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Bettering working conditions and competitiveness in RMG industry

Mohamad Anis Agung Nugroho | November 26, 2023 00:00:00

In the heart of Gazipur's bustling industrial landscape, the workstation of Ayesha Khanom (pseudonym) stands as a beacon of hope and change. The hum of sewing machines is now set against the backdrop of spacious, well-lit halls-a far cry from the cramped quarters of yesteryear. This transformation is a microcosm of the nationwide overhaul underway in Bangladesh's ready-made garment (RMG) sector, since the Rana Plaza disaster in 2013. The International Labour Organisation (ILO) and The International Finance Corporation (IFC)'s Better Work programme is one of the initiatives that contribute to the overhaul. The initiative's potent combination of assessments, advisory services, and strategic training has reengineered the sector's ethos from mere compliance to global competitiveness. Ayesha's work also reflects the broader enhancement of working conditions-a tangible move towards the ILO's Decent Work Agenda.

Unlike the stifling, cramped conditions of the past, her workspace now boasts ample light and ventilation, a testament to the evolution of working conditions in Bangladesh's RMG industry.

Bangladesh has successfully advanced to the 'Next 11,' an alliance consisting of eleven emergent economies. Since 1990 the economy of Bangladesh expanded nearly nine times, or nearly three times in the past decade. The sector producing RMG has been a significant economic driver at the national level.

In 1994, Bangladesh's Gross Domestic Product (GDP) stood at US$ 33.77 billion, with the RMG sector contributing US$ 1.8 billion to this figure. By 2001, the nation's GDP had grown to US$ 54 billion, and the RMG sector's exports had more than doubled to US$ 4.5 billion, accounting for 12 per cent of the GDP. Fast forward to 2022, Bangladesh's GDP had surged to US$ 460 billion, with the RMG sector's export value reaching US$ 45 billion, which is nearly 11 per cent of the total GDP.

Bangladesh's RMG sector stands as a paragon of endurance and flexibility. This pivotal industry has become the economic heartbeat of the nation, empowering millions and crafting the dreams of a thriving future. In the fiscal year 1993-94, the RMG industry in Bangladesh employed approximately 0.8 million individuals. The sector has since seen substantial growth, with current estimates indicating that the number of jobs has swelled to 4.2 million. It's an industry that epitomises the country's tenacious spirit and developmental triumphs, contributing significantly.

Over the past decades, the RMG industry has undergone a remarkable metamorphosis, emerging as the second-largest apparel exporter globally. The export earnings of this sector alone account for an astounding 84 per cent of the nation's total, showcasing Bangladesh's prowess on the international stage. This growth narrative isn't just about numbers; it reflects the triumphs of policies and practices prioritising worker welfare and business acumen.

The RMG industry in Bangladesh has long been the cornerstone of the nation's economic edifice. The journey toward this pinnacle has been about more than just manufacturing; it has been about nurturing an environment that prizes both the dignity of labour and the imperatives of the market.

Ensuring decent work conditions in the garment industry is pivotal for maintaining competitiveness. It's here that The Better Work programme has played an instrumental role. Since its inception in 2014, Better Work Bangladesh has been guiding RMG factories toward the shores of sustainability and competition, with a robust framework of assessments, advisory services, and trainings tailored to each factory's specific needs. The programme has successfully reached over 1.25 million workers and has sparked substantial improvements in compliance with labour standards, including occupational safety and health, social dialogue between workers and managers and business competitiveness. Staying true to the notion of tripartism that the ILO mandates, Better Work has gradually mobilised the support of the government, employers, and workers alongside fostering its relationship with global brands, to elicit change in industry practices, with the aim of scaling it up to policy-level and global supply chains.

By ensuring that factories adhere to core labour standards, the programme has not only uplifted work conditions but has also empowered factory owners to fetch better prices from global buyers. Buyers, in turn, are increasingly gravitating towards Bangladesh, recognising the value of compliance and the allure of ethically produced garments.

Better Work's approach has been transformative, driving a 35 per cent decrease in non-compliance regarding occupational safety and health management systems from 2014 to 2022. According to independent research done by Prof. Julia Cajal-Grossi of the Graduate Institute, Geneva, and Prof. Rocco Macchiavello of the London School of Economics and Political Science, workers in Better Work-enrolled factories enjoy a 5.0 per cent higher likelihood of on-time payment and a 5.4 per cent greater basic pay compared to others. Their hourly take-home pay is about 4.0 per cent higher. Factories under the programme show a 55 per cent increase in export revenue and a 50 per cent rise in export volumes over non-participants. These aren't just statistics; they're milestones marking the progress of countless Ayeshas working in a safer and healthier environment.

Moreover, the factory transformation has had ripple effects throughout the sector. The emphasis on safety, health, and employee well-being has become a selling point, distinguishing Bangladesh as a hub of responsible apparel manufacturing. This reputation for compliance has allowed garment owners to negotiate with newfound confidence, ensuring that the value of the 'Made in Bangladesh' label is recognised in terms of quality and ethical standards.

The RMG sector of Bangladesh has also gained global recognition. The journey toward better working conditions and enhanced competitiveness is continuous. While strides have been made in factory safety and value-chain responsibility-precipitated by initiatives like the Accord on Fire and Building Safety, which is sustained by the RMG Sustainability Council-there remains room for growth. The Tazreen and Rana Plaza tragedies are sombre reminders of the critical need for vigilance and proactive measures to safeguard workers' welfare.

The sector has acknowledged the significance of enhancing other competitiveness factors because of its competitive advantage based on human resources. These include enhancing the firm structure and management strategies and stimulating the growth of related and supporting industries. The sector's resilience and ability to innovate, particularly in the face of challenges posed by the pandemic and global market shifts, underscore the dynamism inherent in its DNA.

The linkage between compliance and competitiveness is profound. With the industry's progression, the understanding has emerged that heightened compliance results in improved working conditions for employees, which in turn enhances productivity and competitiveness. Better Work's interventions have shown that adherence to labour standards can be a market differentiator, enhancing the reputation of businesses and expanding their global footprint.

The RMG sector, which benefits from competitive pricing and a sizable, skilled workforce, is also looking to improve other competitive factors including firm structure, management, harmonious industrial relations and industry-related services. The challenges from the shifting market dynamics have only strengthened the sector's resolve to innovate and diversify.

As half a century has elapsed since the independence of Bangladesh, the focus is not just on its past achievements but also on the path ahead. The vision for the future is clear: to foster an RMG industry that's not only a global leader in exports but also in ethical, sustainable and equitable work practices. The country must build on the solid foundation that programmes like Better Work have laid, ensuring that every garment worker's story is one of dignity, safety and hope.

Once the learning from the RMG industry is tapped into, next comes the support to the constituents in terms of the requirements for other economic priority areas in Bangladesh in the growing narrative in Human Right Due Diligence (HRDD) and Responsible Business Conduct (RBC) with a focus that extends beyond the RMG sector.

The call to action is for all stakeholders-government, private sector entities, workers, and international organisations- to make efforts together toward this common goal. Continued investment in infrastructure, training, innovation, and a steadfast commitment to upholding workers' rights will be the threads that strengthen the fabric of Bangladesh's RMG industry and beyond.

As Ayesha and her peers stitch together the garments that grace global markets, they are not just crafting apparel; they are embroidering the narrative of a nation's unwavering spirit and indomitable will to succeed. This is the story of Bangladesh's RMG sector: a saga of transformation, resilience, and unwavering progress.

Mohamad Anis Agung Nugroho is Country Programme Manager, ILO-IFC Better Work Bangladesh Programme.

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