Trade, labour and Bangladeshi women garment workers
The garment industry in Bangladesh is one of the key engines of economic growth for the country, currently responsible for more than 80 per cent of our foreign exchange earnings. It also supports the jobs of about 2.8 million women, and is a source of empowerment for many of them. However, the United States charges tariffs on Bangladeshi products, mostly on garments, amounting to about $550 million, much more than tariffs collected from wealthier countries such as France and the U.K.
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Last year, tariffs on Bangladeshi products added up to seven times the amount of U.S. bilateral aid given to Bangladesh. Since these tariffs have to be paid by U.S. importers of Bangladeshi garments, they discourage foreign investment in the sector and stand in the way of faster job creation, especially for women. If these tariffs could be lifted or reduced, millions more women would potentially find employment in the industry and the Bangladeshi economy would receive a significant boost.
A number of Bangladeshi delegations visiting Washington, D.C. have urged U.S. decision makers to provide tariff relief for garments. However U.S. domestic interests, including the textile and garment lobbies and labour unions have consistently pushed back, citing Bangladesh’s poor labour standards as a reason why tariff relief should not be awarded. Bangladesh government and industry should take this concern seriously, rather than dismissing it as a purely protectionist sentiment.
The labour standards issue is standing in the way of tariff relief on Bangladeshi garments, which would go a long way towards advancing the government’s poverty reduction agenda, and industry too, would gain significantly from duty free access to U.S. markets. The government and the garment industry must cooperate meaningfully to address the issue of labour standards in the industry. It cannot be denied that there are frequent reports of factory fires, unionised worker intimidation, and wage arrears, due to negligence by the industry. There is also reported government harassment of organisations or unions that support Export Processing Zone (EPZ) workers or insist on the implementation of labour laws.
It may be true that in comparison, labour standards in the garment industry are slightly better than labour standards in other urban sectors, such as construction for example. But Bangladesh needs to compare its standards to those of other low wage garment producing and exporting nations in Asia. For example, while poor conditions have persisted in the Bangladeshi garment industry, compliance has improved in Cambodia, where the country has an agreement with the United States linking positive trade incentives with labour standards enforcement.
As improvements in labour standards are made, trade concessions are awarded to Cambodia by the U.S. As part of this agreement, Cambodia has also entered into a programme known as Better Factories Cambodia, run by the International Labour Organisation. The programme includes technical assistance and capacity building for strengthening the enforcement capability of Cambodia’s government, as well as direct monitoring and inspections of all garments factories by ILO personnel. The programme was initially funded with a limited budget of $1.4 million, of which the U.S. government paid $1 million, the Cambodian government paid $200,000 and the Garment Manufacturers Association of Cambodia (counterpart of BGMEA) contributed $200,000. With an extension of the programme in 2003 with these same three funders, Cambodian government paid a higher proportion (27 per cent) of the total cost, and subsequent funding announcements indicate that in 2009, the Cambodian government provided the highest portion of funding. The programme has set in motion a process for improving working conditions in the garment sector.
Unfortunately, Bangladesh has not shown any interest in such a programme since it would require direct monitoring and inspections of all garments factories by ILO personnel and transparency on the past of government officials. Statements have been made by both government and industry that they are already working on improving conditions within the industry.
However, even where improvements are taking place in labour standards in some limited way, Bangladesh has failed to document them and communicate them in a reasonable way to U.S. policymakers. Many examples of these improvements are anecdotal and do not do a decent job of convincing statistics-prone policymakers.
In particular, Bangladesh has not been able to provide a good answer to the question of freedom of association, i.e. freedom of Bangladeshi workers to unionize. According to some reports, there has been a deterioration of union rights in Bangladesh since the extreme dependence on garment exports started in the early 1980s. Time series data based on U.S. State Department Reports indicate that over the 1981–2006 period, worker rights in Bangladesh changed from being ‘fully protected’ during part of the 1980s to ‘somewhat restricted’ during the 1990s to ‘severely restricted’ after 2001. Notwithstanding general concerns about the poor record of Bangladeshi l Bangladesh has failed standards, this is the one issue that U.S. (specially Democratic) policymakers and their constituencies care about the most.
Bangladesh should follow in the footsteps on Cambodia, a country which is about as poor as Bangladesh and about as reliant on its garment industry for growth, but has invited the ILO to review its labour standards in the industry, provided it with the authority to inspect factories, convene workers, unions, industry leaders and government officials and work on solutions. Labour standards in Cambodia have steadily improved and foreign importers have responded to such efforts with increased sourcing from Cambodia.
The garment sector’s success is critical for Bangladesh’s growth and the United States is Bangladesh’s largest market for exports. Bangladesh government and industry should both understand that addressing the labour standards problem is in their own best interest and they should both work together to achieve it. Lower tariffs would mean greater investment in the sector and a boost for the economy. Most important of all, it would mean employment of more women in Bangladesh.
Consider the following true story. Anwara Begum is a young woman employed as a division manager in one of the largest garment factories in Bangladesh. Five years ago, Anwara’s life changed when she made the hard decision of leaving her parents and four brothers and sisters in their remote village of Munishganj to travel to Dhaka to take a job at a garment factory. Prior to her work in the factory, Anwara’s parents depended upon rice farming for a meagre income for their family of seven. As the eldest member in her family, Anwara grew up having to look after her four young siblings while both her parents toiled on a small rice farm. The annual near-destruction of the family’s rice farm from floodwaters brought by the monsoon season often made it difficult to rely on agriculture for a substantial source of income. Anwara’s family was so poor that her parents eagerly anticipated the wedding of their 19-year-old daughter into a slightly wealthier family as the only escape for their children from economic destitution.
