Is low labour productivity in RMG a non-issue?

Shamsul Huq Zahid The chief of an International Monetary Fund (IMF) mission that has just concluded its third review of the extended credit facility (ECF) to Bangladesh, Mr. Rodrigo Cubero, like many others at home and abroad, saw great potential in Bangladesh to secure the top spot in global apparel exports. But low labour productivity was one of the hurdles, he mentioned, to achieving that coveted position. However, the trouble is not apparel sector-specific. Rather, it has been hurting most productive sectors of the economy. The labour productivity, which is measured on the basis Standard Allowed Minutes (SAM), in Bangladesh is one of the lowest in the world. Mr. Cubero traced a link between low labour productivity and low wage in the Bangladesh apparel industry. He has done the right diagnosis. But the problem of low wage, more importantly, is linked to workers' unrest that often flares up in major apparel hubs in the country. In fact, the issue of low wage agitates the workers more than the lack of safety measures in their workplaces. But will the productivity of readymade garment (RMG) workers go up if the owners of apparel units hike wages? It seems to be not that simple. The RMG owners have always highlighted the issue of 'paying capacity', not anything relating to low labour productivity, whenever demands have been made to pay their workers a 'decent' wage. The owners, who are largely involved in the manufacture and export of low-end products, it seems, are happy with the current level of labour productivity. Otherwise, they would have been keen on getting more from the workers by launching motivational and skill development programmes. Besides, the apparel factory owners are aware of an obvious fact--- workers would demand higher wages in commensurate with their higher productivity and improved skill. Most owners are not ready to accept this kind of wage-hike. Moreover, it is hard to believe that Bangladesh apparel exporters after remaining so many years in business are failing to make an inroad in the high-end products that would have otherwise fetched higher export revenues for the country. There is no denying that Bangladesh apparel exporters are capable of performing better than what they have achieved so far in the face of stiff competition in the global market. It is widely claimed that low labour cost is the one factor that has helped Bangladesh RMG to scale up the global ladder and become the second largest exporter. But that is not entirely true. The entrepreneurial quality of Bangladeshi apparel exporters has played a major part to help them compete successfully. But it remains a mystery why the same entrepreneurs or at least some of them would not try to grab a position in the export of high-end products. They can easily do it provided they upgrade the skill of their workers and pay them wages befitting to their skill-level. Apparel is an item the demand for which would continue to increase as is the case with food, a basic requirement. Though many other developing nations are trying to catch up with Bangladesh in the global apparel market, Bangladesh, as suggested by Mr. Cubero, has all the potential to maintain its upward journey unabatedly provided the government, the industry owners and, of course, workers can ensure a positive environment for growth. Mr. Cubero said Bangladesh has the potential to develop some other export-oriented sectors like that of garments because of its low cost of labour. Possibly, some other sectors would emerge gradually. But the RMG industry would continue to be the life blood of the economy and saviour of millions of poor urban and rural families. It has brought about a social transformation, no doubt. There will be a hike in wages of the RMG workers soon. How the wage-hike announcement would be accepted by the workers is not known for the gap between the workers' expectations and the owners' desire is quite large. With the next general election remaining only months away the government would want a 'decent' hike in RMG workers' wages for understandable reasons. But the owners would not give in to pressure, easily, it seems. But most people sympathetic to the cause of the RMG workers want the owners to be a little bit generous, in terms of wage-hike, to help millions of families that are dependent on the industry to weather some financial difficulties. However, one has no other way but to keep one's finger crossed on the issue of possible impact of the recent and future hike in wages on the price situation. The impact could outweigh benefits of wage-hike. [email protected]