Bangladesh may fail to meet the readymade garment (RMG) export target in the coming days due to rising cost of doing business and mounting conflicts between workers and owners on wages. While thousands of garment workers are on the streets and demanding higher wages since last few days, the head of Bangladesh’s garment manufacturers association on Sunday called on protesting workers to return to work by Monday or companies will cut off their pay. The workers’ protests, which sparked clashes between police and workers and killed at least one worker on Tuesday and wounded dozens more until Saturday, pushed the Bangladesh government to consider the demand for higher pay. But the latest announcement by garments factory owners is sparking gloomy signal to the growth of this potential industry, which generates around $30 billion of exports a year, accounting for 80 per cent of Bangladesh’s merchandise export earnings and serving some of the biggest brands in the world. Bangladesh’s export earnings from the apparel sector in the FY 2020-21 would be US$ 11b less from the US$ 50b target set by the government while the earnings from RMG in the FY21 would be $38.73 billion, against US$50 billion targets, according to a recent estimate of Textile and Jute Ministry. Meanwhile, rising trade disputes between US and China has opened the window of opportunity for Bangladesh to increase its export. China, the world’s largest exporter of apparel with shipments of $158.4 billion last year sees its apparel companies are migrating to neighboring countries with cheaper labor costs. US sanctions on Chinese technology companies are expected to accelerate the trend. The U.S. will prohibit government agencies from having any business dealings with companies that use communication equipment and surveillance cameras from five Chinese companies, including Huawei Technologies and ZTE, starting in August 2020. The main reason is cheap labour costs, industry experts say, as it keeps doing business at target level. Wages in Bangladesh and Vietnam are less than half that in big Chinese cities like Shanghai and Guangzhou. Labor in Bangladesh is cheaper still.A garment factory that uses equipment from these companies will not be allowed to supply uniforms or any other products to U.S. government agencies. And if a company is found to have made false statements about what equipment it uses, the U.S. could move to block its ability to carry out international transactions in dollars. Bangladesh raised the minimum monthly wage for the garment sector’s four million workers by 51 per cent to 8,000 taka ($95) from December. But senior workers say their raise was less than this and unions, which warn the strikes may spread, say the hike fails to compensate for price rises in recent years. The wages were hiked after five years. But in the five years the cost of living has increased more than the wage hike. So, industry experts say the government should take prudent measures immediately by fixing a standard wage policy to keep the growth pace.
