Ready Made Garments (RMG) is the top order Export oriented remittance earning sector of Bangladesh since 1987. Bangladeshi Garments industry has a tremendous past. But in recent time one tragedy has found in apparel sector. Rana Plaza, an eight-story commercial building, collapsed on 24 April 2013, in Savar. The official death toll of the accident is 1,129 and approximately 2,500 injured people were rescued from the building alive. This catastrophe determined a turning point for Bangladeshi RMGs: After this disaster in apparel sector, government took some steps for improving the working condition, health & safety, labor right, wages of garments worker of Bangladesh. This study focuses the overall scenario of before & after Rana Plaza collapsed.

Bangladesh Ready Made Garments (RMGs) are the finished textile product from clothing factories and the Bangladeshi RMG sector is one of the fastest growing sectors in the Bangladeshi economy, with a growth rate of 55% from 2002 to 2012.¹.Exports of Textiles, Clothing, and Ready-Made Garments (RMG) accounted for 77% of Bangladesh’s total merchandise exports in 2002. By 2005 the (RMG) industry was the only multibillion-dollar manufacturing and export industry in Bangladesh, accounting for 75 per cent of the country's earnings in that years.^2,3 Bangladesh's export trade is now dominated by the ready-made garments (RMG) industry. In 2012 Bangladesh’s garment exports – mainly to the US and Europe, made up nearly 80% of the country’s export income. By 2014 the RMG industry represented 81.13 percent of Bangladesh's total export. In the financial year 2016-2017 the RMG industry generated US$30.614 billion, which was 83.49% of the total export earnings in exports and almost 12.50% of the Gross Domestic Products (GDP), the industry was also taking on green manufacturing practices. This report is the overview of before 2013 and after 2013 scenario of Bangladeshi Garments industries.^4,5

Average growth rate of this sector was over 20% per over the last two decades. This single sector alone earns about 80% of yearly foreign exchange of the country. Its contribution to GDP reaches 13% in fiscal year 2009-2010. Since independence, no single sector could accelerate the industrialization process in the country as the RMG sector could do. It has created employment opportunity for about 3.5 million people.⁶ Most of them are uneducated and unskilled. About 80% of them are women. To a creditable extent, it has been able to relieve the country from the burden of unemployment and at the same time contribute to the empowerment of women. Thus this sector is playing a vital role in socioeconomic development of the country.⁷

But this sector is struggling with a number of problems. Conflict between owners and workers, labor unrest, shortage of gas and electricity, poor infrastructure, poor port facility, lead time complexities, conspiracy of home and abroad, advancing competitors in the quota free international market are some of them which are posing a great threat to its survival. In recent time, labor unrest in the RMG sector has been a matter of serious concern.^8,9 Almost every day electronic and print media cover news of labor unrest in RMG sector in one place or another across the country. Fixing new minimum wage for the garment workers and issue of implementing the new wage structure have been the prime causes of recent labor unrests across the country. The unrest takes shape of violence and vandalism. The agitated workers come to the street and go storming on vehicles and garment factories.¹⁰ The attacked factory is declared closed; many labor leaders are arrested, many workers lose jobs or suffer from uncertainty; losing interest in the uncertainty, the international buyers cancel their orders and divert to another market. The industry comes to a deadlock situation.¹¹

The growth of RMG sector in Bangladesh is amazing one and it has been possible mainly because of hard work of labor-force. Rashid, (2010) observes, “It is a story of success, of winning against all odds. It is a story of a nation, which has vowed to overcome all the barriers with limited resources and immense passion.¹² But this glory is being diminished day by day due to labor unrest in this sector. It is designed to unearth the causes of labor unrest and search the areas where Public-Private Partnership can work to address the problem.^13,14

Materials

In this Project, the some very normal materials are used to carry out the data collection and analysis. Those materials are:

1. Statistical data
2. Foreign Trade Source
3. Paper
4. Pencile
5. Calculator
6. Pen
7. Scale and
8. Stop watch etc.

Methodology

Sources of data: In this work here all the data is collected from the workers of different RMG factories and Different data sources. The sources of data are the following:

1. Various data source like BKMEA, BGMEA, Bangladesh bank, Export Promotion Bureau, BTMC etc.
2. Different published material Such as books and articles blog etc.
3. Annual report of the various organizations such as BKMEA, BGMEA, Bangladesh bank, EPB, BTMC.
4. Internet browsing through Different Website searching.

