HRM370 – Labor Economics and Compensation Theory

Report on Ready-Made Garments Industry of

Bangladesh
Team Fourstar
Section 1
Summer 2021
Submitted to:
Ms Nabila Kamal Promy

Submitted by:
Afroza Anika - 1821033
Hasib Al Farooq - 1820063
Md Rafsan Kabir - 1821473
Syed Faizan Hussaini - 1730455
Md Ahasanul Haque - 1920199
Pronoy Rashid - 1821995
Contents

Letter of Transmittal 3
Industry Background 4
Brief History 5
Major economic achievements 8
Organizations and workers within the industry 9
PETE analysis of RMG in Bangladesh 11
Political analysis of RMG industry in Bangladesh 11
Current situation of RMG sector in Bangladesh 12
Ergo- economic/working conditions and labor law: 18
Economic analysis of RMG Industry in Bangladesh 20
Contribution of RMG industry to the Bangladesh economy 20
Technological: 26
Environmental: 30
Has Covid-19 affected the industry’s product demand? If yes, how? 33
Conclusion 37
References: 38

Letter of Transmittal

August 30, 2021

Ms Nabila Kamal Promy

Department of Human Resource Management

School of Business

Independent University, Bangladesh

Dear Miss,

With due respect, we the students of your section have reported on the “RMG Sector of

Bangladesh” with your help and guidance.

Though we are on the learning curve, this report has enabled us to gain insight into how the

garments sector of our country has been growing for the last few years. We also have gained

knowledge on how Covid-19 has affected the state of the industry and the many ways to recover

from it.

We pray and hope that you find this report satisfactory

Sincerely Yours

Industry Background

Introduction

Bangladesh is a country in the process of evolving. The majority of people are still employed in

the agricultural industry. However, land is scarce per capita. The majority of our farmers are
smallholders. As a result, people are moving away from agriculture and toward industry. Our

country's agro-based economy evolved into an industrial economy, which is a crucial component

of a country's development. Among these industries, the ready-made garments (RMG) business

has played a significant role. Bangladesh's export-oriented RMG business first emerged in the

late 1970s. There were just nine exporting clothing industries in the country at the time.

However, the garment industry has matured in recent years. Bangladesh's export-oriented RMG

sector has made a significant contribution to the country's modernization.

The RMG sector has become the country's most profitable export sector. This business has aided

socioeconomic prospects by providing a large number of job opportunities, primarily for the

country's poor illiterate female labor. The industrial sector can provide high-wage jobs for a large

number of people while also increasing social productivity by mass-producing high-value

commodities. Furthermore, poor countries can gain important foreign cash by exporting

manufactured goods, and the resulting foreign exchange can be utilized to invest in new

generations of machinery and technologies, allowing for quick advancement up the technological

ladder.

Brief History

Once Bangladeshi textile, particularly Muslin and Jamdani cloth, gained international acclaim, it

was employed as the sumptuous clothing of royalty in Europe and other places. Our fabric

industry was not developed at all by the British authorities in India. Instead, they destroyed them

and imported English textiles. The Textile Industry in Bangladesh, large-scale production of

readymade garments (RMG) in organized factories is a new phenomenon. Individual tailors

manufactured clothing according to requirements set by individual customers who supplied the
fabrics until the early 1960s. Except for children's apparel and men's knit underwear (genji), the

domestic market for prefabricated garments was rather small.

The RMG business in Bangladesh has been growing rapidly since the late 1970s, predominantly

as an export-oriented industry, despite the fact that the local market for RMG has been rapidly

expanding due to increased personal discretionary income and a shift in lifestyle. In terms of

employment, foreign exchange profits, and GDP contribution, the sector quickly rose to

prominence.

Despite the many challenges the industry has experienced in recent years, it has maintained to

demonstrate strong performance, competitive years or so, the RMG industry, which is entirely

export-oriented, has witnessed amazing growth. Only 9 export-oriented garment manufacturing

units existed in 1978, with export earnings of less than one million dollars. Some of these

factories were quite small, producing clothing for both home and international markets. Reaz

Garments, Paris Garments, Jewel Garments, and Baishakhi Garments were four such small and

old units.

