries including those under quota restrictions, will enjoy quota free

status. Bangladesh will have to compete with a larger number of established and powerful

suppliers of readymade garments. Bangladesh has taken some steps to face the new

challenges. Such steps include removing infrastructural bottlenecks, building additional

supply capacity, use of cost reduction strategy, and increase in value-addition through

backward integration. For RMG sector, the backward linkages are weaving the fabric,

spinning the yarn, and dyeing, printing and finishing operations. These operations can be

combined into one composite mill or they can be established as separate units. Currently,

Bangladeshi apparel exporters import fabrics at international prices using back-to-back

letter of credit. While procuring through back-to-back L/C, the importers (Bangladeshi

exporters of apparels) pay high interest and other charges, commissions, fees for the

services of the middlemen involved. The establishment of composite mills or individual

units of weaving, spinning and processing will reduce lead time and increase value

addition and employment, in addition to improving the cost advantages. In the Fifth Five-

Year Plan (1997-2002), the government of Bangladesh envisages the attainment of self-

sufficiency in yarn production by establishing new spinning capacities. The productioncapacity of this sector increased substantially though not as much as was required. There

are 1,126 weaving and spinning mills including 142 ring spinning mills and 15 open-end

spinning units in Bangladesh. These units produce mostly for the domestic markets. Of

the total production of fabric, only 25% are supplied by the modern mills, the rest of the

domestically produced fabrics are supplied by the specialized units, power looms and

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handloom sub-sectors. The RMG industry uses a small quantity of fabric woven in the

handloom sub-sector. The domestic capacity meets less than 8% of the demand for

woven fabrics of the export-oriented RMG industry. The domestic production can meet

about 40% of the demand for export quality knit fabrics. The current requirement of yarnfor both domestic and export-oriented RMG industry is about 590 million kg and this will

increase to about 818 million kg by the year 2005. The current requirement for fabrics is

4,400 million meters and by 2005 it will increase to 6,000 million meters. It is estimated

that by 2005 Bangladesh will need 156 spinning mills each with 25,000 spindles, 371

weaving mills each with 125 looms, and 371 dyeing and finishing units each with

capacity of processing 10 million meters of fabrics per annum.The government of

Bangladesh has specified some goals in the latest national development plan for

backward linkage industries. To achieve the goals set in the Fifth Five-Year Plan,

Bangladesh offers attractive incentives to attract both local and foreign direct investment

in RMG sector. The Export Promotion Bureau, in collaboration with the Bangladesh

Garment Manufacturers and Exporters Association (BGMEA), undertakes various

activities to promote Bangladeshi garments in foreign markets. They also organize annual

Exhibition in Dhaka in which hundreds of foreign buyers participate. Bangladesh

exports very limited categories of products. The factories in Bangladesh produce shirts,

jackets, trousers, and other garments, with high concentration (about 60% of the total

apparel exports) in the export of shirts of low price. Bangladesh is the largest exporter of

men's and boys' cotton shirts in the US market. In this market, it competes with India, Sri

Lanka, Mexico and other Central American countries in the lower price segment. The

average price of Bangladesh-made shirts was $62.74 per dozen in 1998. This price was

the second lowest. The Dominican Republic sold the lowest priced shirts of the same

category at $54.79 per dozen. Prices of Indian, Mexican and Sri Lankan shirts were

$81.04, $76.26 and $74.77 respectively. Against this, the prices of Hong Kong andMalaysia shirts were $107.34 and $134.08 respectively. Exporters from Bangladesh

produce mostly those items on which quotas are available. However, there are a few

exceptions. Some South Korean firms operating from Export Processing Zones of Dhaka

and Chittagong export padded jacket and trousers of higher value. Many firms now

export some non-quota items as well. The share of such items in the total quantity,

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however, is very small. Recently, export of knitwear and sweaters has increased faster

than that of woven wears. These indicate that Bangladesh is actively engaged in the

process of product diversification. Although Bangladesh exports garments to some 30

countries, its exports are highly concentrated in two major markets, the USA and EU.The USA as the largest importer country imported 43.24% of total garments exported

from Bangladesh in 1998-99. Bangladesh was the sixth largest supplier of apparels in the

US markets in the same year. However, if European Union is considered as a single

market, the US market becomes the second largest. Bangladesh exported 52.38% of its

apparel exports to the EU in 1998-99. The EU is the single most important destination of

knitwear export from Bangladesh. Of the individual members of the EU, Germany is the

largest importer of both woven RMG (15.6%) and knit wears (14.8%) from Bangladesh

and the UK and France follow it. The EU as a bloc has been importing from Bangladesh

an increasing quantity of apparels. In the last five years Bangladesh's exports to the EU

have grown by 174%. The main reason for this phenomenal growth is the almost duty

free (due to GSP privileges) and quota-free access to this market. Other export markets

are small. Japan and ASEAN countries are potentially large markets. Bangladesh has not

yet been able to export sizeable quantity of apparels to Japan, although it imports about

90% of the machinery from Japan to run the apparel industry. Similarly, Bangladesh has

not been able to have market access to ASEAN, or Indian markets although it imports a

huge quantity of fabrics and yarn from these countries. The main reasons for this are the

tariff and non-tariff barriers Bangladesh faces in these markets. Recently, Bangladesh has

started exporting to India, South Korea and other new markets. As a member of South

Asian Association of Regional Cooperation (SAARC), Bangladesh has undertaken an

elaborate programmed to increase apparel exports to India and other member countries of

SAARC. Bangladesh responded positively to the international requirement of elimination

of child labour from the garments sector. Under the Memorandum of Understandingjointly signed by BGMEA, ILO, UNICEF and US Embassy, Dhaka on 4 July 1994,

Bangladesh pledged to eliminate child labour by November 1996. Accordingly, it took

necessary measures to do so. The laid-off children were provided financial support so that

they could attend schools until they attain the age of 15. BGMEA and some NGOs jointly

operate a number of schools for these children. The factory owners are required to abide

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by the laws that regulate minimum wages, working conditions, eco-labeling, etc of the

garment factory workers. The workers are allowed to form and/or join trade unions.

