The latest news from Bangladesh’s flagship RMG industry is about the substantial increase in minimum wages proposed by the Wage Board. This has been welcomed by many. Not surprisingly, the industry has expressed concern about its potential impact on profitability and competitiveness. Yes, indeed we should worry about competitiveness. But is it possible that we can have the best of both worlds? Is it possible that an increase in wages, which will bring some relief to the lives of thousands of poor families, will also trigger a more serious search for efficiency improving actions by the industry? Many people believe that it will; some are sceptical. I think this is a subject worth exploring.
Ever since the Rana Plaza tragedy, innumerable suggestions have been pouring in from home and abroad on how to improve conditions in the garments industry. Actions have been suggested for the various players; what the government must do, what the industry needs to act on and how the international buyers should responsd. But how do you make these actors do the things that they need to do? In most cases, these recommendations require behavioural changes by somebody or the other. Long-entrenched behaviour is difficult to change. However, it is not immutable.
So how do you change behaviour? While there is no shortage of ideas on what to do, we now need some creative thinking on how to get the things done. In some contexts, one can think of a big push. In Bangladesh, I believe, it will have to be a series of nudges. I guess I am talking about acupuncture not surgery! Or perhaps a series of well-executed dribbles rather than a free-kick. Not a bad analogy to use, perhaps, given that a recent President of BGMEA was once the captain of Bangladesh’s national soccer team!
While we must discuss the responsibilities of the international players and ask them to play their roles, at the end of the day it is our house that we must put in order. Let us not forget that there are many industries in Bangladesh where foreign players have a limited or no role — these are industries that cater to the domestic market. As the economy grows, these industries will develop further. But they are afflicted with many of the problems that we see in the garments industry. We want to see good working conditions, fair treatment of workers, productivity improvements and care for the environment in these industries too. It is disconcerting that responsibility for steering industrial development is diffused across so many government agencies. It does not help that the lead ministry, the Ministry of Industries, is one of the weakest in government.
Garment factory owners who have wilfully created unsafe working conditions, treated their workers unfairly and polluted the environment must be condemned. At the same time, we must acknowledge that there are people in the industry who have worked against many odds to create safe working conditions, treat workers relatively well and protect the environment. We do not know what the percentage is – it could be 1%, 5% or 10%. We do not know because their stories are not well publicised. But these stories must be told because efforts to improve the situation in the garments industry will benefit from knowing about such good practices. If nothing else, these stories will counter the argument that the industry can’t afford to adopt good practices due to narrow profit margins. If some can do it and remain competitive why can’t others.
I know of a large textile factory which uses about a million gallons of water a day to produce 35 metric tons of cloth. That is a lot of water – 1.5 times what an Olympic-size swimming pool can hold! This is the flip side of the very successful development of backward linkages in the garment industry. While a much higher proportion of the fabric consumed by our garment factories is now domestically manufactured, it is coming at a cost. The communities around the factories know it best; they suffer firsthand from the contamination of their water bodies as huge amounts of untreated effluents are discharged into the factories. And, they wait in apprehension as they see the water tables falling due to excessive water consumption; where, only a few years ago, one could dig 100 feet and get water, there is now a need to go further deep, 400 feet or more in many places.
Fortunately, some pioneering companies have seen the light, by themselves or prodded by others. The textile factory I am talking about used to consume 120 litres of water to produce one kilogram of fabric – that was lower than the industry median of more than 150 litres per kg. But the factory has gone further; it now uses only 60 litres per kg. of cloth and is looking for further efficiency gains. It also has a state-of-the art effluent treatment plant and facilities for rain harvesting of water. The reduction in water use came about through a modest investment of $80,000 to upgrade some equipment such as boilers, and dyeing and rinsing machines. In addition, the factory went for some simple good practices such as insulating stand pipes, repairing leaks, water recycling. The pay-off has been substantial and swift – the cost savings (water savings plus associated energy savings) in a couple of years have far outstripped the $80,000 investment.
This is just one example. But there are many others. And this brings us to the question I posed at the beginning. Is there scope to increase average productivity in the industry, and thereby keep our production costs competitive, despite a near doubling of wages? The anecdotal stories from the vanguards in the industry suggest that this is indeed possible. The challenge now is replicate their experiments and experiences in the rest of the industry.
A search for solutions often needs to begin at home. Industries have often developed when laggards have learned from the front-runners. These are painstaking processes but it is time to think along these lines. As in the case of acupuncture, interventions in some parts of the industry can create a flow that affects other nodes and eventually the whole industry. Assume that only 10% of the garment companies are currently pursuing good practices. If two laggards can learn from one front-runner and we allow two years for the learning to be complete, then the 10% may become 30% in two years and 60% in five years. That’s not a bad outcome at all. Five years may appear an eternity but time passes fast.
Some talk about the need to bring about revolutionary changes in the industry overnight. That would require very significant changes in long-held behavioural modes of all the actors involved. A realistic approach, which does not ignore the urgency to act, is a patient but consistent series of small changes. If we are concerned about the costs and side-effects of surgery, we could consider acupuncture instead. If we do not have the energy for a 100 yard free-kick, a series of patient dribbles can still do the trick.
Source: Bd news24