Minimum Wage in Readymade Garments Industry in Bangladesh
Minimum Wage in Readymade Garments Industry – Manufacturing Ready-Made Garment (RMG) is labour intensive and low wage based industry. Nowhere, this industry was static or permanent basically on account of wage. As soon as any country became developed, the apparel and textile industry left that country. RMG is highly focused on the relocation of production. The relocation take place from high wage regions to low cost production regions just like water flows down-stream always. This single sector is dominating Bangladesh economy Since ‘80s. In Bangladesh different sectors have different wage levels according to the nature of job. The Minimum Wages Board recommended or re-recommended minimum wages of the 42 industrial sectors. The minimum wage of this very sector is lower than other sectors within the country and among the RMG manufacturing countries as well. On the contrary, within the country, for the same sector – RMG, there are dissimilarity in the minimum wage. Bangladesh Export Processing Zone Authority (BEPZA) declares the same for the industries inside Export Processing Zones (EPZ) which is higher than the declaration by Minimum Wage Board for outside EPZ factories. Minimum wage board has classified the non-EPZ workforces into seven grades according to their skills with seven different wage levels. Contrary, EPZs workers are divided into five categories. BEPZA has fixed higher wages and benefits compere to non-EPZ factories. Moreover, the study finds that the grading system has many loopholes which is not based on well thought and planned. There are so many posts and positions required to run an RMG factory that are not mentioned in the gazette. There is no guideline on how to measure workers’ competency for a particular grade and for how long a worker will be retained in the same grade. These loopholes are helping the employers to manipulate in determining workers’ grade. Minimum Wage in Readymade Garments Industry structure is applicable for whose positions mentioned in the gazette and entitled to all types of benefits mentioned in the law including overtime (OT) payment at double rate of wage. To avoid extra overtime payment factory management promotes or changes the designations like executive, supervisor etc. who are getting comparatively higher wage to keep them away from OT benefits. All those anomalies need to be addressed for properly.
Keywords
Minimum Wage, RMG, Least Developed Countries, Bangladesh
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Importance of Human Resource Planning – Manufacturing Readymade Garments (RMG) as a labor intensive industry requires a large number of labor force to produce its products and (or) services. Usually the least developed or developing countries having huge number of population are the suitable places for labor intensive industries. These industries follow the lowest wage to keep the production cost at a minimum level. Read more about Human Resource Development in RMG factories
Bangladesh and manufacturing ready-made garment (RMG) have been synonymous to the most of the global brands and buyers of this sector. RMG sector was considered a start-up industry in many developed economies. Durations of RMG manufacturing industry in America and UK to Japan to 4- tiger economies (Singapore, South Korea, Hong Kong and Taiwan) were muchshorter than in Bangladesh. The shifting of the RMG manufacturing industryover the period, from country to country is because of labor-cost. Over the last four decades Bangladesh is heavily dependent on a single industry and that is RMG due to absence of any other alternative sector (s) to cope with so much of unemployment. Among the major garment manufacturing countries, Bangladesh has the lowest labor wages. Low-wages certainly are the key to be considered an importing destination by the buyers. Being the lowest even, among the other sectors of the country, proper utilization and planning on importance of human resource planning had never been an issue of concern.
The workers were identified with the numerical value in a factory, not as a resource. As a result, productivity, efficiency etc. are also low while man-machine ratio is high compared to its competing countries. Low wage does not help to keep the production cost lower if the workforces are not skilled. On the other hand, in managerial and technical positions many of the factories employ foreign staff to manage the production floors to material sourcing and negotiating with the buyers. Over the period, cost of production including the labor wage in Bangladesh has increased. To be competitive and to capitalize on green factories status and improved ethical compliance and structural safety, there is no alternative to a sustainable importance of human resource planning , which had been heavily ignored since its inception. Importance of Human Resources Planning There is no universal policy on Human Resources (HR) applicable across the sectors. Rather depending on the nature of business activities Human Resource Management (HRM) formulates the strategies for the organization. Human Resources Planning (HRP) in corporate level and in operation level is not likely the same. Similarly, HR planning, which is effective in service sector, is not necessarily applicable for agriculture sector or manufacturing sector. Even within the manufacturing sector HR planning depends on the uses of technology and work environment, as a whole. The man-machine ratio is not same in the highly technology dependent manufacturing industry like Textiles and labor intensive manufacturing industry, as Readymade Garments (RMG). Huge population and lack of alternative employment opportunity, comparative lower wage etc. have been keeping the sector at the top in terms of formal sector employment especially for the females. As human resources are considered the cheapest element in this manufacturing process. They are still abundant as required. As a result, at the operation level management has to employ more workers than required as they are not yet costlier. A thoughtful plan is still missing on importance of human resource planning . Mid-level management is still very weak or inefficient to play the role they are supposed to play. With those realities, the industry is losing its competitiveness and it is concentrated on lowpriced volumetric products. Generally, management always prefers ad-hoc plan instead of a sustainable strategy. Bangladesh has the highest number of green factory buildings and most of the factories are now structurally safe and sound. There are many group of companies who have multiple production complexes with modern machinery and equipment.
Interestingly they are not serious to develop their human resources. Their investment in human resource development is almost nil or insignificant. Instead, the industry is now overburdened with no or only lowly skilled operators and with absence of local talents in mid-level managerial positions. If within a decade few production lines can be converted into a group of companies, then how many decades are needed to develop an effective human management system? Man, machine and materials are considered the basic elements of industrial production. Among the core elements, managing human being is the most important and complicated as well. Like any other organization, the activities of readymade garment factories can be divided into two key functions – Line – those are directly involved with production, the key function of the industry and Staff – those who provide assistance to production. According to the wage grade of Minimum Wage Board employees of the
Readymade Garments (RMG) industry are divided into two categories, A) Workers – those are differentiated into seven different grades (1-7) and B) Employees – who are not directly involved in production but help in production, delivering their services, divided into four different grades (1-4). There are many other important functions which have been skipped in the wage grade. Following table can be drawn to explain the past and present status importance of human resource planning department in readymade garments industry in the country.
