Unemployment within Bangladesh’s garment industry may be more dire than previously estimated.
As many as 357,000 of Bangladesh’s 4.1 million garment workers may have lost their jobs due to the pandemic, or more than six times the official figure of 56,372, according to a recent survey of 610 factories in the major industrial clusters of Chittagong, Dhaka, Gazipur and Narayanganj.
Between December 2019 and September 2020, the average number of workers per factory fell from 886 to 790, researchers from the Centre for Policy Dialogue and Mapped in Bangladesh have found. Some 232 factories, accounting for 6.9 percent of all factories in Bangladesh, have shuttered due to the pandemic, according to the study, titled “Vulnerability, Resilience and Recovery in the RMG Sector in View of Covid Pandemic: Findings from the Enterprise Survey.”
Researchers found that more than 59 percent of the factories they polled also drafted new workers during the outbreak, with the recruitment rate described as “high” at factories in Dhaka and Gazipur. As many as 37 percent of factories both retrenched and recruited workers amid the Covid-19 outbreak, with laid-off workers usually rehired with reduced pay, downgraded contracts and loss of benefits.
In addition, most garment factories did not adhere to labor laws and rules when laying off or terminating workers, researchers said. Just 3.6 percent of the facilities surveyed complied with the compensation principle, meaning they paid salaries, benefits and cleared dues, researchers said. Roughly 70 percent of the factories paid salaries only. Non-compliance, they said, was much higher in large-sized factories and factories located in Narayanganj.
Though the sector’s overall gender composition did not noticeably shift, as many as 33 percent of factories employed a lower post-outbreak share of female workers, a finding that squares with the International Labour Organization’s assessment that women are disproportionately affected by the fallout of the pandemic.
The study also found that most factories, including those belonging to large enterprises, did not have a plan or financial backup to help them cope with the immediate crisis. Only 44 percent of the factories polled said they were confident about the work orders coming in through April. More than half (56 percent) said they faced different levels of uncertainty and 11 percent reported experiencing high uncertainty.
While subsidized credit offered under the Bangladesh government’s stimulus package, plus the slow uptick in production orders, are helping, recovery remains slow, especially for smaller factories or those not affiliated with either of the two big apparel trade groups, the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association, researchers found. Out of desperation, some 10 percent of factories said that 50 percent to 100 percent of the orders they accepted did not cover production costs. Most factories were operating their units at a loss of between 10 percent and 20 percent, according to the study.
“Risk is absorbed by the supplying country and suppliers but the buyers and brands are largely risk free,” Rehman Sobhan, chairman of the Centre for Policy Dialogue, said at a virtual presentation on Saturday. “Workers’ health risk is a big challenge for the industry.”
Earlier this month, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association said that the garment sector will “collapse” without additional financial assistance or deferment of stimulus repayments. The perception that the industry is on the road to recovery and “getting all the favors from the government,” she added, must “kindly be reassessed.”