The pioneer, Reaz Garments, began as a tiny tailoring shop in Dhaka called Reaz Store in 1960.

For approximately 15 years, it only served domestic markets. It changed its name to M/s Reaz

Garments Ltd. in 1973 and expanded its activities into the export market in 1978, selling 10,000

men's shirts worth French Francs 13 million to a Paris-based corporation. It was Bangladesh's

first direct exporter of clothing. Desh Garments Ltd was founded in 1979 as the first non-equity

joint-venture in the garment sector. Desh worked with Daewoo Corporation of South Korea on

technical and marketing issues. It was also the first corporation that was solely focused on

exports. It had roughly 120 operators, including three women who had been trained in South

Korea, and it began production in early 1980 with these skilled workers. In 1980, Youngones
Corporation, a South Korean company, launched the first equity joint-venture garment factory

with Trexim Ltd., a Bangladeshi company. The new firm, Youngones Bangladesh, was founded

with 51 percent of the equity supplied by Bangladeshi partners. In December 1980, it shipped its

first shipment of padded and non-padded jackets to Sweden.

Major economic achievements

The export-oriented RMG sector has made a significant contribution to Bangladesh's economic

transition. The role of our RMG entrepreneurs, domestic fiscal and financial policy support and

incentives put in place by successive governments, significant RMG-supportive linkage activities

within the domestic economy, and global market opportunities all combined to create a story that

is unprecedented in the developing world. When jute and jute goods lost their usual markets due

to the threat of a sharp drop in foreign profits, the RMG industry stepped in first to replace them,

and subsequently to dominate them. While traditional export sectors failed to deliver expected

results, the RMG sector steadily injected energy into both the export and domestic economies

through backward and forward linking economic activity.

Bangladesh's export-oriented readymade garments (RMG) sector began as a modest non-

traditional export sector in the late 1970s. When Reaz Garments exported its first consignment to

the United States in 1978, Bangladesh exported RMG worth only $69,000. Exports had increased

to US$4.5 billion by FY2002, a two-decade increase. By any measure, the sector has grown at a

spectacular rate of 15% per year over the last decade. In fact, everywhere in the world, this was

an unusually high growth rate for a nascent industry. The industrial foundation that fueled such

rapid growth grew as well, from fewer than 50 firms in 1983 to more than 3,400 in 2002, with

around 1.5 million RMG employees.

Organizations and workers within the industry

Only 47 garment manufacturing units existed by the end of 1982. When the number of clothing

factories reached 587 in 1984-85, it was a watershed moment. In 1999, the number of RMG

factories had risen to over 2,900. Bangladesh is now one of the world's top 12 clothing exporters,

the sixth largest supplier to the US market and the fifth largest T-shirt supplier to the EU market.

During the 1990s, the industry grew at a 22 percent annual rate.

Table 1 shows the industry's growth in terms of the number of units produced and the number of

jobs created:

Year Number of Garment Industries Employment in Million Workers

1983-84 134 0.040

1988-89 759 0.317

1993-94 1839 0.827

1998-99 2963 1.500

2003-04 3957 2.000

2008-09 4825 3.100

Table 1: Growth of the industry and Employment

[Source: BGMEA]

There are around 5000 garment industries in Bangladesh now, with Dhaka accounting for 75%

of them. Chittagong and Khulna are home to the rest. These businesses have employed fifty

thousand individuals, with 85% of them being illiterate rural women. This sector accounts for

roughly 76 percent of our export earnings. In addition to agriculture, transportation, and trade

and industry, Bangladesh's RMG sector has helped to alleviate the country's overpopulation
problem by providing the country's greatest source of employment. This sector has dramatically

improved the country's socioeconomic situation by uplifting a previously marginalized segment

of the population. Such empowerment and employment only served to improve awareness of

children's education, health, population control, and catastrophe management. It is a watershed

moment in Bangladesh's history.