There are many active trade unions with CBAs in the garment industry. But factories

located in the Export Processing Zones do not have trade unions. However, the workersof those factories receive higher remuneration and better benefit packages. To meet the

international standard, the industry with the help of BGMEA makes sure that the factories

do not use any dyes including Azu dye that are hazardous to health. Bangladesh

recognizes the fact that its economic security depends on the future of its RMG industry.

Therefore, it has undertaken an elaborate programmed to meet the challenges it is likely

to face in the post-MFA world market

I mportance of RMG Exports in Bangladesh

Textile Sector as a whole plays an important role in the economic life of

Bangladesh.

The sector contributes 38% industrial value addition.

Earns around 78% of total export earnings.

Employs around 4.5 million workforce of which majority is women

Generates huge cliental base for Banking, Insurance, Shipping,

Transport, Hotel, Cosmetics, Toiletries and related other economic activities.

Provides indirect employment to 0.80 million workforces in accessories industries

related to garments.

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Provides 0.2 million job to waste recycle industry related to RMG sub-sector.

Contributes 10.50% to GDP through RMG sub-sector.

The market share of Bangladesh apparels can be seen from this table (2003-04)

(Value in US $Mn)

Country Total RMG

Import

RMG import

from BD

% Share of BD

EU 74150 3651.81 4.92

US 66400 1628.29 2.45

Canada 3700 256.40 6.93

Japan 19700 19.79 0.01

Hong Kong 1700 6.59 0.39

Korea 900 3.15 0.35

Others 32350 119.76 0.37

Total 198900 5686.09 2.86

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Bangladesh achieved a phenomenal growth in Readymade Garments exports, which

is evident from the table below:

(Value in US $Mn)

Year Total Export RMG Export % Of RMG to

total Export

1995-96 3882.00 2547.13 65.61

1996-97 4418.28 3001.25 64.93

1997-98 5161.20 3781.94 73.28

1998-99 5312.86 4019.98 75.67

1999-00 5752.19 4352.39 75.66

2000-01 6467.30 4860.12 75.15

2001-02 5986.09 4583.80 76.57

2002-03 6548.44 4912.10 75.01

2003-04 7602.99 5686.08 74.79

2004-05 6097.12 4734.14 77.65

From these tables we can understand that RMG sector in Bangladesh is very much

important because from export we can reserve foreign currency and RMG product is the

major export goods. So to increase the foreign currency reserve we need to increase the

productivity of RMG products.

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Now we will see the comparisons of RMG exports and Total exports from year 19984 to

2006. And we will observe how RMG export increase year to year and have a good

impact in our economy.

Functional Requirements for Sound Industrial Relations in RMG Sector(Bangladesh):

History of Good Industrial Relations:A good Industrial Relations mean harmonious relationship between the management and

workers. On the other hand, a bad history is characterized by militant strikes and

lockouts. Both have perpetuating tendency that does not mean that they cannot change

their attitude. The probability of conflict is greater when conflict has been accepted as

normal. The probability of peaceful relations is greater when mutual understanding is

expected to continue as a part of standard operation.

In our country, there is a bad history of Industrial relations, because we see that

frequently strike is there, and we also see that, workers not get a safety environment and

not get minimum wages.

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Year RMG exports

(in million US$)

Total exports

(in million US$)

RMG exports as

% of total exports

1984 32 811 3.9

1990 624 1,924 32.5

1995 2,228 3,473 64.2

2000 4,349 5,752 75.6

2006 7,901 10,526 75.1


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In the previous information of the RMG Sector, we see that type of scenario; On the

morning ofMonday, 22 May, 2008 at Savar Export Processing Zone (EPZ), a suburb of

Dhaka, workers at Universal Garments Limited gathered in front of the factory to demand

payment of 3 months owed back wages. They were attacked by factory security staff. In

response the workers went to neighboring factories and called out other garment workers

for support. The growing group of workers then went from factory to factory calling on

other workers to join them; 20,000 workers are reported to have joined this angryprocession. By the afternoon hundreds of other factories in Savar EPZ and New EPZ had

joined the strikes . Two factories were torched and 100s more ransacked, over 300

hundred company and management vehicles wrecked. The main roads going through

Dhaka were blocked. Eventually the clashes with police escalated and the cops responded

with bullets. The news of the escalation spread among the workplaces and drew out most

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other workers into participating.Regrettably, a significant number of readymade garmentfactories do not even pay the minimum wage of Tk 1, 662.50, let alone overtime bills. In

June 2007 the Bangladesh Garment Manufacturers and Exporters Association released

the report of a survey, amid much fanfare, claiming almost 83% of its member factoriesgo by the minimum wage stipulation. However, subsequent surveys by labour rights and

research organizations revealed a dramatically different scenario. Karmojibi Nari, a

women and labour rights organization, carried a survey, also in June, and found out that

out of the 55 factories surveyed in and around Dhaka only three had wage structures

similar to or higher than the stipulated scale. Another survey by the Garment Sramik

Oikya Forum, the findings of which were reported in the Bangla daily Prothom Alo,

revealed that only 10 per cent of the factories in Mirpur and Pallabi areas abided by the

minimum wage structure. Among factories at Adabor and Mohammadpur the proportion

was an even lower five per cent.

So, we see that strike is there and an employers-employees relation of the RMG sector of

Bangladesh is not good.

