The RMG Sector

National Human Rights Commission, Bangladesh

The RMG Sector: Prospects and Challenges and Role of Different Stakeholders

May 2015


May 2015

National Human Rights Commission, Bangladesh


Study Conducted by 1. Syed Robayet Ferdous, Assistant Professor & Head, Centre for Legal Research (CLR), Department of Law & Justice, Southeast University, Dhaka, Bangladesh. (Team Leader of the Project) Cell: +880 1716588891 E-mail: [email protected]. 2. Md. Asaduzzaman, Assistant Professor & Chairman, Department of Law & Justice, Southeast University, Dhaka, Bangladesh. 3. Md. Asraful Islam, Assistant Professor, Department of Law & Justice, Southeast University, Dhaka, Bangladesh. 4. Md. Emdadul Haque, Assistant Professor, Department of Law & Justice, Southeast University, Dhaka, Bangladesh. 5. Sadia Afroz Binte Siraj, Assistant Professor, Department of Law & Justice, Southeast University, Dhaka, Bangladesh.

Disclaimer: The study data, analysis, opinions and recommendations contained in this report are those of the authors. They do not necessarily represent or reflect the views or opinion of the National Human Rights Commission (NHRC), Bangladesh.

May 24, 2015

Director (Administration & Finance) National Human Rights Commission Dhaka, Bangladesh.

Subject: Submission of study report on ‗The RMG Sector: Prospects and Challenges and Role of Different Stakeholders‘. Dear Sir, I am very glad to submit (both soft copy & hard copy) the study report on ‘The RMG Sector: Prospects and Challenges and Role of Different Stakeholders’. This study has employed mainly qualitative approach with a view to achieving the best outcome of the research. It has also congregated information to make the study report specific and articulated through the procedure of collecting and using necessary data from relevant sources. The main objective of the study is to justify the prospects as well as challenges of the RMG sector and what roles are playing by the different stakeholders. It has examined by international market status, EPB, BGMEA, BKMEA, BTMA and other pertinent reports, national and international legal frame work dealing with the same agenda. Considering above all a recommendation has also been made in this regard. The study is basically confined on Readymade Garments sector within Dhaka and outskirts of Dhaka. It has not investigated the EPZ workers who are not covered by the Bangladesh Labour Act, 2006. I sincerely hope this report has fulfilled the requirements suggested by National Human Rights Commission, Bangladesh. If you have any question please do not hesitate to contact me.

Sincerely yours

Syed Robayet Ferdous Assistant Professor & Head, Centre for Legal Research (CLR) Department of Law & Justice, Southeast University, Dhaka, Bangladesh. Cell: +880 1716588891, E-mail: [email protected]

Acknowledgements At the very outset, I would like to extend my heartfelt thanks to the stakeholders of the RMG sector for cooperating us in order to make the report. I am indeed gratified to BGMEA, BKMEA and BTMA for their collaboration. I also express my gratitude to some institutions for using their secondary data on prospects and challenges of readymade garment sector for analytical part of the study. Basically the documents of the EPB, Bangladesh Institute of Labour Studies, International Labour Organizations, ITC, Accord, Alliance, JETRO, DIFE were very handy in preparing this study.

This study has been supported by the National Human Rights Commission (NHRC), Bangladesh. So, I am indeed grateful to the NHRC for extending their kind endeavor. I sincerely hope this report will fulfill the requirements suggested by NHRC, and I tried to gather information to make the report specific and coherent through the procedure of collecting and using necessary data from relevant and reliable sources.

I must thank to the whole team members, for their sincere, sagacious, and cooperative attitude from the very beginning to the end in accomplishing the whole task.

I would like to articulate my immense admiration to Professor Dr. Mizanur Rahman, Chairman, NHRCB, for his enthusiastic annotations and useful guidelines as to the scope and focus of the present study.

It will be unjust if I do not acknowledge the support and adroitness of Mr. Repon Khan, Executive Coordinator, Japan International Cooperation System, Mr. Syed Delowar Hossain, Ph. D student, University of Malaya and the Faculty Members of the Department of Law & Justice of Southeast University.

i

List of Acronyms Acronyms

Elaborations

AFL-CIO

American Federation of Labor and Congress of Industrial Organization

AMTAC

American Manufacturing Trade Action Coalition

ASEAN

Association of Southeast Asian Nations

BATEXPO

Bangladesh Apparel & Textile Exposition

BB

Bangladesh Bank

BDT

Bangladeshi Taka

BEPZA

The Bangladesh Export Processing Zone Authority

BFTI

The Bangladesh Foreign Trade Institute

BGMEA

Bangladesh Garment Manufacturers and Exporters Association

BKMEA

Bangladesh Knitwear Manufacturers and Exporters Association

BLWF

Bangladesh Labour Welfare Foundation

BNBC

Bangladesh National Building Code

BPGB

Best Practice Garments Bangladesh

BSCI

Business Social Compliance Initiative

BTMA

Bangladesh Textile Mills Association

BUET

Bangladesh University of Engineering and Technology

BUFT

BGMEA University of Fashion Technology

CAFAXPO

Chittagong Fabric, Apparel and Textile Exposition

CAP

Corrective Action Plan

CBA

Collective Bargaining Agent

CDA

Chittagong Development Authority

CEBAI

Centre of Excellence for Bangladesh Apparel Industry

CETP

Central Effluent Treatment Plant

CNGA

China National Garment Association

CNTAC

China National Textile & Apparel Council

CSI

Chief Safety Inspector

CSR

Corporate Social Responsibility

DAP

Detailed Area Plan

DEA

Detailed Engineering Assessment

ii

Acronyms

Elaborations

DIFE

The Department of Inspection for Factories and Establishments

EAB

Exporters' Association of Bangladesh

EII

Employment Injury Insurance

EKN

Embassy of the Kingdom of Netherlands

EU

European Union

FFC

Fair Factories Clearinghouse

FSCD

The Fire Service and Civil Defense Directorate

GAFTT

Global Alliance for Fair Textile Trade

GDP

Gross Domestic Product

GF

Green Factory

GIP

Garment Industrial Park

GoB

Government of Bangladesh

GSP

Generalized System of Preference

GTZ

German Technical Cooperation

HRW

Human Rights Watch

IAF

International Apparel Federation

ILO

International LabourOrganisation

IPCC

Intergovernmental Panel on Climate Change

ITC

International Trade Centre

JETRO

Japan External Trade Organization

JICA

Japan International Cooperation Agency

LEED

Leadership in Energy and environmental Design

MoU

Memorandum of Understanding

NAP

National Action Plan

NBR

National Board of Revenue

NGO

Non GovernmentOrganisation

NHRCB

National Human Rights Commission Bangladesh

NSDC

National Skill Development Corporation

NTC

National Tripartite Committee

NTPA

National Tripartite Plan of Action

OIH

Oriental International Holding

iii

Acronyms

Elaborations

OSH

Occupational Safety and Health

PaCT

Partnership for Cleaner Textiles

PTS

Primary Textile Sector

RAJUK

RajdhaniUnnayanKartripokkho

RMG

Ready Made Garments

RPCC

Rana Plaza Coordination Cell

SEDF

South Asia Enterprise Development Fund

SIDA

Swedish International Development Agency

TTBC

Textile Technology Business Centre

UN

United Nations

UNDP

United Nations Development Program

USD

United States Dollar

USDoL

United States Department of Labour

USGBC

U. S. Green Building Council

VOC

Volatile Organic Compounds

WASA

Water Supply & Sewerage Authority

ZLD

Zero Liquid Discharge

iv

Table of Contents

Chapters

Title

Page

Acknowledgements………………………………………………

i

List of Acronyms……………………………...............................

ii-iv

Table of Contents………………………………………………..

v-viii

Abstract 1.

2.

1

Preliminary

2-7

1.1

Introduction……………………………………………………

2

1.2

Objectives of the Study…………………………………..........

3

1.3

Rationales of the Study………………………………………..

3

1.4

Scope and Limitation of the Study …………………………...

3

1.5

Methodology…………………………………………………..

4

1.6

Growth of RMG Sector at a Glance…………………………..

4

1.7

Contribution of the RMG Sector……………………………...

5

Prospects of RMG Sector of Bangladesh

8-41

2.1

Introduction …………………………………...........................

8

2.2

Leading Export Earner ………………………………………..

8

2.3

Foreign Investment ……………………………………………

9

2.4

RMG Industrial Park ………………………………………….

12

2.5

Export Growth & Vision 2021………………………………...

14

2.6

Progress………………………………………………………...

15

2.7

Launching Textile Technology Business Centre (TTBC)……...

17

2.8

Building & Fire Safety Expo: Overcoming Fear of Fire……….

18

2.9

BGMEA joining CBI…………………………………………..

19

2.10 New Market for Bangladesh RMG…………………………….

20

2.10.1

Prospective Market to Brazil ……………………….

21

2.10.2

Prospective Market to Japan ………………………..

24

2.10.3

Prospective market to Canada ……………………...

26

v

Chapters

3.

4.

Title

Page

2.10.4

Prospective Market to China ……………………….

28

2.10.5

Prospective Market to Russia ……….........................

32

2.10.6

Prospective Market to South Africa ………………...

33

2.10.7

Prospective market to India …………………………

36

2.11 Conclusion……………………………………………………...

39

Challenges of RMG in Bangladesh

42-63

3.1

Introduction …………………………………………………….

42

3.2

Workers‘ Efficiency …………………………………………….

42

3.3

Relocation ………………………………………………………

44

3.4

Infrastructural Development ……………………………………

47

3.5

Application of Labour Law …………………………………….

48

3.6

Loophole the New Rectification of Labour Law……………….

50

3.7

To Meet the Vision 2021………………………………………..

51

3.8

Currency Devaluation with Euro………………………………..

53

3.9

Political Unrest………………………………………………….

53

3.10 Lack of New Investment……………………………………….

55

3.11 GSP Status……………………………………………………...

56

3.12 Craving for Green Industry……………………………………..

58

3.13 Separate Ministry for RMG……………………………………..

61

3.14 Adequate Energy………………………………………………..

62

3.15 Conclusion………………………………………………………

63

Role of Different Stakeholders

64-112

4.1

Introduction ………………………………………...................

64

4.2

Assessment of Initiatives Undertaken by Different Stakeholders

66

4.3

Government and Government Institutions……………………..

69

4.3.1

Amendment of Labour Law and Formulation of Labour Rules………………………………………………….

4.3.2

4.3.3

70

The National Tripartite Plan of Action (NTPA) and Assessment on structural, fire & electrical integrity….

70

Trade Union Registration……………………………..

71

vi

Chapters

Title 4.3.4

4.4

4.5

Page Up-gradation of the Department of Inspection for Factories and Establishments…………………………

71

4.3.5

Training for Labour Inspectors……………………….

73

4.3.6

Revision of Minimum Wage…………………………

73

4.3.7

Regular Inspection of Factories……………………...

74

4.3.8

Fire Service & Civil Defense Department (FSCD)….

74

4.3.9

Strengthening the Department of Labour……………

75

4.3.10 Compensation and Rehabilitation……………………

75

4.3.11 Rana Plaza Coordination Cell (RPCC)………………

76

4.3.12 Sustainability Compact………………………………

76

4.3.13 Cooperation agreement with Germany………………

76

4.3.14 Letter of intent with Denmark……………………….

77

4.3.15 Reduction of Tax & Duty……………………………

77

4.3.16 Housing Loan………………………………………..

77

4.3.17 Composition of Different Committees………………

77

RMG owners Associations……………………………………...

79

4.4.1

BGMEA……………………………………………...

79

4.4.2

BKMEA……………………………………………...

83

4.4.3

BTMA………………………………………………...

84

Brands and Retailers and Their Associations…………………...

86

4.5.1

The Accord on Fire and Building Safety in Bangladesh

87

4.5.2

The Alliance for Bangladesh Worker Safety…………

95

4.6

Trade Unions…………………………………………………….

99

4.7

Factory Owners………………………………………………….

100

4.8

Workers…………………………………………………………..

101

4.9

The

International

Labour

Organization

(ILO)

and

other

International Organisations………………………………………

102

4.9.1

Ensuring safe RMG factories…………………………..

102

4.9.2

The labour inspectorate…………………………………

103

4.9.3

Improving the fire service………………………………

104

4.9.4

Strengthening occupational health and safety………....

104

4.9.5

Launching a Better Work Program for Bangladesh……

105

vii

Chapters

Title

Page

4.9.6

Rehabilitation for Rana Plaza survivors………………

105

4.9.7

Compensation for Rana Plaza survivors………………

105

4.9.8

Establishment of an Employment Injury Insurance

4.9.9

Scheme…………………………………………………

106

Coordination and collaboration………………………..

106

4.9.10 Enhancing workers‘ rights……………………………... 4.10

6.

Non-Government Organizations, Non-State Actors and Civil Society…………………………………………………………...

107

4.11

National Media…………………………………………………..

107

4.12

The National Human Rights Commission Bangladesh (NHRCB)

108

4.13

Overall Status of Assessment by NTPA, Accord and Alliance (up

4.14 5.

106

to April 30, 2015)………………………………………………..

109

Conclusion……………………………………………………….

111

Recommendations

113-121

5.1

Introduction ………………………………………………………

113

5.2

Recommendations for Government and Government Institutions..

113

5.3

Recommendations for Garment Owners‘ Associations…………...

116

5.4

Recommendations for Brands and Retailers……………………...

117

5.5

Recommendations for Factory Owners…………………………...

118

5.6

Recommendations for Workers…………………………………...

119

5.7

Recommendations for ILO………………………………………..

120

5.8

Recommendations for Donor Countries…………………………..

120

5.9

Recommendations for the NHRC…………………………………

120

5.10 Conclusion………………………………………………………....

120

General Conclusion

122

Bibliography

123-126

viii

Abstract This study solely concentrates on the readymade garment (RMG) sector portraying the prospects and challenges of the sector which is persistently playing a key role not only for the economic development but also for the nation building. It also focuses the role of different stakeholders surrounding the RMG sector that is rapidly marching forward with stupendous success and also encountering a surmountable series of challenges forecasting a glimpse of glittering future. The RMG sector is the largest industrial sector emerging in the country during 1970s and established a stronghold during 1980s and further accelerated during 1990s. The golden age of the sector heralded during 2000s and the blooming trend is in continuation with a rapid speed. The undeniable contribution of the sector in earning foreign currency, reduction of unemployment, poverty alleviation, women empowerment, manpower development, and sustainable economic growth is worth mentioning. The sector has been facing some challenges i.e. implementation of Trade Union, relocation of RMG unit from shared building, implementation of new wages structure, closure of factories due to compliance issues and fabricated propaganda from inside as well as outside of the country. Though safety inspection found less than 2 per cent RMG units risky and closure of only 27 RMG units as per recommendation of Accord, Alliance and National Action Plan, this information is exaggerated putting a negative impact on the sector. The country in 2013 has made some progressive amendments in the Bangladesh Labour Act, 2006 with a view to ensuring compliance with issues that the global community has been focusing for quite a long time. But the implementation of these rectified provisions is in progress. Bangladesh being a Muslim country is yet to expand its market to the Middle Eastern, East Asian and Latin American countries. The role of the European Union (EU) has been generous enough since the independence of the country in 1971 extending its helping hand to expand the sector and to mitigate the ongoing challenges of the RMG sector. Along with the EU the United States of America is also supportive in upgrading the sector from the very outset of its journey but the recent suspension of the Generalized System of Preferences (GSP) is major blow for the country and for the sector as well. Even, to regain GSP from the USA is now a major challenge for the sector because to meet up the conditions of transforming the industry into the highest standard ensuring workers safety and security is a daunting task and not a overnight business. Tripartite initiatives to make the RMG sector more efficient encompassing with compliance regime upholding the image of the country is going on in a participatory basis following a roadmap of progressive realization of safety and security issues of all stakeholders. The role of international pertinent bodies like ILO, Accord & Alliance etc. regarding the issues of building codes, fire safety, human rights and workers‘ rights is also crucial.

