The RMG sector has a challenging decade ahead. Is the industry prepared?

The weaknesses within the nation’s RMG sector have as soon as once more been laid naked in latest weeks, as staff’ protests over elevating the minimal wage underscored the struggles they face in assembly their fundamental wants as a consequence of their current low wages.

The authorities have since agreed to lift the minimal wage for garment staff by 56.25%, from Tk8,000 to Tk12,500, with an annual 5% increment, however not earlier than the demise of a number of protesting staff. 

Many staff nonetheless proceed to demand the minimal wage be set between Tk20,000 to Tk25,000, on condition that their present earnings quantity to lower than half of what’s obligatory to keep up a decent lifestyle. Furthermore, rising inflation has added to the monetary burdens confronting these staff.

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Regardless of such hardships, garment producers have persistently asserted their incapacity to accommodate substantial wage hikes, citing challenges corresponding to energy and fuel shortages, fluctuations in trade charges, and diminished demand from key export markets.

Moreover, as Bangladesh prepares for LDC (Least Developed Nation) commencement in 2026 and faces competitors from international locations like Vietnam and rising African nations providing even decrease wages, it turns into essential to seek out methods to stay aggressive for the RMG business, which has been constructed on a mannequin of gaining aggressive benefit by forcefully conserving wages down over time. 

In keeping with economist Dr Akhtar Mahmood, former Lead Non-public Sector Specialist at World Financial institution Group, the RMG sector will be unable to maintain its present low-wage mannequin for lengthy with out transitioning to a extra subtle, developed, highly-productive business.

“Low wage construction helps to maintain our business now. However do we would like that? The employees are in ache, and it’s affecting their productiveness. We will be unable to maintain the construction within the subsequent ten years. We don’t need such a low wage construction precisely as a result of it is not going to maintain sooner or later,” Dr Mahmood stated in a just lately revealed article in The Enterprise Customary.

As we reached out to a number of garment producers to delve deeper into the matter, they made the daring declare that the nation’s RMG sector will not be solely reliant on the low-wage mannequin, however makes an attempt are being taken to extend productiveness with the assistance of educated, expert staff, mixed with the embracing of contemporary applied sciences. 

Consequently, these garment producers preserve an optimistic outlook, affirming that Bangladesh is poised to retain its standing within the international RMG market, however competitors from rival nations.

To start with, most garment producers dispute the concept that Bangladesh’s RMG sector presently operates on  a low-wage mannequin within the first place. 

Barrister Shehrin Salam Oishee, a director of Bangladesh Garment Producers and Exporters Affiliation (BGMEA) and likewise the director of Envoy Design Ltd., contended that the wages provided to garment staff in Bangladesh usually are not low however somewhat aggressive. 

She primarily based this assertion on components corresponding to per-worker productiveness, precise worth addition, and a comparative evaluation of the price of residing within the international locations into consideration. “We have now a vibrant and younger inhabitants. So now we have a transparent benefit of a aggressive labour drive,” Oishee stated. 

She emphasised the need of diversifying merchandise via each horizontal and vertical enlargement, notably transferring from fundamental objects like T-shirts to extra superior clothes, to maintain aggressive wages. She harassed the significance of automation, abilities growth, and innovation in reaching this strategic imaginative and prescient for Bangladesh and sustaining competitiveness within the international market.

That stated, she acknowledged that “LDC commencement will definitely have some affect on our commerce, as it is going to result in some type of shifting tariff construction.”

She highlighted the significance of double transformation within the EU market, the place 60% of Bangladesh’s exports undergo two levels, from yarn to material after which from material to garment. Therefore, she referred to as for the necessity for investing in backward linkage to keep up competitiveness within the EU market and navigate potential challenges in different markets if tariffs enhance.

“However then once more, the dialogue we’re having proper now, if we are able to enhance our effectivity and productiveness, it will not be a problem,” she added. 

In the meantime, in response to Mohiuddin Rubel, one other director of BGMEA and likewise the extra managing director of Denim Professional, the employees’ wage is regularly rising within the nation and it’ll additional enhance sooner or later. 

Furthermore, like their counterparts in different developed nations, Bangladeshi staff are more and more buying superior abilities and schooling, getting ready for the numerous modifications anticipated within the sector as new applied sciences proceed to emerge.

Referring to China for instance, Rubel remarked, “as soon as they too used to 100% depend on guide labour. Nonetheless, with time, they honed their abilities, resulting in the emergence of recent industries and job alternatives, propelling their sector ahead. The same trajectory is anticipated for Bangladesh.” 

There’s additionally a notion that Bangladesh may lose its aggressive fringe of low-wage staff as a consequence of automation. At the moment, lower than 15% of all operations within the RMG sector are mechanised. We’re nonetheless not adapting quick sufficient to the speedy growth in automation. 

Rubel additionally agreed that there’s nonetheless appreciable progress to be made so far as automation is worried. Nonetheless, he emphasised that modifications are on the horizon, as garment producers are starting to recognise that failure to undertake automation promptly could end in shedding floor to their opponents.

“Whereas it is true that we’re trailing behind a number of developed nations, we’re making regular progress,” he stated.