Economic Satisfaction of workers: The conspiracy theory of external forces instigating garment workers into agitation

resurfaced recently as thousands took to the streets at Mirpur in the capital. Such theories,

almost always spun off by owners of readymade garment factories, indicate that they are

in a state of denial about severe problems vis--vis compensation and facilities for

workers. The demands of the workers agitating at Mirpur were rightful, rational and

indeed justified, as they had been on previous occasions. They demanded such basic

provisions as payment of wages within the first week of every month, regular payment of

overtime and institution of weekly holiday. Workers have had to stage mass

demonstrations before demanding festival allowances and festival leaves. That the

management of certain factories settled these issues in the past only in the face of

workers' unrest, through mediation by third parties and in the presence of law enforcer

only point to the extent of workers' exploitation. More often than not, workers do not

even demand payment of overtime with monthly ages; they just want assurance that they

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will be paid for working overtime. A large number of companies enforce workdays much

longer than the standard eight hours, as stipulated by labour laws. Regrettably, a

significant number of readymade garment factories do not even pay the minimum wage

of Tk 1, 662.50, let alone overtime bills. In June 2007 the Bangladesh GarmentManufacturers and Exporters Association released the report of a survey, amid much

fanfare, claiming almost 83 per cent of its member factories go by the minimum wage

stipulation. However, subsequent surveys by labour rights and research organizations

revealed a dramatically different scenario. Karmojibi Nari, a women and labour rights

organization, carried a survey, also in June, and found out that out of the 55 factories

surveyed in and around Dhaka only three had wage structures similar to or higher than

the stipulated scale. Another survey by the Garment Sramik Oikya Forum, the findings of

which were reported in the Bangla daily Prothom Alo, revealed that only 10 per cent of

the factories in Mirpur and Pallabi areas abided by the minimum wage structure. Among

factories at Adabor and Mohammadpur the proportion was an even lower five per cent.

These findings are naturally disputed and contested by the owners association on the

ground of 'unrepresentative' sample size, as its own survey included some 2,420 factories.

According to a recent survey of 1,000 factories across Bangladesh, the minimum wage

was fully implemented by only 28 per cent of the factories. But minimum wage is only

part of the labour rights and just one of the ten points of the tripartite agreement that was

struck by the owners, workers and the government following the violent demonstrations

by garment workers in May 2006. The ten-point agreement stipulated that owners pay

wages within the first week of the months along with overtime. It also stipulated that

factories would have one weekly holiday, ensure good working conditions besides the

provision of maternity leave, identity cards and appointment letters. According to the

survey on 1,000 factories, based on focus group discussions with employees of those

establishments, 75.7 per cent do not provide appointment letters; 42.2 per cent factoriesdo not provide identity cards; 3.3 per cent still do not have a weekly holiday while in

another 21.9 per cent it is irregularly given. Also, 44.4 per cent do not observe

government holidays and 42.2 per cent do not provide any earned leave. The provision of

a fully paid maternity leave of three months is still a far cry. As for working hours, 90.4

per cent factories have more than 8-hour workdays but only 29.4 per cent pay proper

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overtime, while 68.1 per cent of the factories do not pay wages by the first week of the

month. Among the major apparel manufacturers of the world, Bangladesh has one of the

lowest wage structures. The garment workers in Bangladesh are paid less than their

counterparts in China, India, Pakistan and Nepal. Even countries like Togo and Beninhave a higher wage structure than their Bangladeshi counterparts. An obvious result of

such exploitation is that Bangladeshi manufacturers have failed to move up the value

addition chain for which they require skilled human resources for which better working

environment and better compensation packages are imperative. In this respect worker

retention must be stable and at a tolerable level, which the factory management must

ensure before trying to train its workforce and move on to value added and higher end

products in the apparel industry. Despite being in the field Bangladeshi manufacturers

still rely on a handful of items that are typically low-end, high-volume, low-cost items

like trousers, T-shirts and shirts. The terms of trade for such items are bound to remain

adverse, as any other new entrant in the market would start off with these products. To

help the garment exporters and allow them to remain competitive despite the ever-

deteriorating terms of trade, successive governments, including the current military-

controlled interim regime, have ensured that the value of taka against dollar remains

devalued at such levels so as to lure foreign buyers. In the process, however, it has

resulted in a strong backlash by way of costlier imports which in recent times have soared

due to the increasing international prices of fuel and food. That burden is borne by the

general masses, as every citizen has had to suffer from the price spiral of the two

imported items. In other words then, the entire country, even their employees, contribute

to their profit by paying ever more for fuel or food. Besides, the government has also

provided these exporters with a number of tangible and intangible benefits including

back-to-back letters of credit and cash incentives. The owners and manufacturers have on

their part showed a sense of utmost irresponsibility by not investing time and money inhigher and more value-added products or ensuring a reasonable compensation package

for workers on their own volition. Instead the manufacturers and exporters association

continue to lament their state and demand even more cooperation from the government.

The owners on their part seldom consider the input of labour as part of the production

cost. The prices of machinery, cost of land and the establishment, yarn and cloth and

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other accessories are, however, factored in to assess profitability. The only input and

perhaps the most valuable part of the entire process that adds most value to the entire

production of apparels within Bangladesh is ignored. That it is ignored is evident from

the statement of garment factory owners often claiming that after paying the minimumwages in full there is nothing left as profit. Consciously or not, they prove that labour

exploitation equals profit. The recent protests saw an ominous emergence of a rumor that

the management was concealing the body of a worker at a certain garment factory.

According to reports, such rumors were spread by through cell phones among workers

already out on the streets that created further frenzy among the workers. It was not for the

first time that such rumors have surfaced and proven wrong. The possibility of outside

forces instigating the workers to create unrest and tarnish the image of the industry

cannot be ruled out entirely. The suggestion of instigation becomes all the more plausible

when trends suggest that labour unrest directly benefits the competing countries. As

companies fail to deliver within time, having to cope with workers' discontent, foreign

buyers switch to manufacturers in other countries. The rumor of a non-existent dead body

understandably fanning the fury of garment workers already on the streets has become

ominously recurring. Firstly, it must be pointed out that the potency of a conspiracy or

instigation from outside forces hinges on the working environment of individual

factories. If there is substantial labour discontent due to non-payment of wages or

absence of other basic provisions, which there is, the situation becomes all the more ripe

for conspirators to succeed. Secondly, silly rumors of dead bodies being concealed by

certain factory authorities would not hold if there were credible labour unions in the

garment industry, which also happens to be one of the points in the tripartite agreement.

