Bangladesh’s Garment Industry: An Economic Backbone in Crisis
The garment industry has played a huge role in propelling the socio-economic growth of Bangladesh’s developing economy and has been the country’s main source of foreign exchange since 1980. In 2019, the textile and clothing industries accounted for 80% of the country’s exports, worth about $34bn and Bangladesh was recorded as the second-largest individual country, only second to China, for apparel manufacturing in the world. In 2018, HSBC predicted that it would be the 26th-largest economy in the world, by 2030.
The phenomenal growth in garment exports emerged due to the increasing demand for Bangladeshi garments across familiar brands: H&M, Target, Marks & Spencers and Primark where much of the goods are produced and consumed principally, in Europe and America. The profitable exchange provided employment to over 4 million workers in Bangladesh, mostly to women from rural communities who have never before been part of a formal workforce: Bangladesh’s garment industry is now the largest employer of women.
However, the big revenue has offered little improvement to the lives of the workers: poor wages, long working hours, hazardous conditions persist, and the industry is now facing its biggest socio-economic threat - the COVID-19 pandemic. The pandemic which has shaken even the richest countries has devastated the Bangladeshi workers reliant on daily wages to make ends meet. As people avoid discretionary spending and retailers close, falling global demand for apparel is halting operations, putting workers at risk, driving women out of the workforce, and threatening to collapse Bangladesh’s single biggest revenue generator.
Seven years ago, when the Rana Plaza garment factory collapsed and killed more than a 1,130 people outside Dhaka, a harsh global spotlight exposed the death-trap workplaces within the garment industry. Brand names were found in the debris and concerns were raised over their responsibility. This responsibility is being questioned once again. The pandemic has led to a loss of £3.5bn in cancelled or suspended clothing orders from major buyers who also have imposed unfair commercial terms. This has resulted in devastating consequences for workers leading to over 1 million facing job losses and destitution. The efforts of the western fashion brands to recoup their losses down the supply chain during the pandemic and the negligence to respect their commitments has revealed a huge disconnect and failure to share the economic pain with the millions of workers down their supply chain. Seven years after the Rana Plaza disaster, brands continue to overlook their responsibility.
As of 23rd March, over 264 Bangladeshi garment factories have faced cancellations. Debenhams, which is supplied by dozens of Bangladesh factories but has now collapsed into administration due to the coronavirus downturn, is now unable to pay for the millions of pounds worth of ordered garments. According to an ITV News investigation, the retailer demanded 90% discount on garments orders already at UK ports leading to outrage: "How can you not pay us in full when you are selling our product online? This is stealing from the poor and vulnerable people in Bangladesh, who have helped build empires around the globe.” (Shafiq Hassan from Echo Sourcing). Many brands are defending their positions citing the pandemic for their financial difficulties, but in doing so are overlooking the years of a cheap supply of labour that has given them their profits in the first place.
Most Bangladeshi workers are unable to save any portion of their earnings with loopholes in the country’s labour laws and a disconnect between a practical living wage and legal minimum wage. The coronavirus has only exposed the industry’s shortcomings and consequences have been dire. In the wake of the pandemic, millions of workers were released and had no choice but to return to their cramped homes in slums and villages without an income and without resources to fight the pandemic. After most factories shut down, the Bangladeshi Government issued a $600 million bailout for all manufacturing industries but the amount barely covered a month’s salary for the workers in the garment sector. Most have now been able to return to the factories provided that they follow coronavirus safety measures, but the social and economic uncertainty remains. As the garments sector looks to recover when demand remerges and supply chain shocks are overcome, governments and retailers must work to minimize the economic slowdown and ensure that the garment industry is looked after.
Businesses must support Bangladesh’s garment sector and recognise their garment workers as a formal part of their supply chains with an unwavering commitment to human rights. Fair wage methods should be rolled out to all factories that supply them and the rights and protections offered to in-house staff should be replicated down the supply chain. Divulging this information and further details, for instance, the percentage of the retail price that goes to garment workers will create a fairer and stronger relationship between supply chains, brands, and their customers.
Ultimately, collective action by government, brands, international organisations, and factories is imperative: each must respond, act responsibly and reform the garments industry to ensure greater responsibility and transparency. Leadership must be responsive with the objective to develop Bangladesh into a stable and humanitarian state.
By Nishita Choudhury
