COVID-19 and the ready-made garment sector

The ready-made garment industry in Bangladesh has been hard hit by COVID-19, and companies and government must do more to protect its four million workers from being left behind, Shahidur Rahman and Sifat Islam Ishty write.

It took some time for the Bangladesh ready-made garment (RMG) industry to get back to business after the Rana Plaza tragedy in 2013, a structural collapse that killed more than a thousand workers. It was no doubt a wake-up call for the industry, and for policymakers regulating it, and since then, more than a hundred programs have been introduced by various stakeholders directed at getting RMG businesses back on their feet.

As a result of these initiatives, the moment Bangladesh thought it had overcome the consequences of Rana Plaza, and would achieve its target of $50 billion in export earnings by 2021, its dream was shattered by COVID-19.

The virus-fueled global slump has not spared almost any major industry worldwide, and in Bangladesh, the RMG sector has its back against the wall, with some units reportedly opting to furlough and lay off their workers.

Ultimately, this is threatening the livelihood of some four million garment workers, who were often already earning just barely enough, and are grappling with other repercussions of the virus outbreak. For the sake of survival, virtually every government in the world has begun enforcing social distancing and lockdowns, which have triggered the shutdown of stores of retailers and buyers everywhere, but they are especially hurting Bangladesh, which is reliant on exports of clothing.

Over the past seven years, especially following the Rana Plaza tragedy, activists have expressed deep concern about the rights and safety of RMG workers in Bangladesh. Retailers – usually from wealthy countries outside Bangladesh – began a major push to improve workers’ rights through strict monitoring of conditions. This involved collaborating with institutions and organisations and being committed to establishing safer workplaces.

Subject to certain regulations, failure of compliance led to the termination of business contracts and in extreme cases, the complete shutdown of factories. This was broadly successful, with local manufacturers improving the safety of working practices overall.

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As a result, some brands were deemed to be championing workers’ rights, but the pandemic has shown their true colours. At the end of April 2020, orders for more than $3.17 billion worth of garments were cancelled, reported by 1,149 factories in Bangladesh. In fact, more than half of suppliers have had the bulk of their in-process, and in some cases already completed, production cancelled.

Only 14 brands, including H&M, agreed to pay for their export orders that were planned before the pandemic, leaving a long list of brands refusing to pay for goods workers had already made for them.

A spokesperson one of the 14 brands said: “We are working hard to minimise the impact on our suppliers and intend to accept all goods that have left the factory. We are in close contact with our suppliers to find flexible, individual arrangements also for garments currently in production.”

While the loan package of $589 million that the Bangladesh government has given the industry is welcome, it will barely suffice, given that RMG businesses pay out $423 million in wages alone every month.

The cancellation of orders due to the pandemic has already directly affected the lives of 2.27 million of the industry’s four million workers. Right now, 47 per cent of garment workers report that they are receiving zero income.

On 15 April, hundreds of workers staged demonstrations, demanding their salaries for March, leading huge crowds to form in Dhaka, one of the world’s most densely populated cities, at the height of virus fears.

But, with few financial resources or other options, these garment workers were more worried about losing their income than catching COVID-19. So many of them – wearing masks, usually – decided against staying home, and started walking, and travelling in crammed trucks and buses, to Dhaka to resume their work and demand their wages. Importantly, most of these workers are women.

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The crisis has pushed the Bangladesh Garment Manufacturers and Exporters Association into a difficult position, not knowing whether or not to close factories. On one hand, there has been pressure from suppliers to keep the factories open, and on the other hand, trade unions and activists from around the world are worried for the lives of the garment workers. Workers too face a dilemma: whether they are safer in a factory at risk from COVID-19, or in the street at risk of starving and at risk from COVID-19.

It also seems there is a difficult choice for the government. Bangladesh is considered a role model for other developing economies in achieving sustainable development, and now the government must decide whether to take an economic hit to protect its people. Bangladesh has the fastest-growing economy in the region and it has been closing in on double-digit annual growth.

This achievement has been under threat due to the impact of the pandemic on the economy. In 2019, 20 per cent people were living below the poverty line, but within a month after the pandemic it has increased to 30 per cent, which amounts to 50 million people.

The global strategy of lockdown is doomed to struggle in a country like Bangladesh, where the informal sector makes up more than 80 per cent of the economy and the garment sector is the dominant export earning sector.

No matter how much the government helps though, aggressive global competition and wafer thin margins mean the sector is now beholden to the reactions of overseas brands and whether they resume their orders. Without a significant pickup, a complete breakdown of this sector seems certain – at the very least in the case of hundreds of small and medium-sized garment businesses. This is near certain to shatter the lives of some millions of workers.

So what can be done? It is high time that all overseas clothing brands and retailers uphold workers’ welfare and follow the footsteps of the brands who have come forward to meet their commitments.

While most have recognised the importance of responsible sourcing, the livelihood of workers has not been a fundamental priority. Still, there is no time like the present to show responsibility. These brands must honour orders to RMG businesses.

The four million workers that are the engine of the RMG industry are on the lowest rung of the global supply chain, but are beyond doubt a formidable part of the trillion-dollar global apparel market. Overseas retail brands have diverse sources of finance, and if not, often have the privilege of a bailout from a more developed government than Bangladesh. RNG workers, in contrast, can only rely on their labour, and their only chance to feed their family is a hard-earned salary.

Only one outcome can have a truly good outcome for workers. All overseas brands must meet the commitments they made before the pandemic, and see to it that millions of people can protect their livelihoods.