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History of Garment Industry (RMG) in Bangladesh

In the 1950s, labors in the western world become higher organized by forming trade unions. This and other changes provided workers greater right including higher pay; which resulted in higher cost of production. Retailers started searching for places where the cost of production was cheaper. Developing economies like Honking, Singapore, Taiwan and South Korea presented themselves as good destinations for relocation because they had open economic policies and had non-unionized and highly disciplined labor force that could produce high quality products at cheaper cost. In order to control the level of imported RMG products from developing countries to developed countries, Multi Febre Agreement (MFA) was made in 1974. The MFA agreement imposed an export rate at 6% that increases every year from a developing country to developed country. It also allowed developed countries to impose quotas on countries that exported at a higher rate than the bilateral agreements. In the face of such restrictions, they found Bangladesh as one of the most suitable countries. Available records show that the first consignment of garments was exported from the country in 1977 by Reaz and Jewel Garment. Desh Garment was the first biggest factory that started functioning at Chittagong in 1977. In fact that was the humble beginning of new joint venture garment factory in Bangladesh. Thereafter many entrepreneurs became interested and started to setup garment factories following the Desh garment and realizing the future prospects globally as well. Available records also show that one of the reasons of the growth of garment industry in Bangladesh is the collaboration of a local private garment industry, Desh garment with a Korean company, Daewoo. As part of its global strategies, the Daewoo Corporation of South Korea became interested in Bangladesh when the Chairman, Kim Woo-Choong, proposed an ambitions joint venture to the Government of Bangladesh which involved the development and operation of tyre, leather goods, cement and garment factories (Rock, 2001). South Korean Company, Daewoo, a major exporter of garments, was looking for opportunities in countries for using their quotas subsequent to the signing of MFA in 1974. This is when Bangladesh started receiving investment in the RMG sector. Because of the quota limitation for Korea after MFA, the export of Daewoo became restricted. Bangladesh as a LDC got the opportunity to export without any restriction and for this reason Daewoo interested to use Bangladesh for their market. The reason behind this desire was that Bangladesh will depend on Daewoo for importing raw materials and at the same time Daewoo will get the market in Bangladesh. For this desire Daewoo signed a five years collaboration agreement with Desh Garment. It included collaboration in the areas of technical training, purchase of machinery and fabric, plant setup and marketing in return for a specific marketing commission on all exports by Desh (Rock, 2001). The outcome of the collaboration of Desh-Daewoo was significant. In the first six years of its operation, Desh export value grew at an annual average rate of 90 percent reaching more than $ 5 million in 1986-87 (Mahmood, 2002). Rahman (2004) argued that the Desh-Daewoo collaboration is an important factor to the expansion and success of Bangladeshs entire garments export sector

Factors Promoting Growth of RMG Industry


Factors which promoted growth of RMG sector in Bangladesh are 1. Domestic factors&

2. External factors 1. Domestic Factors


a) Cheap labor: RMG is a labor-intensive sector. Bangladesh is an over-populated country burdened with

unemployment problem. The private entrepreneurs in the late 1970s and early 1980s got an opportunity to use cheap labor to flourish this sector over-night. At present, about 3.5 million people are working in this sector. About 80% of them are women. They got a chance to change their fate by working in the garment factories which helped boom the sector. Nowhere in the world is labor as cheap as it is in Bangladesh. The following table shows a comparative study of per hour labor wage in major RMG exporting countries. Country Turkey Mexico China Pakistan India Sri Lanka Vietnam Bangladesh Per hour wage (US$) 2.44 2.17 1.88 0.56 0.51 0.44 0.44 0.22

Table 1: Country-wise per hour wage of garment workers; Source: The Daily New Age, 13 Aug, 2010.

b) Low production cost: As labor cost is very low, RMG factories in Bangladesh can produce quality

garment at lower cost which has attracted the foreign buyers. International companies like Wal-Mart, JC Penney, H&M, Zara, Tesco, Carrefour, Gap, Metro, Marks & Spencer, Kohl's, Levi Strauss and Tommy Hilfiger all import in bulk from Bangladesh. The total export from the sector has doubled from $6.4 billion in FY 04-05 to $12.5 billion in FY09-10. The comparative advantage of low production cost also attracted foreign direct investment. As a result, both backward and forward linkage industry flourished in Bangladesh. Currently, the backward industry is able to meet up to 85% of the demand for the raw materials, which significantly contributed to the country's growth of apparel and knitwear exports.
c) Local Demand: Clothing is a basic need. Bangladesh is one of the most densely populated countries in

the world. Every year Bangladesh needs a huge quantity of garment for its local need. Culturally people of Bangladesh like to wear new cloths on the eve of various festivals like Eid, Puja, Pohela Baishakh etc. Before emergence of RMG industry, people of Bangladesh had to depend on the tailors for their domestic need of clothing. Though tailoring still exists, ready- made garment business is very prolific in Bangladesh.
d) Government Support: The apparel industry received support from the government, which included

