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Strikes Cost Bangladesh $3 Billion in 15 Days

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Bangladesh is in the midst of a hartal (strike) epidemic. Since December 2012, the country has been on strike for fifteen days. A conservative estimate puts the cost of a strike at $200 million a day.

The annual cost is even greater, at between 3 and 4 percent of Bangladesh’s $110 billion GDP, according to a recent study by the United Nations Development Program. That’s equivalent to almost half of India’s annual economic growth.

The strikes also cause insecurity, which dampens consumption levels. They are more disruptive than in previous years, as the opposition has become adept at interrupting road and rail routes, blocking ports and manufacturing zones. The damage becomes particularly high if trucks cannot move goods to market.

Some businesses are reporting cuts in production due to supply chain disruptions. When goods pile up, it is necessary to reduce production in order to avoid overflowing warehouses.

Annisul Huq, former president of the Federation of Bangladesh Chambers of Commerce and Industry, told The Daily Star that the recent shutdowns have affected production in his apparel factories, as workers have been unable to attend.

“We have to ship export consignments regularly. But we could not send clothes for shipment in the last five days,” said Huq, also a former president of Bangladesh Garment Manufacturers and Exporters Association.

“One of the trucks carrying apparel items was torched. It was on the way to the Chittagong Port for shipment. The rest two trucks escaped the violence during the hartal,” he said.

Aside from impacting lead times, this violence and disruption may make companies reluctant to source from Bangladeshi factories.

“The major loss is the damage to our image abroad,” said Fazlul Hoque, a former president of Bangladesh Knitwear Manufacturers and Exporters Association, as quoted in The Daily Star.

Imports are also affected, as full import containers pile up, and importers are forced to pay huge losses for storage.

Strikes may also be preventing foreign capital from penetrating the Bangladesh market, as investors shy away from the negative image. This lack of new capital may be making the country less able to compete with other regional economies.

Strikes are often violent, with workers in technically non-striking industries scared to go to work for fear of reprisals from picketers. Costs include property damage, along with lost earnings and lost output. In the long term, the strikes lead to reduced savings, higher rates of indebtedness, and reduced profitability for businesses.

For impoverished Bangladeshi citizens, the impact of a lost days wages can be dire. They may forego food, or be unable to replace spoiled inventory. Bus drivers, fearing for their safety, often stay in during the strikes.

 

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