Recession heat burns RMG units, not jobs: ILO
Saturday, 5 September 2009
A Z M Anas
More than 100 Bangladeshi apparel firms, mostly woven units, stung by the ongoing global recession, faced closure.
But employment in the industry remained in large part unhurt, according to the International Labour Organisation (ILO).
At least 66 woven factories and 47 knit units were shut down after the global downturn sagged demands for Bangladeshi garment items in the North American and European markets, the ILO says, in a rapid assessment of the impact of global crisis on employment.
"Since most of the growth in the sector (readymade garments) is volume-driven, employment in the sector has been more or less sustained," the ILO report said.
"The sector remains vulnerable to buyers' demands for further cut in cost of cutting and making and deferment of orders," the report said.
Data released by the trade group, BGMEA, said utilisation declaration (UD) issued against export orders slid by 4.11 per cent to April this year, from the corresponding period in 2008.
UD for knitwear exporters fell higher by 12 per cent in April 2009, compared to the previous month.
Some 4500 garment factories are operating in Bangladesh, which employ over 2.0 million workers, also making up nearly 82 per cent of Bangladesh's exports.
Bangladesh shipped apparel and home textiles worth $11 billion in the 2008 financial year and trade analysts expect that figure to double by 2011.
The ILO report warned that a drop in production would further curtail the scope for further employment in the industry, which remained a magnet for females from rural areas.
It said recruitment of fresh workers has also slowed down significantly since mid-2008, and "if recession continues, entrepreneurs may be compelled to consider job cuts."
"Because of reduced demand for products in the international market, opportunities for overtime in the ready-made garment sector is now less than what it used to be prior to the crisis."
The ILO, based on media reports, said as many as 12 out of 341 spinning mills were shut down, while most of the factories cut down production by almost one-third, the report said.
"A significant number of textile and spinning mills in Bangladesh have experienced difficulties because of the crisis. This has come in the form of large volume of stockpiles of yarn in recent times," the report said.
Other sectors battered by the global crisis include jute, shrimp and leather.
Because of downward pressure in the CM (cutting and making), the head of a Dhaka-based global retailer said apparel makers took various steps to cut back on production costs without reducing workers' wages.
Boosting workers' productivity and reduction of wastage of clothes are among the steps taken by the manufacturers.
As a cost-cutting measure, ILO officials said, workers expressed their interest to work at a reduced wage rate, for a temporary period, instead of facing retrenchment.
The ILO said massive subsidies provided by the Indian government in the yarn sector have forced Bangladeshi spinners to lose out to their Indian rivals.
Textile and apparels produced by Bangladeshi manufacturers have remained the cheapest in the world-the "Wal-Mart effect" as called by the World Bank has saved Bangladesh from feeling the severest pain of the global crisis.
American retail goliath Wal-Mart, which is the single largest apparel buyer from Bangladesh, has increased apparel sourcing in recent months, despite the crisis.
The apparel export slowed down to minus 1.5 per cent in the second quarter, i.e., between October and December. However, exports rebounded in the third quarter by around seven per cent.
More than 100 Bangladeshi apparel firms, mostly woven units, stung by the ongoing global recession, faced closure.
But employment in the industry remained in large part unhurt, according to the International Labour Organisation (ILO).
At least 66 woven factories and 47 knit units were shut down after the global downturn sagged demands for Bangladeshi garment items in the North American and European markets, the ILO says, in a rapid assessment of the impact of global crisis on employment.
"Since most of the growth in the sector (readymade garments) is volume-driven, employment in the sector has been more or less sustained," the ILO report said.
"The sector remains vulnerable to buyers' demands for further cut in cost of cutting and making and deferment of orders," the report said.
Data released by the trade group, BGMEA, said utilisation declaration (UD) issued against export orders slid by 4.11 per cent to April this year, from the corresponding period in 2008.
UD for knitwear exporters fell higher by 12 per cent in April 2009, compared to the previous month.
Some 4500 garment factories are operating in Bangladesh, which employ over 2.0 million workers, also making up nearly 82 per cent of Bangladesh's exports.
Bangladesh shipped apparel and home textiles worth $11 billion in the 2008 financial year and trade analysts expect that figure to double by 2011.
The ILO report warned that a drop in production would further curtail the scope for further employment in the industry, which remained a magnet for females from rural areas.
It said recruitment of fresh workers has also slowed down significantly since mid-2008, and "if recession continues, entrepreneurs may be compelled to consider job cuts."
"Because of reduced demand for products in the international market, opportunities for overtime in the ready-made garment sector is now less than what it used to be prior to the crisis."
The ILO, based on media reports, said as many as 12 out of 341 spinning mills were shut down, while most of the factories cut down production by almost one-third, the report said.
"A significant number of textile and spinning mills in Bangladesh have experienced difficulties because of the crisis. This has come in the form of large volume of stockpiles of yarn in recent times," the report said.
Other sectors battered by the global crisis include jute, shrimp and leather.
Because of downward pressure in the CM (cutting and making), the head of a Dhaka-based global retailer said apparel makers took various steps to cut back on production costs without reducing workers' wages.
Boosting workers' productivity and reduction of wastage of clothes are among the steps taken by the manufacturers.
As a cost-cutting measure, ILO officials said, workers expressed their interest to work at a reduced wage rate, for a temporary period, instead of facing retrenchment.
The ILO said massive subsidies provided by the Indian government in the yarn sector have forced Bangladeshi spinners to lose out to their Indian rivals.
Textile and apparels produced by Bangladeshi manufacturers have remained the cheapest in the world-the "Wal-Mart effect" as called by the World Bank has saved Bangladesh from feeling the severest pain of the global crisis.
American retail goliath Wal-Mart, which is the single largest apparel buyer from Bangladesh, has increased apparel sourcing in recent months, despite the crisis.
The apparel export slowed down to minus 1.5 per cent in the second quarter, i.e., between October and December. However, exports rebounded in the third quarter by around seven per cent.