1

Chapter One Preliminary 1.1 Introduction The readymade garments (RMG) sector is the backbone of national economy of Bangladesh. The RMG bears immense potentiality in many respects varying from foreign export earnings to employment generation.1 It also acts as a catalyst for national development and the ―Made in Bangladesh‖ tag has brought glory for the nation from across the globe with a further possibility of glittering future amid growth and development. Despite manifold difficulties faced by the sector over the past years, it has carved a niche in global market and the robust performance of the sector is on the rise.2 The sector is striving to double its export within 2021 earning around USD $50 Billion from its present earnings of USD $25 Billion. Over the past six years the garment industry has grown by an average of 13.9% annually which makes $50bn by 2021 seem within reach.3The epic growth of RMG industry poises bright prospects but challenges are still there. The biggest challenge currently faced by the RMG sector is to ensure workplace safety and better working conditions for the millions of workers. Two major accidents, the Tazreen fire and Rana Plaza collapse, have brought the issue of workplace safety to the fore front of discussion amid engagement of all stakeholders. After the tragedy, image crisis posed a major challenge not only for the RMG sector but also for the nation as a whole.4 However, ensuring workplace safety at all garment factories is a gigantic task and a time consuming issue to accomplish in line with global demand and standard. Apart from workplace safety, developing infrastructure along with skilled workforce are the most pressing challenges for the sector. Along with political unrest and compliance issues, productivity of Bangladesh Garment industry is lower than that of other leading players on the global market. But political stability is very crucial for the sector to keep continuing its pace of development in the days ahead. With the support of global brands and international development partners the crises in the RMG sector may be eased paving the way for socio-

1

Rahman, S. ―Global Shift: Bangladesh Garments Industry Perspective‖, Journal Asian Affairs, 2004, Vol. 26(1), pp. 75-91. 2 Jim Yardley, Made in Bangladesh: Export Powerhouse Feels Pangs of LabourSrife, The New York Times, August 23, 2012, Retrieved from accessed on May 5, 2015. 3 Peter Leahey, Bangladesh‘s $50 Billion RMG Export Target by 2021, The Dhaka Tribune, May 4, 2015. 4 Muhammad Yunus, After the Rana Plaza Tragedy, Time for an International Minimum Wage, The Guardian, May 12, 2013, Retrieved from accessed on May 10, 2015.

2

economic development in the country. It is the responsibility of all stakeholders to protect the interest of this industry which has strengthened the economic footing of the country creating jobs for millions of people, especially for women, lifting them from the abyss of chronic poverty and giving them a touch of dignity in life. This research study is a venture to explore the current status of the RMG sector along with the prospects and challenges aiming at the amelioration of the wounds of the sector and searching further betterment of the sector for the country.

1.2 Objectives of the Study The core objectives of the study include: (a) to know the history of the RMG sector in essence, (b) to explore the present status of the RMG sector in brief, (c) to find out the prospects and challenges of the RMG sector in the country, (d) to shed light on the role of the RMG sector in socio-economic development of the country, (e) to focus on the image building of the country to the world through the RMG sector, (f) to point out the role of different stakeholders to meet up the challenges the sector is facing, and (g) to come up with a bunch of suggestions for the further growth and development of the sector.

1.3 Rationales of the Study Since the RMG sector contributes a lot to the socio-economic development of the country, it demands especial attention from all quarters dependent on it or benefited by it. Being the biggest sector for earning of foreign currency, the study highlighting the prospects and challenges is a demand of the time. Through the study, the revelation of the true picture of potentials and challenges may further gear up the sector towards betterment of the core sector fulfilling the dream of the nation.

1.4 Scope and Limitation of the Study The RMG sector is the biggest industrial sector in all respects. This study is only limited to prospects and challenges of the sector highlighting its past, present and future. However, the issue of prospects and challenges can be focused on every aspect catering from employers, workers and government as well. Each stakeholder views its prospects and challenges of the 3

sector in its own way. So, the delicate harmonization projecting the real prospects and challenges are concerns to the tripartite stakeholders. However, this study aims the common prospects and challenges which are the real concerns for all the stakeholders.

1.5 Methodology The study report has been prepared through desk review relying on basically secondary data, collected through literature review from various reliable sources like Journals, Research articles, Thesis papers, Newspapers, Online news and survey reports, garments Manufacturing Industries Annual reports, Export Promotion Bureau (EPB) Reports, BGMEA, BKMEA and BTMA Yearly reports and Files etc. Due to time constraint, direct data collection was not feasible.

1.6 Growth of RMG Sector at a Glance The ancient Bengal was famous for her world finest cloth Muslin and Jamdani. That is, Bangladesh is traditionally known for her Textile and Garments sector. After the liberation, the RMG business in Bangladesh started in the late 1970s with merely a casual & cursory effort. The growth of the industry in terms of number of units and employment generation is shown in following table: Year

Number of Garment Factories

Employment in Million Workers

1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

134 384 594 629 685 725 759 834 1163 1537 1839 2182 2353 2503 2726

0.040 0.115 0.198 0.283 0.306 0.317 0.335 0.402 0.582 0.804 0.827 1.200 1.290 1.300 1.500 4

Year

Number of Garment Factories

Employment in Million Workers

1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

2963 3200 3480 3618 3760 3957 4107 4220 4490 4743 4925 5063 5150 5700 5876 4222

1.500 1.600 1.800 1.800 2.000 2.000 2.000 2.200 2.400 2.800 3.500 3.600 3.600 4.000 4.00 4.00

Out of 4.0 million manpower employed in BGMEA member factories, 3.20 million are women (80%), majorities of them are disadvantaged and economically poverty stricken women folk. The country's RMG sector, to a creditable level has relieved Bangladesh from over populous unemployment burden through providing the largest employment next to agriculture, transport, trade and industry sector. This sector has uplifted the neglected section of the population, thus radically transforming the socio-economic condition of the country. Such empowerment and employment raised awareness regarding children education, health safety, population control disaster management only so for. It is an epoch making event in the history of Bangladesh.5

1.7 Contribution of the RMG Sector The contribution of the RMG sector to the national economy is now in the leading position. The RMG sector is considered as unpolished diamond. Riding on the thriving RMG industry for the three and a half decades, the country‘s economy is now on a new height. The country‘s economy was elevated from the poverty line to a sustainable growth rate owing to a growth of the sector.6 The country has been maintaining a 6 percent economic growth for 5

http://www.bgmea.com.bd/home/pages/aboutus#.VVnaJfDja1s Bhattacharya et el, Contribution of the RMG Sector to the Bangladesh Economy, Centre for Policy Dialogue, Occassional Paper Sries, Paper No. 50, 2002, pp. 1-31. 6

5

more than a decade only for the growth of the RMG sector, which created more than four million jobs and pumped billions into the economy. About 81 percent of our export earning comes from this sector. Bangladesh exported $25 billion in the 2012-2013 fiscal with nearly 20 percent year-on-year growth despite a volatile global financial system and internal political crisis. Even after the historical Rana Plaza disaster the growth rate in the RMG sector was about 13 percent. Out of $25 Billions the sum more than $14billion worth of products was sent to the EU and about $5 Billion was in America. In 2011, Bangladesh has become the second largest garment exporter in the world, only next to China. At present Bangladesh accounts for 5.0 per cent of world RMG export while China's share is 30 per cent in the $450 billion global market. But China is slipping from its top position, losing 5.0 per cent of its contribution annually due to labour shortage and high labour costs.If there was no slowdown in the global market Bangladesh could export more and meet the target of US$28 billion in the current fiscal year. In spite of the global slowdown RMG exports in aggregate posted a growth rate of nearly 4.0 per cent amounting to US$ 4.99 billion in the first quarter of the current fiscal year of 2015-2016 compared to the corresponding period of the preceding year. Bangladesh has set a target of earning $50 Billion US Dollar by 2021 when the country will be celebrating the golden jubilee of its independence. The RMG industry has contrubuted in diverse ways to the national economy. It has contrunuted in women empowerment espeally in respect of rural and backword section of women. It is well recognized that women‘s participation in income generation activities lends them a better status within the family and provides them with considerable freedom. As the income by the female member reduces dependency on male income it reduces their vulnerability. It also reduces the possibility of domestic violence against women. Though, child labour is a concern in the industry, it has successfully reduced the overflow of child labourers. With the help of International Labour Organization (ILO) and United Nations Children‘s Fund (UNICEF), the progressive phasing out of child labour from more than 2500 factories has been possible. Employment opportunities especially for backward section of women have created positive impact on family planning and population control in the country. Independent working-women are getting more conscious about the advantage of a small family, and are exposed to modern family planning methods. Working adolescent girls tend to avoid early marriage as they have their own source of income and are self-dependent. The mean age at marriage for girls working in RMG factories tend to be higher than the national average.

It also has generated huge cliental base for Banking, Insurance, Shipping,

Transport, Hotel, Cosmetics, Toiletries and related other economic activities paving the way 6

for a sustainable future for the country. After independence in 1971, most observers of the newly emerged country took a pessimistic view about the developmental prospect of Bangladesh but the country has proved bouncing back from the trodden down economy to the present prospective future.7 Although there is little room for complacency Bangladesh has come a long way from there and in the days ahead, the contribution of the RMG sector will be helping a lot in shaping a progressive and sustainable economy of the nation.

7

Jamie Terzi, Macro Review of the RMG Sector: Gains, Challenges and Policy Responses, The Daily Star, June 30, 2014.

7

Chapter Two Prospects of RMG Sector of Bangladesh

2.1 Introduction Yet Bangladesh RMG sector remains a huge challenge and criticism, however, this sector has enormous prospect at the same time. This sector has been providing immense employment facility to the worker, especially empowering woman by employment. Near about 4 million people are directly working within 3,500 active readymade garments factories in Bangladesh where 80 per cent of woman. More or less 20 million people livelihoods depend on the RMG sector. The RMG as a single sector contribute about 13.5 percent of our national GDP. In spite of image crisis of RMG sector of Bangladesh and long-lasting political turmoil this sector has been continuing positive export growth during last eight month of present fiscal year. Last couple of years a huge change has been made after the heinous devastating of Rana Plaza and Tazreen Fashion.

2.2 Leading Export Earner Various sectors have been contributing our national GDP by earning foreign currency. Among the different sectors, garment, jute and jute related goods, leather and leather related products and frozen foods are mention worthy. However, the RMG industry is now the single biggest export earner for Bangladesh. The sector accounts for 81% of total export earnings of the country. Sector Wise Exported from Bangladesh (July 2014 - January 2015) is shown in the following graph:

Source: EPB 8

The above graph shows that among the diverse segments, the readymade garment as a single sector grasp 81 percent of total export from July, 2014 to January, 2015, where leather and leather related product, jute and jute related goods and frozen foods contributes 4, 3 and 2 percent only.

2.3 Foreign Investment As Bangladesh has huge human resource and they can be employed by poor labour cost, foeign investment may be attracted to invest in Bangladesh. So the government can play a vital role for inviting foreign investment in the RMG sector.

Source: JETRO Dhaka office on 22nd February, 2015(survey: Octobers-November, 2014) The Japan External Trade Organization as known as JETRO is the giant business investor in the world. In 2015 they have published a report marking that the Bangladesh is the 2nd best business investment priorities country in the world. The main cause for choosing  Lower production costs,  Lowest worker wage levels among the competing countries,  Workers' wages in the manufacturing sector in Bangladesh is $100 a month, while Cambodia has the second lowest wages at $113,  In comparison to Japan, the cost of production in Bangladesh is less than half 48.7 %, while it is 77 % in China and 71 % in Vietnam.

9

The production cost of different competing countries is shown in the following table: Country

Production Cost %

Position

Japan

100%

First

Thailand

81%

Second

Indonesia

78.5%

Third (Combined with India)

India

78.5%

Third (Combined with Indonesia)

China

77.8%

Fourth

Vietnam

73.2%

Fifth

Shri-lanka

70.8%

Sixth

Bangladesh

48.7%

Seventh

Source: Compiled by author depend on the JETRO report The production cost is lowest in Bangladesh compare with the other countries like Japan, Thailand, Indonesia, India, China, Vietnam and Sri Lanka. According to the above table, Japan stood highest position as production cost is 100 percent. On the other hand, Bangladesh stood lowest position as the production cost is 48.7 percent only. The best investable country in 2015 (opined by CEO of Japanese Company) Country

Opinion in Percent

Position

China

28.9 %

Seventh

Vietnam

44.3 %

Sixth

Thailand

44.8%

Fifth

Shri Lanka

50%

Fourth

Myanmar

52%

Third

India

58.2%

Second

Bangladesh

71.1%

First

Source: Compiled by author depend on the JETRO report The survey has been conducting since 1987, opined 10, 078 firms and chief executive from 20 countries of Japanese Affiliated Firms in Asia and Oceania for the Year 2014. According to the official trade and investment promotion agency of Japan about 71.7% Japanese-

10

affiliated firms in China want to expand their operations in Bangladesh. Whereas 78.2% favoring India, 66 % Vietnam and 60.9 % Thailand. However, the survey stressed to improve worker competence in the country by providing basic education and vocational training. Among the countries assessment, Bangladesh ranked the lowest in quality of employees. The average rate of workers' productivity in Bangladesh is 31.6 %, while it is 77.8 % in Sri Lanka, 68.4 % in Pakistan, 44.4 % in China and 42.1 % in India. Japan investment in Bangladesh Year

Amount in $ dollar

2012

3 crores

2013

9 crores

2014 (January-September)

8 crores & 12 lacs

The bilateral trade balance between the two countries (Bangladesh and Japan) is heavily tilted towards Japan. Bangladesh Export to Japan Fiscal Years

Amount in dollars

2012-13

$750.27 million

2011-2012

$600.52 million

Source: Export Promotion Bureau, Bangladesh. Bangladesh mainly exports apparel items, leather and leather goods, and footwear to Japan. Bangladesh Import from Japan Fiscal Years

Amount in dollars

2012-13

$1.19 billion

2011-2012

$1.45 billion Source: Bangladesh Bank.