Credible labour unions, which the owners actively discourage by either summary

dismissals or other means, would also provide the owners with an effective avenue to

carry out negotiations in case of mass protest or discontent.Trade unions, as has been pointed out by different quarters, are necessary for healthy

industrial relations that would help the industry survive and take it forward into becoming

a truly global player. As workers become more aware of their rights and privileges, the

requirement for their unions will become all the more pressing and evident, which the

factory management would do well to initiate by themselves for their own sake as well as

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the country's sake. Given that the garment sector fetches three-fourths of the countries

export earnings, all quarters including the owners and the government should come

forward to ensure its sustainability that must begin with workers' welfare, as they are the

principal actors. Instead the law enforcers lodged cases last week against workers andheads of certain non-governmental organizations, which are essentially labour leaders, for

instigating workers and violating the state of emergency. By doing so another potential

avenue for negotiations has been closed off, since many of these non-governmental

organizations act as proxy labour unions in the absence of formal ones. Indeed the

garment workers' representative on the committee that negotiated the minimum wage was

also such a person from a non-governmental organization but essentially a labour leader.

To conclude with a harrowing statistic, in about 15 years over 300 garment workers have

burned to death with over 2,000 injured, some whom were crippled for life. In most cases

the reason had been either that the main entrance was locked or that there was no fire

exit. Till date not a single garment factory owner has been prosecuted by the state for this

abject negligence. The state's overt bias towards the moneyed, protecting the garment

factory owners, citing emergency power rules, discipline and damage to private property,

would hardly benefit the overall condition of the industry or improve its competitiveness

in the long run. It is foolish, shameful and imprudent, from a regime that intends to

establish the rule of law and equitable justice, especially when it is the owners who are

the principal offenders and violators of law and not the workers. A half of the garment

factory owners did not pay the festival allowance to workers till Thursday evening, a

deadline set by the government to pay the workers their wages and the allowance, despite

monitoring by law enforcement agencies and the owners association.

Workers at many factories in the capital city and on its outskirts went out on

demonstrations and did not join work, demanding the payment of wages, dues in arrears

and the festival allowance on Thursday. The workers blocked roads at places in Gazipurto push for the payment of their dues and the festival allowance. The blockades caused

severe traffic congestion. The supervision by the law enforcement agencies and the

association leaders could only ensure the payment of wages. But the festival allowance

remained unpaid in about a half of the factories. The monitoring, however, could only

ensure the payment of monthly wages to the workers, who earn about 77 per cent of the

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total export earnings. But labour leaders estimated that a half of the factories had not paid

the festival allowance this year. The Garment Workers Unity Forum president, Mushrefa

Mishu, said, Workers of at least two-thirds of the garment factories have not received the

festival allowance. The workers at the Abarani Garments Limited at Shewrapara, SkyHeart Apparels at Mirpur, Fashion Toy at Ashulia, Union Apparels in Narayanganj, Joya

Apparels at Kanchpur, Sattar Garments at Uttara, and Fame Shirts Limited at Uttara went

out on demonstrations to push for the payment. The leaders of the Bangladesh Garment

Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers

and Exporters Association, high local administration officials, leaders of the workers and

the owners later held meetings and the workers were given their wages, but not the

festival allowance. In Gazipur, the workers of the UTA Fashions at Salna went out on

demonstrations in the morning to push for the payment of the festival allowance.

The workers at about 10:00am took to the streets and blocked the DhakaMymensingh

Highway. Several hundred vehicles remained stranded on both ends of the road.

The police and the Rapid Action Battalion controlled the situation at about 11:30am.

The workers of the Joint Fashions and the Six H Garments at Tongi took to the streets

and blocked the DhakaMymensingh Highway at about 1:00pm. They demanded their

wages in arrears and the festival allowance. The law enforcement agencies tackled the

situation at about 2:30pm after meetings with the garment authorities. The congestion

continued into the evening. The chief inspector of factories, ASM Serajuddin, however,

expressed his satisfaction about the payments. We are pleased to see that the situation

has improved a lot regarding the payment of workers, especially wages, before Eid, he

told New Age on Thursday. As for non-payment of the festival allowance in a significant

number of factories as reported by labour leaders, he said, Let us hope that the owners

pay all the dues to the workers in future.Nazma Aktar, the president of a workers group

named Awaz Foundation, said most owners had paid wages, but not the festivalallowance, before Eid.Shirin Akter, the president of Karmajibi Nari, a watchdog of

workers rights, said their teams had found the payment of wages before Eid to be

satisfactory. The Bangladesh Garment Manufacturers and Exporters Association

president, Anwar Ul Alam Chowdhury Parvez, said the payment of wages before Eid this

year was satisfactory.The association assigned the directors on its board to monitor Eid

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payment and settle related disputes. The Bangladesh Knitwear Manufacturers and

Exporters Association president, AKM Fazlul Hoque, said, There is not a single

BKMEA member which has not paid the workers the wages of September. But he said at

least one-fourth of the factories could not pay the festival allowance.Sources said government agencies were active in monitoring the payment of dues and

allowances to workers before Eid. Intelligence agencies kept watch against payment

related disputes and law enforcers brokered negotiations with the factory managements

for wages before Eid, a high Rapid Action Battalion official told New Age.

The labour adviser, Anwarul Iqbal, at a meeting on Tuesday warned the factory owners

of legal action in case of non-payment of wages and the festival allowance.

He also asked the workers not to go on the rampage in such cases and advised them to

wait for negotiations between lawmen and factory owners. The meeting was told that

intelligence agencies had listed about 100 factories in Dhaka, 83 in Gazipur, and 31 in

Narayanganj where unrest might take place over the non-payment of dues and the festival

allowance before Eid.