PETE analysis of RMG in Bangladesh

Political analysis of RMG industry in Bangladesh

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95% of those firms

are locally owned with the exception of a few foreign firms located in export processing zones

(Gonzales, 2002). The RMG firms are located mainly in three main cities: the capital city Dhaka,

the port city Chittagong and the industrial city Narayangonj. Bangladesh RMG firms vary in

size. The grouping helps to share manufacturing activities, to diversify risks; horizontal as well

as vertical coordination can be easily found in such group activities.

Current situation of RMG sector in Bangladesh

In the RMG sector of Bangladesh, there are more than 5000 garment factories (private statistics)

at the current time, employing more than 1.2 million laborers, where 85% of the labor force is

women. But, according to BGMEA the number of garment factories in Bangladesh is around

4,000. Now, RMG industry is the country’s largest export earner with the value of over USD

24.49 billion of exports in the last financial year. It’s great news for us that Bangladesh is clearly
ahead from other South Asian suppliers in terms of capacity of the readymade garments industry.

are various types of garments manufactured in Bangladesh, all the readymade garments are

classified into two broad categories, where one is woven products and another one is knitted

products. Woven products include Shirts, Pants and Trousers. On the other hand, knitted

products include T-Shirts, Polo Shirts, Undergarments, Socks, Stockings and Sweaters. Woven

garments still dominate the export earnings of the country.

Government Policy and intervention:

1. Even though there are labor laws maintaining occupational health and safety, the overall

standards are low due to the laxity of labor laws enforcement, and the owners not taking

responsibility for maintaining and optimizing working conditions. The foremost initiative

is the establishment of the policies in the garment factories and monitors them by a

committee represented by both employers and employees.

2. Promoting ergonomic practices at the factories can be one of the ways to reduce

ergonomic hazards among the workers. Proper storage and handling of heavy materials

can play an important role to reduce musculoskeletal issues. This intervention can include

providing trolleys and wheeled multi-level racks to carry clothes and material (picture),

reducing height difference to move materials manually, eliminating tasks requiring

bending or twisting etc. This will prevent the workers from carrying heavy loads

manually and reduce back pains or muscle sprain.

3. Workstation design is important to reduce awkward posture for the neck, back and

shoulders. The sewing machine table, chair and paddle positions should be adjusted

considering the worker's body height in a sitting position. Sewing machine table heights

should be adjusted between 10 cm to 15 cm above elbow height for everyone. It should
 also have tilted 10° to 15° towards the operator and the needle at 20° backward

inclination and the pedal position should be placed forward and adjusted per user's

comfort. The adjustable desk height, inclined slope of the table, needle angle and the

pedal position should induce a more upright position of the head, neck and trunk.

Adjustment of the sewing machine table alone does not ensure good posture; adjustment

of the chair is also an important factor. The chair should adjust between 51 cm and

61 cm; the backrest distance should adjust horizontally by about 5 cm and the backrest

height should be fixed at 25 cm. Studies also show significant reduction of physical

discomfort experienced by the sewing machine operators by changing the angle of the

seat pan and backrest of the chair.

Employment:

BGMEA President, Dr. Ruabana Huq said factories are now operating at 55 percent production

capacity due to lack of work orders and maintaining health safety guidelines, maintaining social

distance, and working with less manpower.

However, the government has taken swift action by announcing stimulus packages for export-

oriented industries. The total amount of this package is 5000 crores. The money allocated from

the package can be disbursed only in the form of salaries and wages to the employees and

workers of export-oriented industries including the garment industry. The required amount can

be taken from the package at 2 percent interest. However, the RMG sector has finally overcome

this situation and now most of the factories are operating on a full scale.
In November, Bangladesh’s textile and RMG sector received up to $3.1b exports. However, with

this success, the unemployment of the workers is not decreasing. On the other hand, a large

number of graduates will soon enter the industry where they will have to face new challenges in

the industry. Where they will see that conventional marketing has changed to digital marketing,

physical product exhibitions transform into virtual product exhibitions and start with automation.

This will create a huge skill gap between industrial and academic knowledge.

Syed Mahmudul Huq, President and Event Moderator of CCIFB, said that the COVID-19

epidemic has put a lot of pressure on individuals, enterprises, and society and forced them to

accelerate the use of various 4IR tools.