Bangladesh imports vehicles, electronic goods and spare parts. At present, more than 180 Japanese companies have operations in Bangladesh. 11

2.4 RMG Industrial Park To set up a garment industrial park was a dream of BGMEA. From the beginning of 1990 this sector looking for a suitable place outside of Dhaka city with all contemporary industrial facility. Finally, the Government agreed to provide all kind of support to build in the name of Garment Industrial Park close to Dhaka-Chittagong highway on bank of Meghna River (Munshiganj). The area 492 acres where about 300 knit, woven, dyeing, sweater, accessories factories will be set up.8 The stakeholders of the RMG sector and scholars now have been opining that the incidents of Rana Plaza and Tazreen Fashion Flame were not only curse but also blessing by sack of the deceased workers. As last couple of years after Rana Plaza collapse and Tazreen Fashion Flame, the development of the RMG sector is enormous than that of any other sectors in Bangladesh. However, the main purpose of this industrial park will be to relocate the non-compliant factories that have been marked after all the inspections by Accord, Alliance and NAP. None the less, accordingly implementation of the said park willenhance economic activities of the country and about 3 billion USD per annum will be gained from this industrial park when it becomes fully operational. BGMEA is also trying to build this park on the basis of EPZ model so that all sorts of facilities including fiscal incentives can be provided like those provided in EPZ. Many foreign investors are showing their attention to financially and technically help BGMEA for building this industrial park. As BGMEA has no adequate fund for setting up this park, it signed a Framework Agreement following signing of an MoU with Oriental International Holding (OIH), a Chinese Company, which agreed to invest in the industrial park with zero investment from BGMEA. So the BGMA and OIH as a Joint Venture (JV) Company has been formed and a definitive agreement will be signed by both parties. It is expected that by July 2015 work of the park will be started. As per Framework Agreement, OIH will pay the project cost including land price in the name of the JV Company and it is expected that the proposed project land will be handed over by the middle of 2015 to BGMEA-OIH JV Company. BGMEA members, especially the owners of non-compliant and vulnerable garment factories, will get special preference and priority to relocate their factories in this industrial park.

8

Nabila Jamal Rusha.―Garment Industrial Park: A Stride toward Sustainability.‖ The Apparel Story (JanuaryFebruary, 2015): 9-11. Retrieved from accessed on May 12, 2015.

12

The facilities that are supposed to be provided in the industrial park are as follows:  Fire station,  Bank and insurance services,  Central Effluent Treatment Plant (CETP p)  River Jetty,  Power Plant,  Clinic,  Deep well with Pump house,  Administrative buildings,  Gas connection provision,  Solid waste &Dump station,  Road, Drainage system  Kids will have schools and playgrounds  Elders will have community work etc. The other facilities including sufficient linking internal roads, approach road, drainage system (both surface and waste water) will be there with proper design and as per requirement. Every factory will be connected with Central Effluent Treatment Plant (CETP) for disposal of industrial liquid and sewerage water.

More or less, 512 factories will be set up in the park which will create employment opportunity for 3 lac people, 80% of which will be female. By relocating industries, environmental pollution and traffic jamming in Dhaka will be reduced a lot. The new project will be developed infrastructure and overall economy will be positive at all. Distance will be reduced by about 70 km to 80 kilometers particularly from Gazipur, Savar and Ashulia.The lead time will be considerably reduced and goods will reach Chittagong port directly through the river way. The new Garment Industrial Park (GIP) obviously will attract the buyers by dint of managing their buying activities in a hassle free manner. It will not only give a better environment for work, but also should accumulate workers from the nooks and corners of the country, providing residence for them and their family and giving them the chance to achieve social stability and financial independence. In a short the GIP will be a place as an industrial zone that it is never to be seen ever again. So the prospect is huge in this sector. 13

2.5 Export Growth & Vision 2021 Even during political turmoil from the beginning of the year, export growth rate has brought a ray of brightness amid the depressing economic prospects. According to BGMEA, ―RMG exports could have grown more as they have a lot of work orders from international buyers. Garment products account for more than 81 percent of the country's total export basket. It is indeed a good sign that the US also has started positive movement from March, 2015, after the long downward trend.

According to data from the central bank, the total export earnings so far in fiscal 2014-15 to $23.24 billion year-on-year. It means export rose 7.43 percent year-on-year to $2.93 billion in March, 2015. According to data from the US Department of Commerce, in between the January- February 2015 garment exports to the US registered 2.82 percent growth from the previous year. The first Apparel Summit held in Dhaka, December 7-9, 2014 set a new vision to export clothing goods worth $50 billion by 2021. In order to accomplish the target the RMG sector has to need at least 15 % year-on-year increase in exports.Bangladesh's total exports to the EU are more than $18 billion a year, of which more than $15 billion are garments. 9However, it will not a big challenge to reach this target. According to the following figure, the average annual growth of Bangladesh readymade garments from fiscal year 2009 to 2014is 15 per cent. Even though, in between this time various heinous tragedies were happened including Tazreen Fashion flame and Rana Plaza tragedy.

9

ZillulHyeRazi. ―Look beyond garment: EU trade adviser‖, The Daily Star, (2015, March 16) P. B1.

14

Source: Faaria Tasin (2015)10 It is a good sign that after the Rana Plaza devastation Bangladesh has taken some excellent scheme i.e. more than 200 trade unions have permitted in the RMG industries, hazardous industries have been stopped, government have increased so many new inspector for inspect the factories, remediation of the factories is underway and transparency has been recognized in the business sector. So due to the considering above all the US will support Bangladesh in reaching its $50 billion RMG export target by the end of 2021.11

2.6 Progress Now RMG sector in Bangladesh are more careful regarding the workplace safety. After the Tazreen Fashion flame and Rana Plaza collapse, no more industrial tragedy took place across the country. It is going to extensive development towards fulfilling the required 16 conditions given by the USA for regaining the GSP facility. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is demanded to the Government for duty free import fire safety equipment such as sprinkler, fire door and other safety and environment-friendly equipment due keep the factories safe and secured. BGMEA also demanded duty withdrawal on import of ‗pre-fabricated‘ materials required for building construction. According to the demand the government has agreed to reduce duty on some safety equipment from 61 percent to 15 percent.12 It is a good mark that after Rana Plaza collapse a Memorandum of Understanding (MoU) was signed between Japan International Cooperation Agency (JICA) and Bangladesh Bank (BB) 10

FaariaTasin. ―Export diversification: the need for different eggs and baskets‖(2015, March 10) The Daily Star, P. B.1 11 According to US Ambassador in Bangladesh Marcia Stephens Bloom Bernicaton 5 th March, 2015 in a press meet at the office of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). 12 Apparel makers for duty-free import of safety equipment, Retrieved from accessed on April 30, 2015.

15

due to provide Tk 100 crore loan for the development of RMG sector in Bangladesh. Bangladesh Bank (BB) also insisted on the other commercial banks to lend RMG owners at lowest interest and owners to ensure good terms with workers. Considering good client any bank can lend at 6 % interest rate even standard instruction to allow 10 % interest rate. And any bank can borrow at 5% interest rate from BB.13 According to BGMEA, there are 1110 factories in Gazipur and Konabari, about 600 at Ashulia and Savar and 444 factories in Narayanganj.14Along with above, till now, 2,643 factories have been inspected by three initiatives –  1,261 by Accord15,  647 by Alliance16 and  735 factories by National Action Plan (NAP). Around only 1.25 percent of the inspected factories were found vulnerable and closed down immediately.17And a significant progress has been made in the areas of safety, including fire, and electrical and building structural safety, in the readymade garment factories.Moreover, factories are implementing corrective action plans provided by Accord and Alliance. Alliance holds up democratically elected workers contribution committee in the RMG factories with an aim to raise the voice of the Labours on the safety issues. Alliance intends to improve and empower worker in this sector. In this regard Alliance organized a common set of fire and building safety standards for the RMG sector in Bangladesh which line up with the Bangladesh National Building Code(BNBC), Bangladesh Labour Law, International Labour Organization (ILO) and also maintain the National Tripartite Plan of Action (NTPA). The Alliance promised $100 million in low-cost capital funding to improve fire and structural safety in Bangladeshi factories.18However, all work with the collaboration process of the National Action of Plan.

13

JICA to lend Tk100cr for RMG dev, http://news.priyo.com/2013/10/03/jica-lend-tk100cr-rmg-dev-87051.html Owners mull keeping RMG units shut until after Eid, Retrieved from < http://news.priyo.com/2013/09/27/owners-mull-keeping-rmg-units-shut-until-after-eid-86569.html> accessed opn April 30, 2015. 15 European platform of 189 retailers and brands for the inspection of fire and building safety garment factories in Bangladesh. 16 North American 26 brands and buyers formed ‗Alliance‘ for Bangladesh worker safety. 17 Md. Shahidullah Azim. ‗A paradigm shift in garment industry‘. The Daily Star, (2015, April, 28), P. B. 4. 18 US delegation wants ‗meaningful change‘ in garment sector, accessed on April 30, 2015. 14

16

The Alliance has also launched telephone helpline for aggrieved readymade garment workers in Bangladesh from 2014. Now the government of Bangladesh launched a pilot project in Ashulia, for the same purpose for first time of its kind. The aims of this purpose are to ensure the workplace safety and build the RMG workers legitimate rights. With the support of (ILO) and the Norwegian government, the Inspection for Factories and Establishments (DIFE) department, Bangladesh will run the helpline– 0800 44 55 000. And call will be logged and forwarded either to DIFE, the Fire Service and Civil Defence Department or the Directorate of Labour for resolution. It will play a better role for mitigate the grievance or workers. It is another new step for rescuing trade benefits from the US. There are 16 conditions including workplace safety, Labour rights, telephone hipline, database established has urged by USA for reopen GSP benefit of American market.19 The government has also recruited 200 inspectors, made the import of safety equipment dutyfree and launched a safety hotline for workers. Bangladesh Garment Manufacturers and Exporters Association also took a number of steps to supplement workplace safety efforts by forming a team of 35 fire trainers in December 2013. This team trained 83,678 workers and staff members in 2,386 factories. BGMEA runs a "crash programme" on fire safety and so far 20,188 personnel of 2,342 factories have been trained.20 The dramatic progress in new trade union registration is a tangible result of the new rectification of our labour law in 2013. Until 2012, there were only 138 trade unions in the sector; from January 2013 till now, 304 new trade unions have been registered. The minimum wage of the garment workers has also been increased by 219 percent over the past five years.21 When all the assessments will be over and the factories complete their remedial action plans, the readymade garment industry of Bangladesh can be regarded as the safest industry in the world.

2.7 Launching Textile Technology Business Centre (TTBC) A remarkable stepping stone has been marched by Bangladesh Garments Manufacturers and Exporters Association (BGMEA) in the area of environmental sustainability on 1 October 19

The Daily Star.‗Telephone helpline for garment workers‘.(March 16, 2015), P. B. 1. Retrieved from accessed on April 30, 2015 20 Md. Shahidullah Azim. ‗A paradigm shift in garment industry‘. The Daily Star, (2015, April, 28), P. B. 4. 21 ibid

17

2014. An exciting new centre named Textile Technology Business Centre (TTBC), the first of its kind in Bangladesh, was launched that day.22

TTBC will be supportive to the member factories of BGMEA in adopting resource efficient management system, cleaner production process, and environment friendly technology. As a knowledge hub, one of the key roles of the TTBC will be to assist the RMG and textile industry in adopting sustainability measures, including waste water and ground water management systems. The centre was set up by the BGMEA with support from the Embassy of the Kingdom of Netherlands (EKN) and the International Finance Corporation (IFC), and is part of the Partnership for Cleaner Textiles (PaCT) program. Housed in the BGMEA complex, the TTBC will be supportive to RMG/textile factories in adopting best practices and technologies that improve business and environmental sustainability.23 In the centre of TTBC there is a world-class library and knowledge center equipped with all the necessary books, publications, journals, scientific papers etc to provide updated information to visitors.

2.8 Building & Fire Safety Expo: Overcoming Fear of Fire The following mottos are very familiar to the people of Bangladesh, especially those who are pertinent to the readymade garment industry in Bangladesh. ''A fire today – no job tomorrow'' or ''Kill Fire before it kills you'' or ''Fire safety on, accidents gone''. To hoist more consciousness about fire safety among the worker involved in the sector and makes them well-known with the newest fire equipment.

So the technical seminar is

essential for familiar with the fire safety equipment and its use as well. The following measurement has been founded by the expo surveyed a total of 484 participants. Major findings of the survey are:24 22

Md. MonowerHossain.―Textile Technology Business Center starts journey‖. The Apparel Story, (SeptemberOctober, 2014): 19. Retrieved from accessed on April 30, 2015. 23 Ibid 24 MusharratTarannum. ―Building & Fire Safety Expo: Overcoming Fear of Fire‖. The Apparel Story (November-December, 2014): 24-26. Retrieved from accessed on April 30, 2015.

18

 Untrained managers (45%) and untrained workers (39%) are the top challenges factories face in relation to fire and building safety. Training for management (56%) and training for workers (47%) are measured as top results to remediate these challenges.  Participants believe that this Expo is a huge chance to develop information and consciousness of fire and building safety surrounded by all stakeholders.  Inadequate fire safety tools in factories are another main alarm shared by participants, and the Expo is an immense prospect for them to discover more about the tools and technologies in relation to fire safety.  Fire safety seller feels the Expo provides them with a vast possibility to present their goods and know more about the expected standard.  46% of surveyed participants attended the last Expo in Feb 2014, among them, 91% find this Expo better or much improved than the earlier one.  73% of participants are pleased or very pleased with the Expo.  There is a clear aspiration for more events of this kind. Many participants articulated honestly that such measures should be continued frequently and on a much bigger scale. Suggestions from participants on Building & Fire Safety that can be improved:  Sufficient exhibitors on Building & Fire Safety,  Adequate seminars and presentations suppose on electrical safety etc,  Periodical training for factory managers and consultants and  Can organize discussions between factories and brands Fire safety tools are not sufficient in Bangladesh. Pertinent of the RMG i.e. owners, workers have no proper idea regarding the use and function of such fire safety equipment. So therefore, exhibition in this regard would be the good platform for all stakeholders of the RMG. 2.9 BGMEA joining CBI Due to affluence, smooth and hygienic journey of RMG industry in Bangladesh, BGMEA has been working with different national and international organizations. As component of it,

19

BGMEA has joined with CBI (Centre for the Promotion of Imports from developing countries) an agency of the Ministry of Foreign Affairs of the Netherlands. 25 Surrounded by the agenda of a four-year CBI will find Best Practice Garments Bangladesh (BPGB) by join forces to develop the value chain of the Bangladeshi RMG sector. In addition CBI program will improve the compliance sector of RMG industry, uphold to the world competitive market as the best exporter at the same time to protect and preserve the economy with sustainable development for the country.