Analysis the condition of Bangladesh RMG Industries before & after Rana Plaza Incident is on the following: 

World market

As of 2011 Bangladesh was second largest ready-made garments (RMG) manufacturer after China, by the next five years Bangladesh will become the largest ready-made garments manufacturer. Bangladesh was the sixth largest exporter of apparel in the world after China, the EU, Hong Kong, Turkey and India in 2006.In 2006 Bangladesh's share in the world apparel exports was 2.8%. The US was the largest single market with US$3.23 billion in exports, a 30% share in 2007. Today, the US remains the largest market for Bangladesh's woven garments taking US$2.42 billion, a 47% share of Bangladesh's total woven exports. The European Union remains the largest regional destination - Bangladesh exported US$5.36 billion in apparel; 50% of their total apparel exports. The EU took a 61% share of Bangladeshi knitwear with US$3.36 billion exports.

After the Rana Plaza incident, the scenario of world market for Bangladeshi apparel item has not changed a lot. In 2017, total export of apparel item in EU countries was 18695 million US dollar, where the EU imports 64% of total apparel item of Bangladesh & growth is 4.17%. On the other hand USA is the single largest market for Bangladesh where Bangladesh exports 5246.91 million US dollar of apparel item in 2017, but there is growth about -2.27%. However Bangladesh is still the second largest exporter of ready-made garments in the world after China.

Working condition

The first specific measure was the announcement that the minimum wage for garment industry workers would be increased. Despite the fact that Bangladesh is one of the world’s largest exporters of clothing, the minimum wage for garment workers in the country is the world’s lowest, at about USD 38 per month. It is expected that the government will set a new minimum wage with the collaboration of a board composed of labor groups and factories. This board was supposed to issue its recommendations for the pay increase by September 2013.

After the Rana Plaza disaster criticism has considerably increased and new steps have been taken by the government. While some of the changes had already been under preparation even before the tragedy, like a new labor law, all of them have probably been accelerated. Bangladesh is eager to avoid multinational companies leaving the country and to avoid their exports from suffering more penalties. For instance, Disney had already decided to gradually stop their operations in the ‘Highest-risk countries’ like Bangladesh in March 2013 and the US has decided to suspend continuation of the Generalized System of Preference (GSP) facility for Bangladesh. This decision might influence EU policy as well, which would have far more impact in Bangladesh since its clothing and textiles exports receive duty-free treatment and export figures to the EU are much more relevant. The EU is Bangladesh’s main trading partner, accounting for around 12 percent of the country’s total trade. Clothes are 90 percent of total EU imports from Bangladesh.

Some of the improvements noticed are, provisions to enhance workplace safety, elimination of previous obligation to send to employers the names of union leaders when a trade union is registered, and permission for workers to call on outside experts for advice during collective bargaining. Nonetheless, these reforms have disappointed initial expectations since numerous crucial aspects–above all on restrictions to workers’ freedom of association right–have not been tackled. This is despite the fact that in May the government spokesman, Mosharraf Hossain Bhuiyan, expressed that “ministers had agreed to amend the law to lift legal restrictions on forming trade unions in most industries”. Among these restrictions are a 30 percent minimum membership requirement to form a union and the exclusion of workers in export processing zones from freedom of association and collective bargaining rights. Although an official review of the amended legislation needs to be done later in the year, ILO considers that additional labor law reforms will be required to fulfill the government’s commitments and obligations under ratified conventions. Furthermore, new rules for implementation will be needed to bring the provisions of the new amendments into practical effect.