Bangladesh has the highest number of green RMG factories in the world. Highly environmentally friendly factories do not have strategic plan on human resources development. As a result, shortage of skilled workforce creates an unhealthy competition among the entrepreneurs who recruit experienced supervisors and workers from the neighboring factories with higher wages and benefits instead of developing their own workers in their respective factories. It’s like readymade garment sector always look for readymade skilled workers. On the other hand, workers always think out their present value of work. To them BDT 500 is more important than their future benefits. As a result, workers’ 1st Phase (From the beginning till 2000)
Time Keeper
To maintain the payroll, a job of “time-keeper” was strongly placed to record workers in-out time and including over time (OT) work, wage disbursement etc. This activity was controlled by the concerned Production Manager (PM), then the most powerful and unchallenged authority. 3rd Phase (From 2007 onward) Human Resources Department (HRD). To maintain the payroll, a job of “time-keeper” was strongly placed to record workers in-out time and including over time (OT) work, wage disbursement etc. This activity was controlled by the concerned Production Manager PM), then the most powerful and unchallenged authority. 2nd Phase (From 2000 to 2006)
Personnel Department
With the growth of businesses, it was difficult for the production managers to control the activities beyond their capacity. Increased numbers of employees, their payroll, issuing appointment letters, Identity (ID) Cards, calculation of overtime hours, store, security, loader etc. were not possible for a single head and hand. So, the term “time keeping” section got converted to “Personnel Department”. But in many cases functional authority remained in the arena of production manager. migration is a common and chronic problem of the sector. Production costs have gone up and this trend will continue due to periodical wage upgradations, safety improvements, material costs etc. there is no way rather than productivity improvements and product diversifications. To do so, trained and skilled importance of human resource planning is a must.
The requirement of HRD did not come out from the factories’ side. They appointed HR people to comply with the requirements of audits. Maximum responsibility with no or minimum authority made them dissatisfied performing their job. If there were any conflict between human resources department and production department, top management were always in favor of production department, as most of them considered production department on income side and human resources department on expenditure side. Since, HRD was not to shape the business in corporate culture or in a structured form, so necessary authority was not delivered to make the department functional in the sector, except a few exceptions. Lack of required skills, fear of losing jobs and dissatisfaction are common among the HR members.
To understand RMG industry, one has to first try to understand the background of the workforces before knowing about their management. In our RMG industry, it is very significant to consider the background of workforces – who work in the core value stream. The people in core value stream in the industry are from below poverty line, under privileged, less educated i.e. marginal group of the society. The total number of the workers of the factories under the case study are 8830. Out of total manpower, 51% is male and 49% is female. Among the total manpower, around 55% are from Rangpur and Rajshahi divisions. In contrary, the workers from Sylhet and Chittagong are less in number i.e. 0.45% and 3.34% respectively.
The graph shows that the females are more in number from Barisal, Chittagong, Sylhet, Dhaka, Mymenshing divisions, and more number of males are from Rangpur, Rajshahi and Khulna divisions. Among the various departments and grades, females are mostly employed in sewing section. According to minimum wages Gazette for Bangladesh garment industry grade 7 for helper and grades 6- 3 are for General operator, Junior operator, Operator and Sr. Operator respectively. Out of total 7786 workers 55% i.e. 3495 workers are female while 45% is male. Females are more in the positions of lower grades. In the grades 7, 6, 5, 4 and 3 females are 62%, 66%, 59% , 52, and 46 respectively. Out of total more than 45% workers are in grade 4 whereas in grade 3 and 5 it is 14.32% and 10.34% which indicate that factories are highly depended on migrated skilled workers. In a garment factory operators are the lifeline both in number and in operation of the industry. The supervisor is the 1st line management in RMG manufacturing unit. They supervise the operators’ functions and are responsible for production targets. They play a very crucial role and make the communication bridge between the workers and the upper management. Normally an experienced male operator is promoted to next higher position Junior Supervisor. In the industry though the females are more in number yet we see very poor numbers of female in supervisory position.
The posts supervisors or line chiefs and above are captured by the males. In supervisory level, out of total 680 supervisors only 32 are females which is only 5% of total supervisors. In officer category total manpower is 266 and of them 91% i.e. 243 are from male. In managerial position the scenario is the worst than supervisory and officer levels, i.e. only 1 out of 98 managers is female. This is an example of non-functional or absence of human resources planning of the industry. In RMG sector span of service life in a particular factory is very short. More than 41% of total manpower have less than one-year service with the present companies. More than 80% manpower have been working in the same company for less than 4 years.
According to BLA – 2006
1. A worker who has completed ten years of continuous service or more shall be paid at the rate of thirty days (section 27, 4b) wages for every completed year. 2. If the service length is five years more or but below ten-years calculation should be at the rate of fourteen days (section 27, 4a). 3. There is no provision of service benefits for the workers who serve a company for less than five years. There is a relationship between the service length and service benefit. Workers presence in the same company after 5 years is alarmingly low. It was known that the situations compel the workers to leave the factory before 10-years services due to legal obligations to pay higher service benefits. Thus experienced workers are to change the factories frequently. RMG industry is a temporary filed of employment for the employees. It has not any life time plan for its’ workers. A worker can survive till he/she can serve the industry. With a temporary plan with its workers industry’s sustainable development is not possible. A functional HR hardly exists in the industry. Study revealed, big companies of Bangladesh RMG sector are suffering from lack of modern management concept. If we fail to address appropriate measures the day is not very far when this sector will be a history as it happened in the case of jute, golden fibre of Bangladesh. Now the question is of survival or be perished. For the survival following measures can be taken – Industry efficiency is highly depended on the supervisors. When cost is the biggest concern it will be a luxury to continue with traditional way of doing things. If a factory can attract technically trained people for the supervisory posts then it would be easier to compete with its competing countries in regards to efficiency and productivity. To create a congenial working environment and to ensure a long run growth of the sector HRP must initiate the changes from supervisory level. The focus of discussion on minimum wage gives a perception to the common people that the sector pays as minimum as possible in all of its functional areas. It is unknown to the many that the sector is the highest payer of wages in Bangladesh private sector context. This encasing of information backfired to attract talented students to the industry. To reduce dependency on traditional production managers, some of the companies have been, though in limited
Scale, trying to involve the Industrial & Production Engineers (I&PE) in its production department. But most of the cases the relationship between the traditional managers and the modern engineers is not functional. As a result, expected outcome is yet to be reached. Bangladesh RMG business is highly dependent on foreign professionals. The owners are very polite with foreign staffs simultaneously they are, in many cases, very rough and tough to the locals. Workers and officers, due to inherited colonial mentality, are more attentive and obedient to the foreigner as a boss rather than local boss. Sometimes buyers get confidence if there is any foreigner in their sourcing factory. A foreigner in senior position prefers to recruit the persons under him from his own country. Most of them have average job skills compared to locals but their better communication skills help them better manage their customers. Ensuring a working environment, empowering HRD, industry can hunt local talents from all disciplines, as the sectors’ pay and perks are more than any other sector for the deserving ones. This way industry can minimize dependency on foreign nationals. Identify the KPI (key performance indicators) against each position. Each achievement will be expressed/transformed into numeric values. Organization will follow transparent appraisal method instead of confidential appraisal system. One can evaluate his/her performance by himself/herself. To achieve better score he/she can make effort. In this process the grievance, dissatisfaction and frustration will be minimized and a healthy competition will prevail among the members of the organization. If supervisor is the 1st line management then assistant production manager or floor in-charge is the in-line management. Department heads, production manager and factory manager are in midlevel management. Soon after any incident takes place in any factory the top managements’ and association leaders’ immediate reaction is like “it is the failure of mid management”. This incompetency of mid management story is being told decades after decades. Have the industry leaders or factory owners taken any noticeable initiative to improve their competency? Incidents are taking place at regular intervals and criticisms also are voiced in similar nature. Then the question is why no improvement efforts can be made? It is the owners’ attitude that they will not delegate their authority that they have been exercising over the decades. The owners will make HR, mid management responsible, for the failure, they will assign work load to a particular person or department but they will not delegate proper authority with the assigned responsibility. Without authority no one can exercise his/her responsibility. For the functional HRD this authorization is extremely needed.