Countermeasure against catastrophe:

The epidemic has taken away employment in the RMG and textile sectors. The government of

Bangladesh took the first initiative with a stimulus package of TK 5,000 cores for salaries and

wages of employees and workers. The distribution of salaries to garment workers from the

stimulus package started from May 3.

The government has taken the best initiatives to save employment in the RMG and textile

sectors. Now is the time for large organizations to create more skilled manpower. Industries are

moving forward and looking for more innovative strategies. Soon fresh graduates and

conventional workers will face changes in this industry. Rubana Huq, said, “25% of garment

manufacturing activities in Bangladesh will be automated by 2023, up from 8 percent are already

engaged.”
To alleviate this dire situation, Textile Today Training (TTT) also has taken initiatives to

transform professionals into skilled human capital through various comprehensive training

programs. Textile Today is serving as a platform to consolidate resources for training

professionals in the industry and those who want to join the training.

Ergo- economic/working conditions and labor law:

Occupational safety and health remains an issue with support being provided to implementing

the National Occupational Safety Health (OSH) policy. Employers and workers organisations are

taking an active role in training mid-level managers, supervisors and trade union leaders on

occupational health issues. Meanwhile, at factory level the Better Work programme is helping to

set up structures boosting worker-management relations so that workers play a role in improving

their workplace conditions.

Initially, working hours in Bangladesh were enforced as a way to ensure a safe and healthy

working environment so that no employee is overworked and has a good work-life balance.

However, over the past century, working hour limits have been set to ensure maximum

productivity and as a means to reduce unemployment.

The 2006 Labor Act of Bangladesh states daily and weekly working hour limits that each

employer should follow. It also talks about overtime hours and the required compensation.

According to the Act, each employee can work for 8-hours per day. Any shift exceeding 6-hours

should be coupled with a 1-hour lunch break, and a 5-hour shift should have a 30-minutes lunch

break.
According to the Employee Rights and Labor Law in Bangladesh, each worker’s wage must be

paid before the end of the seventh day after the last day when the wage is payable. This also

applies if an employee has been terminated by retirement or by removal, dismissal, or

retrenchment by the employer.

Economic analysis of RMG Industry in Bangladesh

Contribution of RMG industry to the Bangladesh economy

RMG exports have contributed $34.13 billion to Bangladesh’s total export earnings this year,

growing by 11.49% compared to last fiscal year. According to Export Promotion Bureau (EPB)

data, the RMG sector has contributed 84.21% to Bangladesh’s total exports of $40.53 billion,

growing by 10.55% in FY19. The figure-1 depicts that in the last 5 years the RMG exports added

an additional 10 billion dollars in the export basket that means growing at a rate of on average 2

billion each year. Though the growth rate is impressive it is too optimistic to reach the 50 billion

mark by 2021 which is the target set by the government.

The export growth rate is 11.49% which was only 8.76% in 2017-18 indicates the upward trend

of RMG export after the disastrous year in 2016-17 when the RMG export growth was the

slowest in the history at 0.2%. (Figure-10) The export of knit and woven products seems even to

be growing at a similar rate, however, woven export has surpassed knit export in terms of value

in the past 5-6 years. This year also the woven exports stood at 17.24 billion USD whereas knit

exports stood at 16.88 billion USD.

Source: Bangladesh Garments Manufacturers and Exporters Association

Figure: Export Value of Woven and Knitwear from FY2014-15 to FY2018-19

According to the Research Director of CPD, In the beginning of the year, the government

projected single digit growth but there is a double-digit growth which is a positive sign for the

RMG sector. However, if on average 10% growth is predicted in the upcoming two fiscal years,

the total RMG exports will stand at 37.54 billion in 2019-20 and 41.29 billion in 2020-21 which

is shy by 8.71 billion USD compare to the ambitious target of 50 billion set by the government of

Bangladesh.

Impact of globalization in RMG:

Globalization has been a great boon to our economy since it has enabled top fashion companies

around the globe to farm out production to Bangladesh, where manufacturing is as cheap as it

could get while maintaining a healthy supply chain for the fashion industry. However, the

scenario took a U-turn right after the coronavirus crisis. With the global economy slowed down

to a standstill, Bangladesh is facing the negative impact like most other countries. Indeed, the

two most important sectors that have been powering up our economy for decades – Remittance

and Readymade Garments sector – are taking heavy tolls for this global pandemic.

