Bangladesh cannot afford a crisis in the RMG sector

On September 17, 2024, a ready-made garment worker was killed during a clash between workers in Ashulia, Dhaka. The clash broke out between workers at two factories who were debating whether they should return to work or continue protesting.

Prior to this incident in September 2024, over a hundred factories were closed due to a variety of issues, including worker protests, clashes, and fears of vandalism. Many factories have already witnessed arson and vandalism.

Since the late 1970s, Bangladesh has become a key player in the textile and clothing sector, securing its position as the world’s second largest clothing exporter. The ready-made garment (RMG) sector is considered the lifeblood of Bangladesh’s economy, contributing an annual contribution of USD 47 billion, accounting for 82% of the country’s total export earnings, and employing 4.4 million workers, 80% of whom are women.

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In addition to its economic contribution, the RMG sector plays a key role in social development, providing jobs to millions of women, promoting gender equality and helping to alleviate poverty by offering stable employment to low-income earners. Given its profound economic and social impact, especially in Bangladesh’s post-August 5 Revolution reconstruction period, the ongoing crisis in the RMG sector is something the country cannot afford.

How we got here

The crisis in the garment industry began after gas shortages caused by damage to an LNG terminal in May 2024 forced factories to operate at less than 30% capacity or shut down completely. The situation worsened in July when students began protesting for reform of public services, and by the end of that month the protests had turned into a revolution.

Since the overthrow of the previous government, the RMG sector continues to face unprecedented challenges resulting from political unrest, economic hardship and deep-rooted labor grievances. Two months of demonstrations, curfews, internet blackouts and the ongoing energy crisis have led to significant economic losses in the RMG sector – particularly in July, August and September, the peak season for deliveries and holiday orders for the following summer and spring summer seasons.

On August 29, the crisis escalated when factories in industrial areas began to close due to worker protests and vandalism. The government had to deploy the Bangladesh Army to maintain law and order in the industrial areas. Although military intervention has led to the resumption of work in some factories, the situation has not yet been fully resolved.

Causes of unrest

Several key factors are contributing to this unprecedented crisis. Workers are demanding fair treatment, including equal opportunities for men and women, higher pay, better benefits and a lighter workload. They are also pushing to address issues such as wage delays, alleged blacklisting of laid-off workers and conflicts over unionization, all of which are fueling frustration and anger.

On the other hand, many factory owners say outside forces are fomenting protests, particularly over the scrap and discard trade, known as the “jhoot business.” Some even suggest there are conspiracies to undermine Bangladesh’s main export industry.

A case of old wine in a new bottle?

Labor protests and unrest in the RMG sector in Bangladesh are nothing new. Over time, there were protests over issues such as workers’ rights, wage demands, external pressures, and economic chaos. However, the current situation is more complex, and unrest is fueled by a combination of factors.

The big question remains: Can Bangladesh afford to continue with this situation? Simply put, the answer is no. Bangladesh cannot afford to prolong this crisis, given the serious consequences it will have on the country if it continues for too long.

Since August 5, many have referred to the current state of the country as “Bangladesh 2.0”. In this new reality, the country has a chance to deal with its past and chart a path to a better future. However, the new reality also brought new challenges.

First, the country’s economic activity continues to recover from the political turmoil and resulting instability. The RMG sector is also important to Bangladesh’s export market and the overall economy, accounting for approximately 82% of total exports. Any disruption in this sector could have a domino effect, negatively impacting the overall economy.

Moreover, this is a key season for the RMG industry, as factories are expected to fulfill orders from foreign customers for winter clothing. If orders are delayed, buyers may be forced to cancel orders and seek alternative manufacturers in other countries. Moreover, if the claims of external conspiracies are true, it poses a serious threat to Bangladesh’s economic, social and political stability.

The way forward

To resolve this crisis, a multilateral negotiation process is crucial. Factory owners, workers and union leaders must recognize the seriousness of the situation and refrain from violent action. Factory owners should respond promptly to workers’ legitimate demands, including timely wage payments, equal opportunities and better social benefits. Reform of the practice of blacklisting employees is also necessary, as it can unfairly end careers and is often abused.

Given the government’s commitment to democracy and human rights, this issue requires serious attention. In addition, owners should involve employees more in the production process, encouraging a sense of ownership and responsibility.

In return, employees must remain committed to their work and avoid destructive behavior. They must understand broader economic challenges and prioritize dialogue as the primary method of resolving disputes.

The government must play a key role in facilitating dialogue between all stakeholders, including security officials, civil society, factory owners, union leaders, activists and workers. As the police are not yet fully operational, the presence of the Industrial Police in key areas needs to be increased. Additionally, the government should investigate allegations related to scrap trafficking and external influence as they could pose serious risks if confirmed to be true.

Ultimately, it is important not only to resolve the current crisis, but also to use this opportunity to build stronger coordination between all parties involved, which will help prevent future crises in the RMG sector.

Imran HossainLecturer, Rabindra Maitree University, Kushtia.

Reservation: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Business Standard.