2.10 New Market for Bangladesh RMG Basically, Bangladesh readymade garments market is stuck with only two destinations such as the European Union and the United States of America. After Rana Plaza collapse in 2013, the GSP facility has been cancelled by America. They have given 16 conditions for improving the garments sector (safety, security, ensuring workers‘ rights etc.) of Bangladesh in order to get back the GSP facility from the USA. Necessary remedial measures in the meantime have been taken by Bangladesh Government as per the conditions imposed by the USA. However, yet the American government has taken no positive initiative in this regards. Scholars opine that this issue is now considered as a political issue instead of business concern. On the other hand, recently Pakistan, Philippians and Sri Lanka have got GSP facility from the EU. So, Bangladesh has a possibility to loss her market in the EU and the USA. Nonetheless, in the last year the RMG industry made significant progress in terms of exploring new markets like Russia, South Africa, Brazil, Turkey etc. The percentage of exports to the non-traditional market increased to 14.71% in the last fiscal year of 2013-14 and the growth of export to non-traditional market was 21.15% in the fiscal year of 201314.26 As the GSP facility is closed to the US market and has possibility to loss the market of EU, new destination is essential for RMG sector of Bangladesh.

25

NasimUddin. ―BGMEA, CBI join hands to take apparel sector to next level‖. The Apparel Story (NovemberDecember, 2014): 27. Retrieved from accessed on April 30, 2015. 26 Apparel Story Desk.―2014: A Year of Turning Around for RMG Industry.‖The Apparel Story, (JanuaryFebruary, 2015): 12-14.Retrieved from accessed on May 12, 2015.

20

2.10.1 Prospective Market to Brazil27  Brazil is a $2.38 billion RMG market. Bangladesh‘s share of the Brazilian apparel import is 7.68% in 2013.  RMG export growth from Bangladesh to Brazil was 15.80% in 2013 compared to 2012. In 2009, RMG export to Brazil was $ 50.29 million which is $ 182.58 million in FY 2013.  Developing vast natural resources and a large Labour pool, it is today South America's foremost economic power and a regional leader. Their daily necessity is growing high as a nation resulting in a growth of import every year.  Brazil is flattering one of the new emerging markets for us in the South American region.  Brazil has gone beyond Britain and France for possess 5th largest economy in the world and its burly growth and high rates make it striking target for foreign investors.  Brazil is attractive one of the major players in the world market. Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, and a rapidly expanding middle class, Brazil's economy outweighs that of all other South American countries, and Brazil is increasing its attendance in the world markets.  Brazil is one of the five emerging (BRICS) economies in the world. Brazil is persisting to pursue industrial and agricultural enlargement and development of its interior.

Bilateral trade between Bangladesh and Brazil Bangladesh‘s Export to Brazil in 2013 – 14: US$ 178.03 Million Bangladesh‘s Import from Brazil in 2013 – 14: US$ 998.00 Million Bangladesh‘s Trade Deficit with Brazil in 2013 – 14: US$ - 819.97 Million Source: EPB & Bangladesh Bank; Value in million US $

27

A.K.M. Marzanul Islam Joy &RatanSaha. ―New Market: Brazil‖ The Apparel Story. (November- December, 2014): 58-63. Retrieved from accessed on April 29, 2015.

21

Import Scenario of Brazil’s Clothing Industry Table 1

Source: International Trade Centre (ITC) Table 2

Source: International Trade Centre (ITC) Brazil’s Clothing Import from Bangladesh  From the table-2, it has been shown that import of RMG goods from Bangladesh by Brazil thoroughly improved from 2009.  It was $ 50.29 million in 2009 and it arrived at $ 182.58 million in 2013.  In 2010 and 2011, the import grows up by 40.15% and 65.60% in that order.  In 2013, the import grew by 15.80% and it was 7.68% of Brazil‘s total clothing import from the world.  Bangladesh‘s share of Brazil clothing import growing up radically as it was only 6.56% in 2009. 2014 scenario: Table 3

Source: International Trade Centre (ITC)

22

Table 4

Source: International Trade Centre (ITC) It can be observed that in 2013, Brazil‘s clothing import from Bangladeshi enlarged radically. In quarter three (Q3) of 2014 knit import from Bangladesh grew by 59.36%. For woven, it grew by 52.74%. The overall import from Bangladesh grew by 55.69% in 2014 Q3. Apparel Sourcing Trend Top 10 Knit wear and Woven Garment Exporting Countries to Brazil in 2013:  From the following table, it is has been shown that in knitwear, Bangladesh is the 2nd largest exporting country to Brazil.  In 2013, Bangladesh exported $ 118.84 million worth of knitwear and the market share is 11.27%.  China is the top supplier followed by Bangladesh, Peru and India with market share of 55.97%, 11.27%, 7.09% and 3.32% correspondingly.  Bangladesh is the 3rd largest exporting country to Brazil for woven product with a market share of 4.82%.  China is the market leader with 66.88% market share. We need to increase our share for these items by our increased presence in theBrazil‘s market.

23

Table 5

Source: International Trade Centre (ITC) 2.10.2 Prospective Market to Japan Japan is the 3rd largest economy in the world with a GDP of USD 4.8 trillion. Its economic structure largely depends on its overseas investment and business. The Asian giant‘s main investment has so far been in China. But due to rise in cost of labour and business, Japan has adopted ―China Plus One‖ policy which promotes shifting the production point from China to other countries. This policy has created a golden opportunity for Bangladesh to attract more Japanese investment and increase its volume of exports to Japan.Given the dynamic demographic profile, geographical location and rising prosperity, Bangladesh can be a preferred destination for Japan to invest in. Bangladesh has a population of 156 million. The large populace is a blessing in disguise for Bangladesh as, if turned into human resource, it can be the main driving force of the overall development of the country. According to the Labour Survey 2010, Bangladesh has 56.7 million economically active people; of them 39.5 million are male and 17.2 million female. Moreover, around 2 million people are entering the Labour market every year. Still the labour here is cheaper compared to other Asian countries. Under China Plus One policy Japanese investors in China want to slowly withdraw their investments in China and relocate it to a third country. ―In that context, they have long been interested in Bangladesh for its geopolitical location; huge population (that meant cheap labour) and other favorable production costs.28

28

NasimUddin. ―Japan: A promising market for Bangladesh‘s RMG‖. The apparel story (September- October, 2014): 13-14. Retrieved from accessed on April 30, 2015.

24

Japan also proves to be a lucrative garment export destination for Bangladesh as RMG exports to the Asian giant has increased notably in recent times. Bangladesh‘s RMG exports have so far mainly concentrated on European Union and USA. But dependence on two markets is not enough for sustainable growth. Keeping the fact in mind, Bangladesh‘s RMG industry is looking for non-traditional market. Japan has emerged as a promising nontraditional market for Bangladeshi readymade garment as the size of the market and demand for apparel is huge in Japan. Japan is the biggest importer of Bangladesh. Readymade garments in Asia, as per country-wise export performance data. Japan has reduced its dependence on imports from China, which gave a boost to RMG exports out of Bangladesh. Export of apparel garments from Bangladesh to Japan has witnessed a significant boost in the first nine months of the current fiscal year, indicating that brighter days are ahead. Only $74.37 million was earned by exporting garments to Japan in 2008-09 fiscal year, which stood at USD 572.27 million in 2013-14 FY; this means, the earnings increased more than seven times in just five years, mainly thanks to the "China Plus One" policy that the Japan government adopted in 2008.Japan is the fourth largest knitwear importer in the world. Exporters said Japan bought garments worth $20 billion, or 84 percent of its total global purchase, from China in 2008. While Bangladesh‘s market shares in the Japanese apparel market is only 1.78%. In 2013-14 fiscal year Japan‘s total imports of RMG was around USD 31.78 billion. So there lies an ample scope of increasing Bangladesh‘s share in the Japan market.29 Bangladesh‘s trade to Japan is increasing but still not to the extent of the potentials. ―The reason is Bangladesh‘s garment sector has never looked at Japan seriously. Further, the Japanese market is, unlike the European and American markets, on the high end of the scale. In other words, Japanese buyers do not look for cheap products where Bangladesh‘s advantages lie. Moreover, Japanese garment market is already geared to other markets, Chinese for example.‖ The following graph shown that the fiscal year 2009-10 to 2013-14 export is growing gradually. The fiscal year 2009-10 Bangladesh RMG exports to Japan US$ 173.32million where the last fiscal year 2013-2014 has been exported US$ 572.27 million. It is about US$ 399 million more in the fiscal year 2013-14 than that of fiscal year 2009-10. Yearly growth

29

Ibid.

25

rate near about US$ 80 million in last five years.So it can be said that the Bangladesh readymade garment has enormous prospect to the Japan market.

Source: The Apparel Story (September- October, 2014) BGMEA, said, ―Besides traditional market we are looking for new markets for our apparel sector to make our RMG export basket bigger and sustainable. With the existing market we get sufficient orders in eight months. But if we can explore new markets, the flow of orders will remain same throughout the year as when there is winter in the US, the summer season prevails in Latin America and South Africa.‖30 Bangladeshi entrepreneurs should also understand the difference between European and Japanese markets. Quality and standards are totally different in these two markets. In Western market there is a demand for fewer items but in huge volume while in Japanese market the demand is for a large number of items but in small volume. So, Bangladeshi RMG entrepreneurs need to invest in new equipment to increase the number of items which are in demand in the Japanese market. Given existing proximity to the Japanese market and the newly adopted trade rules by Japan, the situation has become very conducive to increasing Bangladesh‘s RMG exports to Japan. 2.10.3 Prospective market to Canada The value of Bangladesh‘s readymade garment (RMG) export to Canada has crossed one billion in the 2013-14 fiscal. About ninety-one percent of goods exported to Canada from Bangladesh are apparel items. Bangladesh exported goods worth US$ 1099.63 million to 30

Ibid

26

Canada in the last fiscal and US$ 1001.97 million of them were garment products. Among the garments about 55% were woven products and the rest were knit items. Bangladesh‘s garment exports to Canada were worth US$ 595.55 million in fiscal 2009-10, which rose to US$ 1001.97 million in 2013-14, according to the data of the Export Promotion Bureau of Bangladesh.31 The following graph individual sector woven and knit export ratio to the Canadian market shows that the fiscal year 2005-6 to 2013-14 export is growing gradually. The fiscal year 2005-6 Bangladesh woven apparel exports to Canada US$ 179.67 million and knit apparel export US$ 188.55million. Where the last fiscal year 2013-2014 has been exported US$ 556.87 million woven clothing and US$ 445.10 million knit clothing goods. The woven growth more than US$ 377 million from the fiscal year 2005-6 to 2013-14 and yearly woven export growth is US$ 42 million. On the other hand, the knit and knit related goods export is also satisfactory as well. So it can be said that the Bangladesh readymade garment has enormous prospect to the Canadian market.

Source: The Apparel Story (July-August, 2014) So, the garment exports to Canada surged by 68.24 percent in the last five years mainly due to price competitiveness of Bangladeshi products and duty-benefit in the North American country. Bangladesh has been enjoying a duty-free market access to Canada since 2003. ―This historic landmark of one billion worth garment export to Canada signifies that with the spirit the Canadian government and the people of Canada granted the LDCs the duty-free 31

AnikaMohiuddin. ―Bangladesh‘s RMG export to Canada crosses 1 bn‖. The Apparel Story (July- August, 2014): 19. Retrieved from accessed on April 30, 2015.

27

access to their market has meaningfully contributed to the development of the latter, particularly Bangladesh.‖ said Md. Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).―The robust growth in the export value of garments to Canada has been helping the country‘s economy to grow and thus ultimately the fate of the poor people of the country is being changed,‖ the BGMEA President added.32 2.10.4 Prospective Market to China China is one of the new emerging markets for Bangladesh. It is one of the major players in the world clothing industry and the largest apparel supplier in the world. It has a share of more than 37% in the world apparel export market. China is the second largest economy in the world with an ever growing middle class group. Because of this group, their daily necessity is growing high as a nation resulting in a growth of import every year. It is estimated that China has an apparel market of US$ 300+ billion out of which they import around US$ 4 billion apparel from the rest part of the world according to International Trade Centre (ITC). Bangladesh‘s share in the Chinese apparel import is 4.81% in 2013. Apparel export growth from Bangladesh to China was 51.09% in 2013 compared to 2012. In 2009, Apparel export to China was US$ 19.79 million which was US$ 231.20 million in FY 2013. China is one of the five emerging (BRICS) economies in the world. Bangladesh enjoys preferential rate of duty in China as an LDC. China granted duty free market access for 98% products from LDC through global initiative, and this covers a significant part of our exports to China.33 Analysis shows that three major areas make China one of the most potential markets for us:34 Firstly – China itself is a huge market for Bangladesh, with 1.3 billion populations. With the increases in per capita income and standard of living, the need for clothing is also growing. With the rapid growth in apparel imports, the retail sector in China has also seen tremendous boosts and a large number of popular brands have already been developed in their domestic market.

32

Ibid Apparel Story Desk. ―New Market: China‖. The Apparel Story (July- August, 2014): 39. Retrieved from accessed on April 30, 2015. 34 Ibid 33

28

Secondly – As China is moving rapidly toward more high-tech industry, there is possibility that due to increased Labour cost and less competitiveness in the RMG manufacturing, their RMG manufacturers may move out from RMG manufacturing and would find Bangladesh as a potential place to do the business. Thirdly – Since China is on the verge of gradually moving out from RMG manufacturing to high tech industry, losing competitiveness in the industry may result in a huge shifting of global RMG buyers‘ sourcing pattern. Buyers may diversify their sourcing from China to other sourcing countries where Bangladesh will top the list of their preference with its better quality and competitive price.

Bilateral trade between Bangladesh and China: Bangladesh‘s export to China in 2012 – 13: US $ 458.12 Bangladesh‘s import from China in 2012 – 13: US$ 6324.00 Bangladesh‘s trade deficit with China in 2012 – 13: US$ 5865.88 Source: Export Promotion Bureau of Bangladesh China’s Clothing Import from the world:

Source: International Trade Centre (ITC) China’s Clothing Market: at a Glance35  China is the second largest economy in the world, one of the BRICS countries  130 billion population creates a huge captive market for clothing  Per capita income in China has increased from $920 in 2000 to $6560 now  Per capita clothing consumption has increased from $80 in 2001 to around $240 now.  Store-based apparel retailing in China is increasing by 16.7% every year

35

Ibid

29

 As per the statistics of 2012, there are more than 500 thousand apparel specialized stores in China with annual retail sales value around $77 billion (except other multiproduct stores and supermarkets)  Other factors causing robust growth of Chinese retail market is - fast growing online shopping and urbanization of less developed cities  European and US's big retailers are opening new stores in China every day.  China also have a good number of local brands retailing fashionable garment  Besides, China will further increase apparel imports because their local workers are getting more expensive.  Bangladesh as an LDC gets duty free market access for 60% items in China since July 2010. It is expected that this product coverage will be increased to 98% soon which will further boost our exports to China.  Bangladesh is 5th the largest apparel exporting country to China but having a share of only 4.8%, so Bangladesh has a clear prospect to grow in the Chinese market  In 2013, China imported $4.8 billion worth of apparel from the world, which was only $1.65 billion in 2009, which means 191% import growth in 5 years  Bangladesh is already exporting large volume of garment to retailers like Wal-Mart, Tesco, Carrefour, Zara.  Price is a key factor for China market. Bangladesh has the capacity to offer top quality garment at cheaper price than any other regional competitors  Bangladesh exported $241 million worth of RMG to China in FY2013-14, which was $105 in FY2011-12, which means 130% growth in last 2 years.  BGMEA arranged several incoming and outgoing trade missions with China in recent years with a view to expanding Bangladesh‘s apparel export to China  BGMEA signed a number of MoUs with China National Garment Association (CNGA), China National Textile & Apparel Council (CNTAC), and the Ningbo Yinzhou Textile Chamber of Commerce on different occasions.