RMG and Remittance:

The impact of coronavirus on our RMG sector has been outlined throughout the report. In short,

as people are avoiding discretionary shopping, all major apparel stores including but not limited

to H&M, Zara, Gap, Primark, Mark and Spencer remain closed. As of 23rd March, as many as

264 garment factories are on the list of order cancellations by foreign buyers. Moreover, if the

virus continues to spread and no effective safety measures are taken, we could lose up to USD 4

billion by the fourth quarter of 2020. Unsurprisingly, there is a ripple effect of the economies of

the United States of America and European Union on the economy of Bangladesh. Figure 12

below tries to portray the correlation between the growth of Bangladesh, European Union,

United States of America and the World. Interestingly, the growth rate of GDP of Bangladesh

curve mirrors that of the European Union and United States of America during the great global

recession of 2008.
 Source: The World Bank

GDP Growth Rates of the Economy of Bangladesh, European Union, United States of America

and World

At the same time, it is to be noted that remittance has been playing a pivotal role in the growth of

our economy. There are over 10 million workers overseas, and most of them are working in the

Middle East, United Kingdom, United States of America and Malaysia. Countrywide lockdown

means travel restrictions and economic slow-down in the host countries. As a result, workers are

losing out on their wage, adding complexity to the already disastrous situation by lowering the

foreign remittance. Apart from that, there’s a moderately strong relationship of Bangladesh’s

remittance with oil price, which is facing a steep decline amid the global pandemic. Above

Figure depicts how the international falling oil price is having a lagged effect on the foreign

remittance.

Effect of COVID-19 in financial sector:

COVID-19 has hit our financial sector at a very unfortunate time. Indeed, banks were struggling

to get in terms with the Ministry of Finance directive of 6-9% caps to interest rates on deposits

and loans, moribund stock market, vulnerable asset quality, and weakening microfinance sector.

In the past three months, the growth of private sector credit was already declining.

The government sector borrowing may decline in the coming months, which is mainly due to

large projects such as the Padma Bridge, Padma Rail Link, Karnaphuli Road Tunnel, and the

Greater Dhaka Sustainable Urban Transport Project involving financial and technical input

from China. And, both of them are likely to be affected adversely.

Technological:
As the industry moves toward the fourth industrial revolution and global customers shift toward

tech-driven items, the future of Bangladesh's clothing sector will be defined by technology.

Companies can now create clothes more quickly, effectively, and at a lower cost thanks to

technological advancements.

Bangladesh would be naive to disregard the need for innovation. Technology has the potential to

provide larger advantages to all of us working in the garment business, particularly in

Bangladesh, where the sector is so important to the country as an employment and a contributor

to GDP.

In the ready-made garment (RMG) industry, technology is already bringing benefits. There are

systems that may be used to improve the whole supply chain cycle, from raw material and trim

purchases to CAD tools that speed up the product design and development process, increase

fabric use, minimize standard minutes in garment manufacturing, and lower washing expenses.

Innovative new dye processes have been developed because of radical thinking. Take DyeCoo's

recent creation of CO2 dyeing, for example: this revolutionary method employs pressurized,
recovered CO2 as the dying medium in the dyeing of garments, eliminating the need for

chemicals and water and resulting in a huge decrease in energy usage.

Using technology in the physical garment production process has a lot of long-term benefits.

Technology may provide alternatives in terms of power supply using solar, hydro, or wind

energy, alternative modes of transportation to carbon-emitting vehicles, massive reductions in

the use of water and hazardous chemicals in the laundering process of garments, and more.

Innovations in dyeing procedures, manufacturing processes, and garment processing techniques

save a lot of water and energy while also reducing the negative health and safety effects of their

business on their workers.

