Beruflich Dokumente
Kultur Dokumente
Prepared For
Dr. Md. Shahidul Islam
Guest Faculty
Department of International Business
Faculty of Business Studies
University of Dhaka
Prepared By
Raihan Gofur
ID: 03
Session: 2012-13
Department of International Business
Faculty of Business Studies
University of Dhaka
Date of Submission: August 30, 2014.
Dear Sir,
I am submitting the term paper entitled Analysis of the RMG Sector
and its Development Process.
The purpose of this assignment is to give an overall idea about
readymade garments industry and its development process from the
Bangladeshi social and economical scenario.
I hope this term paper will prove to be satisfactory
Respectfully yours
(Raihan Gofur)
ID: 03
Session: 2012-13
Department of International Business
Faculty of Business Studies
University of Dhaka
Table of Content
No.
Topic
Introduction
Case Study on a Reputed RMG Industry
Advantage and Disadvantage of Work Environment
of RMG Industry
Recommendations of Development
The Roles of Government
The Roles of Business Community
The Roles of WTO
The Roles of WCO
Conclusion
2
3
5
6
7
8
9
10
Introduction
Page
Number
01
02
05
10
10
12
13
13
14
Viyellatex has won several awards from international organizations, private sector forums, local
workers organizations, and the government of Bangladesh. For example, in 2010, HSBC, the
leading international bank, and The Daily Star, Bangladeshs largest English daily
newspaper selected Viyellatex as the winner of their annual Green Business Entrepreneurship
award in recognition of the companys moves to adopt green and energy-saving technology in
manufacturing garments.
In 2009, Viyellatex signed up to the United Nations Global Compact, and was subsequently
selected by the United Nations Economic and Social Commission for Asia and the Pacific
(UNESCAP) as a model for putting the Global Compact principles into action in the region. The
UNESCAP report stated that Viyellatex demonstrates that there is an opportunity to make
profits, provide worthwhile and well-numerated labour without the need for forced labour or
other forms of exploitation.
K M Rezaul Hasnat, CEO and Chairmain of the group explain that, Workers welfare
committees operate in our factories and, for three consecutive years, we have been
commended for our practice by the federation of garment workers unions. It is not only about
providing good working conditions, but we also pay 20% more than the national minimum
wage. I told my directors that we have high-end customers, so why should we follow the
governments minimum wage.
For Hasanat, the logic behind his companys progressive approach to labour relations is simple.
The tangible return is that, over the last 11 years, we have never had a workers strike or any
problems with the community.
Viyellatex is also winning accolades for its commitment to green industry and sustainability.
Recalling how his company first started on the road to sustainability, Hasanat says, Our first
sustainable initiative was all about steam. Releasing steam from our factories was a waste of
energy. I sat with my directors and said, Lets use that steam and hot water. The result is preheated water, free of charge.
Viyellatex takes steam, which is produced as the output wastage from the steam supply system
for garments and dyeing units, and uses it to heat water boilers to an instant 70-80 degrees.
The companys 2010 report to the Global Reporting Initiative states that the system saves 40%
of the previous cost of heating water.
Other initiatives followed: more than 300,000 litres of treated effluent water are used for the
toilet flushes every day, saving large volumes of underground water; approximately 45 million
litres of rainwater are collected from one factory roof each year and are then used in textile
processing, saving valuable underground water and avoiding the expenditure on chemicals to
soften the water; and water from workers wash basins is filtered and used to irrigate trees that
are planted in patches throughout the factory compounds.
Yet another initiative involves the company diversifying into tea production. Food leftovers
from the workers lunches and kitchen waste are mixed with cotton dust from
the spinning mill and are converted into compost fertilizer that is then sent to the companys
newly purchased tea estate in the north-east of the country. Hasanat explains that there are
clear rewards for greening his company. We can be environmentally friendly but, unless there
is a return, we cant continue the initiative. We are saving money.
Viyellatex committed to become a carbon-neutral company by 2016, and announced that it
would install energy-efficient and smart lighting systems, replace inefficient machines and
invest more in renewable energy sources.
To the question, apart from saving on costs, what drives sustainability at Viyellatex?, Hasanat
responds frankly, Membership of the Global Compact, the Global Reporting Initiative and
Sustainable Energy for All provides me with a benefit. All these awards for environmental
initiatives and corporate social responsibility give us a competitive edge. Our customers are
inviting me to speak to their shareholders. They are showcasing me to their customers. When
companies negotiate a price with me, I can get a better price from them, because they dont
want to lose me. I am in a better bargaining position.
Bangladesh has so far made a significant progress in improving overall working conditions in the
countrys readymade garment (RMG) sector, but still much work remains to be done.
Advantage of Work Environment of RMG Industry
1. Monitoring Factory safety and Compliance: Recently around 1720 factories inspected
by the Europe based retailers group Accord and the North American retailers group
Alliance. So far only 27 factories were found non compliant and their operation was
suspended.
