Bangladesh: An economic paradox

Value Chains

Bangladesh: An economic paradox

In Bangladesh, much needed jobs are provided by the unscrupulous garment industry, presenting a catch-22 situation. Photo: Tareq Salahuddin (flickr).

Just over a year ago, the steady rhythm of sewing machines in Dhaka’s 5,000 garment factories went silent.

A textile factory shared by a number of western clothing companies, Rana Plaza, had collapsed, killing more than 1,130 laborers. The tragedy shed light on inhumane working conditions in the garment industry. But it’s not a simple issue; the industry is also credited with pulling millions of people out of poverty and improving women’s rights in a conservative Muslim country.

Equally paradoxical are the new policies and regulations, put in place to tackle labor conditions, which also carry significant costs for garment production companies, large and small. New standards may be well intended but these costs to garment production companies also have a negative effect on Bangladeshi laborers.

Large international companies can afford the higher overhead costs associated with new regulations. But smaller players are being forced to consolidate to cut costs or close their doors. Consolidation and closures have led to rising unemployment at a time when 2 million young people enter the national workforce each year.

“Business is only getting better for the big guys, but the small guys are being wiped out,” Omar Chowdhury, owner of Syntex Knitwear, told Financial Times blogger Joseph Allchin. Meeting new regulations with improved infrastructure and higher wages isn’t cheap for smaller companies like his. The result, he says, is “a glut of skilled workers on the streets now.”

Reactions by western garment industry leaders have been mixed. Some clothing companies have paid compensation funds to victims, even though they didn’t employ anyone at Rana Plaza at the time of the accident, while others with direct links to production at Rana Plaza have not offered compensation.

Coined the “world’s basket case” by former U.S. Secretary of State Henry Kissinger, the Bangladesh of the ‘60s and ‘70s is no more. Bangladesh has nearly met some of the UN Millenium Development Goals and has successfully cut poverty by 25 percent between 2000 and 2010. Many attribute this success to the over 3 million jobs being provided by the manufacturing industry, which employs 12 percent of the nation’s women and girls. That steady hum of progress in Dhaka--despite its unscrupulousness--has helped the very poorest break free of poverty.

Aside from poverty alleviation, many also claim that women’s employment in the garment industry has transformed cultural expectations of women and girls. Before the industry came to Bangladesh in the 1970s, women rarely went in public unaccompanied. But as they were seen walking to and from work each day, women found their independence was less and less stigmatized.

Despite decades of horrid working conditions and human rights violations, the garment industry’s growth helped define a new Bangladesh--of a growing middle class and empowered women and girls. The Guardian poses the question, “Is Bangladesh winning or losing in the garment industry?” The answer: both.

Wages doubled in Bangladesh in response to regulators, but they’re still half that of China, one of Bangladesh’s industry competitors. Bangladesh still touts the cheapest labor in the world. After a period of reform, economists predict necessary regrowth in the Bangladesh garment industry is possible by 2016, reemploying those who have lost their jobs and ensuring better working conditions for all.

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Interactive: The shirt on your back

The Guardian - 16 April 2014


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