measures like duty drawback facilities, tax holidays, cash assistance, income tax rebate, creation of export

processing zones, zero tariff on machinery inputs, rebate on freight and power rate, bonded warehouse facilities, provision of import under back-to-back letters of credit, loans at concessional rate, export development fund, etc.
e) Back to Back Letter of Credit: Back to Back Letter of Credit is one of the important factors in the initial

and continuing success of this sector. It considerably eases the financing requirement of garment business for the local entrepreneurs. The entrepreneurs are able complete the complicated process of manufacturing and export with very little of their own funds for working capital. Even if the turnover is Tk. 50 million and the profit is only 5% the returns are still decent since the funds are borrowed largely from the banks. Therefore the rate of return does not need to be high. In the absence of back to back L/C, it would have been very difficult for the new entrepreneurs to raise funds from local financial institutions to import fabrics and accessories.
f)

Private entrepreneurship: The export- oriented RMG sector started its journey entirely with private

initiatives. The journey was not smooth. The entrepreneurs faced tremendous constraints in terms of power and gas supply. Political instability, frequent hartals (strikes), poor port facility, and labor unrest created longer lead time, which became another barrier in competing with neighboring nations. Amidst all the constraints, the RMG entrepreneurs lived up to the buyers' expectations of reduced price margin, improved compliance standards, and quality assurance. There were also significant investments in backward integration.

2. External Factors
a) Quota facility: The key factor behind the growth was the quota system under the Multi-Fibre

Arrangement (MFA). The General System of Preferences (GSP) facilities and RoO (Rules of Origin) offered by the developed nations also helped Bangladesh to accelerate its export. In short, MFA provided market protection for Bangladesh, whereas GSP facilities offered preferential treatment and market access opportunities in developed economies.
b) Civil War in Sri Lanka: Civil War in Sri Lanka which started in late 1970s proved to be boon for

Bangladesh in respect of RMG industry, though it was a bane for Sri Lanka. Sri Lanka was a leading country in exporting RMG among Asian countries. But due to the civil war, the western buyers turned away from Sri Lanka and were looking for substitute of Sri Lanka. Finally Bangladesh came forward to replace Sri Lanka in RMG business based on its huge cheap labor force.
c) Supply Side Factors: On the supply side, several factors can be mentioned that have contributed to the

growth of Bangladesh as an apparel exporter. First as the wages of the East Asian Countries rose and quota restrictions limited shipments from these countries to particularly the US markets, apparel firms from those countries established production operations in other countries with cheaper labor and with few or no quota restrictions. In the second half of 1970s, business houses from the Republic of Korea, Daewoo in particular, ventured into Bangladesh to transfer the technology of production and to provide marketing channels. The number of garment exports business from this arrangement remained small but awareness as regard the

prospects developed within the garment industry. In 1978, fewer than a dozen companies were in operation. The number grew to 80 just in three years. Since then, the growth of the industry has been fabulous. The Korean investment provided the garment industry the decisive advantage without which a much longer time would have been taken by the Bangladesh garment industry to attain its present status.

Contribution of RMG Sector to National Economy


In the 1980s, there were only 50 factories employing only a few thousand people. Currently there were 4490 manufacturing units. Over the past few years garment industry is found to have played such an important role in the process of industrialization and economic growth. 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 FY2009-2010 which was only 3% in FY1990-1991. Government has set 26.36 billion export targets for FY 2011-2012. It has created employment opportunity for about 3.5 million people. 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 socio-economic development of the country. The growth of the industry in terms of number of units and employment generation is
shown in table below:
MEMBERSHIP AND EMPLOYMENT YEAR 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 NUMBER OF GARMENT FACTORIES 834 1163 1537 1839 2182 2353 2503 2726 2963 3200 3480 3618 3760 3957 4107 4220 4490 4743 4925 5063 5150 EMPLOYMENT IN MILLION WORKERS 0.40 0.58 0.80 0.83 1.20 1.29 1.30 1.50 1.50 1.60 1.80 1.80 2.00 2.00 2.00 2.20 2.40 2.80 3.50 3.60 3.60

2011-12

5400

4.00

Table 2: Growth of the industry and Employment

Causes of labor unrest


a) The wage of the worker get is low b) Workers do not get their wage, overtimes & bills in time c) They do not know anything about their job contract d) Being maltreated by owners and mid-level officers they work long hours in congested environment

without sufficient rest


e) Conflict between owners and workers f)

Conspiracy of home and abroad

g) Poor port facility h) Lead time complexities i)

Advancing competitors in the quota free international market are some of them which are posing a great threat to its survival

j)

If any worker protests, he/she are threatened by various types of harassment such as dismissal, arrest etc.