Some Bangladeshi clothing manufacturers have spent a significant amount of money in recent

years to introduce innovative technologies to improve product quality. According to Textile

Today, one example of a Bangladeshi RMG firm investing in innovative technology is that M B

Knit Fashion Ltd has implemented software in the cutting area that analyses all potential angles

based on the input of a product measurement to cut the cloth in the best feasible way. Following

the study, the program generates a plan and marking on which the fabric will be cut either

manually or by an automated system by the makers. It saves time and fabric, making it easier to

negotiate rates with customers in less time.

Vendors such as Amazon, Artificial Solutions, Google, Creative Virtual, Assist AI, and others

are already offering a plethora of technologies that the garment sector may employ to increase

operational efficiency and achieve cost benefits across the supply chain.

With all the technical advancements available, the Bangladesh RMG sector would be naive to

overlook the benefits of innovation.

The garment industry's manufacturing technique has evolved from labor-intensive to more

complex and capital-intensive. Because of their incapacity to adjust to the new production

method, lesser skilled workers are dissatisfied with the change. Workplace discontent lowers

employee performance, which has a detrimental impact on corporate performance. On the other

hand, improvements in task significance, salary increase, improved supervision quality,

improved co-worker relations, and increased benefits are all positive outcomes of technological

change. Furthermore, if skilled technicians are available to instruct, prearranged garment is an

option because labor and energy costs are low in this area.

The creation of new economic zones in Bangladesh is an excellent effort. To secure a bright

future for their sector, Bangladesh's RMG industry must ensure that innovations keep pace with

technical advancements. They must demonstrate to the rest of the world that they are anticipating

future market demands, have a fit-for-purpose business model, and are investing in a

sophisticated garment sector with long-term foundations, attracting more investment from both

domestic and foreign firms.

Environmental:
RMG is a resource-intensive and polluting industry. Because of poor waste management in

Bangladesh, the ecological consequences of clothing on the environment are difficult to explain.

It is primarily due to a malfunctioning drainage system. Furthermore, the government is not

doing enough to address waste management in Dhaka. RMG industry produces noise and air

pollution because of its operations.

The textile industry in Bangladesh uses around 1,500 million cubic meters of water, the majority

of which comes from groundwater. Wet processing of textiles, which includes washing, dyeing,

and finishing, is estimated to account for over 70% of total water use.
Wastewater discharge, solid and hazardous waste discharge, air emissions, and nuisances are all

examples of environmental pollution.

Though the growth of green garments in Bangladesh has been commendable in recent years—the

United States Green Building Council (USGBC) has certified 82 garment factories in the

country, and 320 more have registered for LEED certification, which is the highest in the world

—the textile industry still faces the challenge of dealing with effluent discharge and other

environmental issues.

Water conservation and rainwater harvesting should be promoted more widely across the sector,

and many RMG operators are currently taking steps in this regard. They are investing in

innovative technology, such as water-saving processing equipment and improved treatment

technology, including high-tech wastewater treatment equipment. The sector is undoubtedly

progressing in the right direction, but additional assistance from the government and overseas

customers, who are highly reliant on our industry, is required.

To please customers, many garment manufacturers have used environmentally friendly and

water-saving technology, resulting in high-quality items with the best price-to-value ratio.

Meanwhile, technology is assisting Bangladesh in reducing its negative environmental effect.

RMG industries have adopted technology that is extraordinarily successful in reducing the use of

water and ensuring hazard-free biochemical emission in the washing of denim and dying of

garments, according to the sector's representatives.

As recognized worldwide companies want to construct green buildings with green manufacturing

to preserve an eco-friendly atmosphere in industrialization, apparel manufacturers in Bangladesh

are increasingly choosing green technologies to improve competitiveness in the international

market.
In the RMG business, achieving environmental sustainability is a priority. This can be done by:

1. Utilizing resources efficiently like reducing energy usage , water usage and optimizing

material flow and usage.

2. Emission reduction

3. Improving management practices

To enhance their efficiency and sustainability, compliance factories are following a variety of

best practices. The following are some recommended practices:

● Rainwater collection

● Water reduction, reuse, and recycling

● Cogeneration

● Condensate recovery boiler

● Chemicals and colours that use less water

● Use of renewable energy (solar panel)

● Prismatic skylight

● T5 and LED light

● Sustainability reporting etc.

