A Theoretical Analysis of Bangladesh’s Readymade Garment Industry
Bangladesh has long been considered one of the least developed countries in the world, as measured by gross national income (GNI) per capita. According to the latest available data, Bangladesh has a GNI per capita of $2,010 (The World Bank, 2021a). As such, it is a part of the “lower-middle income economies” that include all countries with a GNI per capita between $1,046 to $4,095 (The World Bank, 2021b). In the latest available global comparison, Bangladesh ranks 151 out of 194 in terms of its development (The World Bank, 2019). Notwithstandingly, Bangladesh is one of the developing countries that have managed to improve their economic stance over the years, as the country is recommended to graduate this year from the official “list of least developed countries” (United Nations Economic and Social Council, 2021) – in this case, primarily by catering to the fast-fashion phenomenon through the expansion into the so-called readymade garment industry, hereafter referred to as RMG industry (United Nations Department for Economic and Social Affairs, 2020).
Analytical Ambiguities
Before turning towards the analysis, it is necessary to address the two main obstacles that aggravate a precise analysis. First, while often used interchangeably, the Bangladeshi government differentiates between the textile and RMG industry (see the official Bangladesh Statistics report published by the Bangladesh Bureau of Statistics in 2019). Thus, for a clear-cut analysis, it is crucial to continue this separation to avoid further confusion. The principal disparity is that the RMG industry solely entails the mass-production and distribution of complete pieces of clothing (garments) (TIS, n.d.). In contrast, the textile industry refers to the production and distribution of pure fabrics (TIS, n.d.). For this paper, the industrial sector of relevance will be RMG, as it supplies to fast-fashion brands.
Secondly, it must be cautioned that numbers and statistics can potentially vary between sources. Reasons for this can be manifold and can include, amongst other factors, a low literacy rate or lack of awareness and education as well as insufficient institutional resources (Elahi, 2008). Additionally, statistical variation may also stem from the definitional confusion described above. Anyhow, this is a separate topic in itself and shall not be part of this analysis. Nevertheless, in order to maintain the validity of the claims made in this essay, it is necessary to bear this consideration in mind when researching official statistics related to Bangladesh’s industry. Yet, this fact shall not take away from the prime argument of this paper as the general findings remain largely verified.
The RMG Industry – Economic Impact
With its independence from Pakistan in 1971, Bangladesh’s economy had to be rebuilt as a new independent entity. In the late 1970s, the newly-formed country only counted a negligible nine RMG factories spread over the country, concentrating on the domestic market with little to no exports (Asif, 2017). Over the years, the industry has seen an immense growth as the number of officially registered factories has risen to over 4500 (Bangladesh Garment Manufacturers and Exporters Association [BGMEA], 2020). With these factories, the RMG sector is the largest industry in Bangladesh, accounting for 83% of its total export earnings (BGMEA, 2020) and 12.36% of the country’s total GDP in the fiscal year of 2016-2017 (Chowdhury et al., 2019). As published in the official statements by the BGMEA (2020), Bangladesh’s RMG exports “more than doubled, from $14.6 billion in 2011 to $33.1 billion in 2019”, with an annual growth rate of 7% (Berg et al., 2021, “From Tragedy to Transformation” section). In sum, this showcases the sector’s strong potential and overall significance for the country’s economy.
Furthermore, following Muhammad’s (2011) caculations, the RMG sector alone has created employment for over 3.5 million Bangladeshis, of which more than 80% are women with minimal to no education. Bangladesh’s RMG industry has always had the lowest wages and labour cost compared to all other RMG producing countries, which caused the attraction of the large share of foreign interest. Following several strikes and protests in 2018, the legal minimum wage of garment workers was increased to Tk 8000 (US$ 94.33) per month as reported by Human Rights Watch (2019), which equals more or less US$ 3.1 a day. For reference, the average monthly income of a working person in Bangladesh is, according to the World Bank (2019), estimated to be around Tk 13,120.14 or US$ 154.65. Considering this notable monetary gap, it could be argued that while the RMG industry created millions of jobs, these were below-average income jobs, showcasing the prevalence of cheap labour in the RMG sector.