Abdullah Hil Rakib, one other director of BGMEA and likewise the managing director of Staff Group, stated that though full automation will not be but potential, Bangladesh’s RMG sector has seen a change in direction of semi-automatic processes. 

He went on to clarify that material inspection, rolling, and chopping are extensively automated, but the guide numbering of lower material continues. Equally, though the stitching course of has partially shifted to semi-automatic strategies for element creation, human labour stays important for meeting, alongside the mixing of superior stitching machines and productivity-measuring IoT gadgets like “Nidle.” 

He additionally knowledgeable that high quality inspection stays totally guide as a result of limitations of AI expertise, whereas ironing and urgent are regularly shifting to semi-automation, and the packaging course of stays totally guide.

“There isn’t a different to coaching to reinforce the productiveness of staff. It is not solely about offering them with the talents of their course of, it is also about sincerity, motivation, office security, staff’ wellbeing, psychological well being and so many different non-production issues,” Rakib stated. 

In the meantime, Oishee additionally reckoned that factories within the Bangladeshi garment business are present process vital technological transformations, with automation and multiskilling of staff changing into prevalent, from autocad and material optimisation to waterless dyeing and Ozone wash applied sciences. 

The adoption of superior applied sciences, corresponding to ERP (enterprise useful resource planning) for provide chain administration and digital fee of wages, signifies a shift towards extra environment friendly and digitally managed manufacturing unit operations, disrupting conventional manufacturing practices.

Nonetheless, she conceded that when contemplating all these developments within the total context of Bangladesh, they is probably not notably vital. These trendy applied sciences and developments are deemed inadequate within the broader perspective of the nation.

“On common, Bangladesh is lagging behind many different international locations. notably, China, Vietnam, Indonesia. The state of affairs of Vietnam is completely different, as a result of Vietnam is instantly adopting Chinese language applied sciences and automation with the help of China. Due to this, Vietnam has taken a special place, which is why their effectivity is far increased,” she reasoned.

It’s value noting that within the context of productiveness, Bangladesh’s hourly productiveness within the RMG sector is considerably decrease than that of its counterparts, because the Asian Productiveness Group (APO) Database (2018) revealed that Bangladesh’s hourly productiveness stands at $3.4.

On the flipside, main exporter China’s productiveness is recorded at $11.1, whereas Vietnam’s productiveness is $4.7, Sri Lanka’s is $15.9, Indonesia’s is $12.3, and India’s is $7.5. Regardless of being the second-largest garment exporter, Bangladesh trails behind its Asian counterparts by way of attire labour productiveness per hour, aside from Cambodia.

Oishee agreed that “the productiveness in Bangladesh has been traditionally low in comparison with the opposite main supplying international locations.” She famous numerous components contributing to this, together with low employee productiveness, a spot in abilities, and reliance on typical manufacturing processes somewhat than systematic and scientific approaches.

In keeping with her, lately, notably within the final decade, many transformations have taken place on this space. Each manufacturing unit has its industrial engineering crew. They examine the movement time effectivity, productiveness and every little thing, and so they stability every little thing accordingly by modernising the manufacturing unit format and adopting completely different processes, like stock management, Simply-in-Time (JIT) and so on. 

“As well as, many factories are implementing instruments like linen manufacturing, six sigma, and so on. Nonetheless, after we discuss staff’ productiveness, there are a number of components related to this. 

“Like the usage of expertise, administration methods. On the subject of the usage of expertise, then clearly it is vitally troublesome to attract a common image of the entire business as a result of we do not have superior producers who advance the state of contemporary applied sciences,” she defined. 

Nonetheless, A F M Towhidul Alam, director of Silken Stitching Ltd, attributed this low charge of our staff’ productiveness to the federal government’s strict guidelines and rules, along with the superior high quality of merchandise manufactured in Bangladesh in comparison with these from different international locations. 

“After visiting quite a few factories in China, Vietnam, and India, it’s evident that our product high quality surpasses theirs,” he stated, additional noting that upholding such excessive requirements compels Bangladeshi clothes to keep up cost-effectiveness, whereas it additionally impacts productiveness charges.

Moreover, he claimed that even after Bangladesh’s commencement from LDC standing, the RMG sector will not be anticipated to come across instant dangers to its present place, given its sturdy repute and continuous introduction of recent merchandise and improvements.

“Given our present standing, there will not be any higher different to Bangladesh anytime quickly. Our patrons have sought options for lower-priced merchandise prior to now, however finally, they’ve at all times returned to us. Due to this fact, I do not assume there must be any query on the potential of our sustainability,” he added. 

The director of one other main garment firm in Bangladesh, who most popular to stay nameless, additionally acknowledged the troubling problem of low productiveness. Nonetheless, he expressed his perception that the employees’ abilities usually are not missing.

In keeping with him, one of many main causes of our low productiveness is site visitors congestion. The typical journey time for staff from residence to the manufacturing unit and again, about two hours every means, considerably impacts their effectivity and limits their productiveness.

“Moreover, there may be additionally a difficulty of inefficiency on the administration stage inside our factories,” the director supplemented.

It’s estimated that the effectivity of most garment factories could possibly be a lot increased than the common 40%-45% in Bangladesh, in comparison with international benchmarks of 75%-85%, with obligatory interventions.