It is commonly remarked by the entrepreneurs that they are not having qualified candidates to recruit though the organization has the number of vacancies. In contrary, students after completing their academic life they remain unemployed, and they think that is due to lack of suitable job opportunities. Both are the harsh realities when education system and industry demand do not match. Most of our students are now enrolling themselves in the business faculty where the number of the student in science faculty is decreasing alarmingly. In Bangladesh, education system could not adopt the changing demand of the industry due to lack of communication between the academicians and the entrepreneurs. Entrepreneurs can share their experience to the students and academicians can contribute to the industry with their knowledge. Here, government role is very crucial to make the bridge between the parties. The entrepreneurs can open up internship opportunities for the students and the government, through policy making, can encourage students to study science more in number.
The RMG sector has flourished in a very scattered way. Unplanned expansion of production capacity without development of importance of human resource planning management has created the dependency on foreign professionals. There was no effective management system for maintaining the labor intensive industry like the RMG. The sector is highly influenced by the theory “X” of Douglas McGregors (1906-1964) where extreme negative approaches towards the workers were perceived. Employee dissatisfaction, absence of job security, low retention rate etc. is very common in the sector. One single department, Human Resources, is responsible for multiple works. They have a huge work load with minimum or no authority. They cannot involve themselves in workers training and development and motivational activities. Moreover, department itself has weakness to manage the functions effectively. importance of human resource planning
Conclusion
Recently the government, apex bodies and some of the brands have taken different initiatives like Skills for Employment Investment Program (SEIP), The Centre of Excellence for Bangladesh Apparel Industry (CEBAI) to develop operational and managerial skills for the apparel industry. but Much more is needed to be sustainable as Bangladesh RMG sector will lose LDC-specific benefits in 2027 like duty free access to European Union which is one of the major attractions for the importers. Considering the importance of the problem, an in depth and immediate study is needed in this particular area which is still missing. If the sector fails to address this crucial issue, then importance of human resource planning may lose the present business share.
Manufacturing Readymade Garments (RMG) traditionally accord alliance is a labor intensive but low waged industry. As a labor intensive sector the manufacturing activities are more on man based rather than machine based. Contrary, as this is low waged industry workplace, health and safety always an issue of concern. The sector is economically attractive where human resources are available with lower or minimum cost. Generally, developing or least developed countries are the suitable place for large scaled RMG production. At present, more than 70% share of total global apparel business is holding by south and south East Asian countries where position of Bangladesh is second largest, after China with a share of 6% of world market. With all those achievements, Bangladesh RMG sector has experienced severe industrial accidents repeatedly since its growth stage where many of its workers sacrificed their lives. The fire accidents at Tazreen Fashions at the end of 2012 and the multi-stories building where five factories were housed “Rana Plaza” collapses in early 2013 were the deadliest disasters in the history of Bangladesh and in readymade garment sector in the world. Both the devastating accidents attracted utmost criticism from home and abroad. As a part of global supply chain manufacturing RMG is subject to strict maintenance of compliances regulations and standards. Among the countries of the region, the minimum wage in Bangladesh RMG sector was the lowest. Though manufacturing RMG is a low-skill job yet even after three-decade workers’ productivity in Bangladesh is lower than its’ competitors. Low wage does not help to keep the production cost lower if the workforces are not skilled. On the other hand, in managerial and technical positions many of the factories employ foreign staff to manage the production floors to material sourcing and negotiating with the buyers. Since 2013, especially after Rana Plaza disaster, the sector has been passing a very crucial time due to price and compliance pressure. Moreover, Bangladesh RMG sector will lose LDC-specific benefits in 2027 like duty free access in the form of General System of Preference (GSP) to European Union, which is one of the major attraction for the importers. To face all those challenges much more needed to be sustainable. Considering the importance of the problem, an in depth and immediate study is needed in this particular area which is still missing. If the sector fails to address this crucial issue, then i the present business share.
Started its journey during 1980s Bangladesh RMG had achieved 3rd position in the global apparel market in the year 2010. Both product and market diversity happened in a large scale during 2009 – 2013. Initially the export strategy of Bangladesh RMG sector was product penetration; limited to two major markets – EU and USA. During FY 2012- 13 exports have expanded in some 25 new destinations, which was around 20% of total apparel export. In its 2012 article “Bangladesh: Next Hot Spot for Apparel Sourcing?” Mc Kinsey & Company, an American worldwide management consulting firm, forecasted export-value growth of 7 to 9 percent annually within the next ten years, so the market will double by 2015 and nearly triple by 2020. The study also mentioned, “all the respondents identified attractive prices as the most important reason for purchasing in Bangladesh.” (Mc Kinsey, 2012). This study on Bangladesh RMG made the entrepreneurs more aggressive on investment. Many existing factories expanded its capacity and diversified products range. New factories had been set up with more value added products. In the FY 2012-13 total number of factories was 5870 that was the highest number of factories with 4.0 million employments under the two apex bodies, BGMEA & BKMEA (BGMEA Members Directory, 2014-15). Moreover, many RMG subsectors and subcontract factories developed rapidly. The suicidal accidents happened at such a time when different international experts and companies forecasted that Bangladesh exports would double within 2015.
