Compliance in the garments sector is now a hotly debated issue in the country. The western buyers are increasingly becoming vocal about workers’ rights and safe working conditions and, at the same time, demanding cheap products from the country. Local ready-made garment (RMG) manufacturers are finding it very hard in meeting their additional spending on compliance issue under the existing level of price margin. The global buyers are now offering very low prices for products compared to the prices they offer for other competitive countries including China, Vietnam and Mexico. In fact, mobilising additional costs by cutting suppliers’ profit is not an easy task in the context of low-level profit margin. Firms in many other countries spend more on compliance. They are, however, able to maintain their competitiveness by way of low interest rates, developed infrastructure, skilled labour force, semi-automated production processes, financial incentives, higher labour efficiency and low cost of raw materials. Bangladesh lags behind in most of these issues. Without sufficient improvement in these factors, it would be very difficult for local manufacturers to increase spending on compliance under the existing level of profit margin. Taking part at a discussion on compliance in Bangladesh’s apparel sector in the city last week, local economists, entrepreneurs and workers’ rights activists demanded that international buyers should pay a portion of compliance costs through increasing the price of products sourced from Bangladesh. However, many of them opined that compliance cannot be compromised, using lower profit margin as a pretext, in the ongoing efforts to improve working conditions and ensure labour rights in the garment sector. It can no longer be left on whether any industry earns profit or not. Profit margin is supposed to be neutral with regard to compliance, while necessary costs for compliance are supposed to be built in the margin. According to a study conducted on the compliance issue in RMG sector, the apparel sector is now undergoing major reforms, following Rana Plaza collapse and Tazreen Fashions fire that together killed more than 1,200 people, mostly garment workers. It said compliance-related standards have changed particularly during the post-Rana Plaza period. Most of the firms are moderately equipped with major physical compliance-related indicators. However, there is a wide difference in terms of compliance between large and small companies and sub-contracting firms, which indicates a lack of investment as well as a dearth of proper monitoring, inspection and auditing practices of buyers. Bangladeshi firms, in fact, struggle to invest more to ensure compliance, as the rise of compliance-related expenses is reducing competitiveness. Compliance cost in Bangladesh has undeniably risen to a great extent. An average factory with 600 workers needs to spend from $600,000 to $1.0 million on compliance. This is not an easy task for local factory owners to mobilise such additional funds. Local RMG makers say the buyers should add compliance cost in the value chain and increase cutting and making charges of apparel items. Unfortunately, the whole regulatory initiative has been coming from the buyers. But the primary responsibility for regulation should come from the government of Bangladesh, they claimed. On the whole, compliance must aim at improving productivity, working conditions and living standards of workers. Accord and Alliance, the two foreign inspection agencies, have long been asking for corrective actions from faulty factories, but the funds pledged by the western buyers have not come. So, there is a mismatch between the availability of funds and the reconstruction. On its part, Bangladesh government maintained that the rules of the amended labour laws have been finalised and would be published by the end of this month or early next month. Such laws are likely to strengthen the efforts of establishing compliance in the sector, it claimed. Many suggested that the market players should build an integrated value chain in which suppliers and buyers would jointly share the responsibility for improving compliance issues. The allocation for maintaining compliance by apparel firms needs to be increased and a part of this additional spending should come from buyers as increased cutting and making charges of products. In such a way, harmonisation in compliance standards globally could be ensured. Analysts say, the challenges of the garment sector in the next few years are enormous. The sector will have to recover the momentum lost in bizarre accidents. The appreciation of the local currency taka against the US dollar might also pose as a challenge to the sector, they said. The government and large-scale factory owners should otherwise take proper initiative to make the medium and small-scale factories compliant to bring them under order-book as the buyers were reluctant to place orders with those factories. If the medium and small-scale factories are forced to go out of production, a big export market might be lost. The recent Global Social Responsibility Conference held in the city suggested that the compliance issues, particularly safety at workplaces and welfare of workers, warrant more attention to make the readymade garment a $50 billion industry by 2021. The targeted $50 billion from RMG export will not be out of reach, but the challenges to the apparel industry should be addressed with top most priority. Bangladesh has already made significant progress in many areas, and the country will be in a different position in the next 10 years from where it is now if it can keep the momentum. However, there is a need for improving infrastructure besides establishing good governance and promoting social responsibility among all stakeholders of the RMG sector. Social responsibility always pays back to businesses, and for Bangladesh it would help address the compliance issues to build a positive image of the country in the global market. All said and done, it is believed that a strong private-public partnership (PPP) could address the compliance issues effectively by ensuring fire safety and workers’ welfare. Major focus should be on the stakeholders’ responsibility in ensuring safety of the workers. In doing so, it has to be ensured that retailers and buyers come up with a business model that assures the workers of workplace safety along with living wages and also helps businesses prosper.
