Textile & Clothing Sector

Textile & Clothing Sector in Post MFA Regime: A Case from Bangladesh

Did you know that in the post Multi Fiber Arrangement (MFA) regime, women become more vulnerable to violation of labour standards (downward pressure of wages and working condition) especially in Bangladesh?

Before 2005 (in MFA regime), exports of textile and clothing (T&C) from Asia were increasing. China and India have been the major players in exports of T&C. However, small players such as Bangladesh, Sri Lanka, etc have gained competitiveness significantly during this period. Several studies point out that severe competition among Asian countries can create a negative pressure on LDCs in terms of welfare impact especially the probability of violation of labour standards and job losses. In Bangladesh, despite the fact that nominal wages have increased slightly, it has completely been worn out due to inflationary pressure. Also due to occupational segregation, gains to women remain minimal. As female employment in these sectors is quite intense, the impact on them as a group is also quite severe. It is important to note that USA imports almost 2.3 -3 % (2004-06 period) of its textile and garments from Bangladesh. The share is around 5.5-6% in case of EU. However, despite the fact that textile exports are increasing to developed countries from Bangladesh women are not able to drive home the gains from trade. Again, increasing segmentation in the readymade garments (RMG) is being observed.

Woven segments are now lagging in terms of its exporting opportunities. This is being replaced by knit wear. The cause of concern is that the lagging woven segment in the RMG accounted for nearly 50% of the 2.2 million workers in the RMG sector which is predominantly female. Further, the skills in demand in the expanding segment are some what different from what is possessed by the majority of the workers in the woven segment. The inter-segment dynamics within the RMG is such that the process of substitution of less educated and low / mono skilled workers by more educated and multi skilled is likely to emerge as a phenomenon. This makes the situation of those engaged in the woven segment more vulnerable. In most cases, real wage rates remain unchanged (or declines) and several labour standards get violated to keep the sector competitive.

 Bangladesh has ratified the ILO Core Conventions yet, its implementation has remained poor. A survey undertaken in 2007 suggests that the compliance with international labour standards has declined. In the post MFA regime, due to economic frictions, violations of labour rights have increased. In Bangladesh, there are evidences of decline in child labor, but weak union rights, lack of anti-discrimination provisions, and a host of other labor standards related to wages & hours. As per the World Bank study on investment climate only 11.1% of workforce in Bangladesh is unionized against the World average of 22.9%. Even within Asia, trade union rights are quite poor in Bangladesh. This gets reflected when average production days lost due to strikes is only 0.2 compared to world average of 0.7. This shows that despite violation of labour standards, and less than expected rise in real wages especially in T&C sector voices are not being raised and ultimate benefits are reaped by the developed countries in terms of cheap imports. Women being at the lower end of the value chain in T&C sector in Bangladesh are all the more alienated despite the fact that country’s exports are increasing.

Studies have shown that lack of monitoring and persistence of non-compliance is an important issue in Bangladesh. According to monitoring report of Fair Labor Association (2005) on the Workplace Code of Conduct Violations in Clothing Factories, Bangladesh has worse records compared to China, other Asian countries and other regions regarding awareness of labour standard codes, forced labour, harassments, etc. In terms of working hours violation the percentage is slightly less than other Asian countries but worse than China. A study in 2006 on Bangladesh reveals that female wage is 3/4th of their male counterpart. Continuous work schedule, wage penalties, physical and verbal abuse is not uncommon. In all these cases women are the worst sufferers. Fear of loosing jobs and lack of alternative jobs compel workers to continue with the job despite no signs of improvement.

A trade policy oriented approach may be considered to improve the condition of workers in the factories. GSP from developed countries may be revived as well revisited for modification so that LDC’s can protect themselves from the onslaught of competition. A country like Bangladesh needs to think in terms of product diversification in the sector so that some amount of higher value addition gets percolated to the bottom and the sector gets organized. Government of Bangladesh is now actively involved along with several multilateral bodies to design and implement social protection policies in the textile sector. The pilot projects intend to track the development in the sector and identify the target group. It will provide livelihood counseling, redeployment assistance, retraining and awareness generation on labour standards.

Compiled by Bansari Nag from “The Debate on Labor Standards and International Trade: Lessons from Cambodia and Bangladesh’, by Günseli Berik & Yana Rodgers, “Social Protection For Retrenched Female Garment Workers in the RMG Sector”, by Md. Osman Goni Talukder, “Gendered Impacts of the Expiry of ATC on Developing Economies in the Asia-Pacific: Assessment and Policies”,   by Yumiko Yamamoto. The papers were presented in the International Seminar on “Moving Towards Gender Sensitisation of Trade Policy” UNCTAD India 25-27 February 2008, New Delhi