One of the key features of manufacturing readymade garments, as a part of global supply chain, is to maintain strict compliance requirements likes upholding workers’ rights, health safety etc. But all of those requirements did not evolved all on a sudden. Rather different situations in different times compelled the sector to comply with new requirements. Initially, during ‘90s, compliance started with social issues directly related to child labour, workers’ rights and working conditions. After the collapses of twin-tower in New York, USA on September 11, 2001 by terrorist attack, which is commonly known as 9/11 attack, Security issues added as a new compliance requirement through Customs-Trade Partnership Against Terrorism (C-TPAT) audit. Environmental factors came into the compliance audit net due to global warming and climate change issue. In 2013, after two tragic accidents – fire in Tazreen fashions and collapses of multi-storied building – Rana Plaza, a country specific and possibly most critical compliance requirement was imposed on Bangladesh RMG sector, through two different independent and international agreement and legal bindings – The Accord & Alliance on Fire and Building Safety in Bangladesh (the Accord) and The Alliance for Bangladesh Worker Safety (Alliance) by the brands to make their sourcing factories safe and secured. To meet the compliance requirements over the period of time cost of doing businesses has increased. To the buyers, main attraction of Bangladesh to be the major supply base was low manufacturing cost along with compliance standard. In 2013, the sector experienced deadliest accident in the apparel history with the collapses of multi stories building ‘Rana Plaza’. The buyers of the sector imposed strict and expensive compliance requirement in regards to fire and building safety issues. In addition, minimum wage has increased more than double over the period. Many factories have failed to comply those requirements and finally closed. Bangladesh, the labor-intensive industry like RMG had never concern about productivity, as labor wage was the cheapest compare to its competing countries. As wages of the workers are in increasing trend while price of the same products is decreasing. The challenges are not only in context of price and wage issues, the capacity of the mid-level management and productivity of the sector are a big threat for the sector. However, the minimum wage in Bangladesh is still lower than its competing countries but in productivity, efficiency and supply chain, Bangladesh RMG is far behind to many of those competitors. According to a recent survey conducted by CPD, it shows that 16 percent factories (out of 193 sample factories) have employed foreign staff (Textile Today, March 2018). However, the minimum wage of Bangladesh RMG sector is still lower than many of its competing countries but in context to productivity, Bangladesh is far behind than its competitors. Now the question is how the sector is offsetting the increasing production cost with reduced price. Is it productivity or any other factors? The present study has focused on the impact of productivity of the workers of the sector along with the different initiatives taken by the different stakeholders like – buyers, factory owners and government towards the shifting of sustainability.
The Accord, the Alliance and the National Initiative
Since its journey, the sector has faced many accidents of fire, building collapse, labor unrests on different issues including wages hike. There were 21 fire accidents recorded during 1990 – 2012 where 530 workers had died. Among them fire in Tazreen Fashions, on November 24, 2012, was the most devastating in number of casualties where 117 workers were died with more than 200 injured. Three factory buildings had collapsed in between 2005 – 2013 where 1236 workers lost their lives on the spot and thousands of workers were critically injured. Among three the Rana Plaza collapse (where five garment units were housed) on 24 April 2013 was the deadliest structural failure in the country where 1137 workers died and at least 2,500 were seriously injured.
When the garment sector’s reputation, recognition, achievement and trade privileges in overseas markets were at stake due to fire in Tazreen fasions and everyone was busy trying to restore the lost image abroad, another accident took place just after five-month time on April 24 at the Rana Plaza that collapsed with the casualties surpassing all previous records. The then US President Barak Obama, Pope Francis, United Nations Secretary General Ban Ki-moon, ILO (International Labour Organisation) chief Guy Raider and other leaders of the world issued statements on the accident. Western brands have been sourcing their apparels from Bangladesh were seriously attacked by the consumers and rights groups. Once Bangladesh was named a country of natural disaster, after the incidents the country, the 2nd largest RMG exporter after China, was renamed by the different rights group as a country of man-made disasters.
The incident raised big question on business ethics, brands’ responsibility and supervisory system. The fire proved that the government’s supervision and monitoring by third parties were not effective. Those two devastating and deadly accidents were a serious call from the buyers’ side for the sake of their business interest. On 15 May 2013, within less than one month, the buyers mostly from European Union signed “The Accord & Alliance on Fire and Building Safety in Bangladesh (the Accord) on 15 May 2013 and another workers safety initiative “The Alliance for Bangladesh Worker Safety (the Alliance)” was formed on July 10, 2013 by the mostly North American buyers.
Both the initiatives were an independent inspection program and the areas of inspections were concentrated mainly on Fire, Electrical and Structural issues with a five-year action plan. Apart from the inspection a remediation guideline with specific period, health and safety committee with safety complaints mechanism and workers empowerment through an extensive training were the major areas of their activities. The initiatives total covered 2475, Accord 1690 and Alliance 785, factories. There were 188-shared factories where both Accord & Alliance conducted inspection separately. Out of total inspected factories, both the initiatives terminated total 358 suppliers – Accord 182, Alliance 176.
In addition, the government of Bangladesh formed a National Initiative (NI) under the National Tripartite Plan of Action in May 2014 funded by the International Labour Organisation (ILO) where Bangladesh University of Engineering and Technology (BUET) conducted the inspection on structural integrity, fire and electrical safety. The platform, National Initiative, inspected 1549 RMG factories those were not in the Accord & Alliance safety program list.
To meet Accord Alliance’s requirements on safety issue, most of the small and subcontract factories were unable to run, and finally closed. Both the government and the owners have once again moved forward in response to buyers’ initiatives and once again proved that Bangladesh RMG sector stands on a solid foundation.