In 2002, when Anwara learned about the many job opportunities in the booming garment industry in the capital city, she realized an alternative opportunity to escape from poverty. Within a few weeks of travelling to Dhaka, Anwara landed a job as a line-worker at a factory, which supplies ready-made garments to major U.S. retailers. She began to earn an income that was double what her parents earned combined from their farming activities.
Eventually, Anwara’s earnings benefited her family as a whole. Within a few years, she was promoted to line supervisor, a role that allowed her to send 60 percent of her annual income back to her family in Munshinganj and still afford a decent living in Dhaka. Her consistent contribution to the family income helped her two younger brothers finish secondary school and find jobs of their own. Presently Anwara works as a division manager, supervising 470 employees in the factory’s knitting department.
In Bangladesh, sewing machines are the source of livelihood for almost 2.8 million poor women. Many of the women send money back to their villages, thus enabling their families to enjoy a slightly better life. However, these women also deserve to work in an environment that is free of injustice. If the issue of labour standards is addressed, we can make sure that many others like Anwara are gainfully employed.
Lately, the issue of tariff relief for poor countries has captured the U.S. government’s interests as they are contemplating tariff reducing legislation for Pakistan. Trade legislation does not pass Congress every day, or every year for that matter, so Bangladesh should make every effort to get its act together on the labour standards issue and lobby for tariff relief alongside Pakistan and other low income nations. The longer we are delayed, the greater the chance that the ship will sail without us.
Shamarukh Mohiuddin is the Executive Director of the U.S. Bangladesh Advisory Council, which aims to promote economic development in Bangladesh. She is based in Washington, D.C.
A transparent policy will play significant role in making projects successful
Syed Ershad Ahmed
Anyone familiar with Public-Private Partnership (PPP) will agree that it is currently a rapidly growing concept in the world. Bangladesh has a Vision of becoming a middle income country by 2021. To make it real, we need to ensure a more rapid, inclusive, and sustainable growth trajectory over the years to come. While we are aspiring for a better future, being the hope imbedded deep in our mind, our government is to raise the GDP growth rate to 8 percent by 2013 as straightway goal to reach out to the millennium target.
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Our government has its own limitations of arranging adequate investment fund from internal resources as we have large financial deficit every year in our budget. Though it is unsought, we cannot deny the dependency or contribution of foreign aid to blanket our budget deficiency and to run our development projects. To reduce the investment deficit and dependency on foreign aids, participation of the private sector through PPP is an important route.
A large number of infrastructural developments are still required for the country to tap the opportunity of international export market. Technological innovation might be a good answer to that, in addition to other steps. Apart from current low technological apparel export industry, the country needs to adopt high technology for long term sustenance.
Introduction of the private party in the government creates a field of transparency, and removes corruption as well as influence from the political leaders and bureaucrats. In Bangladesh, implementation of annual development program (ADP) is poor every year due to lack of smooth operation, cooperation, poor management, and presence of undue influence of political leaders and the bureaucrats. Private participation in this case can bring smoothness and transparency in the government’s projects and also help reduce service cost and make products viable and cost effective for the people.
Experience of Bangladesh with the PPP
A good number of examples at PPP already exist in the country. Current operation of three Five Star Hotels (The Pan Pacific Sonargaon, The Sheraton Hotel, and the Radisson Water Garden), US oil company Chevron, the IDCOL, and others are unique examples of the PPP in Bangladesh. The above PPP projects are making profit and serving the nation with goodwill.
Benefits of PPP
If large, medium and small scale projects such as, power generation, tourism, automobile industry, engineering, and other projects are undertaken using the PPP model, there is every possibility that these projects would also be effective like the above PPP projects. Projects such as multipurpose bridges, highways, deep sea port, cargo handling at airports, barge facilities from Chittagong to any river port in or nearby Dhaka, monorail/intra-city rail and LNG terminal under the PPP may bring immense benefit to the general people. This will also reduce the project cost, corruption, mismanagement, political influence, bribery, and would also bring transparency in operation.
Challenges and Opportunity
Challenges in projects under PPP are likely to come from high prices of products. Currently the government provides subsidy in usage of services like transport infrastructure, import of petroleum to minimize traveling costs, power, and in other services. If the motive of the private participants become making more profit, it is inevitable that product prices would be increased and it would also not be possible for the people to purchase services with their limited income. To make products viable, mindset and transparency between the two parties must be based on low price service to the people. The officials’ corruption, political influence, and tendency of making high profit may result in unbearable costs of products and finally collapse the entire projects under PPP.
Use of technology in the PPP may be effective as the country is still dependent on import of foreign technology. Proper management of the ports, tourism sites, and technological industrial units under the PPP would be profitable for both the parties. As Bangladesh is still dependent on import of huge amounts of engineering parts, equipments, machinery, and other high technological products, it is possible to build industrial units under PPP and export a huge amount of products to other countries. Fuel the engine of industrialization for power could also be met by adopting nuclear power generation technology under the PPP.
The writer is a past Amcham president