Contribution to GDP with worker and factory statistics

By 2002 exports of textiles, clothing, and ready-made garments (RMG) accounted for 77% of Bangladesh’s total merchandise exports.

In 1972, the World Bank approximated the gross domestic product (GDP) of Bangladesh at USD 6.29, with USD 31.2 billion of that generated by exports, 82% of which was ready-made garments.

In 2012 the textile industry accounted for 45% of all industrial employment in the country yet only contributed 5% of the Bangladesh's total national income. Table 1 shows the summery of the GDP contribution before 2013.

The country’s overall imports grew by 14.75 percent in the first four months of the current FY 2016-17, where 83 percent increase in import of capital machinery is significant. It could be said that the growth in import is mainly due to higher import of capital machinery and industrial raw materials, according to Bangladesh Bank. Garment factories, which are obligated to become compliant, are importing most of the capital machinery, in recent times for complying with the requirements of Accord and Alliance. More than 4,000 woven and knitwear garment factories are under pressure from their Western buyers to improve their workplace safety to global standards by June 2018. For this reason, capital machinery particularly in the safety equipment import is increasing year by year.

FDI trends

During last few years Reinvested Earning is leading the FDI components. From Figure 1 it is quite clear that, the fresh FDI flow into Bangladesh is quit an insignificant amount in recent years. In Figure 1 Net Foreign Direct Investment (FDI) in garments industry are stated here. In this table also discuss about the growth rate of net FDI inflow.

Figure 1 FDI Report before Rana Plaza incident.

Foreign Direct Investment in Bangladesh increased by 1706 USD Million in 2017. Foreign Direct Investment in Bangladesh averaged 958.13 USD Million from 2002 until 2017, reaching an all-time high of 1726 USD Million in 2013 and a record low of 276 USD Million in 2004 (Figure 2).

Figure 2 FDI report after Rana Plaza incident (Source: Bangladesh Bureau Statistic).

Worker unrest

Labor unrest has been a common phenomenon in the RMG industry of Bangladesh. Workers are being embroiled in clashes frequently; they call strikes often to make their demand home. It causes enormous loss to the owners, cripples the economy and tarnishes the image of the country aboard. It also makes foreign buyers reluctant to render future orders. In addition the industry is losing competitive edge for this. In July 2009, due to massive labor unrest, Hameem Group, a leading garment manufacturing factory incurred a loss of around 100 crore taka and two workers died with resultant loss of 2000 jobs. Causes of labor unrest are many. First and foremost is the long-standing grievance of the workers. The growth of RMG industry of Bangladesh much depends on hard work of the labor force. But unfortunately they are deprived of minimum facilities. They are to live a sub-standard life in city slums for years. The wage they get is low. Very often they do not get their salary, overtime bills and bonus in time. Their recruitment system is hiring and firing as they do not get any appointment letter and identity card of the factory and at any time they can be dismissed by owners for any reason. They don’t know anything about their job contract. Being maltreated by owners and mid-level officers, working long hours in congested environment without sufficient rest, lack of nutritious foods, medicine, right to legitimate protest against ruthless exploitations etc. are their daily destiny. They don’t have any access to the decision making process. Factory building collapse, fire accident, stampede render many dead and injured. Common causes of labor unrest in the RMG sector in Bangladesh are discussed briefly below. Most of the labor force of this sector are uneducated and unskilled and have come from rural area simply in search of livelihood. They have to work hard in return for a very poor salary. The detailed 4^th wage structure for the garment workers is shown in the following Figure 3. 

Figure 3 Wages before Rana Plaza incident (Source: BGMEA).

In 2016, the textile industry has observed some incidents where the workers have come down in the street and making insurgence on their demand and tried to destruct public properties. Operations of 55 factories were stopped for few days. More than 1,000 workers have been accused of instigation, trespassing, vandalism and theft in seven cases started over the unrest so far. As a result, companies lost working-hours and production targets. It also hampered export earnings and the image of the country to the international markets. Some of the leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) attributed the decline in apparel exports to the latest labor unrest. Export earnings of woven garment declined by 9.36 per cent in July-December period of 2016 (Figure 4).