Social and Psychological satisfaction:Identifying the social and psychological needs of workers is very important step to

determine the good industrial relations. It has been reveled by the Hawthorne

Experiments that a man has several other needs besides his physical needs. Employment

relationships are not only an economic contract; supportive climate is more required than

economic rewards. The supportive climate of organizations is essentially built around

social and psychological rewards. Workers participation in management, job enrichment,

suggestion schemes, redressal of grievances, effective two ways communication are some

of social and psychological rewards. When we see the research paper of different

expertise, the present situation of RMG sector regarding social and psychological

perspective is not good, workers participation is not there, workers not get chance to

raise up there voice regarding wages, or any surrounding physical environment. When we

see that, workers are happy if she/he get proper environment to done their jobs, but we

see that supervisors behavior is not satisfactory level, when supervisors deal with the

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employees. So, ultimately we see the workers are not psychologically satisfied; another

things is that most of the RMG sector in Bangladesh not maintain to give minimum

wages to the workers, so workers not maintain their minimum social status because due

to the increasing inflation rate is high, so worker are not capable to buy their necessarythings of this wages. So, ultimately social satisfaction is not their in RMG sector in

Bangladesh.

Off the Job Conditions:

For good IRs it is not enough that the workers factory life alone should be taken care of.

His home life is not totally separable from his work life and his emotional condition.

Each affects the others. For these reason workers off the job conditions should also be

improved. Through the readings of different papers, we see that; minimum wages is not

provided most of the garments in Bangladesh. So, they are not capable to meet up their

family demands, so ultimately their family members are not satisfied. This impact is

creating big influence on the performance of the workers, as its affect there attitude

towards the job (Motivation is declined). So, frequently strike is happen.

Enlightened Labour Unions:Strong and enlightened labour movement can help to promote the status of labour without

hampering the interest of management. Labour unions always talk much of the

employers obligations to the workers but say very little about the workers responsibility

to the employers. For our thinking on different database we see that-

Predatory Unions: The characteristics of this type of union are

that, non ideological perspective is there. There set of mental.

tendency is always greedy type.

Self- seeking Leadership: Majority of union leaders at all

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levels (At plant, Industrial and national) are concerned with self

interest.

In this point of view, Trade union activities are not satisfactory level in the perspective of

RMG sector in Bangladesh because proper utilization of leadership capability is not

there. The leaders of the trade unions should have proper educational background, so that

they can understand what are their rights as well as responsibilities, while they negotiate

for their workers to the perspective of problems facing regarding RMG sectors in

Bangladesh.

Negotiating skills of management and workers:Good industrial relations depend on the ability of employers, organizations and trade

unions to deal with their mutual problems freely, independently and with responsibility.

From the perspective of different literature it is clearly identified in the RMG sector in

Bangladesh, there is a involvement of weakness of different trade union activities and

finally we see that workers do not get chance to give their opinions independently

regarding their wages, physical environment, psychological conditions and their health

and hygiene, so we easily understand negotiation skills of management and workers is

really poor in the RMG sector in Bangladesh. The educational backgrounds of the trade

union leaders are not satisfactory that reduces the chance for a better solution.

Urge on the part of employers:Good industrialrelations depend on the realizations and urges on the part of employers

for the promotion of their workers welfare. From the different scenario of the RMG

sector in Bangladesh, we find out that employers are not interested regarding workers

welfare because most of the cases they are not properly give the wages and other

facilities of workers. Think of this scenario we can easily understand willingness of give

and take perspective is absent most of the RMG sector in Bangladesh

Genuine sympathy of the public:

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Good IRS depends on the genuine sympathy of the general public towards labour.

Sometimes we see that very small portion of columnists, write regarding the different

problems of the workers such as wages, physical conditions, working environment,

psychological satisfaction, trade union activities, employers unethical decisions and soon.

Public policy and Legislation:Government becomes a third major force in determining IRS. It regulates the behaviors

of both labour and management. In our country we see that Government regulates the

laws and policies to proper maintaining industrial relations of the RMG sector in

Bangladesh but many of the cases implementation is not there and Government not

enforce to maintain the rules and laws to the employers. That means there is not

monitoring mapping is there.

Better Education:

Better education provides proper sense of responsibility and thus they will be lessinfluenced by outside forces. When we see that different conflicts in the RMG sector in

Bangladesh that most of the cases conflict is happen because of the lack of education of

the workers.

Collective Bargaining:Collective Bargaining is the cornerstone of good industrial relations through the

assistances of appropriate Government agencies might be necessary in public interest. Weknow that collective bargaining is the negotiation of different parties but in the actual

scenario of the RMG sector in Bangladesh that there is a poor understanding of

relationship between the workers and the employers, so proper negotiations is absent.

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RMG in Bangladesh: Wake up call and the ground realities:Recent violence in RMG sector has really given all of us a stern wake up call. What

really started to be an isolated dispute between the management and laborers of a single

garment factory, spread out like a fire across hundreds of factories. As a result of this

massive outburst, nearly 300 factories, including 21 factories in the Savar Export

Processing Zone (EPZ), were damaged or partially damaged. The total loss of the

garment industry was around Tk 4 billion (nearly $70 million). Many global buyers have

already communicated to the Bangladesh Garment Manufacturers and Exporters

Association (BGMEA) that it would not be possible for them to give export orders any

more unless the present situation improves or in any way the supply is impacted during

the peak season. Conspiracy, professional jealousy, and sabotage whatever we term the

incident, first we have to understand the ground realities prevailing in the RMG industry.

Let us look at this most vital industry in our economy to have a thorough understanding

of the situation. The country entered the export market of apparels in 1978 with only 9

units and earned only $0.069 million. During the last two decades this sector has

achieved a phenomenal growth, due to policy support of the government and dynamism

of the private sector entrepreneurs. Now the number of RMG units is around 4,000 and

the export earnings have reached at $6.40 billion. Now in Bangladesh, 2 million garmentworkers are working in the RMG units, of whom 80 per cent are women. RMG roughly

covers 76 per cent of the total export of the country and is the highest earning industry in

the economy. 2 million workers in 4,000 factories, which is about one-fourth of the

number of employees engaged in the manufacturing sector, constitute the real backbone

of the country's economy. Study shows that the RMG sector and related upstream and

downstream activities are estimated to contribute an income of about $ 5.0 billion which

is equivalent to about 9 per cent of Bangladesh's current GDP. Comparatively, over the

same period Bangladesh's net disbursement of aid was to the tune of only about $ 800

million. Thus, RMG sector's contribution to Bangladesh's balance of payments and

foreign exchange reserves also cannot be understated. Against all these achievements, we

just cannot also overlook the major issues and problems facing the industry, especially

the RMG workers. The common identified problems on part of the RMG workers are low