Initiatives taken by the government
Immediate after Rana Plaza disaster USA suspended GSP facility of Bangladeshi products, though RMG never enlisted with the facility, on June 2013 over safety issue. Considering business risk and criticisms from home and abroad government also took some initiatives to fulfill the conditions to regain GSP facility though in USA market readymade garment was not in the list of GSP facility. The initiatives were taken after Rana plaza disaster were termed as a “Paradigm Shift” by the leaders of the apex bodies, BGMEA & BKMEA. Some named the disaster as “wake up call”. To mark its golden jubilee of independence, government set her vision to upgrade Bangladesh to a middle-income country (MIC) by 2021. In line with the government’s vision, apex body, Bangladesh Garments Manufacturers and Exporters Association (BGMEA) set the “vision 2021” declaring its new target of $ 50 billion export to be reached by 2021 along with “Made in Bangladesh with Pride” slogan in its “Dhaka Apparel Summit” (BGMEA, 2014). An eleven member “Cabinet committee on Garment sector” headed by the Minister, Ministry of Labour & Employment along with different sub committees were formed by the government. The Ministry of Labour and Employment enhanced by creating new posts. The Directorate of Inspection for Factories and Establishments (DIFE) upgraded to a Department. New inspectors, especially female, were recruited for the strengthening of the controlling authority- DIFE. Development partners especially ILO provided training to those inspectors to implement the Bangladesh Labour Law (BLL) more vigorously. The government amended Bangladesh Labour Law – 2006 on 16 July 2013 focusing workers’ rights, safety and welfare. In addition, government formed the National Occupational Health and Safety Policy in 2013. Another enhancement on minimum wages from Tk 3000 to Tk 5300, around 77% implemented since December 2013. Official gazette of Rules published after nine years of enactment of BLL-2006 in 15 September 2015. DIFE has developed publicly accessible database of export-oriented RMG factories. To share workers grievances or any urgent issue with the DIFE hot line (help line) has been setup at Ashulia on pilot basis. The number of trade unions has increased significantly. Fire Services and Civil Defense (FSCD) department under the ministry of Home affairs arranged fire drill and awareness training program for every workers of their listed factories. Government of Bangladesh with the financial assistance from Asian Development Bank (ADB) and other donor agencies has established “Skills for Employment Investment Program (SEIP) in 2014 to develop unskilled and semi-skilled workforces into productive and skilled labour forces. On the other hand, to provide competency based training one of the brands in association with others opened the Center of Excellence for the Bangladesh Apparel Industries (CEBAI) at Ashulia in 2014 to meet the need of skilled labour forces. In addition, many of the buyers have initiated different skill enhancement programs in their sourcing factories. From the factory perspective, many LEED (Leadership in Energy and Environmental Design) certified factories were came up with Lean manufacturing concept to minimize wastage, address environmental issue and new department, Research and Development (R&D) or Industrial Engineering (IE), was introduced to cope with increasing demand of efficiency and quality.
The Remediation Coordination Cell (RCC)
For the continuation of ongoing remediation program after the termination of contract with Accord & Alliance (2013 – 2018), The Remediation Coordination Cell (RCC) was formed in May 14, 2017 under the National Initiative of Bangladesh. In the process of formation two major apex bodies – Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), trade unions and international buyers have been collaborated and consulted. The Cell has consisted with the members from the Department of Inspections for Factories and Establishments, Fire Service and Civil Defense, RAJUK, Chief Electrical Inspector, Public Works Department and Chittagong Development Authority. Additionally private sector engineers have hired as technical expertise. The International Labour Organization (ILO) funded the cell with the assistance from Canada, the Netherlands and United Kingdom. The government is viewing the cell a long term approaches toward safety inspection and licensing body that will provide “one-stop-shop” service across the industries in Bangladesh.
Objectives of the Study
The key objective of the study is to find out the measures taken by the industry to match financial pressure to meet safety requirement by the Accord & Alliance and how the sector is offsetting enhanced wage of the workers?
Research Question
Based on the ground reality of increasing cost and decreasing selling price the main question of the present study is how does the increasing efficiency offset the rising of the production cost?
Methodology
This is an empirical research. The study is based mainly on primary or firsthand data. Factories payroll data and the reports from various departments have been used as firsthand data whereas secondary sources like newspaper, internet articles, books and journals also reviewed. Therefore, the study has applied both qualitative and quantitative method and focus group discussion.
Scope and Limitations
The study did not focus on the number of the factories covered by Accord, Alliance and National Initiative and the standards or checklists of inspection. The study also did not analyze assessment status i.e. inspections findings, corrective action plan (CAP) and remediation progress etc. Rather the focus of the present study was concentrated on the impact of the business very specifically on productivity. First hand data from three different types of factories – Woven top , Knit and Trouser has been used in the study
Rationality of the study
Readymade Garment (RMG) industry in Bangladesh has been playing as a catalyst in Bangladesh economy for more than three decades. Around 83%, USD $ 29 bl, of the countries national export dependent on this single sector. Moreover, 4 ml workforces, which is around 63% of total industrial employment, are directly engaged in the sector where 80% of them are female, according to apex bodies – BGMEA & BKMEA. The sector alone contributes around 12% of the country’s GDP.
In RMG, as a labour intensive sector, percentage of wage is at the top of all cost. Cost effectiveness is the key consideration by the brands for sourcing from Bangladesh. Over the period, the minimum wage has increased many folds. In 2010, the minimum wage of the sector was BDT 3000.00 ($ 37.5). Within three-year time, in 2013, which was BDT 5300.00 ($ 67.00). Since December 2018 this wage has reached to BDT 8000.00 ($100.00) i.e. 167% enhancement since 2013. Moreover, according to Bangladesh labour law, outside EPZ, every year workers’ wage has to increase 5% minimally which is 10% inside EPZs. Enhancement minimum wage has multiple impacts on companies cost, both in regular expenditure like Over Time (OT) benefits, festival bonus and in long-term expenditure like service benefit, gratuity, provident fund etc. Bangladesh produces mostly low-end products. Contrary the price of the products has been decreasing alarmingly. Various studies find that “Bangladesh is battling to keep its position as the world’s second-largest exporter of clothing after China, as it faces intensifying competition from Cambodia, Vietnam, Myanmar and now African countries like Ethiopia as global brands search for cheap labor” (Nikkei, 2018).