As with any industry, the different sectors in one way or another intertwine and intersect. Focusing on the RMG sector, its growth also positively impacted other sectors through generating profits and increasing general employment throughout Bangladesh (Bhattacharya et al., 2002). Following the authors’ report, amongst the sectors that have been impacted the strongest are the financial and insurance sectors, whose robust growth is usually attributed to the RMG sector. Comparable effects apply to various other sectors, including the engineering sector, real estate and its development, the ICT sector, utility services, waste recycling and tourism. Furthermore, the intense growth prompted an extension of Bangladesh’s port facilities, which was necessary to serve the industry’s international significance, as 40% of the port’s total earnings can be attributed to the RMG sector. Similar effects were observed with increased inland transport services. By occupying such a significant position within Bangladesh’s economy, it may not be surprising that the RMG sector is also responsible for millions of US Dollars that have flowed into the Government Exchequer and into the hands of professional services, such as business consultants or legal agencies, further fuelling the country’s business sector (Bhattacharya et al., 2002).
All in all, the potential and significance of the RMG sector is not solely but certainly to a high degree responsible for the economic development of Bangladesh.
The RMG Industry – Societal Impact
Similar to the economic impacts, the growth of the RMG sector has also had tremendous social impacts in Bangladesh. Although many are to be positively interpreted, some issues have also arisen around the RMG sector. However, it may be debatable whether these issues are attributable to the RMG sector itself or rather to the official handling of the sector by governments and foreign retailers.
On the positive side, first and foremost, the RMG sector granted employment to millions of workers, giving them a chance to improve their social conditions and security. To be precise, having a stable income allows workers to have savings (Loayza et al., 2000), which are beneficial to the individuals and their families as they provide small-scale financial security, reducing not only economic but also societal vulnerability (Altmann, 2003).
Furthermore, as the employees in the RMG factories are predominantly women, the industry has generated access to a monetary income for many uneducated or lesser-educated women. Numerous studies, as assessed by Zohir (2001), have concluded that having a source of income is recognised as a means to gain more independence from the family, thus reducing female vulnerability. At the same time, according to Bhattacharya et al. (2002), increasing female labour that is not confined to household-related tasks draws attention to the needs and specificities of working women. Based on the aforementioned factors, one could argue that the industry is a tool of empowerment by providing employment to millions of Bangladeshi women. Despite that, the dominance of women can also be criticised as it (1) may perpetuate gender stereotypes in terms of work tasks and (2) leaves an abundance of women with a considerably lower-than-average income.
Another positive effect of the massive employment of women is the observation that working women are more aware of family planning due to newfound sources of financial security (Bhattacharya et al., 2002), which reduces the perceived need for a large family or early marriage as a source of financial insurance (Fischer, 2010). Lower fertility rates are by no means the solution to improve Bangladesh’s state of development. However, higher fertility rates do affect the pace of economic growth in developing countries due to the scantiness of many vital resources, such as water access or employment opportunities (Livi-Bacci, 2017).
Following the earlier mentioned public concern about the exploitative working conditions, the Bangladeshi government pledged on various occasions to improve these conditions by implementing policies and regulations in favour of the garment workers. Indeed, officially, Bangladesh has a broad legal framework set up to ensure the workers’ rights (Islam & Rakib, 2019). One policy the country particularly prides itself on is one of many child labour elimination programmes by the International Labour Organisation (ILO). Implemented in 1995, the programme aimed to gradually reduce child labour in the Bangladeshi garment factories by giving decruited former child workers monthly stipends and placements in local schools (Rahman et al., 2018). However, policies and laws of such nature are to be viewed critically, as, despite their existence and implementation, they do not automatically eliminate such issues. We see recurring incidents of violations of workers’ rights, specifically in the garment industry. One such incident occurred in 2019 after workers protested and demanded higher wages. Human Rights Watch (2019) reported that after the strikes, thousands of workers were dismissed without further notice and blacklisted at other factories. Dozens of people were arrested, and protestors were shot at (officially only with rubber bullets) by the police, which caused the death of one of the workers. Other personal accounts of ongoing exploitative conditions can, for instance, be found in an interview-based study by Akhter, Rutherford, and Chu (2019). In regards to the programme to reduce child labour, while it was introduced in 1995, an investigation by the Overseas Development Institute found that child workers as young as eleven years old are still a common occurrence and make up roughly 15% of the workforce in the RMG sector (Quattri & Watkins, 2019, p. 51). This shows again that we need to be aware that “official” numbers or statements may not be taken for granted without critical consideration, as reality may showcase a different picture.
In terms of the overall societal impact, it can be concluded that while the employment of workers by the RMG sector did have a considerably positive impact, especially on women, any official improvement has to be critically assessed. There are still wide-ranging issues within the industry, especially concerning workers’ rights and general working conditions. However, it is arguable whether these are issues caused by the RMG industry itself or those deciding over the industry.