Figure 4 Wages after Rana Plaza incident (Source: BGMEA).

Declared wage structure in 2013 for the garment workers of Bangladesh after Rana Plaza incident

On December 2013, the government took immediate step to increase the minimum wage from US$39/month to US$66.49(5,300 Tk) with an increase of 76.67% in the wake of the Rana Plaza tragedy. But this was still considerably less than what the workers had claimed (Table 2).

It has been argued that minimum wage needs be fixed on a rate that helps meeting up the minimum main necessity of the least wage earner. While there exists 7 categories of distinctive ranks, the changes in the midst of each of those ranks seem to be noticeably less. As it can be perceived from the following (Table 3) (Table 4), the relationship between the level of wage and senior position is thoroughly not controlled correctly at the time of the disbursement of payments. Thus, the gap of pay amounts in the middle of two different ranks of workers is perhaps very little to hold them at the same company in the long run. The outcome of this eventually increases revenue yet deteriorates the productivity.

Labor productivity and wage ratio comparison

Following Figure 5 displays the connection amongst average productivity of labor and average wages in the case of eighteen industrial regions.

Figure 5 Relative labor productivity and wages in 18 manufacturing sectors.

Since there’s a noticeable positive correlation between wage and labor productivity, this certainly implies increased wages progress productivity. On the contrary, increased payment can be fostered if the right capital spending are made & invested to spur efficiency. 

Development of export of RMG sector

 In terms of GDP, RMG’s contribution is highly remarkable; it reaches 13 percent of GDP which was only about 3 percent in 1991. This is a clear indication of the industry’s contribution to the overall economy. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc. One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors.

The garment industry is by far the country’s most important manufacturer, earning around $5 billion annually and accounting for about two thirds of all exports. Bangladesh has about 2,500 garment factories with up to 10 million livelihoods dependent on it directly or indirectly. About 80 per cent of garment workers are women. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the country’s social development, woman empowerment and poverty alleviation.  

The 100 percent export-oriented readymade garments (RMG) industry of Bangladesh has witnessed remarkable growth since its inception in the late 1970s. Paradoxically, this flagship industry of Bangladeshi private entrepreneurial talent took roots through the first export consignment of shirts from Bangladesh made by the state-trading agency, the Trading Corporation of Bangladesh (TCB), in the mid-1970s under countertrade arrangements and the destination was some East European countries. Subsequently, however, private entrepreneurs entered the industry and phenomenal growth took place in RMG exports from Bangladesh. Export of RMG increased from US $40 thousand in 1978 –79 to US $6.4 billion in 2004-05. The industry has also provided employment to nearly 2 million workers, most of them women drawn from the rural areas. Explosive growth of RMG exports is of course not unique to Bangladesh. The annual compound growth rate of RMG export industries in Indonesia (31.2%), Mauritius (23.8%), and Dominican Republic (21.1%) compares favorably with that of Bangladesh (81.3%) over the 1980-87 period 1. However, while initial conditions were favorable for export growth in the countries noted above, this was far from true in the case of Bangladesh. This makes research into the factors responsible for the observed striking growth of RMG exports from Bangladesh a compelling case study in economic development (Figure 6).

Figure 6 Data source export promotion bureau, compiled by BGMEA.