Though manufacturing RMG is a low-skill job yet even after three-decade workers’ productivity in Bangladesh is lower than competing countries. Low wage does not help to keep the production cost lower if the workforces are not skilled. “The industry is currently employing 4.4 million workers where our productivity is 77%. This is lower than our main competitors (India 92%, Vietnam 90%, Pakistan 88%).” (Sharif – As- Saber, et al, 2014). In supply chain, compare to other RMG manufacturing countries Bangladesh has some in-build limitations due to geographical location. It takes 3 to 7 days to in-house the required materials from China to Vietnam, Cambodia and Myanmar while it is around 30-day time to Bangladesh. In addition to time, supply chain system is affected for so many other reasons. Say, due to supply chain uncertainty, a 20 lac pieces/month capacity factory confirms order 25-30 lac pieces. When everything is well managed, factory goes for EOT and/or subcontracting for excess work volume to cope with lead time. When supply chain does not function well due to delay receiving of materials, quality or quantity and approval issues again factory goes for EOT or holiday work to meet the shipment dead line. The factory gains in 1st situation as they earn more money from subcontracting but it loses in 2nd situation as they have to pay double as EOT or holiday payment for regular work. After Rana plaza disaster and in presence of Accord Alliance finding a subcontract factory is near impossible and no buyer does allow substandard subcontract factories. “The once booming opportunities for subcontracting have nearly evaporated following the nation’s deadliest back-to-back industrial disasters, the 2012 Tazreen Fashions fire and 2013 Rana Plaza building collapse” (Mirdha, 2018).
Table 1.00 : Decreasing Small Factories, Increasing Large Size Factories
Grade
Worker Range
’14-15
15 -16
1
1 – 500
1105
767
2
501 – 1,000
545
474
3
1,001 – 2,500
471
462
4
2,501 – 5,000
148
154
5
5,001 – 100,000
39
45
Total
2308
1902
Source: BGMEA, 2016
On the other hand, in managerial and technical positions many of the factories employ foreign staff to manage the production floors to material sourcing and negotiating with the buyers. According to a recent survey conducted by CPD, it shows that 16 percent factories (out of 193 sample factories) have employed foreign staff (Textile Today, March 2018). The government of Bangladesh has set its target to transform the country from Least Developed Country (LDC) to middle-income country by 2021. With this enhancement, all kind of privileges especially import duty facility in the form of GSP Bangladesh has been enjoying at present due to LDC status will be withdrawn by 2027 while Bangladesh’s close competitor Vietnam is going to have extra advantage due to Trans-Pacific Partnership (TPP) agreement.
Wages, the prime consideration for business, and compliance requirement have increased. Contrary, price of the products and business lead-time, in the era of fast fashion, both have decreased. Presence of foreign professionals in local entrepreneurs’ business, country’s upgraded status from LDC to Developing Country etc. are the present and upcoming challenges for the sector. The present study is very important and time befitting to find out the present practices and future course of action to make the sector competitive, profitable and sustainable. If the entrepreneurs fail to take appropriate measure on time sustainability will be questioned and investment will be at risk finally the people employed in the sector will be more vulnerable.
Productivity and Efficiency in context of RMG sector
In the competitive world, profitability depends on productivity. Sustainability of any business motive organization depends on profitability. Productivity enhancement is a must for Bangladesh RMG industry not only offset the uptrend wage but also to remain competitive. In context of the productivity various study reveals that China, India, Vietnam and Pakistan’s positions before Bangladesh. Though Bangladesh is around 40 year experienced country in RMG but still now the sector is known as low-end garment manufacturing country. The minimum wage for the sector has increased over 167% since 2010. Contrary, product price has decreased alarmingly while demand of compliance requirement is a never-ending expectation. The management to measure overall productivity performance of an organization uses various indicators. Productivity is generally defined as a ratio between output units and input units. On the other hand, achieving maximum productivity with minimum input is called efficiency. Productivity is the result or output against any given input. Say, a factory XYZ with five production lines produces total 6050 pieces garments with 10 hours and 75 man. However, all the lines have same man and working hour but per person per day per line productivity is different and factory productivity is the average of total production divided by total man and working hours.
Table 2.00 : Calculation of Productivity and Efficiency
Data
1st Line
2nd Line
3rd Line
4th Line
5th Line
Factory
Production Per Day
1000
1100
1250
1300
1400
6050
Working Hour Per Day
10
10
10
10
10
10
Manpower
75
75
75
75
75
375
SMV
27
25
22
20
18
Productivity Per Person Per Day (Production / Manpower / Working Hour)
1.33
1.47
1.67
1.73
1.87
1.61
Output Minute (Production X SMV)
27000
27500
27500
26000
25200
133200
Input Minute (Manpower X Working Hour X 60)
45000
45000
45000
45000
45000
225000
Efficiency (Output Minute / Input Minute) x 100
60.00%
61.11%
61.11%
57.78%
56.00%
59.20%
To discuss about efficiency it is important to know about Standard Minute Value (SMV) of the products to be produced, input minutes and output minutes. According to ILO Standard minute is the time taken by a 100 rated worker to complete a given task. All the five lines produce different styles of products with different SMV. Above table shows that though input minute (total manpower x working hour x 60) is the same for all five lines yet output minutes (production x SMV) are different due to varied SMV. Therefore, line efficiency (output minute / input minute x 100) is also different due to varied output minutes.
Findings of the study
A details case study has done in two different factories of different capacities and products. From available data on production and unit price of the products since 2012, from pre- Rana plaza disaster, to 2018 present year. Based on an in-depth discussion with factory in-charges, IEs, merchandisers and compliance managers following findings have been furnished.
Table 3.00 : Average Unit Prices in different years
Year
Woven -Top
Knit – Top
2012
4.45
1.91
2013
4.53
1.92
2014
4.30
2.16
2015
4.51
2.06
2016
4.28
2.00
2017
3.89
1.85
Oct.2018
3.86
1.83
Source: Field Data
Above data depict that, over the period, though the unit price of the product has been reduced though the total volume both in quantity and value have been increased. To achieve those extra quantity production they did not recruit additional manpower. Rather it was known from the focus group discussion that all the factories have reduced their manpower to offset their additional cost due to wage enhancement but price reduction situation.
Table 4.00 : Number of factories and Volume of Export
Year
No of Factories
Export in USD billion
2011-12
5400
19.70
2012-13
5876
21.52
2013-14
4222
24.50
2014-15
4296
25.49
Source: Collected from EPB & BGMEA Members Directory, 2014-15
Before Rana plaza disaster, in FY 2012-13 there were highest, 5876 in total, number of factories in Bangladesh RMG history. Within a year of Rana Plaza disaster, the number came down to 4222 in FY 2013-14 and which was 4296 in the FY 2014-15. With all those hurdles total export of the sector has been increasing and entrepreneurs are investing in green building and making LEED certified factories.