This is why labour unrest has been a common phenomenon in the RMG sector of Bangladesh.
a) Workers are being embroiled in clashes frequently; b) 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 abroad. It also makes foreign buyers reluctant to render future orders. In addition, 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. 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.

RMG in Post- MFA Scenario


Over the last thirty years, international trade and investment in the global textile and garment (T&G) sectors has been influenced by Multi-Fiber Arrangement (MFA) quantitative restrictions (quotas) applied by the major developed country importers (the United States, the European Union, Canada and Norway) on T&G exports from (predominantly) developing countries. MFA quotas were negotiated bilaterally and applied on a discriminatory basis to some exporting countries but not to others, thus differing from country to country in both product coverage and the degree of restrictiveness. In such a context, the Multi-Fiber Arrangement governed the trade in textiles and clothing from 1974 to 1994. This arrangement was superseded in 1995 by the Agreement on Textiles and Clothing (ATC) under the administration of the World Trade Organization

(WTO). From 1 January 2005 all such quantitative restrictions on the trade in textiles and clothing were phased out, and finally abolished. The quota system under the MFA has distorted international T&G trade and has resulted in global welfare losses since quota limits on the exports of selective producers have prevented an allocation of resources to the most efficient T&G producers and prevented prices in quota protected developed country markets from falling. Competitive exporting countries with comparative advantages in T&G production have been restrained from expanding under the MFA quota system, while relatively uncompetitive producers have enjoyed guaranteed market access (up to the quota limit) to developed country markets (Spinanger, 1999). In such a context, there was serious concern that low income countries, such as Bangladesh, Cambodia and the like, which relied heavily on the garment industry, would suffer from the keen competition expected to be triggered by the complete liberalization of trade in textiles and clothing from the beginning of 2005. From the many corners it was predicted that China would expand its exports and India would follow, and that the other relatively small exporters would suffered seriously from the competition of these two giants. However, it turned out that some garment-exporting Least Developed Countries (LDCs), such as Bangladesh, Cambodia & Haiti, faired very well throughout the year 2005.

Labor unrest
It 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. They dont 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 dont have any access to the decision making process. Factory building collapse, fire accident, stampede render many dead and injured. Nevertheless, if any worker protests against owners or management, he/she is threatened by various types of harassment such as dismissal, arrest or even physical assault by the hired hooligans of owners. 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.

Grade with posts Grade 1 : Pattern Master, Chief Quality Controller etc. Grade 2 : Mechanic, Electrician, Cutting Master etc. Grade 3 : Sample Machinist, Senior Machine Operator etc. Grade 4 : Sewing Machine Operator, Quality Inspector, Cutter, Packer, Line Leader etc. Grade 5 : Junior Machine Operator, Junior Cutter, Junior Marker etc. Grade 6 : Operator of General Sewing/Button Machine etc. Grade 7 : Assistant Sewing Machine Operator, Assistant Dry washing man, Line Iron man etc.

Basic

House rent (40% of Basic)

Medical Allowance

Net Salary Tk. 9300 Tk. 7200 Tk. 4218

Tk.6500

TK.2600

Tk.200

Tk.5000

TK.2000

Tk.200

Tk.2870

TK.1148

Tk.200

Tk.2615

TK.1046

Tk.200

Tk.3861

Tk. 2395

TK.958

Tk.200

Tk. 3553

Tk.2230

TK.892

Tk.200

Tk. 3322

Tk.2000

TK.800

Tk.200

Tk. 3000

Table 3. 4th minimum wage structure for the garment workers

Minimum wage of workers of RMG sector with other industries of Bangladesh Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Sector Oil-mills Re-rolling Foundry Ship breaking Ayurvedic unit Pharmaceutical Soap and cosmetic RMG Shrimp processing unit Tailoring shop Minimum wage in Tk. 7420 6100 5100 4645 4350 3645 3300 3000 2645 2350

