Ready-made garments in Bangladesh: No longer a forgotten sector

The collapse of Rana Plaza in Dhaka, killing over a thousand workers, was not just a human tragedy. The ready-made garments sector is hugely important in Bangladesh, both economically and socially. This gives dealing with the Rana Plaza aftermath even greater importance. 

The RMG sector contributes around three quarters of total export earnings. An estimated 4.2 million people are employed in the sector, most are women, half of whom come in from rural areas and remote villages. By 2013 there were approximately 5,000 factories, part of Bangladesh’s US$19 billion a year export-oriented RMG industry

In June 2013 the Bangladeshi government established a wage board for fixing new wages for workers. In November it set a new minimum wage of BDT5,300 ($68.40) per month, with a basic of BDT3,000 ($39) for entry-level garment workers. Factory owners started implementing the new wage board structure as from December 2013.

Over the last 15 years the RMG industry has revolutionised the country in terms of its contribution to GDP growth, women’s empowerment, income generation for rural immigrants and socio-economic development. About half of the foreign currency from the ready-made garments comes from sales to the EU and the US, with more coming from Canada, Japan, Australia, New Zealand and Russia. Markets are also opening up in the Middle East, Latin America and Africa.

However, global brands have come under huge pressure from consumers while several controversies have emerged in the US, Canada and EU countries that call into question the credibility of purchasing garments from Bangladesh.

Indeed, its mills and factories have been marked as death traps for labourers. Tragically, Rana Plaza was a case in point.

Retailers from the EU have responded, by creating the Bangladesh Accord Group, while in North America the buyers’ Alliance evaluates compliance issues in Bangladesh's RMG units. The Bangladeshi government has also formed a review committee to investigate operational conditions in the more than 3,500 garment factories in the country.

 Accord is monitoring working conditions in 1,619 factories and the Alliance is monitoring that in another 700. These factories produce 86% of the country’s ready-made garments, which are exported to European and US markets. Both Accord and Alliance have come up with reports after assessment of conditions in about 700 factories.

Thanks to these and other reports, the government has shut down 13 factories in four buildings in Dhaka and Chittagong.

Meanwhile, as well as raising minimum wages, the Bangladeshi government has taken some important steps which include hiring inspectors to conduct preliminary safety inspections and registering more labour unions. In 2013 some 96 new trade unions in the RMG sector registered with the Bangladesh Department of Labour (DoL), compared with just two trade unions over the previous two years. Presently, 222 unions in the RMG sector are registered with DoL

Compensation has been a problem. While the Bangladeshi government has spent BDT235.5 million for the victims of the Rana Plaza collapse from the prime minister’s relief fund, a study by the Centre for Policy Dialogue reported that only 41 out of the 333 badly injured survivors have received compensation. Around 88 % of them are yet to accept any financial assistance from the prime minister’s fund.

The legacy of the Rana Plaza will continue for some time. The Bangladesh Institute of Development Studies (BIDS) researcher Zaid Bakht estimates 13% growth in RMG even after Rana Plaza. He argues that the disaster has focused global attention on issues of workplace safety and labour rights in the country, with the government, buyers, international organisations and workers coming together in an unprecedented effort to improve the conditions in the industry.

As Hafiz Ahmed Mazumder, a garment factory owner, puts it, “the RMG industry was primarily in a cluttered circumstance. Industry people are [now] undertaking positive initiatives for more development in terms of labour rights and industry friendly environment”.


*Ms Khadija Farhana has written widely on development issues, notably for the DEVEX , The Networker, Digital Development Debates, The Guardian and the Asian Development Bank. She is a member of the International Environmental Communication Association, DEVEX. The views are the author’s and do not necessarily reflect those of the OECD or its member countries.

See http://oe.cd/Bg and http://oe.cd/Fw

See also http://oe.cd/Bi

©OECD Observer No 299, Q2 2014




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.60% Mar 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 6.993% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 12 May 2015

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