30

Source: International Trade Centre (ITC) China’s Clothing Import from Bangladesh From the table, shown that import of apparel products from Bangladesh by China radically increased from 2005. It was USD 3.00 million in 2005 and it reached USD 231.20 million in 2013. In 2010 and 2011, the import increased by 114.30% and 144.66% respectively. In 2013, the import grew by 51.09% and it was 4.81% of China‘s total apparel import from the world. 2013 Scenario

Source: International Trade Centre (ITC) In 2013, Chinese import from Bangladeshi apparel showed significant increase. In quarter three (Q3) and quarter four (Q4), 2013 knit import from Bangladesh grew by 47.98% and 48.47% respectively. For woven, it grew by 55.10% and 73.96% respectively. The overall import from Bangladesh grew by 52.07% and 63.44% in 2013 Q3 and Q4.

Source: International Trade Centre (ITC) 31

Top 10 Knitwear and Woven Garment Exporting Countries to China in 2013 From the following table, it is seen that in knitwear, Bangladesh is the 4th largest exporting country to China. In 2013, Bangladesh exported US$ 88.88 million worth of knitwear and the market share is 5.33%. Italy is the top supplier followed by Vietnam and Turkey with market share of 16.05%, 10.12% and 7.56% respectively. Bangladesh is the 4th largest exporting country to China for woven product with a market share of 4.53%. Italy is the market leader with 18.37% market share. We need to increase our share for these items by our increased presence in the market.


2.10.5 Prospective Market to Russia

(Bilateral trade between Bangladesh and Russia) Bangladesh‘s Export to Russia in 2012 – 13: US$ 208.29 Bangladesh‘s Import from Russia in 2012 – 13: US$ 337.76 Bangladesh‘s Trade Deficit with Russia in 2012 – 13: US$ - 129.47 Source: EPB & Bangladesh Bank; Value in million US$

32


Russia knit and woven import from world (position of Bangladesh)

Source: International Trade Centre (ITC) 2.10.6 Prospective Market to South Africa  South Africa has a $1.76 billion apparel market. Bangladesh‘s share of the South African apparel import is 3.32% in 2013.36  Apparel export growth from Bangladesh to South Africa was 6.60% in 2012 compared to 2011 which declined to -4.89% in 2013. In 2009, apparel export to South Africa was $ 40.92 million which is $ 58.55 million in FY 2013. South Africa is becoming one of the new emerging markets for Bangladesh in the African region. 37

36

A.K.M. Marzanul Islam Joy &RatanSaha.―New Market: South Africa.‖ The Apparel Story (January-February, 2015): 55. Retrieved from accessed on May 12, 2015. 37 Ibid

33

(Bilateral Trade between Bangladesh and South Africa) Bangladesh‘s Export to South Africa in 2013 – 14 : US $ 57.03 Million Bangladesh‘s Import from South Africa in 2013 – 14 : US $ 64.62 Million Bangladesh‘s Trade Deficit with South Africa in 2013 – 14 : US $ - 7.59 Million Source: EPB & Bangladesh Bank

South Africa's Clothing Import from the World: Table 1

Source: ITC, by A.K.M. Marzanul Islam Joy &Ratan Saha. The Apparel Story (Jan-Feb, 2015)

Table 2

Source: ITC, by A.K.M. Marzanul Islam Joy &RatanSaha. The Apparel Story (Jan-Feb, 2015) South Africa’s Clothing Import from Bangladesh: From the table-2, it has shown that import of apparel goods from Bangladesh by South Africa radically increased from 2009. It was USD 40.92 million in 2009 and it arrived at USD 58.55 million in 2013. In 2011 and 2012, the import enlarged by 46.44% and 6.60% respectively. In 2013, the import fallen by -4.89% and it was 3.32% of South Africa‘s total apparel import from the world. Bangladesh‘s share of South Africa apparel import grew significantly as it was only 4.49% in 2009. 34

Table 3

Source: ITC, by A.K.M. Marzanul Islam Joy &Ratan Saha. The Apparel Story (Jan-Feb, 2015) Table 4

Source: ITC, by A.K.M. Marzanul Islam Joy &RatanSaha. The Apparel Story (Jan-Feb, 2015) It has been shown that in 2013, South Africa‘s import from Bangladeshi apparel showed significant reduce. In quarter two (Q2) of 2014 knit import from Bangladesh grew by 11.94%. For woven, it grew by -16.12% respectively. The overall import from Bangladesh grew by -14.15% in 2014 Q2. Top 10 Knit wear and Woven Garment Exporting Countries to South Africa in 2013 From the following table: 5, it has been shown that in Knitwear, Bangladesh is the 7th largest exporting country to South Africa. In 2013, Bangladesh has exported $ 24.31 million worth of knitwear and the market share is 2.76%. China is the top supplier followed by Mauritius, Madagascar and Swaziland with market share of 57.74%, 92.95%, 43.09% and 38.68% respectively. Bangladesh is the 7th largest exporting country to South Africa for woven product with a market share of 3.89%. China is the market leader with 56.56% market share. We need to increase our share for these items by our increased presence in the market.

35

Table 5

Source: ITC, by A.K.M. Marzanul Islam Joy &RatanSaha. The Apparel Story (Jan-Feb, 2015) 2.10.7 Prospective market to India By: RDTI Cell of BGMEA Preface38  India is the tenth largest economy in the world and the third largest Asian economy after China and Japan. India is the 12th largest stock exchange in the world.  India has a $500 mln apparel market. Bangladesh‘s share in the Indian Apparel Import is 22.72% in 2014. Apparel export growth from Bangladesh to India was 31.12% in 2014 compared to 2013. In 2010, Apparel export to India was $ 16.06 mln which is $ 113.61 mln in FY 2014. India is becoming one of the new emerging markets for Bangladesh. Bilateral trade between Bangladesh and India: Bangladesh‘s Export to India in 2013 – 14 : US $ 456.63 Million Bangladesh‘s Import from India in 2013 – 14 : US $ 6035.50 Million Bangladesh‘s Trade Deficit with India in 2013 – 14 : US $ - 5578.87 Million Source: EPB & Bangladesh Bank

38

RDTI Cell of BGMEA. ―New Market: India.‖ The Apparel Story (March- April, 2015): 50. Retrieved from: accessed on May 12, 2015.

36

Import Scenario of India’s Clothing Industry

India's Clothing Import from the World:

Table 1

Source: ITC, compiled by RDTI Cell of BGMEA

Table 2

Source: ITC, compiled by RDTI Cell of BGMEA India’s Clothing Import from Bangladesh From above the table 2, it has been shown that import of apparel goods from Bangladesh by India radically increased from 2010. It was USD 16.06 million in 2010 and it reached USD 113.61 million in 2014. In 2012 and 2013, the import increased by 28.24% and 61.52% respectively. In 2014, the import increased by 31.12% and it was 22.72% of India‘s total apparel import from the world. Bangladesh‘s share in India‘s apparel import grew significantly as it was only 148.55% in 2010.

37

Table 3


Table 4

Source: ITC, compiled by RDTI Cell of BGMEA It has been shown that in 2014, India‘s apparel import from Bangladesh apparel improved. In quarter two (Q4) of 2014 knit import from Bangladesh grew by 23.51%. However, for woven, it decreased by -3.19%. The overall apparel import of India from Bangladesh grew by 1.90% in the Q4 of 2014. Apparel Sourcing Trend Top 10 Knitwear and Woven Garment Exporting Countries to India in 2014: From the following table 5, it has been shown that in Knitwear, Bangladesh is the 2nd largest exporting country to India. In 2014, Bangladesh exported $ 27.88 million worth of knitwear and the market share is 13.72%. China is the top supplier with market share of 46.10% followed by Spain (6.88%), Hong Kong (4.81%) and Sri Lanka (4.77%). We need to enhance our share for these items by our increased presence in the market. Bangladesh is the biggest exporting country to India for woven product with a market share of 28.88%. China is the second largest woven exporting country with 26.96% market share.

38

Table 5


2.11 Conclusion Considering all, pertinent to RMG, this sector has enormous prospect in Bangladesh. The constructive export rate to the traditional and non-traditional market, for the sake of lowest labour cost and manufacturing cost, Bangladesh is the number one choice in the eyes of foreign investor. Building collapse and fire flame in the RMG sector is the past and just will remain in the archive as Accord, Alliance and NAP have been ensuring the stander of building and declared safe. This sector is also affirmed an industrial zone and going to be shifted in Munshiganj. It has a new vision know as vision 2021 for reaching US$ 50 billion export. The sustainable development and huge progress (after Rana Plaza and Tazreen Fashion flame) will make the branding Bangladesh in the world market. And the prospect of RMG does not mean only the gain of business persons but also the gain and empowerment of women and employment of people, development of socio-economic condition and at large the overall development of the nation in a sustainable manner. So we should concentrate to this sector for the sake of better Bangladesh.

39

Bangladesh’s RMG Export to the World (July-September, FY 2013-2014 & 2014-2015)

Source: EPB, Compiled by RDTI unit of BGMEA

40

Bangladesh’s RMG Export to the World (July-September, FY 2013-2014 & 2014-2015)

Source: EPB, Compiled by RDTI unit of BGMEA

41

Chapter Three Challenges of RMG in Bangladesh 3.1 Introduction No doubt that the Readymade Garment (RMG) as a single sector makes Bangladesh as a brand to the world market. The apparel buyers are rotate in Bangladesh mainly due to the following reasons: 

Lower price of the product,



Branding quality of the goods,



Innovative design, smooth finishing, and



Committed to provide goods as per the retailer‘s time frame and demand.

Nonetheless, this sector has also some challenges. And the challenges in terms of Lack of work efficiency,  Cost of relocation this sector to the other places,  Development of poor infrastructure,  Lack of application of labour law and poor standard of labour law,  Currency devolution with Euro,  Political turmoil,  Lack of GSP facility from world market,  To meet the vision 2021 and  The lacks of commitment of the stakeholder in this regard are imperative. Workers‘ efficiency can play a vital role for progress and produce of goods a lot. And it can contribute to the workers‘ skill development, employment, branding product as well as share to the national economy and growth of national GDP. The RMG workers‘ in Bangladesh has some lack of workers‘ efficiency. To compare with the other competitive neighboring countries like China, India, Vietnam, Pakistan, Bangladesh took of its lowest position according to the following graph.

3.2 Workers’ Efficiency BGMEA study demonstrates that the performance of Bangladesh RMG export is lower than Vietnam's - the Bangladesh RMG earns US$ 21.5 billion with an active workforce of 4.0 million. On the Other hand, the Vietnam earns US$ 17 billion with only 1.3 million 42

workers.39 The main grounds behind shortage of skilled manpower in Bangladesh in addition the mid-level management of Bangladesh RMG industries are also lacks efficiency in productivity.

Source: BGMEA (The Apparel Story, Nov-Dec, 2014) In order to overcome of lack of workers‘ efficiency, In association with the International Labour Organization (ILO), the financing partnership with Hennes & Mauritz (H&M) and Swedish International Development Agency (SIDA), Bangladesh Garment Manufacturers and Exporters Association (BGMEA) established the Centre of Excellence for Bangladesh Apparel Industry (CEBAI). It is probable that the CEBAI can play an important role for upholding the image of RMG sectors in Bangladesh. The key obligations of CEBAI are in the following  To provide training to all pertinent of RMG industry for future progress of the industry and provide certificate of trainers,  To build a leadership skills that will focus on Occupational Safety and Health (OSH) and  To fulfillment the workers' rights and responsibilities.

39

Apparel Story Desk. ―CEBAI: A Centre to Improve RMG Productivity.‖ The Apparel Story (NovemberDecember, 2014): 23 Retrieved from accessed on April 30, 2015.

43

3.3 Relocation Bangladesh garment manufacturing industry has an impressive history. So therefore, the first choice of the world buyers is Bangladesh.

To keep and establish the RMG industry

sustainability and due to ensure workplace safety relocation is essential. Behind the above, almost 40 percent of RMG factories are not made by garment factories purpose. So, most of factories are not follow the building code as per the Building Code Rules in Bangladesh.40 However, the relocation is one of the big challenges of Bangladesh RMG sector. None the less, the government of Bangladesh already decided to relocate this sector and due to this declared Munshigoange as an industrial zone. In order to relocate with complying proper environment and labour standard, the large number of RMG factories approximately $2-3 billion is to be needed over 4-5 years of time.41 So the amount of money is as large as the sector could not stand up with the existing problems. It is also difficult to manage the huge amount by the single provider i.e. only RMG or government or any of private donors. So it should extend hands together with all the stakeholders of the readymade garment industry. Chart-1: A case study on relocation of five different factories is given below (Amount in BDT)

Source: Interview with industry people, BGMEA (The Apparel Story,Nov-Dec, 2014)

40

Star Business Report. ―US pledges to help achieve $50b apparel export target‖(2015, March 6 th)P. B.1, http://www.thedailystar.net/ 41 Apparel Story Desk. ―Remediation Financing for Transforming Bangladesh RMG Industry.‖The Apparel Story (NovemberDecember, 2014): 33 Retrieved from accessed on April 26, 2015.

44

In a small survey has found that an average factory with 5-30 lines needs $ 2, 84,000 for only fire safety measures. Alliance estimated that on an average $250,000 would be needed for safety improvements of each factory.42 A number of pecuniary schemes are already underway namely the Bangladesh Bank will grant $1.25 million loan for remediation and ensuring workplace safety to each export oriented RMG factory with 9% interest rate only. In order to improve working environment in the RMG sector government and ILO are implementing a three-and-a-half-year-long project involving $24.21 million for five years.43 On the other hand, JICA has signed a MoU with Bangladesh Bank to provide low cost finance for the RMG factories in Bangladesh. Even though, the procedure for gain of this loan is so complex and for which factory owners are not being able to avail those. Though, the Accord is yet to come up with any clear financing strategies that may help factory owners in properly implementing CAP however, member of the Alliance companies have made $100 million in affordable capital available to factory owners to help cover the cost of factory improvements. Alliance also effectively promoted for Bangladesh government to reduce current import tariffs on sprinkler systems and fire doors along with the BGMEA. And finally tariff on safety tools has withdrawn by Bangladesh government. Moreover, Alliance is also communicating with the International Finance Corporation (IFC) to launch a $20 million low-cost loan program for any Alliance factory interested in low-cost financing for remediation. Individual loans granted to suppliers are expected to range from $100,000 to $1.0 million and considering any of the following standards  Assessment and management of environmental and Social impacts;  Labour and working conditions; or, resource efficiency and  Pollution prevention Even though, professionals suggest that the progression have to resolve locally. Government of Bangladesh may allot $ 30 Billion initially in the upcoming budget 2015-2016 or as a special RMG Support Fund.44 They also suggested to allowing for a humble export tax of 42

Ibid Ibid 44 Ibid 43

45

perhaps 1% -2% of the FOB (freight on board) value that could be time bound (say 3 years for the period of reforms). The Government of Bangladesh could provide 2%-3% relocation incentive on FOB for three years to following terms and conditions (a) The factories, which relocate to any new zone; and (b) To the factories are unable to obtain concessional funds from elsewhere. Besides, US, EU, UK, Dutch and Japanese official development agencies are willing to contribute to such reform initiative. The Government of Bangladesh can work with the multilateral and bilateral official growth associates for a Multi-donor Fund of $2 billion (to be collected over 3 years) on concessional terms and longer tenor that can be accessed by BGMEA members to finance either relocations or other necessary compliance/safety measures for the readymade garment workers. In the following, chart-2 shows that larger factories are more cost they incur for CAP. On a usual a factory with an annual turnover worth of around $ 15 million, the investment needed for fire safety, electrical safety and structural remediation in total is around 23.5 million taka. Even though, the larger factories labours are about 3000 and an annual turnover more than $ 20 million and the cost for remediation will be off course higher, as it shown in the following that the Factory A where it needs 56 million taka in total for remediation. Also factories can be small with around 500 workers only and an annual turnover of around $ 5.5 million, but they may need to invest a lot in comparison because of their poor state of structure and compliance.45 So it can develop an idea that what categories of factory should give highest priority for relocation as well as will be benefitted to all stakeholders.