Table 4: Sector-wise minimum wage for workers

Recent Labour Unrest in RMG Sector


The RMG sector has economic contribution as well as social contribution in Bangladesh. It has created employment opportunities for about five million people including young, poor and illiterate women. However, recently the RMG sector is going through severe disturbances. The clashes between garment workers and law enforcers create serious crisis in this industry (Islam and Ahmad 2010). In January 11, 2010, the garment workers created violence for getting the facilities such as lunch bills and encashment of casual leaves. Forty workers were injured, production of 30 garment factories were halted. The garment workers had created another aggression on April 28, 2010 for increasing their monthly wage rate from US$ 25 to US$ 70. During that incidence, more than 22 RMG factories were affected and 30 peoples were injured (Islam and Ahmad 2010). The wage rate (0.25 US$ hour) is the lowest in Bangladesh compare with other countries mentioned in appendix. Another major worker disputes had taken place on May 25, 2010 for low house rent allowance. Thirty peoples were wounded, a police station was burned down and many roads were blocked for several hours. Another worker unrest took place on June 21, 2010 for implementing minimum wages of US$ 70 a month. In that clash, two hundred peoples were injured and thirty factories were ransacked (Islam and Ahmad 2010). The garment workers had violated at Dhaka on June 30, 2010 for protecting the closure of factories, and more then 40 people were injured. The workers have been engaged in street protest, picketing, or blocked of a manager's office or a factory for expressing their dissatisfaction about their wages and other job related issues. One of the reasons for this unrest in the garment industry is legal and institutional failures to ensure labour rights (Islam and Ahmed 2010). Most of the garment factories in Bangladesh do not follow the labour law and ILO conventions (Islam and Ahmed 2010). The Labour Act 2006 (called Labour code) clearly mentions that the wage of a worker must be paid within seven workings days [Section 123 (1)]. Majority factories do not provide appointment letters/contract letters, identity cards and employee handbooks. Health safety and security condition in this sector are also insufficient. The workers do not have a clear idea about their rights and labour laws (Islam and Ahmed 2010).

Fire at garment factories


Around 33 major fire incedents at garments factories claimed at least 500 lives between 1990 and 2012. Listed below are some of the disasters since 2000 Year 25.11.2000 08.08.2001 06.01.2005 23.02.2006 25.02.2010 No. of Death 46 24 22 54 21 Factory Chowdhury Knitwear Garments factory Maico Sweaters Shan Knitting and Processing Ltd. Kts Garments Garib and Garib Sweaters

14.12.2010 24.11.2012

26 111

Ha-Meem Group Tazreen Fassion Source: The Daily Star 27.11.12

Fire service officers inspected 163 out of 574 in Ashulia after November 24 fire. The findings were appealing. 53 of those inspected factories lacked minimum fire safety standards.

Expressed & Hidden Causes Labour Unrest in Garments Industry


Expressed causes of labour unrest at RMG sector in Bangladesh
a) Low wage rate: As the industry is highly labour intensive in nature, the historical evolution of world

apparel business supplier in the world. As human labour is embodied in the manufacturing process. It makes wages rate as an important determinant of production cost. As quotas were imposed on some apparel exporting countries, a large number of intermediate buyers shifted sourcing of RMG product to Bangladesh which was reinforced by the market access power of the country through the US and Canadian markets quotas imposed on imports apparel garments. Considerably the prevailing low wages ensured competitive prices for the ventures entrepreneurs to shift low wages helped Bangladesh focus on high volume mass production of RMG items competing directly countries such as China, India, and Vietnam.
b) Access working hours: Though the wages are low, the working hours are very long. The RMG factories

claim to operate one eight-hour shift six days a week. The 1965 factory Act allows women to work delivery deadlines; however, women are virtually compelled to work after 8 oclock. Sometimes they work until 3 oclock in the morning and report back to start work again five hours later ar 8 oclock. They are asked to work whole months at a time the Factory Act, which stipulates that no employee should work more than ten days consecutively without a break.
c) Poor accommodation facilities: As most of the garment workers come from the poor family and comes

from the remote areas and they have to attend to the duties on time, these workers have to hire a room near the factory where four to five huddle in a room and spend life in sub human condition. For four to five workers there is one common latrine and a kitchen for which they have to pay from Tk=2000 to Tk=2500/.They share this amount among themselves to minimize the accommodation expense. The owners of these factories must not treat the workers as animals. The owners of these factories who drive the most luxurious car and live in most luxurious house do ever think that these are the workers who have made their living so juicy. Will these selfish owners ever think of these workers of their better living for the sake of humanity by providing better accommodation for these workers in addition to providing with the job?
d) Safety Problems: Because of the carelessness of the factory management and for their arrogance factory

doors used to be kept locked for security reason defying act Safety need for the worker is mandatory to maintain in all the organization. But without the facility of this necessary product a lot of accident is occur incurred every year in most of the company. Some important cause of the accident are given below-

Routes are blocked by storage materials Machine layout is often staggered Lack of signage for escape route No provision for emergency lighting boors, opening along escape routes, are not fire resistant Doors are not self-closing and often do not open along the direction of escape Adequate doors as well as adequate staircases are not provided to aid quick exit Fire exit or emergency staircase lacks proper maintenance Lack of proper exit route to reach the place of safety Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air Fire in a Bangladesh factory is likely to spread quickly because the principle of compartmentalization is practiced
e) Political crisis: Garments industries often pay dearly for political unrest, hartal and terrorism etc. The

international market has withdrawn quota advantage over garments export form Bangladesh since December 2005.
f)