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wage, irregular payment, forceful overtime, bad working environment, physical and

sexual harassment, termination etc. Low wages have traditionally been a major strength

of Bangladesh's labor-intensive apparels sector. The hourly wage rate in Bangladesh's

apparels sector is lower than those in China and Sri Lanka (US$ 0.39 as compared to US$0.69 and US$ 0.48 respectively); however, wage rate of other competitors such as

Pakistan and India are somewhat similar to Bangladesh's, being $ 0.41 and $ 0.38

respectively (USITC, 2004). According to unofficial sources, only a few owners of

garment factories pay the monthly wages and overtime bills to their workers in time and

look after the welfare of the workers. In most of the factories, the owners deliberately

keep at least two months' salary and overtime bills of the workers in arrear. The

management does hiring and firing of workers randomly and retrenched workers, in most

cases, are not paid their dues. Further in absence of weekly holiday the workers; their

families and their children are all being severely affected both mentally and physically.

Most garment factories in Bangladesh have no minimum safety measures, not even the

required number of fire extinguishers. Some 227 garment factories in Dhaka alone do not

have emergency exits. Most factories do not conduct the required monthly evacuation

drills. According to unofficial sources, nearly 300 workers were killed and 2000 others

injured in fire incidents in garment factories across the country since 1990. Some of the

victims were burnt alive and others died either from suffocation or in stampede. Most of

the RMG factories do not have any special reproductive health care for women workers

to safeguard the motherhood. Due to absence of such healthcare along with congested

and suffocating working environment, the trend of producing physically disabled babies

is reportedly increasing. One may raise a valid question: why should there be frequent

fire incidents in garment factories alone when there are hundreds of other factories across

the country? The answer is not that difficult to find. Most of the garment factories are

housed in rented premises at commercial or residential areas. These buildings have notbeen built to accommodate factories having all the safety measures. According to

national labour studies, there are only five inspectors for the entire industry -- the same

number as in the 1970s, when the industry first sprouted. According to unofficial sources,

90 per cent of all garment factories in Bangladesh lack proper industrial approval.

Thousands of buildings escape scrutiny because the building inspection system is as old

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and decrepit as the buildings themselves. Many issues concerning the Bangladesh RMG

surfaced from time to time, the first being the child labour issue. An influential US labour

organization forced the government and the Bangladesh Garments Manufacturers and

Exporters Association (BGMEA) to address the child labour issue. They had to phase-outchild labour from RMG units and create facilities for their rehabilitation and schooling.

There is no denying that employers do enjoy upper hand in Bangladesh labour market

where every third person is either unemployed or under-employed. But for the sake of

better and quality output, the owners themselves need to be more aware of keeping their

workforce satisfied by providing them with reasonable pay and ensuring other basic

necessities. It goes below the dignity of any nation if the outsiders force its factory

owners to comply with their own demand relating to better wages and freedom of

associations for the workers and improved working conditions in the workplace. In

perspective of all this, we have to evaluate the situation with clear responsibility and

judiciously. There is no way that the leaders of the RMG industry ignore the grievances

of the workers. They can no longer afford to refrain from investing in the welfare of their

workers and workplace. They would have to immediately look into some critical issues.

A barrier to change in the Bangladesh RMG industry is the lack of understanding of

global pressures to improve labour standards among middle management. There is a need

for rigorous training on industrial relations, human resource management, factory

management, disaster management and continuity of business at the supervisory level to

build more educated manpower instead of skilled one. More emphasis on gender issues is

needed, as RMG sector middle management is predominantly female. The absence of

hard evidence about the links between implementing core labour standards and increased

profitability makes it difficult to establish the business case in support of improved labour

standards. Most of the RMG units in Bangladesh are owner driven rather than process

driven. This culture needs to be changed. There should be a listening culture in place,which will help to identify the opportunities as well as to foresee the imminent crisis.

While the garment leaders readily acknowledge the necessity of solving these problems,

the reality is that all these problems cannot be solved overnight, even with all the good

intention. Here, we believe that the labour leaders have very strong and far-reaching roles

to play. While it is extremely necessary for them to vehemently argue for the cause of the

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workers, they also must realize that violence in the name of protest will not solve the

workers' problem. Destruction of the property, arson and discontinuation of operation

will severely affect the industry as a whole. And the decline of the garments industry will

only aggravate the misery of the workers' plight. Their pragmatic leadership can save thecountry from an over all jeopardy. All of us must realize that the current crisis in RMG

sector is not something isolated from the over all socio-economic problems. Like

everywhere else, there is huge a 'Trust Gap'. The owners and the laborers cannot build

enough confidence among themselves to have an equitable solution to the problem. Both

the parties must realize, that they have bigger interest at stake to protect the industry.

Violence, coercion or anything imposed forcefully will not solve the problems. All the

parties must come into an equitable solution keeping in mind the bigger interest of the

economy. RMG sector in Bangladesh has come a long way in last two decades. The

industry has crossed many hurdles to stay competitive. It has proved many predictions

futile and wrong, and compete fiercely even after the abolition of quota. The credit for

that achievement goes to both the entrepreneurs and the laborers. Taking that fighting

spirit ahead, the RMG sector must formulate an equitable solution for all the involved

parties and ensure brighter future for the country as a whole. The near term reality for a

country like Bangladesh remains to be competitive through cheap labour, unless we can

improve our infrastructure and fix the domestic economy dramatically as well as manage

a shift to quality through better productivity and efficiency. Some of the garments

owners'(especially the EPZ ones) has recognized the hard realities and managing the

transition well. The others have to take it or leave it. These `others' also include workers,

policy planners and civil society members.