Factory performance indicators in different period
A 15-line factory, produces woven top garments, has achieved incremental progress in terms of productivity and efficiency over the period in different indicators. Though the factory has chosen easier styles of garments yet their efficiency and productivity has increased remarkably. In the year 2013 average SMV was 24.60 which was 20.03 in 2018 but average man per line has been reduced from 83 to 76.
Table 5.00 : Key Performance Indicator (KPI)
Factory – XYZ
Year
2013
2014
2015
2016
2017
2018
Remarks
Avg. S.M.V
24.60
23.39
23.22
22.51
20.66
20.03
Avg. Man/Line
83
80
78
77
75
76
Total Production
3844847
3760339
4199217
4640701
6035560
5551463
Total Output Min
92079141
85823261
94631683
102600883
117437474
103329977
Total Input Min
227004038
195277140
203162940
204446880
202283940
164042218
Efficiency%
41%
44%
47%
50%
58%
63%
Total Working Hour
47258
40517
43245
43904
44406
35419
Production/Hour
81
93
97
106
136
157
Avg.Working Hour
10.43
10.19
9.98
9.79
9.95
9.85
DHU
12.20
11.27
6.67
4.77
3.17
Defect %
4.68%
3.60%
5.32%
3.89%
2.79%
Total production in the year 2013 was around 38.44 lac with 41% efficiency while the production quantity has jumped to 55.51 lac with 63% efficiency in 2018. This increased productivity was possible with less hours of work, which was around 47.00 thousands hours and 35.00 thousands hours in 2013 and 2018 (up to October) respectively. Per hour per line production was 81 piece in 2013 which is 157 in 2018.average working hour was 10.43 in 2013 which 9.85 hours in 2018. Over the period both DHU(Defect per Hundred Unit) and defects have been minimized significantly. In 2014 DHU was 12.20 that is3.17 in 2018 and defects for the same period was 4.68% now in 2018 it is only 2.79%
Initiatives Taken by the RMG sector
There were huge financial impact to fulfill fire, electrical and building safety compliance with lower price of the products from the buyers. With the stringent compliance requirement and shrinkage price, the number of the factories have been reduced but Bangladesh RMG export industry has been maintaining steady growth. Many entrepreneurs still are investing to expand their existing production capacity and going for LEED certified factories. With this reality, factories have taken various initiative, especially after Rana plaza accident, to enhance productivity to be competitive and sustainable. Present study has tried to illustrate how increased productivity is helping in offsetting incremental wages over the period.
Recruiting Industrial Engineers (IE)
In most of the cases, persons holding supervisory or managerial positions are the promotees from the floor level. Traditionally they are less concern about efficiency, man-machine ratio and wastage. When cost is the biggest concern, no one can afford to continue with traditional way of doing things. Almost all the factories are now Industrial Engineers for Research and Development in production process, material consumptions and utilization of human resources. This department has taken various actions including-
Prepare skill matrix of the operators
There are different graded operators in a factory. One of the primary work of IE department is to classify the operators according to their skills. With this skill matrix a factory can find out its strength and weakness. The operators are awarded depending on their skills and can be trained according to their need.
Review the process critically
This department involves from the samples making to bulk production stage. They identify critical operations, requirement of special equipment. They plan for skill requirement for the operations. Before feeding the line, production in-charge, maintenance, quality manager & I&E officer sit together and make a line lay out plan to right operator for right operation, as per SMV and Technical equipment to reduce line setting time.
Line balancing
Line balancing helps to remove bottlenecks inside the line, to reduce operator’s idle time, to minimize WIP (work in Process), to maximize operator’s utilization. In a balanced line, work will flow smoothly and no time will be lost in waiting for work. At the time of line setting, select for a particular operation operators are selected with matching operator’s skill Matrix. As a result, production runs without any break or with less no. of breaks, line productivity does not fall.
Inline quality inspection at regular interval:
To reduce product quality defect at source they introduce traffic light system. Green light gives the signal of no defect in line while red light indicates quality issue while quality inspector will be on the spot to address the issue. This is the most effective inspection tool to solve with immediate action.
Monitoring production in every hour of production
A dedicated team is monitoring productivity in every hour to match with target production quantity. If they find any mismatch, necessary measures are taken so that at the end of the day target production can be met.
Picture: Hourly production monitoring
Training for Line Supervisors and production Manager
Supervisor is the 1st line management people and they make the bridge between the workers and mid-management. To implement any new process both supervisors and production managers must be trained with fundamental management and communication skill. They need to understand the fundamentals of industrial engineering tools like operation bulletin, skill matrix, workstation layout, capacity study and line balancing, target set up, line efficiency, Defect per Hundred Units (DHU) etc. With those trainings, managers are more capable to establish control and achieve targeted productivity.
Pic: Production manager and Supervisor Training program.
Training to sewing operators:
Operators are the most valuable resources in the apparel manufacturing. Production from an operator depends on his/her skill level to the task. A low-skilled operator will consume higher resources (time) and give less output. Moreover, low skilled and untrained operators cannot make first time right product on quality related issues. Without operators’ training for skill development achieving greater productivity is not possible. Initially any form of training was considered as a cost by the management but at present considering the need of the time previous cost has tured into an investment. Factories have initiated motivational and technical training for the workers to make multi skill operator to increase the productivity.
Picture: Training of un-skilled & semi-skilled sewing Operators.
Use Modern Tools &Technic:
With the passes of time Bangladesh RMG sector is moving towards automation. Though any automation requires more investment initially but in the long run it returns back many folds in terms of productivity and manpower reducing. To save electricity factory is using servomotors in place of clutch motors and buying auto trimmer sewing machines to remove helpers from the process. Moreover modern tools & technic as like 5S, kaizen & Lean production method are being applied.
Operator motivation:
Only financial incentives does not work to get maximum from the workers. Operators’ motivation is the most crucial part in productivity improvement. If they are motivated, they will put enough effort on the work. Employee motivation generally depends on various factors like work culture, HR policies, bonus on extra effort or achieving target. In garment manufacturing operator’s motivation come through extra money and supervisors’ behaviour. Various schemes have been applied to achieve maximum output keeping the workforces motivated. Attendance bonus, performance incentives are common in the sector. Some of the factories celebrate workers’ birthday to make him/her psychologically attached.