Accommodation and higher house rent: Workers do not have dormitories for their accommodation. As a

result, they have to pay higher house rent. Owners of these houses in Ashulia have increased the rent four times in a year. Following such arbitrary moves, workers put pressure on factory managements to increase their salary and they take to the streets when managements do not increase the salary.
g) Lack of motivational training programme: According to present estimate, the country's more than 5,000

woven, 1,700 knitwear and nearly 1,300 spinning, weaving, finishing and dyeing factories suffer from shortage of 25 percent workers. Currently, 3.5 million workers are employed in the sector. They do not have institutional training on production management, organizational behavior and adaptability but they are the most important part of the multi-billion dollar garment business. If they were trained properly, they might not engage in frequent unrest.
h) Unskilled workers: Most of the illiterate women workers employed in garments are unskilled and so their

products often become lower in quality.


i)

Improper working environment: Taking the advantages of workers' poverty and ignorance the owners

forced them to work in unsafe and unhealthy work place overcrowded with workers beyond capacity of the factory floor and improper ventilation.
j)

Lack of managerial knowledge:There are some other problems which are associated with this sector.

Those are- lack of marketing tactics, absence of easily on-hand middle management, a small number of manufacturing methods, lack of training organizations for industrial workers, supervisors and managers, autocratic approach of nearly all the investors, fewer process units for textiles and garments, sluggish backward or forward blending procedure, incompetent ports, entry/exit complicated and loading/unloading takes much time, time-consuming custom clearance etc.

k) Gendered division of labor: In the garment industry in Bangladesh, tasks are allocated largely on the

basis of gender. This determines many of the working conditions of women workers. All the workers in the sewing section are women, while almost all those in the cutting, ironing and finishing sections are men. Women workers are absorbed in a variety of occupations from cutting, sewing, inserting buttons, making button holes, checking,cleaning the threads, ironing, folding, packing and training to supervising. Women work mainly as helpers, machinists and less frequently, as line supervisors and quality controllers. There are no female cutting masters. Men dominate the administrative and management level jobs. Women are discriminated against in terms of access to higher-paid white collar and management positions.
l)

Rumour: Rumour is a common problem in the garment sector. Very often rumours of deaths and

accidents cause commotion among workers and resultantly, workers vandalize factories without checking up on the veracity of the rumours. Consider the following incidentals an example. A few years ago a large number of workers at a Gazipur based garment factory were stampeded and injured while they were coming down from the upper floors of the building after a rumour of a co-worker being attacked by a genie spread. Needless to say, the existence of the genie could not be found anywhere in and around the factory. The latest incident of unrest at Ashulia also started from a rumour of a missing Salman, a storekeeper of Ha-Meem Group, which was baseless.
m) Fear of job loss: Sometimes workers, in fear of losing their jobs, engage in vandalism. They fear job loss

for their misbehaviour with the seniors or if they are identified in any kind of violence.
n) Jhut business: Jhut (the scrap of clothing items) is a very profitable business for a section of traders as the

item brings them cash money. Previously jhut was a waste product of the garment factory but now it has become a by-product for its commercial value. As a result, some people, especially the locally influential people want to grab more jhut through influencing either workers or mid-level management of the factories. Many factories have faced unrest for the politics involved in jhut business.
o) Case with police stations:Filing of cases with the police station by the factory authorities on many an

occasion have triggered labour unrest and work stoppage. When any kind of violence takes place at the factories, the managements and the local police file cases against hundreds of workers and the workers' leaders without mentioning their names. Police then search for the workers even after normalcy returns to the factories.
p) Fear of shutdown of factories: In majority of factory closure cases, the managements do not follow the

rules of law. Without serving any prior notice to the workers, they shut down the production units. As a result, workers get involved in clash with them and vandalise factories either for reopening production units or for arrear salary and other dues.
q) Arrears: Workers clash with the management for arrear salary and bonuses especially during the Eid

festivals. The situation in salary disbursement has improved a lot as managements are now handling it professionally and have enhanced the compliances at factory level.
r) Checking at entry point and identity cards: Some severe labour unrest took place during checking the

workers at the entry point of garment factories by the security guards. Workers engage in altercation with the

guards when they ask them for identity cards during the checking. Sometimes workers forget to carry the identity cards. In such cases guards do not allow them to enter the factory.
s) Pay hike and discrimination in grades: Incidents of unrest in November 2010 were only triggered by

discrimination in salary hike and changes in grades. Many senior workers or operators did not get the salary at the proper grades although the minimum wage was implemented since that month. As a result, workers vandalized many factories. In the latest wage structure workers were categorized in seven grades. A section of workers started demonstration when the experienced and old workers were graded properly.
t)

