Dhaka, Bangladesh (BBN)- Bangladesh might face severe challenges in its economic outlook following the ongoing labour unrest in the garment industry compounded by the lingering outcome of recent student unrest, massive floods and frequent power shortages.
The recent student protest-propelled destruction of lives, property and assets coupled with devastating floods clouded the start of the new fiscal year as the factors intensified financial woes and created uncertainty about the road ahead.
During the recent student unrest several hundreds were killed and thousands were injured.
The value of the lives lost is immeasurable, but the prolonged unrest had cast a massive negative impact on the Bangladesh's roughly $450 billion economy.
Official data shows that the country incurred losses of over $1 billion daily after economic activities came to a halt amid the violence and subsequent government-imposed-curfew.
The primary textile sector counted losses worth $58.8 million while the apparel sector lost Tk 6,400 crore as per the rough estimates.
On the other hand, the internet blackout, difficulties in shipping goods from port, expensive air shipments, work order cancellations or offering big discounts to international buyers also mounted the losses.
Meanwhile, in a televised address to the nation Chief Adviser Dr Muhammad Yunus called on the RMG factory owners to come to an understanding with workers for keeping the factories open for the sake of navigating the economy of the country.
Mr Yunus was addressing the nation on the occasion of his completion of one month as the chief Adviser of the interim government of Bangladesh.
Around 114 garment factories have been closed today following labour unrest in the Ashulia, Savar and Gazipur industrial zones of Bangladesh.
Sources from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) confirmed the closure.
The industrial zones which are primarily considered as home to export-oriented garment factories has become a hotspot of labour unrest over the past two weeks.
Research shows that the main causes of Bangladesh’s readymade garment factories turbulence include lack of minimum facility and safety at work, substandard living conditions, deferred payment of wages and benefits, lower allowances and benefits but longer working hours, discrepancies in offering bonuses to male and female workers, international conspiracy, coercive role of the law enforcing agency, too much dependency on buyers, mistreatment by mid-level staff and seeking equal employment opportunities for male and female workers.
The recent labour uproar attributed to both external influences and internal factory issues, sources inside the factories claimed.
Of the closed factories, 54 were closed on a ‘no work, no pay’ basis, as per a provision in the labour law, the BGMEA said.
The Section 13(1) of the Bangladesh Labour Act, 2006 states that the owner can partially or fully close a branch or division of an establishment due to an illegal strike and the workers participating in the strike will not receive any wages.
Insiders explained that under the Section 13(1), workers will not be paid while the factories remain closed, which could further fuel their frustration.
On the other hand, 60 remaining factories have announced a leave with pay.
In several factories, workers have seen sitting idle. However, authorities fear that the situation could escalate if large groups of workers leave the factories and join the protest.
In Ashulia industrial areas where a number of factories remained closed for several days, reopened today, but workers refused to resume their works.
A heavy police contingent and army personnel were deployed in Savar industrial area, with workers gathered inside their factories.
Yesterday, several factories in the Jamgara, Narsinghpur and Pukurpar areas were vandalised by angry workers. In response, factory owners decided to shut the factories today.
Notices regarding the closure were seen hung on the gates of the factories last night and this morning.
A number of workers claimed that they went to their factories in the morning but found closure notices positioned on the gate.
They also alleged they had not served with any prior notice regarding the shutdown.
The closed factories are mainly located in Ashulia industrial area.
The sources said the owners had no other choice, but to keep their factories closed to protect the workers and assets of the industry.
Internally, many terminated workers who are reportedly blacklisted through the BGMEA database, also fuelled the chaos due to their unemployed crisis.
In another development, workers of Beximco Industrial Park also demonstrated blocking the Nabinagar-Chandra highway in Savar since morning today, causing long tailback on both sides of the highway.
After the workers’ unrest began and the situation became chaotic, many owners called for factory closures under section 13(1).
The factory owners' demands were also raised during a Bangladesh Garment Manufacturers and Exporters Association (BGMEA) meeting.
However, for the sake of the workers and the industry as a whole, collective decision is yet to be made.
The Bangladesh’s garments industry has been facing crisis even before the current round of labour mayhem.
The operations in the textile industry were severely impacted during the student protests, which led to curfew for several days and shut down of the industry.
The situation became to improve following the resignation of ex-prime minister Sheikh Hasina on August 5 and subsequently formation of an interim government-led by Nobel Laureate Dr Muhammad Yunus on August 8.
The recent floods in Bangladesh accompanied by frequent power shortages further aggravated the situation.
Bangladesh's garment industry plays a viral role in its economy and is a main performer in the global apparel market especially with the US, EU, UK and Canada being its largest export markets.
However, in the first half of 2024, RMG exports to the EU fell by 4.98% year-on-year to €8.72bn ($9.65bn), according to local media reports citing Eurostat data.
Experts believe that India’s RMG sector could benefit from the crisis in Bangladesh.
Meanwhile, Sandeep Jain, executive director of Ludhiana-based Monte Carlo Fashions, stated in an interview with Mumbai-based business news channel CNBCTV18 last month that the crisis could boost India’s garment industry by positioning the country as a preferred alternative for global buyers.
New Delhi-based research firm Primus Research suggests that Indian textile businesses could potentially gain an additional $300-400mn in monthly revenue if 10-11% of Bangladesh’s textile exports are redirected to India.
To take advantage on the situation, India is mulling strategic approach and infrastructural development for securing favourable trade deals, the Primus Research report published last month added.
Around 25% of garments units in Bangladesh owned by Indian companies—such as Shahi Exports, House of Pearl Fashions, Jay Jay Mills, TCNS, Gokaldas Images, and Ambattur Clothing—are anticipated to wrap up their operations to India, the report stated.
Indian cloth hubs like Tirupur, known for their vigorous industrialized competence, are expected to see a surge in orders.
BBN/SS/TA