45

Ibid

46

Chart-2: Below is the amount needed for CAP of five Different factories (Amount in BDT):

Source: Interview with industry people, BGMEA (The Apparel Story,Nov-Dec, 2014)

3.4 Infrastructural Development According to the eminent economists, even since Adam Smith, infrastructure is a key component for productivity and growth. The most recent Apparel Summit held in Dhaka on December 7-9, 2014, was the main attraction for the development of infrastructure along with others. It is now has proved by various empirical and theoretical research that an awful infrastructure can affect growth of a country‘s economy. On the other hand, better infrastructures not only improve the economy but also educational sector, health sector and all other pertinent sectors as well. For example, 32 of 39 studies of OECD countries find a positive effect of infrastructure on some combination of output, efficiency productivity, private investment and employment. Furthermore, 9 of 12 studies on developing countries indicate a significant positive impact. Studies based on panel data combining industrial and developing countries suggest that a 1 percent increase in physical infrastructure stocks, given other variables, temporarily raises GDP growth by as much as 1-2 percentage points.46 In Bangladesh, we have a huge infrastructural lacuna. Bangladesh took a shocking position considering access to infrastructure in the South Asia. And the situation is going from bad to

46

ZahidHussain. ―Why does infrastructure matter?‖Special Supplement of the Daily Star. (2014, March 12): 36

47

worse day by day. Within the worse infrastructural situation, communication i.e. the total road networking infrustrure, electricity and gas is the main problem in Bangladesh. According to World Bank estimation in 2013, Bangladesh needs to spend 74 to 100 billion US dollar for the development of worse infrastructure within 2020. As per the report, per year Bangladesh require to provide between 7.4 to 10 percent. 47 So it is remain a big challenge to our RMG sector. They are also urging the government for the speed up the development of Dhaka-Chittagong Highway to four lanes to reduce traffic jamming that delays transportation of exports. The road can play an important role for the export and import businesses in the country, and the government's construction work on development has been going on for many years now. So therefore, first of all internal obstructions have to eradicate for reaching the goal by 2021.48

3.5 Application of Labour Law Bangladesh Labour Act was enacted in 2006. It was amended in June, 2013 to ensure the standard of International Labour Organization (ILO) and ensure the labour rights of Bangladesh. However the application of labour law still remains so far. In the following cases labour law of Bangladesh not yet implemented so far: 

Employment procedure of Ready Made Garment (RMG) worker,



Maternity Benefit of Ready Made Garment (RMG) Women Worker,



Health and Hygiene Condition of Ready Made Garment (RMG) Worker,



Welfare Measures of Ready Made Garment (RMG) Worker,



Working Hour and Leave of Ready Made Garment (RMG) Worker,



Wages and Payment of Ready Made Garment (RMG) Worker,



Worker Compensation for Injury by Accident of Read Made Garment (RMG) Worker,



Trade Union in Ready Made Garment (RMG) Sector,



Worker‘s Participation in RMGs Profits in Bangladesh,



Provident funds in Ready Made Garment (RMG) Worker,

47

Ibid The Apparel Story. ―Business Leaders Demand Adequate Energy‖(November- December, 2014): 56. Retrieved from accessed on April 29, 2015. 48

48

According to the Labour Act, 2006 as amended in 2013 are the rights of RMG workers. However, none of these are absolutely implemented yet. One of the American Labour Organization known as ‗American Federation of Labour and Congress of Industrial Organization‘ (AFL-CIO) has raised 46 Labour torture against the garment sector in Bangladesh.49 They claim the following:  Owner are creating obstacle against Labour union and making barrier for the registration of Labour union in the readymade garment sector,  Failing to protect torture against those who are in favor of Labour union,  Failing to make an international standard EPZ law,  Failing to maintain a Labour standard in the shrimp industry and  Falling to protect Labour rights in the telecommunication sector in Bangladesh. They have categorically mentioned 46 individual case of torture against the readymade garments workers who are in favor of trade union. Owner of the readymade garment are very reluctant against the trade union. From June, 2011 to September, 2014 about 196 garment industries have created union among them only eight organizations (4%) finally established Collective Bargaining Agent (CBA) by the contract with owner of the readymade garments. Among the various categories of torture against readymade garment worker (who are like/ favor to trade union) the following are -creating presser to the worker, torture, abduction, beating, threatening to death, blaming to theft, ejection from job, compelled to leave the job, threat to rape woman worker, threat to parent of the worker. Victims of the incident complain to the police station however police were reluctant and no case was filed in this regard. They state that government is failed to protect the Labour rights, criticized by the AFL-CIL. The inspection officers of the garment factory are not properly visit the garment factory, the government also fail to execute the duty properly. Bangladesh University of Engineering and Technology is a delegated institute to visit garment industry however they are not visiting that extend. So therefore, in order to overcome of this situation Government monitory system should be developed  Labour should conscience about their rights  Owner should moral in this regard

49

Bangladesh Protidin.―46 more claim USA for labour torture‖ November 8, 2014.Retrieved from accessed on April 26, 2015.

49

3.6 Loophole the New Rectification of Labour Law The latest rectification on 15 July, 2013 did not fulfill the gap and not lifting up to international standard like International Labour Organization (ILO) also not comprehend the Labour rights of workers in Bangladesh. The different national and international rights groups have termed it 'anti-worker' and 'pro-employer' one. They also urge to the prospective donors and international investors to press the Bangladesh government to reconsider the new amendment or to make further amendments to the law to fully ensure workers' rights to form unions, bargain collectively, participate in workplace decisions on safety and ensure the different testable bonus right within the provision of existing Labour law. This amendment mainly for get back Generalized System of Preferences (GSP) 50 facility from the US and hold the one in the European Union (EU) market. Even though it seems that the amended Labour of Bangladesh would guarantee some development but the same still fall far short of protecting workers' rights and meeting international standards according to Human Rights Watch (HRW). After a few series of disaster in 2013, it is a huge burden to probe the government of Bangladesh to do something in favor of RMG workers in Bangladesh. The whole world especially the donor and buyer countries kept their eager attention in this regards. "The Bangladesh government desperately wants to move the spotlight away from the Rana Plaza disaster, so it's not surprising it is now trying to show that it belatedly cares about workers' rights. This would be good news if the new law fully met international standards, but the sad reality is that the government has consciously limited basic workers' rights while exposing workers to continued risks and exploitation.‖51 "The government has not only missed a golden opportunity to get rid of provisions that limit workers' rights, it has even sneaked into the new law and harmful regulations. Even after Rana Plaza, the government still is not fully committed to the protection of workers' rights and safety" according to the said above source. 50

The US suspended the GSP to Bangladesh last June, 2013 over shortcomings in safety and Labour standards while the EU threatened similar action. 51 Phil Robertson, deputy director (Asia) at Human Rights Watch said in a statement.

50

The major loopholes of the new Labour Law are government control over Labour unions‘ access to foreign funding, lack of ILO standards Labour union, lack of accountability of employers, no provision has been mentioned about festable bonus of workers, no accountability of inspector who suppose to inspect periodically readymade garment, gratuity benefits which are not reflected as per the new rectification, no procedures to tackle sexual irritation of women, who make up the vast majority of workers in the garment industry. Along with above loopholes government also did not follow or carried out the Bangladesh High Court Division‘s guideline in order to stop the sexual harassment in the workplaces. The new amended Labour law terming the 'inhumane' and 'black' one and did not at all consider the proposals of the trade unions of Bangladesh, the international trade unions or the International Labour Organization (ILO) to allow all workers to form and join trade unions as per ILO conventions 87 and 98. As per the existing Labour law of Bangladesh thirty per cent membership requirement to form a union is not unacceptable one where there are more than 10, 20, 30 or 40 thousand workers work in one factory.52 On the other hand, participation committees, which is largely powerless body made up of management and workers, could not be the substitute of trade unions. It is also state that the new amended law is undemocratic, anti-worker and it was done to protect the interests of the employers, the Bangladesh Garment Manufacturers (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters (BKMEA) leaders. The rule of transferring the five per cent profit of companies to workers' welfare fund is not also properly executing as per the provision of Labour Law Bangladesh.53

3.7 To Meet the Vision 2021 Bangladesh apparel summit was held in December 7 – December 9, 2014. The title of the first session was ―Bangladesh RMG 2021-Reaching $50 billion on 50th anniversary A colLabourative and Coordinated Approach.‖

During this summit a survey was held by cell hope in Dhaka Bangladesh. Asking the stakeholders that which one is more important to reach the target of 50 billion by 2021? Answer is in the following-

52 53

Vice Chairman of Bangladesh Institute of Labour Studies (BILS) MojiburRahmanBhuiyan. MoshrefaMishu, president of the Garments Workers Unity Forum (GWUF).

51

Sectors

percents

Other sectors

Infrastructure

56.6%

Skilled Labour

22.41%

Land Acquisition

5.17%

New Market

5.17%

 Labour life standard development,

Reducing Bank Interest

3.45%

 Increasing salary also be concentrated

Stable Politics

1.72%

 Ensuring safety working environment,

Sources: Compiled by authors with the help of various sources

According to the survey there is a huge challenge to the RMG sector in Bangladesh to reach the target by maintaining the above sectors. In order to get a new market, there are 19 commercial counselor office of Bangladesh across the world. The commercial counselor offices usually advise and promote

exporters about

different countries and demand of goods there. In order to achieve the vision 2021 by exporting $50 billion and where the Ministry of Commerce wants to gain $ 70 billion, Government of Bangladesh (GoB) decided to open new six more commercial counselor office to the following countries.54 Seoul, Geneva, Kunming, Istanbul, Singapore City and Pretoria And the part of it, GoB has already finalized the decisions to set up commercial counselor offices in Seoul and Geneva. The counselor offices will be given export goals in a year and their performance is on the basis of their efforts to attain the targets, not on the success. 54

The Apparel Story Bulletin. ―6 more counselor offices abroad to chase $ 50 billion RMG export target.‖ The Apparel Story (Nov-Dec, 2014): 52. Retrieved from accessed on April 26, 2015.

52

3.8 Currency Devaluation with Euro Due to political unrest retailer could not receive work order. They are facing problem in transportation of goods from factory to port on the flip side port to factory. Bangladesh readymade garment has a large market to European countries. About 60% or more than $ 14 billion garment items being shipped to the region each year. However, due to continuing political unrest, on one hand, RMG sector is losing business inside the country and on the other hand, losing money for currency devaluation with Euro.

In September, 2014, each euro traded for Tk. 110, nevertheless, at present it is trading at Tk. 87 only, it mean about 21% decline in worth.

3.9 Political Unrest The political instability is another challenge in this sector. During political instability retailer are very reluctant to raise their further order. Garments administrators are also face problem for shipment as per the order. Worker cannot join their work due to political unrest. At all due to political turmoil, the country is facing a serious decline in investment both public and private which ultimately results in GDP (Gross Domestic Product) growth rates declining. The GDP growth rate in the election year i.e. 2013-2014 was 6.1 but as fresh violence has erupted in the country since January 2015, GDP growth rate is expected to plummet this year. Investment is a sine qua non for GDP growth but it is natural that political instability hampers investment. Lack of public investment is due to inadequate tax resources and on the other hand private investment demands security and political stability.

53

Source: The Daily Star, Feb. 14, 2015 B1 It can be clearly seen that the GDP growth rates in the year that had political instability are lower than those years that had political stability. Therefore political stability and increasing GDP go hand in hand. Political impasse is a massive threat to this sector especially because the retailers cannot trust on the manufacturers of timely supply therefore the retailers place their order to some other country where there is no political instability. Supply on time is very important for any sector. Political crisis in Bangladesh has posed challenges to the apparel industry in the past but the current threat is very menacing as nobody knows when it will end. Political crisis threatens the timely delivery of goods to buyers or retailers and also increases the cost of transport many fold. Political instability is a prerequisite for the development of any sector in general and particularly for exporting industry like apparel industry. The impact of the current stretch of political unrest would manifest in the export earnings three or four months later, as garment makers‘ bagged fewer than normal orders from retailers between January and March. So therefore to keep all things in consideration a stable political environment is more important to reach the export target in time.

54

3.10 Lack of New Investment New investments in the Bangladesh RMG sector dropped harshly in the year 2013. Apart from various tragic incidents, energy crisis in the year moreover the economic turmoil in Europe and the United States left an adverse impact on the sector. Only six RMG units have been listed with the Registrar, Joint Stock Companies, Bangladesh and Firms in FY 2012-13, shiny the insecurity that has gripped the industry, which accounts for 80 per cent of Bangladesh's exports worth almost US$ 27 billion. Various numbers of applications has submitted to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has declined to 122, from 149 in FY 2011-12 and 176 two years back. On the other hand, the FY 2012-13 Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) approved around 65 new memberships, down from 113 two years back.55 Export order is also decline day by day due to some chapter of accident i.e. Tazreen fire, Rana Plaza collapse, Smart Fashion fire etc. According to the Exporters' Association of Bangladesh (EAB) export orders of RMG jumped down by roughly 30 per cent after the various incidents and it would be reflected in the export position of ending 2013. The EU and the US together comprise nearly 90 per cent of Bangladesh's annual garment exports, with the EU buying every six of the 10 garment items Bangladesh ships every year. In addition, debt crisis is raised from European Union (EU) many buyers have shown their dissatisfaction to put their new order. Similarly, US market also fall down; exporting to US market was below anticipation.56 Along with the accidents, Bangladesh RMG sectors have some infrastructural problems; including high cost of land and dearth of skilled workers, and instability in the international market have dispirited fresh investment in this sector. So many possible orders have been forwarded to the Latin American and other Asian competitive countries like, Sri-Lanka, Cambodia, India, and Pakistan instead of Bangladesh. Bangladesh had missed a fair-haired chance to clutch the orders worth billions of dollars diverted from the increasingly costlier China according to Centre for Policy Dialogue (CPD), 55

The Financial Express.―New investments in RMG sector decline last fiscal‖, (2013, July 22).Retrieved from accessed on April 29, 2015. 56 Ibid

55

Bangladesh. New and smaller units garment factory cannot comply with the buyer demands, which is another reason behind the sluggish trend in creating new entrepreneurs in the sector. Government of Bangladesh can set up a task-force to face the latest threats to the garment industry.