Bad relations between workers and mid-level management: Very poor understanding between workers and

mid-level management is a perennial problem in the garment sector. Floor managers demand a quick delivery of works from the operators, but it might not be always possible. In such cases the mid-level officials engage in altercation with workers. Many mid-level officials were injured for bad relationship between workers and the management.
u) Provocation by locally influential people and international conspirators and some NGOs: Local influential

people play a vital role in the sector. Local MPs have a great role to play, but sometimes they allegedly influence workers for some undue facilities. They use workers to establish their supremacy locally. They use workers to get jhut items and orders from garment owners for supplying materials, food items to the workers and other tenders. In cases of any outbreak of unrest, owners blame international conspiracy and NGOs overlooking the direct role local vested quarters play in the sector for business and political gain.
v) Fear of police and role of industrial police: The police force has a major role to play to quell garment

unrest. During the recent unrest in Ashulia, many questioned the roles played by the newly introduced industrial police. Some quarters say that a clear division has already been created between industrial police and the normal police force.
w) Sudden orders cut by international buyersSometimes international buyers do : not follow ethical buying

practices. For different reasons they undercut the prices or reduce the volume of order. As a result, garment makers either delay in payment to the workers or deprive them as factory owners also become victims of order cuts and rate cuts. Ultimately, workers engage in clash with the management.
x) Production in piece rate: Sometimes sweater factories are considered the source of unrest for mismatch in

calculation in piece rate. Sweaters are produced under piece rate basis, meaning workers receive salary upon production. Sometimes workers are not paid in exact calculation of pieces at the end of the month. Suppose, at the end of a month a worker claims he has produced 100 pieces of sweaters while the officers calculate it to be 95. Many factories were vandalised for such wrong calculations in sweater factories.
y) Inflation: Spiraling of prices of basic commodities is a major source of unrest. For example, prices of

four eggs are Tk 40, which only five months ago were Tk 24. Similarly, prices of almost all commodities have increased. As a result, workers always bargain with the managements for pay hike.

Hidden causes of labour unrest at RMG sector in Bangladesh

a) Lack of motivational training programme: According to present estimate, the country's

more than

5,000 woven, 1,700

knitwear and nearly 1,300 spinning, weaving, finishing and dyeing factories suffer 3.5 million workers are employed in the sector. They

from shortage of 25 percent workers. Currently, do not have institutional

training on production management, organizational behavior and adaptability but

they are the most important part of the multi-billion dollar garment business. If they were trained properly, they might not engage in frequent unrest.
b) Case with police stations: Filing of cases with the police station by the factory authorities

on many an place at the

occasion have triggered labour unrest and work stoppage. When any kind of violence takes

factories, the managements and the local police file cases against hundreds of workers and the workers' leaders without mentioning their names. Police then search for the workers even after normalcy returns to

the factories. Such objectionable police behavior often results in clashes with the factory managements
c) Reduction of product: At present, industry sector is severely hit by the power and gas crisis. Many

factories have suspended production for want of power and gas. In some cases, some factories are running their factories in the night instead of day. It is very unusual for both the owners as well as for the workers .This is why the total production has fallen 0; the cost of production increases dramatically, earning has

slimmed down. For this reason the owners do not want to pay the reasonable salary to the labor as a result conflict rises.
d) High cost of production: The cost of production is increasing day by day as the price of raw material is

rising. As the prices of essential raw materials are increasing beyond the control of the RMG owners, hence the pay increase is not possible. The price of essential raw materials to be done by the government. It is a major reason for labor unrest.
e) Communication gap: Communication gap between owners and labors is another hidden

must be

kept under control. This has

cause behind

the
f)

labour unrest. Due to communication gap misunderstanding create and it causes labor unrest.

Mistreatment of the workers by managers: Sometimes the manager or top level authority of the garment

mistreats with the labor and it creates labor dissatisfaction which turns into labor unrest.
g) Non-execution of labor laws: In our country labor law is not executed properly. On execution of the labor

law is the reason for labor dissatisfaction and dissatisfaction leads to create unrest in the garments sector.
h) Sudden order cut by international buyers: Sometimes international buyers do not follow

ethical buying

practices. For different reasons they undercut the prices or reduce the volume of order. As a result, garment makers either delay in payment to the workers or deprive them as factory owners also become victims of order cuts and rate cuts. Ultimately, workers engage in clash with the management.

Threats to Development Economy


Development economics seeks to determine how poor countries can be transformed into prosperous ones. Strategies for transforming a developing economy tend to be unique, because the social and political background of countries can vary dramatically.

