Factory closures and job losses point to an impending economic disaster as foreign orders dry up
Stephan Uttom and Rock Ronald Rozario, Dhaka Bangladesh
December 5, 2019
Until September, Tarik Hasan, a Muslim father of two, was an employee at Angela Fashions, a garment factory in the seaport city of Chittagong in southeastern Bangladesh. This small factory employed 225 workers like Tarik and relied on overseas work orders and regular subcontracts from big factories for production and business. For several months, the factory had incurred losses due to a drastic slump in orders at home and abroad. In October, the factory closed and summarily laid off all workers. Despite Bangladesh’s labor law stipulating redundancy payments in cases of abrupt termination of jobs, the workers received nothing. Many workers like Tarik have since failed to find jobs in other factories due to the depressed state of the garment industry.
Tarik, 42, had worked in the garment industry for 15 years and used to earn about 15,000 taka (US$177) a month as a quality controller at Angela Fashions.
He is now working as a day laborer for less than half of his former salary. His wife has become a domestic worker to support the family.
“We have to earn enough to pay for family expenses and to support the education of two school-going children. The factory closure was a disaster for families like us. We are struggling to survive,” Tarik told ucanews.
Tarik has no other vocational skills, making it difficult for him to find alternative employment.
“I know many workers like me are facing the risk of becoming jobless as factories have seen production cut in recent times. Without support from the government, poor workers like us have nowhere to turn,” he said.
Mainstay industry struggling
The case of Angela Fashions and Tarik might be just the tip of iceberg of an impending disaster for Bangladesh’s vital garment industry.
At least 60 garment factories have closed and about 30,000 workers have been laid off in the past 10 months, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the main trade body.
Media reports suggest that, apart from BGMEA members, another 40 small factories have closed and a total of 60,000 workers have lost their jobs during a period when foreign work orders dropped about 17 percent from last year.
Bangladesh’s US$30 billion garment industry is the world’s second largest after China’s and it supplies clothes for high-street apparel brands in Europe and North America.
The industry employs about four million workers, mostly poor rural women, making it the second largest employer in this largely agricultural country of more than 160 million people.
The garment industry is Bangladesh’s biggest annual foreign exchange earner, making it a vital sector for the impoverished South Asian nation.
For years, the industry has been plagued by poor labor practices and unsafe working conditions, leading to the tragic deaths of hundreds of workers in factory fires and building collapses.
Since the deadly Rana Plaza factory complex collapse in 2013, the industry has made a major push for reforms following pressure from labor groups, foreign buyers and governments.
The industry has been reforming gradually but was not ready for the slump in business, according to Dr. Rubana Huq, president of the BGMEA.
“The industry has been going through negative growth in recent months, largely due to a change in the global economic scenario. Buyers are more selective and seek more qualitative products, for which we are not yet ready,” Huq, managing director of Mohammadi Group Ltd., told ucanews.
The economic slowdown in Europe and America, the trade war between China and the United States and the emergence of new garment markets in countries such as Vietnam, India and Myanmar are responsible for the industry’s challenging time, she said.
Lack of innovation and eco-friendliness are also causing a loss in business, Huq noted.
“Many factories were set up in unplanned ways, so when buyers refuse to place orders in factories without green certification, these factories suffer. Also, for years factories have produced typical items, which no longer work. We must improve and become innovative to keep the business alive,” she added.
Huq lamented that the government is not offering enough incentives for the vital sector to carry on.
In fact, the industry enjoys 5 percent cash incentives and a reduced tax rate of 10 percent, both the highest for any industry in Bangladesh.
Allegations of propaganda
Labor leaders claim that the situation in the garment industry is better than what is being reported.
“As far as we know, business is going as usual in the industry and only small factories are losing business to big factories,” Jolly Talukder, secretary of the Dhaka-based Garment Workers Trade Union, told ucanews.
“Factory owners have made huge money and laundered it into foreign bank accounts. They are now washing their hands of it by saying business has incurred losses and so factories must close down. It is just propaganda to deprive workers.”
Big companies don’t want small factories to exist, so they are putting pressure on them by not placing orders, she said.
“Businessmen are hankering for more money and can take unethical steps to realize their plans. Business without ethics and humanity is not good business because it deprives people at the end of the line — the workers,” she added.
Support for workers
Catholic charity Caritas Bangladesh offers various types of support to garment workers, though it does not have a specific project, said assistant executive director Ranjon Francis Rozario.
Caritas offers monthly stipends to victims of the 2012 Tazreen factory fire and the 2013 Rana Plaza collapse with funds from foreign donors and garment buyers. About 100 children of Rana Plaza victims also get similar monthly stipends, Rozario said.
“We have daycare centers for children of garment workers in Dhaka and Chittagong where they can get free food and schooling. In future, we would like to start more such centers in industrial areas,” Rozario told ucanews.
“Garment workers are poor rural people, and NGOs like ours have few resources to support workers who lose their jobs. The government must come forward to help them.”