Buyers of RMG sector

Bangladesh is becoming more and more significant for the apparel retailers and fashion brands worldwide as the country is consistently providing the C&M service at the most competitive price maintaining acceptable quality standards. Existing merchants and brands are expanding their work order and new ones are coming hurriedly to utilize the opportunities and to make their products more competitive in the global apparel market. Prominent fashion brands like H&M and Wal-Mart are intended to increase their sourcing from Bangladesh to a great extent and the other retailers are also following; making the situation lucrative and tricky at the same time for the industry. This issue of Bangladesh Textile Today is designed to make an overview of the fashion brands and apparel retailers sourcing from Bangladesh and their point of views about the existing industry. Readymade garment (RMG) is the key export item and a main source of foreign exchange for the last 25 years. Bangladesh textile garments sector has been expanded in a vigorous way and maintained its maturity by holding 2nd position globally with 5% market share in Readymade Garments production and export in 2012. During the Fiscal Year (2011-12) our total export volume was USD 24.23 billion. Out of the total export, export from the RMG sector was USD 19.08 billion which is 78.7%. Global market size export of RMG (Woven & Knit) is US$ 400 billion. Bangladesh share in the global market is about 5 %. This mere 5% share alone is literally strong to indicate that there is a great opportunity of expansion. That means more and more fashion retailers and brands will be looking to source from Bangladesh and the trend has already been started. Bangladesh has been successfully supplying apparel products consistently to the premier international fashion brands like H&M, C&A, M&S, Wal-Mart, GAP, Levi's, s’Oliver, Tesco, Zara, Carrefour, JCPenney and many more. In November last year, McKinsey & Company, a global management consulting firm forecasted Bangladesh's apparel exports could grow double by 2015 and triple to $42 billion by 2020. They also mentioned that Bangladesh will be the apparel sourcing hot spot over the next 5 years. 

Compliance & safety

The garments industry in Bangladesh is the creation of the World Trade Organization’s Multi Fiber Agreement (MFA) that was in force from 1974 to 2004. Bangladesh had no quota restriction until 1986, a fact that attracted a number of entrepreneurs from quota-restricted countries (mainly South Korea) to undertake joint ventures or subcontracting relationships with Bangladeshi garment manufacturing firms. During this period, numerous initiatives were launched by the Bangladeshi government to attract foreign investors and buyers into the sector. Examples include the establishment of Export Processing Zones, a ten-year tax holiday for foreign investors, duty-free importing of machinery and raw materials, and bonded warehouses and back-to-back letters of credit facilities offered to 100 per cent-export-oriented garment companies. The MFA agreement, combined with the government initiatives, contributed to the rapid growth of the industry, with the number of garment factories increasing from 50 in the early 1980s to 4,200 by 2004 .In contrast to the predictions of numerous researchers, the Bangladeshi garment sector has observed a 5 per cent increase in growth even since the phasing out of the MFA quota in 2005 .This surge in growth has resulted from Bangladeshi garment manufacturers’ continued, and even greater, focus on lean manufacturing and attention to low-cost, low-value-added, and large-volume supplies with shorter lead times. These goals have been achieved at the cost of rampant labor exploitation and a rise in unauthorized subcontracting to small factories where working conditions are even worse. Thus, after 2005, the industry entered a new phase of problems related to poor working conditions and trade union activism.

Accord and Alliance started inspection to the garment factories after Rana Plaza and Tazreen fashion fire incidents. Accord and Alliance inspection found less than 2% factory risky to safety, while the global safety risk rate is about 4%, according to BGMEA President Siddiqur. International buyers are very particular about compliance with codes of conduct before placing any import order. In 2016, RMG factories achieved a great success on it and the sector is going ahead in being more environments friendly. Moreover, the top three performing environment-friendly LEED certified garment and textile factories in the world are located in Bangladesh. BGMEA president recently said, “Environment-friendly factories have been established in the country, meeting the best compliance standards of the world. Now 150 factories are being prepared as green factories. That will increase confidence of buyers in our clothing industries. It will expand business as well.”

Unemployment rate

Unemployment Rate in Bangladesh remained unchanged at 4.20 percent in 2017 from 4.20 percent in 2016. Unemployment Rate in Bangladesh averaged 3.85 percent from 1991 until 2017, reaching an all-time high of 5.10 percent in 1997 and a record low of 2.20 percent in 1991 (Figure 7).

Figure 7 Unemployment rate in Bangladesh from 2008 to 2016.