2. Training of Industrial police: Industrial police provides security for the worker and
maintains stability in the industrial areas. Government of Bangladesh through the
Ministry of Commerce has taken some initiative to improve the expertise of the
industrial police to develop a quick response system in times of tragedies and labor
unrest. Developing and implementing mechanism for training industrial police who
guard the RMG sector and oversee workers freedom of association at tense moment.
The purpose of the training should be to prevent intimidation, harassment and violence
against labour activists.
3. Improved Fire and Building Safety: Fire and building safety is one of the important
conditions for establishing workplace safety in the RMG sector. Due to the continuous
monitoring by the government and the foreign development partners this sector has
seen much improvement in terms of fire and building safety.
4. Peaceful Functioning of Trade unions: Functions of trade union for the work place
safety is very important. Labour unions of these sectors are co-operating with the
government in providing suggestions and recommendations and setting the wage for
the workers.
5. Ensure Rights for the women workers: women garment workers, various women
groups and activists are working hard in improving the lobour practices through setting
a plan of gender equality. Women groups have been working for garment worker to
change their status through making strategy paper, and writing regular features which
are enhancing the voice of women workers.
against
in
terms
of
access
to
women
are
generally
management positions. They are generally considered only for helpers, machinists,
finishing helpers and sewing helpers frequently and as line supervisors and quality
controllers. It is rare to find women working as cutting masters, production
managers, supervisors, finishing and machine operators, or as in charges who draw
salaries varying from 2-10 times that of the average operator.
3. Irregular Wage payment: irregular payment practices by some the culprit owners in this
industry has become the major concern. In many cases before the religious we see that
there is a trend among the garments owner of not clear the payment; which maybe in
case of regular wage or in cases of bonus. In some extreme cases the payment due is 3
to five months which eventually creates an unrest in the industry.
4. Low payment for Long work hour: Workers in the Bangladesh RMG sector often work
long hours for unusually low pay, regardless of laws mandating overtime pay or a
minimum wage. The RMG wage level is one of the lowest in the world. Even by South
Asian Standards, it remains very low with average hourly wage in Bangladesh being 42%,
50% and 33% at those in India, Nepal and Sri Lanka. In contrast with US apparel labour
charge per hour (wage and fringe benefits) of US$ 16.00, the RMG worker
receives a minimum wage of US$ 0.15. Whereas unit labour cost of $0.22 per hour is
the lowest in Asia, behind Cambodia ($0.33), India ($0.51) and China ($0.55).
5. Lack of Standard Working hour: Most of the garments factories do not have standard
working hours. Government should take initiatives to set standard working hour for
male and female workers.
6. Forced Labour: Forced labour is common in Bangladesh especially in the RMG sector.
Workers are often given a quota to fulfill. In the case of workers unable to fulfill their
quota during work hours, they have to stay behind and work without pay. Regular two
hours overtime is compulsory, and if any one refuses to work him or she is dismissed,
terminated, has wages deducted or receives verbal harassment, sometimes escalating
into physical punishment. Furthermore the factory management rarely informs workers
in advance if they have overtime; it is only announced at the end of the working
day. Workers dont receive any notice of overtime. In some of the factories, workers
are forced to do night shift duty, up to 12 to 3am. And then start the next shift at 7am.
In many factories, the factory gates are locked to enforce overtime. Forced labour
constitutes the antithesis to decent work and violates all core labour standards. In
Australia, the law does not explicitly prohibit forced or compulsory labour,
including by children.
7. Lack of Residential and Transportation Facilities: Though most work until after dark,
there are no safety measures for them and no residential facilities or transportation
facilities provided. As a result, they frequently feel insecure, and for good reason
many female garments workers are raped and abused. Sexual harassment as well as
killing by management is also found in the Lani Fashion Limited is an example of
such violence. The liability for a safe life and safety environment in both cases is that of
the employer. The employers are allegedly not taking care of the workers but exploiting
them for their business interests.
8. Political Influence: Around two dozen factory owner are parliament member, there is
always a political influence in fulfilling with the compliance in this sector
9. Lack of Mechanism for Benefit Sharing: There is also no mechanism for benefit sharing
in RMG industry. They do not have a bonus payment system for workers as provisioned
in the labour laws nor do they have provision to increase salaries for changing
profitability and inflation. Employee benefit plans or incentives are voluntary offerings
by the firm. Expenditure on benefits contributes to employee retention through
increasing
job
satisfaction
workers certain tangible benefits over and above the basic pay. Some benefits help
fulfill the social and recreational needs of workers, for example, a festival bonus, a
target bonus or a production bonus. They may provide extra leisure, extra income
and a better work environment. Such incentives enhance employees loyalty and
build a positive attitude towards the company and workers feel that they have a
role in the success of the organization. Thus incentives are important in reducing
dissatisfaction and unrest in an industry.