a) Price competitiveness: China and some other competitors of Bangladesh have implemented sharp price-

cutting policies in exporting garment products over the last few years, but Bangladesh has failed to respond effectively to such policies. China was able to drop the export price of 29 garment categories by 46 per cent on average in the United States within a year, from $6.23 per sq metre in December 2001 to $3.37 per sq metre in December 2002. Bangladesh needs to respond to such price-cutting policies of its rivals in order to remain competitive in the quota-free global market.
b) Impact of labour unrest: Whatever might be the cause of labor unrest in the RMG sector, impact is,

beyond doubt, catastrophic. All the four parties- the workers, the owners, government and foreign buyers will be affected. If labor unrest continues, the foreign buyers will cancel their orders and divert to other exporters like, India, China or Cambodia. Hundreds of factories will be closed. Many owners may be bankrupt. Labors, losing jobs will lose their livelihood and many will involved in criminal activities. This will create burden on the existing unemployment problem and increase various types of crimes in the country. The government will be deprived of huge foreign exchange and revenue income. The foreign buyers, who could buy quality garments at a low price and make huge profit in the US or EU market will have to eye on another exporter country from where they have to count a high price for the same garments. Hundreds of businesses, grown based on RMG industry, will suffer. The whole economy of Bangladesh will be adversely affected.
c) Conditions of service and employment: It includes conditions of employment, classification of workers,

letters of Appointment and identity card, service book, form of service book, entries in the Service book, register of workers and supply of tickets and cards. (Section 3-9, Bangladesh labor Act 2006)
d) Health and Hygiene: The Act describes the terms and conditions of cleanliness, ventilation and

Temperature, dust and fume, disposal of waste and effluents, overcrowding, lighting, Drinking water, latrines and urinals, etc. (Section 51-59, Bangladesh labor Act 2006)
e) Safety and Health: It includes safety of the building and machinery, precaution in case of fire, fencing of

machinery, work on or near machinery in motion, cranes and other lifting Kamal, Billah & Hossain: Labor Unrest and Bangladesh Labor Act, 2006 5 machinery, hoists and lifts, floors, stairs and means of access, etc. (Section 61-72, Bangladesh labor Act, 2006)
f)

Working hours and leave: It describes the rules and regulation of daily hours, interval for rest or meal,

Weekly hours, weekly holiday, compensatory weekly holiday, spread over, night Shift, extra allowances for overtime, casual leave, sick leave, annual leave with Wages, festival holidays, etc. (Section 100-118, Bangladesh labor Act 2006)
g) Wages and payment: It contains special definition of wages, responsibility for payment of wages,

Fixation of wage-periods, time of payment of wages, wages to be paid in current Coin or currency notes, deductions for absence from duty, etc. (Section 120-126, Bangladesh labor Act 2006)
h) Trade unions and industrial relations, disputes: It narrates the rules and regulation of special definition of

worker, trade unions of workers and employers, collective bargaining agent, participation committee, Industrial disputes, lockout and strike, etc. (Section 175-211, Bangladesh labor Act 2006)

i)

Penalty and procedure: It shows the penalty for non-compliance of labor courts order, penalty for

Employment of child and adolescent, penalty for unfair labor practices, penalty for Illegal strike or lockout, penalty for taking part in or instigating go-slow, penalty For general offences by workers, penalty for other offences, etc. (Section 283-307, Bangladesh labor Law 2006) Based on the above mentioned literature it assumed that most of the labor unrest Occurred due to lack of proper implementation of Bangladesh labor Act 2006. Now the authors go for exploratory research to find out the reasons for labor unrest considering Bangladesh labor Act 2006, because labor unrest is a major problem for the growth and sustain of Ready Garment Factories.
j)

Children and women development: In garment industry most of the labors are women. By working and

earning money they are being able to support her family. This economic support to her family increases their dignity to her family. They get the power to give the opinion to make the family decision. But due to labour unrest many garment workers are being deducted. Many garment industry are being closed. It is creating threat in the process of developing and empowerment of the women.
k) Macro-economic perspective: Due to labour unrest the garments are being closed or decreasing the

production. Sometimes the buyers are finding new market are diverting to the new market. It will decrese the GDP of the country, decrease the rate of earning foreign currency. Due to this problem the infrastructural development will be decreased and the whole economy will have to face critical situation.
l)

Threats to poverty reduction target: In PRSP the poverty reduction target are set out. Labour unrest may

one of the major reasons or threat to achieve the target. Because this labour unrest will be responsible for creating the unemployment problem and this problem will restrain to the poverty reduction target.
m) Good governance: Good governance is another part to PRSP. It is most important factor the total

development of the country. Without good governance the country will not be able to run successfully. Labour unrest hampers the law and order situation. It affects the national and development economy of the country which is big threat to the good governance.
n) Food insecurity: Food security is one of the toughest challenges for the country especially for the govt.of

developing country. In PRSP food security has given most priority to achieve. Without food security a country cannot maintain the law and order situation. Due to labour unrest the production of the garment industry is becoming low. It is affecting the whole production and creating unemployment problem. So labour unrest is great threat to the food security. In PRSP criminal and justice has got great importance .Due to labour unrest the criminal and justice problem are raising.