3.11 GSP Status Generalized System of Preferences or GSP is a special facility for the developing country for getting duty benefit. Since 1971, Bangladesh has been enjoying this duty-free benefit from European Union (EU). The EU is the largest export destination for the country's garment products. Bangladesh accounts for about 13 percent of the garment substance that enter the European Union, meeting 25 percent of the region's order for shirts, T-shirts, sweaters and trousers. Bangladesh Garment Export to European Union (EU) Year

Amount

FY 2011

$ 10.51 Billions

FY 2012

$ 11.37 Billions

FY 2013

$ 12.56 Billions

FY 2014

$ 14.74 Billions

Source: compiled author himself by collecting data from Export Promotion Bureau (EPB) Sri Lanka is one of the close competitors to grasp world apparel market. A new challenge is set for Bangladesh garment sector as Sri Lanka is lobbying for duty free benefits or Generalized System of Preferences Plus (GSP+) from the European Union.57 If the status is granted, Sri Lanka may exports to the EU with duty free. As Sri Lanka has well-qualified labour efficiency than that of Bangladesh labour force and also have quality to move further up the value chain. Distinctive design services and goods, further mechanization, and effective branding could help Sri Lanka to retain market share intake. Sri Lanka could also advantage by intensifying its position in non-traditional markets like the Middle East, India and China. 57

RefayetUllahMirdha. ―New challenge to garment sector: Sri Lanka‖ (April 1, 2015). P. B. 1 & 3. Retrieved from accessed on April 26, 2015.

56

It is also noted in January, 2014 Pakistan newly ensured the GSP Plus status for 75 items, of which, 77 are garment items and similar to Bangladeshi products destined for the same markets.58 So it is also a big challenge for the apparel of Bangladesh. (BGMEA) The Philippines suppose to raise exports to the E.U. by 35 % and create 200,000 jobs as a result of the preferential status, which begun December 25, 2014. In is noted that very recently, European Union (EU) has approved the Philippines‘ application for Generalized System of Preference (GSP) Plus59 status, and the country will now benefit from zero tariffs on 6,274 products—nearly two-thirds of its exports destined for Europe.60 Philippine could enjoy tariff free exports on a limited number of products to EU and exports $2.07 billion in total in 2013 and is 33%of total exports. However, the new status change is predicted to raise annual export earnings by as much as $737 million. Philippine is one of the most competitor countries in Asia to export RMG products to the EU and US markets. The Philippines exported 176 million euro ($216 million) worth of textiles and textile articles to the E.U. in 2013, down 20.8% from the previous year. Garments, textile products and footwear are among the top sectors expected to benefit from the GSP upgrade.61 Philippines is the only E.U. GSP+ beneficiary country within the Association of Southeast Asian Nations (ASEAN) region, which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. Philippine also expect for foreign investor and turn the attention to the Philippines and like to create a business center for the Asian region. Bangladesh, as one of the least developed countries it was supposed to enjoy zero-tariff benefit from the US market. However, it is unfortunate that Bangladesh pays the second highest duty for export to the US. Before the US scrapped Bangladesh's GSP (Generalized System of Preferences) privileges, the country enjoyed duty-free access for 97 % of its exporting goods. Even though, the main apparel item was not included in this duty structure. Now the duty construction for Bangladeshi goods is prejudiced as other contrasting countries 58

Star Business Report. ―US pledges to help achieve $50b apparel export target‖(2015, March 6th)P. B.1, http://www.thedailystar.net/ 59 GSP+ program, part of the E.U. Generalized System of Preferences (GSP), offers eligible countries zero tariffs on all products covered by the scheme. 60 The Apparel Story. ―EU Grants Philippines GSP Plus Status.‖ (November-December, 2014): 54. Retrieved from accessed on April 29, 2015. 61 ibid

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pay much less tariff on exports to the American market. About 95% RMG items are yearly exporting to the American market. On average more than 16% duty has been paying to US and the tariff on RMG products is 15.62%. On the flip side, Vietnam pays 8.38 % tax; Indonesia pays 6.36 %, China 3 %, Germany 1.16 %, India 2.29 %, Turkey 3.57 % and Hong Kong 1.25 % on export of goods to the American market. Bangladesh paid $828 million in taxes to the US customs last year and $3.38 billion over the last five years since 2009.62 The flip side, after the Rana Plaza collapse, USA has cancelled the GSP facility for Bangladesh RMG. So in absence of GSP facility reduces the RMG export in USA. Even though, after the incident, Accor & Alliance has visited 2193 RMG and have found only 29 factories in danger and close down immediately. None the less, GSP status still has remain closed to the US market. From January to October, 2014, the USA total RMG goods imported $ 70.04 billion. The main exporting countries are the followingCountry

Position

Amount in billion

First

$ 25.626

Vietnam

Second

$ 7.932

Indonesia

Third

$ 4.206

Bangladesh

Fourth

$ 4.196

Mexico

Fifth

$ 3.157

India

Sixth

$ 2.947

Chine

Source: Compiled by authors with the help of ‘Office of Textile and Apparel’ (OTEXA)

3.12 Craving for Green Industry The economy of Bangladesh is now a transitional point for development of its economy. And its economy is shifting from casual agro-based to industrial-based formal sectors. Over the last few decades the manufacturing segment attained amazing growth typically through readymade and textile sector. As the industry is growing significantly, this development should ensure by sustainable way. According to Intergovernmental Panel on Climate

62

US urged to cut duty on RMG, Retrieved from accessed on April 29, 2015

58

Change‘s (IPCC), Bangladesh is one of the most danger countries to climate change.63 So the government of Bangladesh and the leader of the industry should handle this issue together with keep the development of industry with sustainable precedence. A Green Factory (GF) fulfills all the areas of environmentally sustainable production such as from site selection to ultimate waste disposal. This has been felt by the RMG factory of Bangladesh. The segment has already stepped into making factories eco-friendly. Only 28 industrial units which are taking place for green factory and a number of factories have achieved Leadership in Energy and environmental Design (LEED) certification from the U. S. Green Building Council (USGBC).64 In the last year a total of 87 LEED certified factories were given permission and are now under construction from which 75 factories are for RMG and textile.65 Following is the rating system of LEED certification: Normal: 40 -49 points Silver: 50 – 59 Points Gold: 60 – 79 Points Platinum: 80 or more LEED credit categories follow the 5 distinct areas as mentioned in the following.

63

Fifth Annual Report of Intergovernmental Panel on Climate Change‘s (IPCC). Mohammad MonowerHossain. ―Mohammad MonowerHossain‖ the Apparel Story, (November- December, 2014): 43-44. Retrieved from accessed on April 29, 2015. 65 Apparel Story Desk.―2014: A Year of Turning Around for RMG Industry.‖The Apparel Story. (JanuaryFebruary, 2015): 12-14.Retrieved from accessed on May 12, 2015. 64

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A GF has to use natural resources in a way that does not create problem in the eco-system. A GF must have a storage and collection system of recyclable materials and has to ensure higher use of local materials. A GF uses water based paint with low Volatile Organic Compounds (VOC) and etc. Bangladesh RMG sector is initiate LEED certified Green building and it has a great opportunity now. In order to get a LEED certification following is the procedures:  Submission of proposal to USGBC  Submission of Project report  Submission of Role Matrix  Submission of LEED specification  Submission of material list  LEED efficient energy system design  Energy simulation  Lighting, day light and view analysis  Analysis of renewable option  Construction and monitoring  Fundamental Commissioning  Construction Submission On the other hand, water usage by the textile industry in Bangladesh is predicted to be 1,500 million cubic meters, which is principally made of groundwater. Around 70% of this water consumption takes place in the wet processing of textiles, which involves washing, dyeing, and finishing of textiles. Besides high water footprint, the textile industry also faces the challenge of dealing with the problem of effluent discharge and the use of coagulants and chemicals for its treatment. Realizing the scale of these issues and the urgent need for addressing them, Bangladesh Government has recently issued the Zero Liquid Discharge (ZLD) Regulation for the textile sector. This poses a huge challenge for the industry, particularly for the small and medium sized units.66 Implementation of ZLD is a vast challenge like;67 66

SomnathBattacharjee&RituBharadwaj.―Zero Liquid Discharge: Options for Bangladesh Textile Industry.‖ The Apparel Story (January-February, 2015): 38-39. Retrieved from >http://www.bgmea.com.bd/media/newsletters/January-February-2015/January-February-2015.pdf> accessed on May 12, 2015. 67 Ibid

60

1. Technical feasibility of various options, 2. Financial viability, 3. Practical implementation issues like lack of space in existing units to install effluent treatment plants, 4. Disposal of solid waste/ sludge that would be generated as a result etc.

3.13 Separate Ministry for RMG In order to create a vibrant RMG industry and for a business hub in the Asian region, the BGMEA and BKMEA are repeatedly demanding for a separate and devoted ministry for the RMG sector. BGMEA and BKMEA, opined, that Poor infrastructure is the main challenge for export growth of RMG sector and within this rough infrastructure port, skilled Labour and transportation i.e. road and highway is the main problem. According to the BGMEA, country had been expending Tk 400 crore every year as salary to near about 19,000 foreigners working in the RMG sector because of a weak forward linkage industry and shortage of skilled manpower.68 Very recently, in 2014 Accord and Alliance have visited 2021 garment factories and out of this number only 30 or 1.8% found fault. But 2% is acceptable as per international law.69 ―Along with the micro perspective, we have to focus on larger perspective as well. We are facing challenges from Vietnam and Cambodia. We have to make sure that we maintain the minimum standard and at the same time be able to compete from within our limits.‖70 ―It is true that 2% of the factories that we inspected are critical and most of the factories have some problems which have to be fixed. It is important for all of us to fixing those and fixing in a timely manner. And that is the best way to show the buyers, show the world that Bangladesh is improving and will dominate the industry.‖71

68

The Apparel Story. ―Separate Ministry for RMG Demanded‖ (November- December, 2014): 55. Retrieved from accessed on April 29, 2015. 69 ibid 70 Dr. Towfique Ali, chief executive of the Bangladesh International Arbitration Centre (BIAC) 71 Rob Wayss, Accord executive director in Bangladesh

61

3.14 Adequate Energy The RMG business leaders repeatedly demand for uninterrupted sufficient supply of gas and power and a stable political environment for smooth business operations. Gas is a very important natural resource which meets around 73% of total demand for fuel in commercial sector in Bangladesh. The growing RMG industry also heavily depends on the natural resource since it is used as the prime source of energy in the sector. But at present shortage of natural gas has been affecting the RMG industry. New factories cannot be set up for lack of gas connection while production at running factories is greatly hampered due to low pressure of gas. The ongoing shortage of natural gas has adverse impacts on RMG sector. There are 250-300 factories which are ready with all the equipment and machinery to operate in full swing. But due to lack of gas connection many factory owners are incurring huge losses in terms of productivity and export. Thus, in return, Bangladesh is getting deprived of a huge amount of foreign currency.72 Production has slowed down in many garment factories due to low pressure of natural gas while new factories cannot go for production without gas connection, thus incurring huge losses. Apart from hampering production in the factories, gas crisis has become a bar to creating new employment in the country. New factories cannot be set up without gas connection. But the shifting is being delayed due to complexities arising from lack of gas connections. If any industrial unit is shifted or relocated, it will need a fresh gas connection. As a result, the garment factories, which are relocating from the city to the outskirts, are facing problems and their operation remains stalled due to shortage of gas supply. On the other hand, shifting gas pipe line to the new business area and very recently raising gas price is another hassle and barrier for the development of RMG sector. Many factories have already been shifted from Dhaka to neighboring areas, but the government has barred the shifting of gas pipelines through a gazette. RajdhaniUnnayanKatripakkha also raises some methodical problem to build up new building near to Dhaka in the name limitation of Detailed Area Plan (DAP). So the above obstacles should overcome by the hands of government than it be able to fulfill the aspiration of the goal of RMG industry. At the same time as a vast prosperity of the RMG industry it is now indispensable to maintain by one-stop 72

MusharratTarannum Baishakhi.―Need for Smooth Gas Supply to RMG Industry.‖The Apparel Story (JanuaryFebruary, 2015): 41-42. Retrieved from accessed on May, 12, 2015.

62

services to attract the prospective investor. RMG industrial sector are misery from insufficient delivery of gas, and the committee is not working to this end.

3.15 Conclusion RMG sector has huge prospect notwithstanding the fact, however, a few challenges of this sector cannot be denied at all. The most important challenge of this sector is lack of infrastructure i.e. electricity, gas and communication. The infrastructure development means development of other manufacturing sector like jute and jute related goods, leather and leather related goods, frozen food, home textile and so on. In order to reach the vision 2021, development of work efficiency and foreign investment is must. Application of labour law, relocation and political turmoil are the big challenges of the RMG sector. In order to get back GSP status from US market amendment of labour law and its execution along with compliance of global standard in the RMG units is a must. However, grasping new market instead of traditional EU & US is remaining a big challenge of this sector.

