Germant crisis in Bangladesh - Daldrup Management/Crisis of Read… · Important issues related to the Bangladesh ready-made garment industry • Year(s) Issue • 1977-1980 Early

Crisis of Ready Made Garment (RMG) in Bangladesh

Presented by Md. Ashraful Alam

ID: 863249 Energy Systems(Masters)

07.04.2018

1

Content

• Introduction of RMG of Bangladesh

• Classification of RMG

• Effect on Exports

• Growth rate of Garment Industry per year

• Number of worker‘s increasing rate per year

• Facilities for Increasing RMG

• Wage compare with Different countries

• Main causes for RMG crisis

• New law from Government

• Other Recommendation from NGO

• Conclusion

07.04.2018 2

Introduction of garment industry of Bangladesh

Important issues related to the Bangladesh ready-made garment industry • Year(s) Issue • 1977-1980 Early period of growth • 1982-1985 Boom days • 1985 Imposition of quota restrictions • 1990s Knitwear sector developed significantly • 1993-1995 Child labor issue and its solution • 2003 Withdrawal of Canadian quota restriction • 2005 Phase-out of export-quota system • 2007-2012 many Pakistani and china’s textile are shifted to Bangladesh

Source: • Compiled by the author from Quddus and Rashid (2000), Mainuddin • (2000) and databases of the Bangladesh Garment Manufacturers and Exporters • Association, and the Export Promotion Bureau, Bangladesh

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RMG of Bangladesh

http://textilelearner.blogspot.de/2012/11/present-conditionsituation-of-ready.html

Woven product Knit products

Shirt,T-shirts and Trousers

Undergarments,socks, stokings and soft

garments

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Classification of garment industry in Bangladesh

Effect on Exports in Bangladesh

Major products exports from Bangladesh

RMG

Frozen Food

Raw Jute& Goods

Medicien& chemicalproduct

Ships and others

71.1

15.86

07.04.2018 5 http://www.bgmea.com.bd/#ad-image-7

Rapid growth rate per year

0

1000

2000

3000

4000

5000

6000

19

84

-85

19

86

-87

19

88

-89

19

90

-91

19

92

-93

19

94

-95

19

96

-97

19

98

-99

20

00

-01

20

02

-03

20

04

-05

20

06

-07

20

08

-09

20

10

-11

Factory growth in Bangladesh(In Number)

Factory growth inBangladesh(In Number)

07.04.2018 6 http://www.bgmea.com.bd

0

0,5

1

1,5

2

2,5

3

3,5

4

4,51

98

4-8

5

19

86

-87

19

88

-89

19

90

-91

19

92

-93

19

94

-95

19

96

-97

19

98

-99

20

00

-01

20

02

-03

20

04

-05

20

06

-07

20

08

-09

20

10

-11

Numbers of workers (In Million)

Numbers of workers (InMillion)

07.04.2018 7 http://www.bgmea.com.bd

Main Facilities for RMG increasing

• Low labor cost and duty advantage • raw materials • Real estate costs are also cheaper in Bangladesh • Good environment

• Good transport from chittagong port and mongla port • Skills and creative workers

• Negligible Tax • Government support

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Competitiveness enhancement model for the Bangladesh ready-made garment industry

Action Impact

Managerial efficiency enhancement

Technological upgrades

Compliance with code of conduct of buyer

Long-run relationship with buyers

Upgrading products

Textile university build up

Product diversification

Market diversification

Shorter production and distribution time

Government support

(infrastructure, police support)

Establishment of common ware houses

Short lead time

Export order increase

Industrial development Economical development

07.04.2018 9 http://e.unescap.org/tid/publication/aptir2456_haider.pdf

Wage compare with Different countries

No. Country Wage/hour

(US$)

No. Country Wage/hour(

US$)

1. Germany 25.00 9. Nepal 0.30

2. USA 16.00 10. Bangladesh 0.15

3. Mexico 2.40 11. Vietnam 0.85

4. Poland 1.40 12. Turkey 7.3

5. Sri Lanka 0.45 13. Pakistan 0.41

6. China 0.5 14. Cambodia 0.32

7. India 0.35 15. Thailand 1.75

8. Indonesia 0.40 16. South Korea 5.00

Table 2: Inter-country comparative average hourly wage in the RMG industry

Source: Ahamed, Ferdous(phd) ; 07; http://www.nla.gov.au/openpublish/index.php/lmd/article/viewFile/2269/3148

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Compare with India

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Main causes for Garment crisis in Bangladesh

• Low wage to workers

• Working Environment is not suitable

• Non-payment of overtime,

• late payment of wages

• lack of contract between the worker and the employer

• no maternity leave

• No holydays and

• High pressure

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Scenario of working environment

• Unhealthy environment

• absence of trade unions

• informal recruitment, and irregular payment

• sudden termination

• wage discrimination

• excessive work and

• child labor

http://www.ijsst.com/issue/375.pdfhttp://www.ijsst.com/issue/375.pdfhttp://www.ijsst.com/issue/375.pdf 07.04.2018 13

Effect of Low wage

http://www.chintaa.com/index.php/chinta/showAerticle/71/english

07.04.2018

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Pic. left and right: garment workers from the sandwiched floors of Rana Plaza at Savar Bazar bus stand after it collapsed yesterday morning. Photo: Palash Khan, http://www.thedailystar.net/beta2/newspaper/?date=2013-04-25

http://www.thedailystar.net/beta2/newspaper/?date=2013-04-25

http://www.thedailystar.net/beta2/newspaper/?date=2013-04-25

http://www.thedailystar.net/beta2/newspaper/?date=2013-04-25

Left and right: Lifestyle of Garment workers and their protect about garment owners

New law from government

0

500

1000

1500

2000

2500

3000

3500

4000

4500

before new law After new law

Series 2

Series 1

Legal minimum

Total 4100

600

3500

2400

600

Supplement

supplement

07.04.2018

15 http://www.fairwear.org/ul/cms/fck-uploaded/documents/countrystudies/bangladesh/MinimumWageImplementationBangladesh.pdf

1 Euro= 100 Taka

Recommendation from NGO’s

0%10%20%30%40%50%60%70%80%90%

100%

New law

New law

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16 http://www.fairwear.org/ul/cms/fck-uploaded/documents/countrystudies/bangladesh/MinimumWageImplementationBangladesh.pdf

Conclusions and Questions

• Ensure that workers are paid the news legal minimum wage

• Ensuring that proper wage documentation is provided to workers

• Reducing excess overtime

07.04.2018 17

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