Bangladesh average monthly income

Wages in Bangladesh increased to 13258 BDT/Month in 2017 from 12897 BDT/Month in 2016. Wages in Bangladesh averaged 12549.33 BDT/Month from 2013 until 2017, reaching an all time high of 13258 BDT/Month in 2017 and a record low of 11493 BDT/Month in 2013 (Figure 8).

Figure 8 Bangladesh average monthly income.

Garments factories status

The number of garments factories in Bangladesh is continuously increasing from 1990-91 fiscal years & reached almost 5000 factories in 2012-13 fiscal years which were highest in our RMG history. But unfortunately after the Rana Plaza incident the number of garments factory started declining. But recently the number of garments factory has started to increase again (Figure 9).

Figure 9 Number of garments factories in Bangladesh.

Employment status

After Rana Plaza we can see that the no. og compliance factory has stopped their activities. They cannot meet accord and alliance factory rules and regulation. But after Rana Plaza incident the compliance factory has received a huge amount of order. That’s why we can see the no. of employment has increased after rana plaza. As a result, the incident did not influence our employment status in Bangladeshi RMG sector (Figure 10).

Figure 10 The employment status rate of Bangladesh per year.

Percentage before and after the incident of Rana Plaza collapse

After Rana Plaza Bilding collapse The whole condition of the Garments sector have been changed because the whole world buyers such as EU and other countries give there attention on workers Working condition, Health & Safety, Labour right and the Wages of Garments workers. So, after the Rana Plaza building Collapse all these are significantly increase. The Table 4 show the percentage o Working condition, Health & Safety, Labour right and the Wages of Garments workers.

RMG sector is growing though there is a little bit slow down in last three years but it could be enhanced to take some steps by government and others stake holders. If the country could help bringing more investments to the sector and a strong positive reformation continues the sector would reach its expected growth. More investment behind the human capital of the sector would be key for coming days. To secure more value addition companies must invest behind human resource. If not full RMG sector a portion of must be transformed into world class best performing ones. Product and process diversity is the key along with productivity and performance improvement. At the same time, building proper infra-structure throughout the country and special look should be given to the livelihoods of the workers and staffs in and around RMG factories.

Authors acknowledge the authority and the management who and whose whole department helps and giving continuous support by providing various information’s. Specially thanks BGMEA, BKMEA and Textile Today Bangladesh for giving valuable information’s.

None.

The authors declare that they have no competing interests.

1. Uddin M. How Bangladeshi Ready Made Garments industry can be competitive in the global Market. Business Economics and Tourism. 2014:1–68.
2. Textile Today.
3. BGMEA.
4. Islam Khan MA. Labor unrest in the RMG sector of Bangladesh: a public-private cooperation perspective. 2011:1–72.
5. Mohammed Ziaul H. Competitiveness of the Bangladesh RMG industries in major International markets. Asia Pacific Trade and Investment Review. 2007;3(1):3–27.
6. BKMEA.
7. Bangladesh Bureau Statistic.
8. Tahlil AM, Uddin N. Challenges for garments sector in Bangladesh after 2004: avenues for survival and growth. Bangladesh Institute of International and Strategic Studies Journal. 2003;24(1):49–82.
9. Bangladesh daily newspapers.
10. Bow JJ. Bangladesh’s export apparel industry into the 21st century – the next challenge. The Asia Foundation; 2000.
11. Coping with post-MFA challenges: strategic responses for Bangladesh RMG Sec-tor. CPD Dialog Report No. 55, Dhaka, Bangladesh; 2003.
12. Jahan Sarwat. The end of multi-fiber arrangement: challeng-es and opportunities for Bangladesh. WBI Policy Note; 2005.
13. Yongzheng Yang. The end of textiles quotas: a case study of the impact on Bangladesh. IMF Working Paper WP/04/08; 2004. 38 p.
14. Dowla CAF. The future of readymade clothing industry of Bangladesh in thepost-uruguay round World. The World Economy. 1999;22(7):933–953.