Bangladesh has imposed a nationwide lockdown as it fights its own battle against the deadly and damaging COVID-19 virus.
Local authorities have asked citizens in the country to stay indoors, and have banned passenger travel via waterways, rail and domestic flights. Public transportation on roads will be suspended temporarily in hopes of stemming the spread of the virus. It’s not yet completely clear what impact this will have on factory operations or whether there will be any allowance for garment workers to get to and from their posts.
“It was decided to lock down all public transport across the country from March 26 to April 4. Trucks, covered vans and vehicles carrying medicine, fuel and perishable items will remain out of the purview of the lockdown,” Road, Transport and Bridges minister Obaidul Quader, told Turkey-based international news source Anadolu Agency.
As of Tuesday, official reports from the World Health Organization (WHO) put Bangladesh’s confirmed coronavirus cases at 33, though the actual number is likely much higher.
Already, the world’s second largest garment manufacturer after China is teetering on the brink of despair as retailers back out of orders daily, leaving factories cash poor and staring down dark zero revenue days ahead.
For now, Bangladesh is hoping a bailout can quell the crisis.
On Wednesday, the country’s Prime Minister Sheikh Hasina announced in an address to the nation, a 5,000 crore Bangladeshi taka ($590 million) bailout for export-oriented industries. The funds, she said, are to be used solely as salaries and allowances for workers in the export sectors.
It remains to be seen how the bailout will bolster the flailing sector, but for now, things are looking bleak.
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“There is a growing fear that if this unprecedented pattern of order cancellations continue, factories in Bangladesh could see indefinite shutdown,” Asad Sattar, director of Utah Group, a knits and wovens manufacturer in Bangladesh, told Sourcing Journal. “There have already been 700 million pieces cancelled or suspended—valued at $2.25 billion (BGMEA). Factories have begun to shut down and 1.5 million workers are now facing job suspension.”
Apart from the bailout announced Wednesday, Sattar said Bangladesh’s Labor Act does provide some protection for workers—but that can only go so far as the factories’ survival.
“In the case of a factory being unable to sustain itself financially due to losses from providing pay without work (due to no orders), there is nothing to financially protect the workers,” he said. “Bangladesh had already been going through a liquidity crisis, and even with government intervention it’s tough to imagine how most factories will manage cash flows, particularly given that there are two yearly bonuses coming in May and July due to the Eid Holidays. For many, the Eid bonus is considered an essential form of income.”
Without some help from the brands and retailers that have called themselves partners, companies may meet a relic of what was once an industry manufacturing garments for the masses. It’s not a situation anyone involved can afford to be in.
If the cancelled orders, plus coronavirus, plus the country-wide lockdown leads to worker layoff—which, at this point, may be inevitable—Sattar says there’s an allowance that will see workers earn 50 percent of their basic salaries and housing and rent, for 45 days. It’s not clear whether the $590 million bailout will come in addition to this or simply provide for it.
“However, if the crisis continues beyond this, then factories that are unable to continue to pay large overheads without revenue will declare bankruptcy. In such a case, we could see millions unemployed,” he said. “There is growing fear that this may in turn lead to unrest if multiple factories shut down in one go.”