You will be redirected back to your article in seconds
Skip to main content

Bangladesh Garment Sector Stares Down ‘Irrecoverable’ $5 Billion Loss

As clothing orders from Western brands and retailers continue to slump in the wake of the COVID-19 pandemic, the Bangladesh garment industry could see an “irrecoverable loss” of $5 billion by the end of the fiscal year, the country’s largest union of garment factory owners has warned.

Because of the dearth of work, factories are running at 55 percent capacity, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, said at a virtual press briefing Thursday. At least one-quarter of Bangladesh’s 4 million garment workers have been laid off or furloughed due to pared-back production, according to the Center for Global Workers’ Rights (CGWR) at Penn State University. Huq said that further retrenchments may be imminent.

“As factories are running with lesser work orders, it will not be possible to engage all the workers,” Huq said. “Global consumption of clothing goods is expected to decrease by 65 percent and our work orders will also go down by 30 percent. As a result, the export earnings will decline.”

To date, more than $3 million in orders have been canceled, or the equivalent of 982 million garments, per the BGMEA. A previous estimate by the group pegged apparel export earnings to plummet by $10 billion in 2020, or one-third of the $30.1 billion it made in 2019.

Although retailers such as H&M, Zara owner Inditex, Nike and Marks & Spencer have pledged to foot the bill for roughly 26 percent of canceled orders, many have been demanding retroactive discounts or extending payment terms by as many as 180 days, Huq said. Still others—Topshop owner Arcadia Group, C&A, the Edinburgh Woollen Mills Group, Gap and Urban Outfitters among them—have not committed to honoring previous commitments, instead invoking force majeure to wriggle out of their contracts, according to labor advocates.

Related Stories

Labor leaders say factory owners are already firing workers as they returned to work after Eid-al Fitr, Islam’s largest holiday.

“Many workers were terminated or forced to resign after they had come back to rejoin their workplace after Eid holidays,” Nazma Akhter, president of Sommilito Garments Sramik Federation, wrote to the Ministry of Labour and Employment in an letter on Wednesday. The organization wrote to the ministry late last month to complain that more than 260 factories did not pay workers’ salaries for March and April and holiday bonuses for Eid.

Financial help for the embattled industry is coming from certain quarters, though whether it’s enough remains to be seen. Local media reports that the Bangladesh government has announced 19 stimulus packages worth 102,957 crore taka ($12.1 billion)—or 3.7 percent of the country’s gross domestic product—to ease the COVID-19 crunch for “various sectors of its economy.” Earlier this week, the International Monetary Fund approved a $732 million disbursement to Bangladesh to relieve some of its financial duress.

On Tuesday, the European Union pledged 113 million euros ($128 million) to pay three months’ worth of wages to 1 million garment workers who have lost jobs because of the pandemic. Under the terms of the grant, each worker will receive 3,000 taka ($35) per month for June, July and August. The current minimum wage for garment workers is 8,000 taka ($94).

The Dhaka Tribune reported Wednesday that 187 garment workers have been infected with COVID-19 since factories reopened “on a limited scale” on April 26. Of the positive cases, 126 are from 51 BGMEA member factories, 58 from 21 Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) member factories, and three from two Bangladesh Textile Mills Association member factories, it said.

Trade union leaders say the real number could be higher.

“I don’t believe the figures and it does not reflect the real scenario as the workers are not getting enough testing opportunities,” Taslima Akhter, president of Shramik Sanghati Andolon, told Dhaka Tribune.

Both the BGMEA and BKMEA say they are regularly monitoring factories to ensure they are complying with safety guidelines.

“We have teams selected for different zones and they monitor to see whether the factories comply with health safety guidelines or not. We also monitor the infected workers to ensure treatment and provide necessary assistance for testing, in case of a suspected case,” Fazlee Shamim Ehsan, a director of the BKMEA, told Dhaka Tribune.

The country of 161 million has to date confirmed 57,563 cases of COVID-19 and 781 coronavirus-related deaths.