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Bangladesh: overready garments at a price

By FashionUnited


If China is the garment king in terms of export volume, then Bangladesh is the jack of all trades in terms of services provided, prioritizing the garment industry over all others and trying to fulfill customer orders as fast, efficient and cheap as possible.

In the fiscal year till June 2013, Bangladesh's garment exports increased by 11 percent to 27.02 billion US dollars, raising hopes of reaching the target of 30.5 billion US dollars in 2013. At almost 80 percent or 21.51 billion US dollars, ready-made garments (RMG) make up the biggest part of those exports.

Almost 90 percent of all exports go to Europe and North America
Most of Bangladesh's garment exports (almost 60 percent) go to the European Union (see table), while 23 percent land in the US and five percent in Canada. The remaining 12 percent go to so-called non-traditional markets like Australia, Turkey, Japan, Russia and South Africa. Especially the last three are emerging as solid alternative export destinations if yet still far behind the traditional ones in terms of volume.

The high export rate to EU-countries is partly due to the European Union’s “Everything but Arms” free trade agreement that does not impose restrictions or duties on imports from Bangladesh – a saving of about ten percent for European buyers compared to imports from countries like China and India. Similarly, the US introduced the Tariff Relief Assistance for Developing Economies Act of 2009 and thus affords Bangladesh and 13 other “least developed countries duty-free access for apparel assembled in those countries and exported to the US" from 2009 to 2019.

This has helped Bangladesh tremendously to increase its garments exports to the current level. The expiration of the Multi Fibre Arrangement (MFA) on 1st January 2005 gave an additional boost to the industry as from 1974 through 2004 when the MFA was in effect, developing countries like Bangladesh had to stick to certain export quotas that they could not exceed, thus hampering the increase of trade volumes.

Wages, Bangladesh’s double-edged sword
One of the country's strengths is also its greatest weakness – extremely low wages. At roughly 38 US dollars a month, Bangladesh pays its garment workers the lowest wages in the world. Though Bangladesh has thus beaten the competition, it has come at a high price – the health and life of the workers. Not only do workers not take home enough to feed themselves and their families, resulting in poor health, illnesses and thus frequent absences, profit margins are also so thin that factory safety measures are at the bottom of a long list of expenses to cover.

How low the wages really are is apparent when one considers that Bangladesh's garment industry in 2012 accounted for 45 percent of all industrial employment in Bangladesh, yet contributed only five percent of the country's total national income. At the same time, textiles, clothing and RMGs made up 80 percent of Bangladesh total exports, accounting for a record 27.07 billion US dollars in 2012.

Recent tragedies that cost the lives of hundreds of garment workers like the Rana Plaza building collapse in April of this year and the fire at Tazreen Fashion in November 2012 have put the issue of factory and worker safety on the international agenda. Efforts are underway to improve the situation for Bangladeshi workers with the Accord on Fire and Building Safety in Bangladesh, signed by almost 90 international brands and buyers, being a first step and a potential blueprint for other countries.

Child labor is still rampant
Child labor is another area that needs to be tackled. Though Bangladesh has undertaken moderate efforts in 2012 to eliminate the worst forms of child labor, for example through the Child Labor Elimination National Plan of Action (NPA) approved by the government, the situation remains dire. According to figures from the US Department of Labor's 2012 report “Findings on the Worst Forms of Child Labor”, 10.1 percent of all children between the ages of 5 and 14 are working in Bangladesh – that's more than 3.7 million children. Especially in the informal garment producing sector, children are “exposed to loud noise, extreme temperatures, sharp tools, machinery and dust” according to the report.

Though education is mandatory and free at the elementary level (ages 5-10), families from socioeconomically weak backgrounds struggle to cover basic expenses for school books, uniforms, etc. and are often forced to discontinue their children's education because of it. Accordingly, Bangladesh's literacy rate is low – 61.3 percent for men and 52.2 percent for women (2010).

Though Bengali is the official language of the country and is spoken by about 98 percent of the population, English is widely used as a second language by the middle and upper classes, furthered by the common use in higher education and the legal system.

Concentration of workers and factories
Of the 4 million workers employed by the garment industry, 90 percent are women. The RMG sector has given a great boost to women's employment as rural migrant women have been able to find work here, in between rural livelihood options and urban formal work, either of which are limited or exclude women.

Most of the 4,500 to 5,000 garment factories are centered around Dhaka in garment clusters like Ashulia, Savar and others in a 30 to 40 km radius around the capital. Chittagong in the south east is Bangladesh's second biggest city and an important seaport especially for goods like RMGs, knitwear, jute/jute products and leather/leather products.

Responsible sourcing and production in Bangladesh
Last but not least, it should not be forgotten that for every unsafe company portrayed in the news, there's at least one that is run in a safe, clean and responsible way. TEB Fashion International, a Turkey-based garment company with an independent production unit in Bangladesh, for example gives their 400 workers three free, warm meals a day, pays wages that are 50 percent above the minimum and even provides medical aid and childcare. Regular fire safety drills are also on the agenda.

In an earlier interview, FashionUnited spoke with Huseyin Guller, head of sales and design at TEB, about staying competitive despite their investments in workers and safety. “There are very fine companies in Bangladesh,” confirms Guller. “’We want to be an example for other companies,” he adds, adhering to the company motto ’take care of your employees, only then will you get the best quality’. Thus, TEB is not looking for slaves but responsible workers who can be trusted and who in turn can trust their employer.

“Bengali workers tend to be afraid of the buyers … and have to learn to believe in themselves. This can be done after training and they are very hard-working people. They believe in the short-term end of business rather than long-term planning. Trust in the buyers is not enough, they also need to trust the employer”, adds Guller. In terms of improving safety at all factories in the future, “buyers need to ask for audits and do their own checks”, emphasizes Guller, especially in “risk countries” like Bangladesh.

Do not miss our next country portrait on Wednesday about India and do send us your thoughts, comments and suggestions at news@fashionunited.com.