Causes of poor Industrial Relations in Bangladesh:

Government action in support of globalization has to rely on policy planning and delivery

services provided by the public and public sector. This sector has to be restructured to

meet the demands of, or overcome problems arising from, globalization (e.g., demands

from MNC's and domestic firms for less "red tape"; and the problem of enterprises

having to rely on inefficient public enterprises for provision of basic services). In this

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regard, Ministries of Labour often have a narrow and reactive role. Given the importance

of industrial relations to economic development, they should be working more actively

with planning and finance Ministries to generate development options, create more

coherent and coordinated strategies and, generally, improve public and public sectorefficiency. There is also a need for governments to include trade unions in any public

sector and public sector reform process and take account of their major concerns.

Finally, governments should continue to promote bipartite and tripartite institutions and

processes to establish appropriate labour policy and standards. Inputs from all relevant

parties should be considered. Not only will this limit potential conflict in the future, but

(particularly where major business and investment interests - including those of MNC's -

are involved) it should establish a sound basis for investment and economic and

employment growth.

Compliance of the RMG Sector of Bangladesh:

Compliance in the Ready Made Garments (RMG) sector is broadly defined by standard

building-structure of factories, working condition, various rights of workers, workers'

health and safety measures, and environmental safety measures etc. Maintaining

compliance standard has gradually been considered as one of the important factors for

competitiveness in the global apparel market. It is found that buyers are putting more

emphasis on compliance standard as consumers of developed countries are becoming

increasingly concerned about work and social environment in the sourcing factories.

Bangladesh's apparel sector has emerged in early 1980s. The sector has developed

overtime under various incentives and supports provided by the government and market

access provided by different developed countries. It is also true that government

maintained a 'soft look' policy as regards compliance standard during the early stage ofdevelopment of apparel sector; besides, buyers put less emphasis on high level of

compliance standard of RMG units. Factory level compliance standard has got much

attention since the mid-1990s as buyers have started to put emphasis on different issues

related with compliance. Subsequently, enterprises have initiated to improve the

compliance standard of the factories. However, factory level compliance standard has not

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developed to that extent as it should be during the last twenty five years. It is now

important to appreciate status of the compliance standard of RMG units, especially after

the MFA phase out in a competitive world market. One of the major limitations as

regards compliance standard of RMG units of Bangladesh is lack of available informationwhich hinders any sort of assessment of compliance standard in the country.

Consequently, it is rather difficult to suggest various policies for the development of

compliances in the RMG units. Recently, BGMEA and BKMEA have initiated to

develop a database on the compliance standard of RMG units, which is a welcome

initiative. However, by and large there is dearth of information as regards the compliance

standard of RMG units. This paper attempts to highlight on current state of compliance in

the RMG units based on the data of collected through firm level survey in 2006. A total

of 190 factories were surveyed comprising of 63 woven, 63 knit and 26 sweater units.

Besides, 470 workers of these enterprises were also surveyed. Present paper draws

heavily on CPD's recent study on Bangladesh's Apparel Sector in Post-MFA Period: A

Study on the Ongoing Restructuring Process.

Finally if we observe the real conditions of the RMG sector in Bangladesh, then the

following findings observe on various policy measures for the improvement of

compliance standard of RMG units.

Factory Level Compliance Standard: Ergonomic Balance:

Factory level ergonomics indicate appropriate balance between factory space, installed

machines and workers. This refers to size of floor space available for doing work, ratio

between floor space and number of workers, workers and machines used workers and

production lines, adequacy of air and light inside the factory, etc. Floor space available

for working in the surveyed factories was, on average, about 50,000 sq ft, while spaces

for setting up a production line was about 6128 sq ft. Available space for each worker on

average was 52 sq. ft. It appears that large and medium enterprises provided relatively

more space for setting up production lines and for workers working in the factory.

Average worker-machine ratio was 1.74, indicating that every operator of a machine took

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support of 0.74 additional workers (usually these workers are called 'helpers').

Enterprises, directly dealt with buyers, (which also tended to be large and medium

enterprises) were operated by higher number of workers in production lines and also

provided higher space to the workers. In other words, ergonomic standard was better inenterprises, which worked directly with buyers. A majority of large enterprises were

purpose-built, while the proportion of such enterprises in the case of medium and small

units was relatively low. Factories established in earlier periods were behind in terms of

complying with factory level compliance standards, perhaps because of government's

soft look towards apparel sector in the earlier stage of its development when these

standards requirements were either mildly dealt or overlooked by concerned offices. In

general, factories established in more recent periods were relatively better compliant in

terms of factory standards.

Worker's Job-related Compliance Standard:Factory management, in most of the cases, checked the minimum age of workers that

they were recruiting. It appeared from the survey that entrepreneurs are very strict on this

issue, a considerable change compared to the 1990s. With the introduction of Harkinss

Bill in the US Senate in the early 1990s, both the government and the entrepreneurs had

taken steps to eliminate child labour in the export-oriented RMG sector of the country.

Buyers are at present very strict in terms of ensuring that they do not place orders to

factories that have any child labour. Majority of sample enterprises did not provide

appointment letters to the workers, according to the data collected through survey in

2006. A high proportion of large enterprises provided appointment letters to their

workers; about 53 per cent of knit, 51 per cent of woven and 40 per cent of sweater

enterprises did so. The proportion of sample EPZ enterprises that provided appointment

letters to workers was about 69 per cent, while the proportion of non-EPZ enterprisesproviding appointment letters to workers was 22 per cent. A formal appointment letter,

where all important aspects of employment, were mentioned, would give confidence to

the workers regarding job security which could lead to higher levels of retention in the

factory. According to entrepreneurs, most of the enterprises paid workers' wages within

first and second week of the month; more than 90 per cent of the enterprises did so. The