To be environmentally sustainable, Bangladesh's RMG business requires a comprehensive plan.

The worldwide influence of production and consumption patterns must be understood by both
industry owners and policymakers.

Has Covid-19 affected the industry’s product demand? If yes, how?

The COVID-19 is a brand-new COVID model. A pandemic is a long-term outbreak of severe

acute respiratory illness caused by the coronavirus. The epidemic was first reported in Wuhan,

China, in December 2019. The outbreak was declared a public health emergency of global
significance by the World Health Organization on January 30, 2020, and a pandemic by the

World Health Organization on March 11, 2020. Initially, the COVID-19 pandemic was assumed

to be limited to China. As a result of human migration, it later spread over the world. The

economic suffering worsened as people were encouraged to stay at home, and it was felt

throughout the economy, with travel restrictions affecting the airline industry and sporting event

cancellations. Bangladesh's readymade garments business is one of the most vital and important

sectors, directly affecting the country's GDP and economy. Barriers and challenges in the

operation of this particular sector have a detrimental impact on the economy, companies, and

employees. The Coronavirus, on the other hand, has had a significant impact on the sector's

ability to operate independently and seamlessly as before. COVID 19 has been circulating in

Bangladesh since March 2020, affecting the country's population. Thousands of people have

suffered enormous loss and hardship in their communities and families. To keep this deadly virus

under control, the leaders mandated that factory owners follow a strict health protocol to avoid

virus interaction. However, neither the workers nor the management followed the requirements.

As a result, the BGMEA considered closing plants, but after receiving backlash from industrial

owners, it reversed its decision. Employees began to organize, demanding industrial shutdown,

as the viral outbreak spread, raising concerns about infection and mortality. COVID 19 brought

the entire globe to a halt. Lockdowns were established in several countries to prevent the

infection and its interaction, as well as for the sake of the population's safety. Due to the

lockdown, well-known brands such as H&M, Ralph Lauren, Bershka, Levis, and others had to

close their walk-in stores. The demand for RMG products plummeted as a result of this. As a

result of the epidemic, local manufacturers face a USD 3.18 billion work order cancellation or
suspension, and this has been one of the most frequently pushed themes, even while reporting on

RMG workers demonstrating for their salaries, arrears, bonuses, or layoffs.

In Bangladesh, there are currently around 4,000 RMG enterprises. With the exception of a few

foreign firms located in export processing zones, more than 95 percent of those businesses are

locally held (Gonzales, 2002). The RMG enterprises are mostly concentrated in three cities:

Dhaka, Chittagong, and Narayangonj, which are all in Bangladesh. The size of Bangladesh's

RMG companies varies. According to data from the Bangladesh Garment Manufacturers and

Exporters Association (BGMEA), more than 75 percent of the enterprises employed a maximum

of 400 employees in 1997. There are currently around 5000 garment manufacturers in

Bangladesh's RMG sector (private statistics), employing over 1.2 million workers, with women

accounting for 85 percent of the workforce. However, the Bangladesh Garment Manufacturers

and Exporters Association estimates that there are roughly 4,000 garment factories in

Bangladesh. With nearly USD 24.49 billion in exports in the previous financial year, the RMG

industry is now the country's greatest export earner. Bangladesh is well ahead of other South

Asian suppliers in terms of readymade clothing capacity, which is fantastic news for us. The

main cause of the RMG industry's product demand drop was the entire curriculum and people's

lifestyles. COVID 19 essentially reshaped the world and taught individuals how to conduct their

day-to-day activities and meetings in a new way. The lethal illness has made it impossible to

attend large gatherings or travel without an emergency. As a result, most companies, workplaces,

and events such as social meetups, weddings, and other gatherings came to a halt, instilling in

people a new sense of not going out. People's requirement for clothing has decreased

dramatically as a result of the preventative measures. Furthermore, termination, closure of the

company, layoffs, and cutoffs have had a significant impact on the global population's earnings,
wages, and income. The global average unemployment rate has risen dramatically, forcing

people to rely solely on their basic requirements for food, shelter, and other necessities. Apparel

slips into the luxury category for certain people, resulting in a drop in sales for the RMG

industry.

