RMG industry in a tight spot: Export orders already fall amid global recession.

By: Refayet Ullah Mirdha

The apparel industry is in a double bind: continuous high inflation has led to a wage pressure and a gloomy global economy has left the garment owners in a tight financial situation.

The garment workers had a pay hike less than two years ago, but they are already finding it hard to meet their expenses.

Financially, the garment owners are in a bad shape too as work orders have dipped alarmingly.

Take Rahima (her real name withheld), for instance. She earns Tk 4,500 a month, and pays Tk 1,000 per month for her one-room shanty. Her landlord now wants Tk 1,400.

Over the past several months, she had to skip eggs, the almost one and only source of protein for low-income group people.

“Four eggs cost Tk 40 now. When my wages were increased [in late 2010] they cost Tk 24,” she says as she explains why she cannot afford eggs any more.

With such a price spiral, the inflation graph has swung wildly and remains at a high level. On a 12-month average basis, the inflation rate accelerated to 10.76 percent in May, up from 8.67 percent in the same month a year ago, according to the Bangladesh Bureau of Statistics (BBS).

Rahima and her fellow workers were shattered by the skyward journey of inflation.

“The workers did not get any benefit of the pay raise as the house owners increased rents four times a year,” said a worker at Ha-Meem Garment at Ashulia on the outskirts of the capital.

Rahima’s employer, Arif (again, not his real name), sandwiched between inflation and global financial crisis, also feels helpless.

He found prices of his product — basic T-shirts — falling to $2 now from $4 a piece two years ago, while his interest rate remained high at 15 percent. In a time of high inflation, one cannot expect banks to charge low.

“Inflation is cutting into workers’ purchasing power,” says Ahsan H Mansur, executive director of the Policy Research Institute, adding that food and housing are the two major expenditure items for the garment workers.

A garment worker spends 60 percent of his income on food, which is the same as the national average; and nearly 25 percent on accommodation, which is 7 percentage points higher than the national average of 18 percent in urban areas, he adds.

Prices of firewood also shot up due to higher demand among the workers in Ashulia in the absence of gas burners.

On November 1, 2010, the wage board for garment industries nearly doubled the minimum wages to about Tk 3,000 a month at the entry level. In dollar terms, the minimum wage was $43, the lowest in the world, at the exchange rate in 2010, which is now $36.4, as the taka has lost its value against the dollar.

Facing severe protests by workers over the last six days, the owners of more than 300 garment factories in the industrial hub of Ashulia closed down their units from yesterday for an indefinite period.

The latest spell of labour unrest started with the rumour of the death of Salman, a storekeeper at a unit of Ha-Meem Group, on May 11. Later, Salman was found alive with minor injuries he had suffered in clashes with factory officials.

The Salman issue over, factories in Ashulia resumed production on May 14.

But street violence returned to Ashulia on June 11. This time, the workers made a demand for a pay hike.

During a meeting with Labour and Employment Minister Khandker Mosharraf Hossain at the Ha-Meem factory on June 13, the workers pressed their clear demand for a wage raise.

With the country’s main export earning garment sector mired in labour unrest, exporters look to a bleak future as the financial crisis in Europe, the major export destination, cut into export growth.

Export Promotion Bureau data show Bangladesh’s export growth to have slipped 7.52 percent below the target in July-May period of the current fiscal year, compared to the same period a year ago.

In the 11 months through May this year, knitwear exports were calculated at $8.58 billion, which is 11.5 percent below the target. During the same period, woven exports were calculated at $8.7 billion, which is 1.45 percent more than the target, the data show.

Asked, Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the organisation had held several meetings with the stakeholders over the last one month, but nobody came forward with any charter of demands.

“I did not get any list of demands from any quarter,” Mohiuddin told The Daily Star yesterday. “We are still saying we are the victims of a conspiracy.”

“Many owners will go bankrupt because of the closure of the factories as they are losing production every day,” he said, adding that the shutdown would hamper export growth.

Referring to the recent vandalism in at least 200 factories at Ashulia, the BGMEA president said, “The government should punish the culprits who are involved in the vandalism.

“The highest loss of the country is that it will lose its image before the buyers.”

Source: The Daily Star


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