10. Health and Safety regulations: Health and Safety regulations, as prescribed in Factory
Rules 1979 are routinely ignored by management and are hardly enforced by
government. Most factories do not have adequate ventilation and exhaust fans
that leave the garments workers exposed to toxic substances and dust. Raw materials
contain dust and fibre particles that hang in the air. Dye, a toxic substance emitted from
coloured cloth, spreads in the workroom. As a result, many workers suffer from
constant fatigue, headaches, anaemia, fever, chest, stomach, eye and ear pain, cough
and cold, diarrhoea, dysentery, urinary tract infection and reproductive health problems
due to overwork, uncongenial working conditions, and wide-ranging labour law
violations. In fact the Factories Act of 1965 sets the occupational safety and health
standards in Bangladesh, but like every other aspect of the Labour Code, it is rarely
enforced due to the lack of resources and corrupt practices in the system.
Policy should be formulated in a way that enables the external financing. There is still
some defect in terms of
II.
Bangladeshi RMG products are mainly destined to the US and EU. In this regard the
government can play vital role in market diversification and encouraging new buyer and
investors to get involved with the RMG sector
III.
Government should be strict about the workers safety issue. They should regularly
monitor the working conditions to the factories.
IV.
Government needs to make finance available for the R&D of this industry because RMG
is fashion oriented industry. Without regular research its not possible to cope with the
latest global trends.
V.
Government should organize trade fair on a regular basis nationally and internationally
to attract both buyer and investors
VI.
VII.
Pass draft environmental laws and see that they are implemented.
VIII.
Supervise and monitor the emissions and soil management systems of RMG companies
IX.
X.
Link companies producing waste to recycling facilities. Increase the number and capacity
of recycling facilities to process waste
XI.
The government of Bangladesh and the BGMEA should immediately develop and
implement tough and effective sanctions against factory owners who engage in
The government of Bangladesh and the BGMEA, in coordination with the ILO,
should undertake a program to educate garment factory owners on the constructive
role of labor unions in garment factories and endeavor to ensure that anti-union
activity is eradicated.
XIII.
The government of Bangladesh and the BGMEA, in coordination with the ILO and
representative unions, should sponsor a program to educate garment factory workers
about their rights and responsibilities with respect to freedom of association,
organization, and collective bargaining.
RMG manufacturer should look for other strategic factors other than the human capital
of lower cost.
II.
Opportunity of RMG industry must be converted to strength with the support of the
government
III.
Manufacturer should look for other strategy like value chain competitiveness rather
than only price competitiveness.
IV.
Business community should respect their worker because workers are the primary
stakeholder of the business
V.
Business community of the industry should be careful in making the in time wage
payment
VI.
Business community should be more responsible and they should work with the
government in completely eliminating the forced labour or child labour
VII.
Workplace safety should be ensured and all compliance should be complied timely
VIII.
Government and the business community should work align for the development of the
RMG sector of the country
IX.
X.
Apparel brands and retailers, especially those with very large operations in
Bangladesh like Wal-Mart, Gap, and others in the Alliance for Bangladesh Worker
Safety, should, in coordination with the ILO, launch long-term, well-resourced
programs to educate their suppliers of their expectation for compliance with laws
allowing the right to organize unions and bargain collectively.
XI.
Apparel brands and retailers, in coordination with the ILO and representative unions,
should launch a program to educate garment factory workers about their rights and
responsibilities with respect to freedom of association, organization, and collective
bargaining.
Trade Negotiation: WTO can help in trade negotiation when bargaining with the foreign
trade associations and international garments buyer. The can facilitate the trade
different procedure. The WTO should facilitate the implementation, administration and
operation and further the objectives of different Agreement and of the Multilateral
Trade Agreements, and should also help this sector provide the frame work for the
implementation, administration and operation of the multilateral Trade Agreements
II.
Implementation and Monitoring: The WTO should provide the forum for negotiations
concerning their multilateral trade relations in matters dealt under the Agreement
III.
Building Trade Capacity: WTO can help in building trade capacity by giving
infrastructural and policy support for the development of RMG sector.
II.
WCO Secretariat can also actively support Bangladeshi RMG Sector in their
endeavours to modernize and build capacity within their national Customs
administrations.
III.
WCO also play a role in combating the fraudulent activity in its member country, so
it can help Bangladesh to reduce the customs fraud.
IV.
Conclusion
The various worker safety programs initiated in the wake of Tazreen and Rana Plaza have the
potential to considerably improve the safety of Bangladeshs garment factories in the short
term. But these gains may be lost without strong worker oversight in the form of
independent unions. Some progress has been made recently by Bangladeshs fledgling unions,
but much more remains to be done.
To sum up, the new trading environment is going to pose serious challenges for the RMG
industry in Bangladesh. Time is also of essence (five years have already gone). Unfortunately,
Bangladesh has been slow to respond. Given the strengths, weaknesses, opportunities and
threats, establishing backward and forward integration should get first priority. All inefficiencies
and irregularities also have to be removed from production and export processing. Bangladesh
should penetrate into new markets, diversify into new items, and relocate into new territories.
If these measures are not taken in time, The rapid growth rates that Bangladesh exhibited in
world trade will be a thing of the past.