The coronavirus's global economic impact is mostly produced by a sharp drop in demand, which

means that there aren't enough clients to buy goods and services on the global market.

Globalization has been a fantastic boon to our economy, allowing major fashion houses

throughout the world to farm out production to Bangladesh, where manufacturing is as cheap as

it gets while yet maintaining a robust fashion supply chain. The scenario changed with the

coronavirus outbreak. Bangladesh, like the rest of the globe, is feeling the pressure as the global

economy grinds to a halt. Indeed, remittances and readymade clothing, two of our most

important industries that have driven our economy for decades, are feeling the brunt of the global

pandemic's consequences. All actors in the Bangladesh RMG sector, including global health

communities, BGMEA, international brands/retailers, the GoB, and the International Labor

Organization, must act quickly and effectively to protect workers' health and overall wellbeing

during the COVID-19 pandemic, as well as the health of people in other countries. Furthermore,

the global supply chain and RMG trade must be tenured for the long run to maintain

Bangladesh's economic viability. During the COVID-19 outbreak, clothing manufacture should

not proceed without a complete examination of the system and the design of a strategy to protect

the health and safety of personnel.

Does change in product demand of the RMG industry affect how the industry is paying its

employees? Discuss.
The garment industry has provided opportunities for young women and employees with limited

skills and education to transition into formal professions with regular pay, which are now under

peril as demand for apparel exports declines. Bangladesh, where export development is

concentrated in the ready-made garments industry (RMG), feels the impact more strongly than

economies with more diverse exports.

Due to the outbreak of the fatal virus that resulted in the epidemic, the sector is already

confronting its greatest fear. A number of factories and businesses were unable to withstand the

sudden disaster due to poor management and other issues, ending in bankruptcy and closure.

Along with all of these issues, the unexpected drop in garment demand has resulted in low pay

for RMG workers.

Last year, the Covid-19 outbreak forced the closure of 47 readymade garment (RMG) companies

in Chattogram, resulting in the loss of thousands of jobs. The factories were halted from March

to December 2020, with many foreign clients canceling orders and lowering buying prices on

Bangladesh-made clothing. The list of shutdown factories, according to BGMEA, may get longer

with the second wave of Covid-19.

Apparel workers lost an estimated $502 million in earnings between March and May 2020, a loss

of about 35%, with a large number of workers, including pregnant and elderly women, being

fired or laid off without pay. Workers in the apparel industry are being rehired, albeit at a lesser

pay rate. Due to the current economic scenario, many factories are electing to downsize their

operations, putting workers in a difficult situation. Because there is a sufficient supply of

workers, factory owners take advantage by offering low wages.

 Conclusion

The current state of the RMG sector appears to be dire at this moment. The COVID-19 epidemic

has had a severe impact on Bangladesh's economy. RMG employees are the most vulnerable

stakeholders, as they face financial and health risks. These employees are the lifeblood of

Bangladesh's RMG sector. Bangladesh's economy is also under jeopardy since the RMG industry

accounts for the majority of export earnings. It is the very moment for the RMG sector to

progress, as it has battled in the past because it had to tackle unforeseen events like the Rana

Plaza’s collapse and in the end recovered from it. We believe it is critical to concentrate our

efforts on keeping workers and delivering social security. Meanwhile, efforts should be made to

locate alternate supply sources, establish effective health and safety frameworks, reorganize

business lines, and declare a temporary state of emergency to accommodate the pandemic's

adjustments. Because buyer-seller distrust has become a major issue as a result of consumers

failing to pay for products produced, it is critical that fashion companies modify their legal trade

responsibilities. Last but not least, another approach that the RMG sector should start

familiarizing themselves with is the involvement of automation and digitization. This can include

companies investing in machineries that design clothes, 3-D designing, the use of Autocad etc.

The firms belonging in this sector are already changing their operations and delivery to a more

online based approach. This is more and more necessary because of the nature of COVID-19

itself. If all the stakeholders in the industry work together in this situation, the healing process of

the industry will be faster than ever.

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