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practice of payment of workers' wages in the third week of the month was evident not

only in small enterprises, but also in medium and large enterprises. Getting income in the

first week of the month was felt to be critically important by the workers since they had

to pay their monthly dues including room rent, utility charges, etc. in the first week of themonth. Irregular payment was a major inducement for switching jobs and a high

turnover. In most of the sample enterprises, normal working hour (excluding overtime

working hours) was 8.28 hours, which was more than the stipulated working hours set by

the law. In general, normal working hour in 2005 was marginally lower (-0.2 per cent)

compared to that in 2004. From workers' point of view, reduction of normal working

hour was less important compared to effective working hour that included overtime-

working hour along with normal working hour. Length of overtime working hour was

considerable - it averaged about 13.9 hours per week or more than two hours a day. In

general, overtime working hour has increased by about 3 per cent after the MFA phase

out. It was argued by entrepreneurs that managing bulk volume of production orders was

often difficult within a predetermined schedule of work as production was often

hampered due to electricity outage, strikes, etc. Thus factories had to operate for longer

hours to compensate for these disruptions. However, in most instances longer working

hours in factories was dictated by the pattern of orders placed by buyers which

necessitated production of certain volume within a strictly stipulated time line. As

maintained by workers, longer working hours and high load of work in the factory,

especially in sweater and knit factories, have reduced workers' leisure hours. Besides,

pressure from the production managers to fulfill high production targets also made their

lives very stressful. This often led to deterioration in relationship between workers and

the management people directly involved in production. Workers maintained that in

many instances workers' unrest was caused by deterioration of relation between workers

and management. Most of the enterprises, according to their owners, maintained a weeklyholiday. Workers maintained that in view of long working hours a weekly holiday was

essential for them. Most of the sample enterprises provided maternity leave to their

female employees. More than 80 per cent enterprises provided maternity leave; the ratio

was higher in the case of sample sweater units. Most of the factories did not have day-

care and canteen facilities. Workers had to take their meal sitting in the stairs or in the

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corridors or by going back home. Day-care or canteen facility was available in 53 per

cent woven factories; the share was very low in the case of sweater and knit factories. In

general, the trend is for all types of enterprises to provide such facilities in increasingly

greater numbers in recent years. Because of having no day care facility in most of thefactories, female workers had to leave their children at home or in many cases in their

villages. Monthly wage of a female worker was 28 per cent less than that of a male

worker with identical characteristics. However, the field survey indicated that situation

has improved in recent years and large enterprises tended to provide relatively better

facilities compared to medium and small enterprises. Analysis indicates that compliance

standard of large enterprises was about six points higher than medium enterprises; while

the standard of small enterprises was three points lower than medium enterprises and

both are significant at a high level. It was also found that initial investment was very

important for the level of compliance standard that was maintained by enterprises.

Workers' Health and Safety Related Compliance Standard:

There were, on average, more than two emergency exits in a sample factory. More than

600 workers could use one exit in large factories, while the number for medium and small

factories was 353 and 170 workers respectively. Number of emergency exits was

relatively higher in EPZ-factory compared to non-EPZ factory. However, availability of

emergency exits did not necessarily ensure worker's safety in full measure. The width of

the exit, landing space available etc. was also important factors from the perspective of

safety. There were, on average, 0.8 doctors available in every factory, which indicates a

good number of factories have no in-house doctors. In other words, one doctor was

available for 1,088 workers. According to sample workers, most common diseases from

which they suffered were headache, cold fever, etc. Most factories did not have adequate

ventilation and exhaust fans and few workers use masks. As a result, there was strong

possibility to be affected by serious diseases, such as tuberculosis. Incidence of accidents

while working in the factory was not found to be very high. Other than accidents, in-

house doctors usually diagnosed the patients and prescribed medicines free of cost, but

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workers had to bear all costs of medicine. Trade union activities were almost non-

existent in the garment sector. There were very few factories where workers were

allowed to have trade unions at the factory premise. As is known, following long debates

over the issue of allowing trade union activities in EPZ factories, the government agreedto allow formation of Workers Welfare Committee (WWC) in the RMG factories located

in EPZs. The WWC is usually comprised of representatives of workers and factory

management, which regularly met and discussed worker related issues. About 52

factories were found where WWC activities prevailed. Fifty five per cent of EPZ

factories were found to have WWC, while only 20 per cent of non-EPZ factories had

WWC. Prevalence of WWC activity has marginally increased in 2005 compared to that

in 2004. Entrepreneurs were more or less divided as regards the issue; one group

supported such a negotiating body while the other group was against it. A regression

analysis was carried out to understand the impact of different factors on workers' health

and safety related compliance standards maintained by the sample enterprises. It is found

that large enterprises were better compliant as the value of index of these enterprises was

9.6 points higher compared to medium enterprises, while small enterprises were less

compliant compared to medium enterprises: score of the former was 5.5 points lower than

the latter. Highly compliant enterprises were 57 per cent more productive compared to

less compliant enterprises and 65 per cent more productive compared to moderately

compliant enterprises. Thus, maintaining compliance with the required standards was

found to have a positive impact on productivity, indicating the need to enforce

compliance at the factory level for the good of the RMG sector itself. Sample

entrepreneurs were of the opinion that for enhancing labour productivity a number of

measures should be taken: organize training for workers, improve compliant situation,

diversify production, provide entertainment facility, increase workers' wage and provide

other incentives, and ensure good behavior with workers, etc.

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Code of Conduct Followed by Major Buyers and Bangladesh's RMG Industry:

Codes of conduct have been an important part of efforts to improve labour standards in

global supply chains. Over the past ten years, these codes and systems put in place to

ensure their implementation have seen a large scale proliferation. Brands and retailers are

faced with multiple industry standards and suppliers are confused by the numerous codes

and initiatives. There is lack of harmony in the Code of Conducts of the different brands,

particularly in the cases of minimum age requirements, wages and benefits and overtime

payment. However, there are some common concerns and standards and Bangladesh will

need to be very careful in addressing the norms established by the brands. Both

legislation of appropriate laws and their enforcement are important. Lack of uniformity in

the brands' requirements often gives rise to confusion among suppliers. A large number

of suppliers do business with several brands. Moreover, although all buyers talk about

following the code of conduct which refers to maintaining and adherence to local

legislation as a minimum requirement, when monitors appointed by buyers or an

independent monitor conducted audit of firms, they tended to follow detailed checklists

provided by respective

project (modified)

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