BBC
Many clothing manufacturing jobs still pay well below minimum wage.
Bangladesh is the world’s fast fashion business capital.
Clothes exported from its factories are stocked on the shelves of H&M, Gap and Zara. Over three decades, this transformed the country from one of the world’s poorest countries to a lower middle income country.
But the garment industry, worth $55bn (£42bn) a year, now faces a precarious future after weeks of protests toppled Sheikh Hasina’s government in August. Hundreds of people died in the riots.
At least four factories were set on fire as manufacturers struggled to operate amid a nationwide internet blackout. Three companies that help supply companies including Disney, US supermarket chain Walmart and other global clothing companies told the BBC that some big brands are already selling next season’s clothing elsewhere. He says he is looking for it.
The confusion continues. About 60 factories on the outskirts of Dhaka are expected to be shut down starting Thursday due to worker unrest. Employees have been holding protests with various demands, including improved wages.
Reuters
Massive protests gripped the country for weeks until the government collapsed.
Recent events “will have an impact on brand trust levels,” said Mohiuddin Rubel, director of the country’s Garment Manufacturers and Exporters Association.
“And maybe they wonder: Should I put all my eggs in one basket?” he says, pointing to competing clothing producing countries like Vietnam.
In fact, Kyaw Sein Tai, who has procurement offices in both Bangladesh and the US, suggests that “exports could fall by 10-20% this year” due to the recent political unrest. Considering that fast fashion accounts for 80% of exports, this is not a small portion of Bangladesh’s export income.
Even before the events of the past few months, Bangladesh’s garment industry and its economy were not in good shape. Child labor scandals, fatal accidents and COVID-19 closures have all taken a toll.
Rising prices had increased production costs, but slowing demand meant they were no longer able to sell at similar prices. This was particularly bad for Bangladesh, which is heavily dependent on exports. As export profits declined, foreign exchange reserves also declined.
There were other problems as well. Excessive spending on high-profile infrastructure projects was draining government resources. And rampant nepotism weakened the bank, with powerful businessmen linked to former Prime Minister Sheikh Hasina’s Awami League party unable to repay loans.
Dr Ahsan Mansour, the country’s new central bank governor, recently told the BBC in an exclusive interview: “This was not benign neglect, but a planned robbery of the financial system.”
Dr Mansour said resolving the issue was a top priority, but warned that it would take years and the country would need further financial support, including further bailouts from the IMF.
“We are in a difficult position and we want to maintain full compliance in all respects in terms of fulfilling our external obligations. But for now we need an additional cushion,” Dr. Mansour said. Said.
Abandoned office space in a technology park near Dhaka
Maherbul Rahman, whose family founded Sonia Group, a clothing manufacturing company, 20 years ago, said the decline in the country’s foreign exchange reserves alone is enough to undermine confidence.
“They are concerned about how they will pay for yarn imports from India and China if they do not have enough dollars.Many of them do not have travel insurance, so they have to travel to Bangladesh to place new orders. They can no longer even come to the office,” Rahman said.
However, Bangladesh has an even bigger problem. The protests that ousted Hasina were sparked by students frustrated by the lack of well-paying jobs and opportunities.
Clothing factories may have created millions of jobs, but they don’t pay well. Some factory workers who spoke to the BBC said they were struggling to survive on just half the national minimum wage and had to take out loans to support their children.
Many of them have taken part in student-led protests in recent months demanding better pay and conditions.
“We are willing to settle for more than doubling,” union leader Maria said. “Wages must reflect increases in the cost of living.”
But student protesters are calling for more fundamental changes to the job market.
Abu Tahir, Mohammad Zaman, Mohammad Zaidul and Sardar Arman also participated in the demonstration.
All told the BBC they had been unemployed for two to five years and wanted to work in the private sector, but did not feel they were qualified for the job.
“[My parents] Few realize how competitive the job market is. Being unemployed has put a lot of pressure on my family. I feel disrespected,” Zaman said.
“We only have degrees, but we don’t have the right skills,” Seidul says.
“But the new adviser is also an entrepreneur himself, so we all feel more hopeful that he will do something about this issue,” she said, referring to the country’s interim leader Muhammad Yunus. added. Yunus won the Nobel Peace Prize for his pioneering work in microlending.
The clothing industry has lifted millions of people out of poverty
Dr. Fahmida Khatoon of the Center for Policy Dialogue think tank points out that economic diversification is essential to meeting the aspirations of educated young people, and argues that this is not bad for the economy.
“No country can survive for long based on just one sector,” she says. “I can go this far, but I can’t go any further. [diversification] There are attempts, but so far it’s only in the books. ”
A disused technology park on the outskirts of the capital, Dhaka, is proof of this. The scheme, launched in 2015, was to be part of a nationwide effort to create better-paying jobs and reduce Bangladesh’s dependence on garment production.
It now lies abandoned, a reminder of the previous government’s economic failures.
“This is a perfect example of the gap between what industry needs and what government is providing,” says software entrepreneur Russell T. Ahmed.
“No one asked us if we needed these parks. Bangladesh has invested in physical infrastructure, but how much has it invested in human infrastructure? That is the raw material that this industry needs. It is.”
Dr Khatoon says what the new government needs to do is remove bottlenecks such as corruption and bureaucracy to encourage foreign and private investment.
Mr. Yunus has vowed to bring comprehensive reforms to the country’s economy and repair institutions that have been, as Mr. Khatun put it, “systematically destroyed” over the past few years.
He faces the difficult task of stabilizing the economy, holding free and fair elections, and preventing government policy-making from being dominated by vested interests.
All of this comes as a result of slowing global demand for the products the country makes, worsening relations with India, its giant neighbor and trading partner that has sheltered Hasina, and climate change that is causing more cyclones, among other factors. All of this must be done while facing many problems. in flood-prone countries.
These challenges are as vast as the hopes that many people have placed on Yunus’ shoulders.