Setting individual operator target:
Based on operator’s skill level and capacity supervisors with the help of IE sets individual target instead of an equal target to all operators working in a line. Now every operator knows her/his target and they are aware of after achieving that target they will be rewarded. This is not a static target rather it is an incremental target. Initially achievable target is being set. Once previous target is met then higher target is set for that operator. This is a tricky game for increasing target step by step. This approach is helping to improve operator’s individual efficiency.
Production award Program:
Not only the individual level target factory management set line target, floor target etc. to compare and compete with each other performance. They recognize best performer through award and incentive program weekly or monthly. With all those programs workers are earning extra money, satisfaction and confidence. Contrary, factory is getting maximum output to keep them competitive and sustainable.
Picture: Production award program
Better working environment, better productivity
Employees’ motivation and engagement are not only depend on wages and incentives. With the completion of Accord and Allinace remediation activities workers are more confident about their workplace safety. They can represent and share their grievances through Participatory Committee (PC) which is now elected by the workers and more effective. Many of the factory have introduced digital payment system. Workers are now proud of having a bank account for them. They were gone through different trainings including fire safety, first aid – health and hygiene.
Pic: Doctor counsels Factory Worker
Pic: Fire safety training
Pic: Factory internal Fire drill
Pic: Meeting with PC Members
Concluding remarks
The RMG sector has flourished in a very scattered way. There was no effective management system for maintaining the labour intensive industry like the RMG. A thoughtful plan was missing before Rana plaza disaster. More workers were employed than required against a particular task as they were not costlier and their efficiency was lower than other competing countries. Over the period, workers’ wages has been increased and products price has been reduced. To match with this situation the entrepreneurs of this sector has taken courageous and innovative initiatives to be efficient and make their investment sustainable. At present the sector is passing a transition period from traditional approach to modern approach of production. Experienced workforces and knowledge of industrial engineers jointly helping the sector to overcome wage and pressure through the enhancement of productivity. Bangladesh has the highest number of green factory buildings and most of the factories are now structurally safe and sound. There any many group of companies having multiple production complexes with modern machineries and equipment. Though the present achievement is at satisfactory level but not sufficient to face coming days challenges. Still there are some missing link in the whole supply chain. Mid-level management is weaker or inefficient to play the role they needed to be played. The positions of top management are heavily filled with so-called foreigner experts. A all-out effort and comprehensive approach are urgently needed to cope with up-coming challenges to be profitable and sustainable. End of accord alliance article
Learning and Earning Digital Center A center for Human Resources and Organizational Development through Education, Training, Consultancy & Research
Bangladesh is the heavily densely populated and 8th most populous country in the world. With minimum natural resources at present total 1291 people live in per square kilometer land. Bangladesh is going to celebrate her 50 years anniversary in 2021. To celebrate the Golden Jubilee gloriously Government and different sectors have setup various targets. Upgradation of economic condition from least developed to developing country is the common of all of their goals. To achieve that target Human Resources development is the key.
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Application and Admission Requirements Charts
Type of Student
Application and admission requirements
Required HSK level
Study time
Short-term student
Secondary High school graduate or the equivalent (e.g. A-level, successful completion of Year 12, etc).In some of China’s universities, any education background is accepted.
No requirement
1 – 20 weeks
Language student
Secondary High school graduate or the equivalent (e.g. A-level, successful completion of Year 12, etc).
No requirement
1 – 2 years
Undergraduate or associate student
Secondary High school graduate or the equivalent (e.g. A-level, successful completion of Year 12, etc).
Possession of a Bachelor’s degree, at least two letters of recommendation from professors.
HSK level 5-8 (for Chinese-medium programs)
2 – 3 years
Doctoral student
Possession of a Master’s degree, at least two recommendations from professors.
HSK level 5-8 (for Chinese-medium programs)
3 years
Transfer student
Student who is studying at another Chinese university should provide a sealed transfer letter from the Foreign Students’ Office of current university; and meet other requirements according to degree level.
Depending
Depending
Required HSK Level: For more on HSK/Chinese Proficiency Test. Each school sets its own requirements.
Normally, a transfer student will not be accepted by any of the Chinese universities.
Please note that GCSE holders are not admitted onto degree programs by China’s universities; those students should apply for a one year program of Pre-College training at the chosen university.
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Full-time universities’ academic year in China normally contains two semesters, Spring semester and Autumn semester, except for a few ones implementing 3-semester system. The first semester starts on autumn of each year, requiring fully submission of materials between late February and late July of that year; and the second starts on spring, receiving materials between late October and late January starting from the previous year to the current year. But the dates are generally set, hence, it is important to figure out every university’s specific application deadline for each semester, and when it comes to those universities of 3-semester system, it becomes more significant.
Programs Start and its’ duration
China’s universities offer thousands of programs for foreign students. Non-degree programs teaching Chinese language and culture are particularly popular, but it is also possible to earn a degree in China. Most degree programs are taught in Chinese and therefore require a certain level of language proficiency. However, an increasing number of English-taught degree programs are available. most degree programs have certain requirements regarding the applicant’s academic background and language skills.
Degree programs are generally of a fixed duration, undergraduate degree programs last from four to five-years, master’s degrees for two to three years, and doctorate degrees for three to five years. Language programs are mainly one semester (4-6 months), one year or short-term (anywhere from 1-8 weeks). Application and Admission Requirements
Degree programs: At most Chinese universities degree programs begin every autumn (September). A small number of programs can admit students beginning in the spring semester.
Language programs: one-semester (4-6 months) language course usually begin in both semesters (in which start in September and February/March); one year language programs usually begin during autumn (September); some short-term courses run according to a fixed times while others may operate on an on-demand basis at the request of a group of students. Short-term summer programs have start dates throughout June, July and August, and last between 1-8 weeks. Application and Admission Requirements
First come First serve
When the starting date comes, the university usually commences to accept applications. If a student is qualified, an offer will be made afterwards. There are limited places for every batch of every major, therefore, being an early bird to submit the application will help you gain a bigger chance to be matriculated, and for some courses, even a bigger chance for winning a scholarship. End of Application and Admission Requirements