Challenges to our National & Development Economy


a) Less foreign currency: as the production is less so the export of commodities will be decreased and a

deficit balance of payment will be occurred.


b) Less FDI(Foreign direct investment): When there is favorable environment for business , possibility of

having more profit in a country, then the foreign country want to invest there. So the foreign investment increases. As a developing country FDI is most important for Bangladesh. But, unfavorable business

environment and many other problems are providing a bad image to the foreign clients and abstaining them from investment. So we are suffering from lack of capital. As a result quality products are not being produced.
c) Reluctance to reorder: Though there must have risk in a business nevertheless the client must try to their

best to avoid the risk. Labor unrest make the clients think the related party risky. So, for avoiding risk the clients become reluctant to reorder and look for alternatives. Therefore we are losing clients and it makes the companies weak what hampers our economy.
d) Lessen Export: Garments sector provides lions share of our attained foreign currency. So it can be

imagined that how much it contributes to our economy. If the main earning source of a country is harmed then its national economy must be harmed. As the labor unrest make the regular activities face of problem so, there must have performance gap what results in less production as well as less export. Less export will provide less foreign currency and generally it will make a mess in our economy. Thats why it appears as a threat.
e) Bad image to the countries abroad: Because of inconsistent economy, political instability , labor unrest

the garments industries are failing to deliver the produced products on time as well as to deliver the quality products. The production cost also increasing for bearing the compensation of damaged products. So the final price is also increasing. Thats why the countries abroad who are our client are carrying a bad image and being reluctant to buy our products. We cant but think it a great threat.
f) Damage the economic strength: If the labor unrest , economic instability , political instability every now

and then it will be enough to damage the garment sector. And it will take a long period of time to rebuild a new way of alternative. By this time the economy may be damaged and lose its strength. Loss of economic strength will cause many other problem even it may lose sovereignty. It is the booming and most potential sector of economy. We know 80% of export is earned from this sector. So if this sector is damaged the economic strength will be damaged.
g) Inconsistent Economy: Our economy is inconsistent and labor unrest will add scratching to the wound.

When such unrest situation occurred some unexpected occurrence is appeared. Physical confliction, firing etc. Thus production rate fall down on the other hand due to the physical conflict other production related supporting business activities also remain stop. So the whole economy faces a problem.
h) Political Instability: Generally, a company has a labor union. The labor unions in our country are enticed

by politics unexpectedly. So, whenever the political instability takes place, it also touches the labor union as well as the company. Therefore labor unrest raises and hamper the regular activities of the companies what does not let them to attain their goal. So the political instability must be considered threat.
i) Potentiality to civil war: A lot of employees are working in the garments sector. Maximum of them are of

lower level and they dont have any other skill to do any other job. If, this great number of poor people loses their job at a time because of labor unrest and other problems, it must lead toward civil war. Because they will try to abduct others wealth for living. A single and short period war is enough for breaking the backbone of the economy of a country. So, we cant help thinking it Great threat.

j) Reduction of production: due to the effect of the unrest the labor will be unwilling to work in the firm

and thus the production rate will be reduced automatically.


k) Lower income level: due to the unrest the production will reduce and thus the income level of both

employer and employees will be decreased.


l) Remaining unskilled labor: if the workers remain closed to the unrest situations their efficiency and skill

will remain low.


m) Less demandable labor market: If our image about labor market remains same foreign employers will be

reluctant to import our labor. Thus our labor market will remain less recognize a high performing worker results in dissatisfaction and in some cases job turnover

Recommendations
a) An appealing wage structure should be made and implemented. b) Government should take initiatives to solve this problem by implementing strong policies related to

minimum wage rate, and reducing inflation etc govt. can control this unrest condition of labor.
c) A strong CBA can perform to control the employees. They protect the right of the employees as well as

the employers.
d) Good relationship among employee and worker should be developed e) Giving them a healthy workplace f)

Ensure the protection of job:

g) Lessening rumor h) RMG factories should ensure proper production and official layout with perfect place materials, tools.

Organization should tape up unused machine and keep it away from the manufacturing plant safely.
i)

All of the employees related with this potential industry should be enthusiastic to avoid the conflict of

interests. This means that employees and employers should not place themselves in situation that might face them to choose between their own interest, business or financial interest and the interests of readymade garment industries.
j)

Workers should be properly seated for waist and foot rest. Workforce is the heart of any organization.

RMG factories should guarantee the workforces proper rest for the fix time which can easily be helpful for the productivity of this industry.
k) Industries should provide chair with backrest. Fatigue will surely arise during work in a place; to remove

such type of tiredness garment factories should make available place with suitable chair which can ensure backrest of the workforce in the right time.
l)

RMG industries should have adequate leg space to allow easy leg movement of the workers. That means

layout of the manufacturing plant should be more spacious.


m) To be competitive, industries should comply with international standard code, such as ISO or imported

countries standard code.

n) Factories should have effective fire distinguisher and separate and adequate space for entrance and exit of

the workers. Every displays and control systems should be clear to all employees and workers.