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Chapter Four Role of Different Stakeholders 4.1 Introduction The safety record of the Bangladesh garment industry is one of the worst in the world. According to the Bangladesh Fire Department 414 garment workers were killed in at least 213 factory fires between the years 2006 and 2009.73 A further 79 workers lost their lives in 2010 in 21 separate recorded incidents.74 On 24 April 2013 about 1129 people died and another 2515 injured in the collapse of Rana Plaza, an eight storey multiplex housing clothing factories, a bank, shops and several residential apartments in the Savar district of Dhaka. Months before a fire in the Tazreen Fashions factory killed an estimated 112 workers. The collapse has since become emblematic of the human costs of doing business in Bangladesh.75 The high death toll from these incidents reflects not only substandard buildings but poor emergency procedures, inadequate and blocked fire exits and overcrowded workplaces. Many of the workers involved were killed while producing clothing for brands and retailers in Europe and North America.76 Since the inception of its garment export industry in the late 1970s, the RMG export level of Bangladesh has been increasing rapidly and in recent times Bangladesh has become of the top global exporter of RMG products. In 2011-12 Bangladesh was the world‘s second largest exporter of apparel, registering $19.1 billion of RMG exports. Ready-made garments account for nearly 75% of export revenue, a 13% share of GDP, and nearly a third of total exports.77 Over the last 15 years, Bangladesh‘s share of apparel imports to Europe and the US has more than doubled.78 High capacity and continued wage competitiveness have consolidated

73

Based on an English-language newspapers (LexisNexis) by ILRF and Clean Clothes Campaign (2012) Ibid 75 Bangladesh All party Parliamentary Group. ―After Rana Plaza, A report into the readymade garment industry of Bangladesh‖.Parliamentary Liaison Office, UK(2013):14. Retrieved from accessed April 25, 2015 76 Clean Cloth Campaign.―Hazardous Workplaces: Making the Bangladesh Garment Industry Safe‖. (2012): 1. Retrieved from accessed on April 25, 2015 77 McKinsey & Company, ―Bangladesh‘s ready-made garment landscape: The challenge of growth‖. (2011). Retrieved from accessed on April 25, 2015 78 War on Want.―Deadly Secrets: What Companies Know About Dangerous Workplaces and Why Exposing the Truth Can Save Workers‘ Lives in Bangladesh and Beyond‖.(2012). Retrieved from accessed April 25, 2015. 74

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Bangladesh‘s position as the third most prolific importer to the European Union and the fourth most prolific to the United States.79 In 2012 McKinsey & Company forecast an annual export-value growth of 7-9% over the next ten years, predicting that the market will nearly triple by 2020.80 Goldman Sachs has included Bangladesh in the ‗next 11‘ of emerging countries after BRICS. JP Morgan has identified Bangladesh among its ‗frontier five‘ emerging economies in which it is worth investing. However, this story of growth is shot through with digressions that hint at systemic vulnerabilities and exploitation.81 The rapid growth of RMG sector of Bangladesh gives rise of about 5000 factories throughout the country specially in business districts and export processing zones. These 5000 factories provide employment for an estimated 3.6 million workers.82 Between 2000 and 2009 employment in the apparel sector grew by 94%.83 Whilst the growth of the RMG industry has provided millions with an opportunity for paid work, the work itself can be precarious and its rewards are routinely low. Increases in employment have been matched by a decline in real wages84 and workers can take home up to 62% less than the living wage.85 Moreover, as evidenced by the collapse of Rana Plaza and the fire of Tazreen Fashions, the conditions in which these wages are earned are sometimes proves unsafe. The downfall of Tazreen and Rana Plaza cannot be treated as some isolated events. These are the ultimate results of poor safety measures and hazardous conditions of RMG sector of Bangladesh. The stakeholders should not only applaud about the rapid economic development of Bangladesh by its RMG sector, there are lots of things like enforcement of labour laws, environmental laws, building and safety standards must be understood and addressed. Leaving Bangladeshi markets by the brands is never the ultimate solution of the problems. Avoiding Bangladeshi markets wouldn‘t help the workers in improving their conditions. In 79

McKinsey & Company, Ibid. McKinsey & Company, Ibid. 81 Bangladesh All party Parliamentary Group, Ibid 82 McKinsey & Company, Ibid. 83 Pickles, J. ―Economic and social Upgrading in apparel global value chains: public governance and trade policy‖.Working Paper 13 (2012): 53, Retrieved from accessed on May 8, 2015 84 Ibid 85 Hurst, Rosey and Gittings Selene.―Nice Work? Are Workers Taking the Strain in the Economic Downturn?‖.Impactt Ltd, (2012): 20, Retrieved from accessed on May 8, 2015 80

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viewing the problem through the ‗Protect, Respect and Remedy‘ framework of the UN Guiding Principles on Business and Human Rights, states bear a duty to protect against human rights abuses by third parties, whilst business enterprises should act with due diligence to avoid infringing on the rights and address the adverse impacts their actions cause. 86 The brands have a responsibility to use their influence and offer redress for poor conditions of the RMG sector of Bangladesh. To abandon Bangladesh would be an avoidance of responsibility and to refrain from addressing the systemic problems would be a risk to the long term integrity of the brand and a potential risk to both consumer loyalty and long term share-price stability. This part of the paper aims to give an overview about the role of different stakeholders in the RMG sector of Bangladesh and highlights of what action needs to be taken by the different actors involved in order to improve the overall situation of garment factories in Bangladesh. This part also discusses what has been achieved so far both in preventing future tragedies and compensating the victims of previous incidents and what more could and should be done by the government, brands, retailers and employers and other stakeholders to ensure that the RMG sector of Bangladesh is not becoming the bloodthirsty monster for the sake of cheap fashion.

4.2 Assessment of Initiatives Undertaken by Different Stakeholders After the Spectrum tragedy some demands were made to buyers, the garment owners and the Bangladesh government to take steps to improve the safety of garment factories. The demands included developing a program of inspections to check the building safety of garment factories and the establishment of a multi-stakeholder oversight committee, which would include representatives of employers, government, trade unions and fire and safety experts, to investigate and monitor building safety issues.87 At that time some measures were taken including the stepping up of buyer requested audits focused on building safety, the setting up of a government task force to look into safety, which included a point of contact where workers and others could raise their concerns, and the involvement of the Bangladesh

86

Office of the High Commissioner, United Nations Human Rights.―Guiding Principles on Business and Human Rights‖. Retrieved from accessed on May 8, 2015 87 See Clean Cloth Campaign. ―Hazardous Workplaces: Making the Bangladesh Garment Industry Safe‖. November (2012): 3

66

Garment Manufacture and Export Association (BGMEA) in unannounced inspections to check on access to fire exits.88 From the very beginning the trade unions and labour groups were complaining that these responses are nominal and not systematic enough. In fact almost all the recommendations made by the task force were already in different laws of Bangladesh; the real problem was the implementation and enforcement of laws. There were also concerns that factory owners would simply sub contract orders to smaller factories that were outside the remit of the task force and BGMEA inspections and thereby avoiding inspections or costly re-mediation actions. The Multi-Fibre Arrangement Forum Bangladesh (MFA Forum) in 2006 brought together representatives of government, industry, buyers and trade unions to find out a more structural response to the problems of building safety but unfortunately it failed to reach agreement or to carry out any practical work in this area.89 In February 2010 another catastrophe shook the RMG sector of Bangladesh. Following the tragedy, various parties once again tried to pull together a multi-stakeholder approach to dealing with fire safety. In May 2010 a proposal was made to organise a meeting together with government, buyers, industries and trade unions. This meeting finally took place in December 2010 attended by representatives of buyers, the garment industries, trade unions and labour rights groups. Unfortunately the government failed to send a representative. In the meeting the stakeholders shared the progress of their individual progress which largely limited to an increased focus on electrical inspections. Less than two weeks after the meeting, 29 workers died in a devastating fire at That's It Sportswear (Hameem Group). In April 2011 the third multi-stakeholder meeting was held in Dhaka where representatives of the government, BGMEA, trade unions and buyers discussed the signing of a Memorandum of Understanding (MoU) that would establish a program of work aimed to prevent future tragedies. In the meeting the government was represented by officials from the Fire Safety Department and the Building and Factories Departments. All the stakeholders agreed that more negotiations would be necessary to address various aspects of the MoU and no action was agreed upon during the meeting. It was foreseen that negotiations would continue until the summer, with the hope that a final MoU would be signed within months. On the 15th March 2012 anMoU was signed between PVH Corp., a US company owning several brands 88 89

Ibid Ibid, p.4

67

including Tommy Hilfiger and Calvin Klein, and Bangladeshi and international labour rights groups and trade unions, including both the Clean Clothes Campaign and the International Textile Garment and Leather Workers Federation. The MoU allowed for independent building inspections, worker rights training, public disclosure and a long-overdue review of safety standards. It was transparent as well as practical, and the most unique thing was that it was supported by all key labour stakeholders in Bangladesh and internationally. On the 14th September, 2012 another retailer named Tchibo signed the MoU. A number of initiatives were undertaken by the national and international stakeholders have taken to improve factory safety and labour rights in 2013-2014. Following are the major ladder taken by the government during this period:  Amendment of the existing Labour Act, 2006;  Making the National Occupational Safety and Health Policy, 2013;  Creation of task force to review inconsistencies in industry-specific laws;  Increase of minimum wage for garments workers by the Minimum Wage Board. The Board proposed a 76.7% increase of total wages in lowest grade;  Formulation of labour Code and inspection checklist;  A Government Order (GO) ruling out the issuance of construction approvals by Union Parishad;  Formulation of two high level committees; a Cabinet Committee on RMG sector and a Secretary Committee to ensure accountability and oversee all initiates centrally;  Decentralization of power and responsibilities of RAJUK and Directorate of Inspection for Factories and Establishments (DIFE) to regional offices from central offices;  Introduction of online application and approval process by the RAJUK;  Launching of a website to ensure public access to relevant information;  Introduction of online application for factories and trade union registration;  Creation of a one stop service point by the Fire service and Civil defense authority formed in order to make fire safety licensing and certification process easier and more transparent.90

90

See Transparency International Bangladesh.―Good governance in the Readymade Garments Sector: Promises and Progress, A follow-up research‖. 21 April (2014): 3-4, Retrieved from accessed on April 25, 2015

68

Following joint initiatives were taken by the factory owners, workers and state:  Formation of a National Tripartite Plan of Action on Fire Safety and Structural Integrity (NTPA) with the assistance of International Labour Organization (ILO);  Signing of a sustainability Compact;  Introduction of a unified manual for assessing structural integrity and fire and electrical safety under NTPA;  Surveys to assess the fire, electrical and structural safety in factories have been conducted under the coalition of European buyers. For this purpose two major initiatives were taken; i.e. formation of i) the Accord on Fire and Building Safety in Bangladesh (Accord); and ii) the Alliance for Bangladesh Workers‘ Safety (Alliance);  Setting up The ‗Rana Plaza Donors Trust Fund‘ to provide compensations to the victims of Rana Plaza disaster;  Frequent initiatives among the factory owners with regard to work safety and compliance.91 Unfortunately all these measures could not provide maximum results due to lack of coordination among different stakeholders at implementation level, lack of clarity by the buyer and tendencies among the owners, buyers and the government agencies to avoid responsibilities.

4.3 Government and Government Institutions As one of the main stakeholders in the RMG sector the Bangladesh government has the most important role to play for the development of the sector. It is indeed the sacred duty of the government to secure the most GDP earning sector of the country at any cost. Immediate after Tazreen Fire incident and tragic collapse of Rana Plaza, the Government has taken various steps to improve overall workplace safety and compliance, as well as made some commitments to international community which includes adoption of a National Tripartite Plan of Action by the constituents, implementation of the Sustainability Compact, and the US Action Plan focusing on legislation and policy reform, administration and practical actions.92

91

Ibid, p. 4 See Steps taken by Government and Other Related Stakeholders after Rana Plaza Collapse at Savar on 24th April 2013: as of 21 April 2015, Retrieved from accessed on May 15, 2015 92

69

The following government institutions are directly and indirectly working for the development of the RMG sector of Bangladesh: a) The Office of the Prime Minister; b) The Ministry of Labour and Employment; c) The Department of Inspection for Factories and Establishments (DIFE); d) The Department of Labour (DoL); e) The Fire Service and Civil Defense Directorate (FSCD); f) The Ministry of Foreign Affairs (MoFA); g) The Ministry of Home Affairs (MoHA); h) The Industrial Police; i) The Department of Environment (DoE); j) The Ministry of Finance (MoF); k) The Ministry of Commerce; l) The Bangladesh Bank; m) The Board of Investment Bangladesh (BOI); n) The Bangladesh Export Processing Zone Authority (BEPZA); o) The Bangladesh Foreign Trade Institute (BFTI); p) The Minimum Wage Board; etc. Following are the mentionable initiatives undertaken by the Government of Bangladesh and different government institutions subsequent to the Rana Plaza incident: 4.3.1 Amendment of Labour Law and Formulation of Labour Rules The government has amended the Bangladesh Labour Act, 2006 in July 2013 to ensure workers‘ safety, welfare and rights and promoting trade union and collective bargaining. Following the amendment the National Occupational Health and Safety Policy has been adopted by the Government in the same year. A committee is also established headed by the Secretary, Ministry of Labour& Employment to formulate the rules of the Bangladesh Labour Act. Currently the government is holding consultation on the draft rules with different stakeholders and hopefully the draft will be finalized within the shortest possible time. 4.3.2 The National Tripartite Plan of Action (NTPA) and Assessment on structural, fire & electrical integrity The Government has adopted a Tripartite National Plan of Action on Fire Safety and Structural Integrity in the RMG Sector with the assistance of ILO and funded by Canada, the 70

Netherlands and the UK. To implement the Plan of Action a sixteen members Tripartite Committee headed by the Secretary of Ministry of Labour& Employment has been formed. According to the Plan of Action ILO has been implementing a project ‗‗Improving Working Condition in the RMG Sector of Bangladesh‘‘ of $24.5 million under the Ministry of Labour& Employment where the following areas are being intervened: a)

Verification of building and fire safety of the factories;

b)

Strengthening inspection activities;

c)

Training on Occupational Safety and Health;

d)

Rehabilitation of the disabled and injured persons;

e)

Implementation of Better Work Program.

A plan for assessment of building, fire and electrical safety of all 3532 export oriented RMG factories has been developed with the assistance of ILO and under the supervision of the National Tripartite Committee (NTC). A Common Standard has been developed for assessment of fire, electrical and building safety of the factories by all initiatives such as the NTPA, the Accord and the Alliance. 4.3.3 Trade Union Registration Trade union registration situation in the RMG sector has got a thrust immediately after the amendment of the Labour Act in 2013. Till 20 April, 2015 more than 300 new trade unions have been registered in the RMG sector. ILO has started training programs to new trade union officials and organizers on rights and responsibilities in collaboration with the government and other stakeholders. This program is funded by the US Department of Labor and Norway. 4.3.4 Up-gradation of the Department of Inspection for Factories and Establishments The Government has upgraded the Department of Inspection for Factories and Establishments (DIFE) through an accelerate process. An Additional Secretary level officer has been appointed as Inspector General. Recently the government has recruited 218 Inspectors through the Public Service Commission (PSC) Bangladesh raising the total number of Inspectors to 285. The Government has allotted about 230 million BDT for the DIFE for salary and allowances and other related activities in 2014-15 financial year which is about triple compared to the allotment of 2013-14 financial year.

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The Department of Inspection for Factories and Establishments (DIFE) works under the Ministry of Labour and Employment. This department is responsible for ensuring welfare, safety and health of valuable human resources working in various sectors contributing national development including the RMG sector. By enforcing labour laws of the country, the department has been leading the nation in creating a safe and healthy work culture and improving the quality of wage earner. The Department also provides information and advice to the RMG employers and workers concerning the most effective means of complying with the legal provisions. The DIFE Collaborates with various government and private organizations, agencies along with international organizations specially ILO to facilitate policy, planning, measures and directions adopted to enhance occupational safety and health for all workers by appropriate working conditions and environment.93 Currently DIFE is providing its invaluable support to the National Tripartite Plan of Action (NTPA), Accord and Alliance in inspection of RMG factories and the remediation process.

The major activities of DIFE in the RMG sector include the following:  To inspect factories, industries and commercial establishments under the Bangladesh Labour Act, 2006 along with the other existing regulations.  To Investigate and response to every complaint received.  Giving explanations on labour law and rules related issues to the stakeholders.  To eliminate child labour.  To monitor factories of high hazardous risks.  To share knowledge and experiences with workers, employers and concerned organizations.  To lodge cases in the labour court against the law violating employer or factory owner.  To approve the construction, modification and expansion plan of a factory.  To issue registration for factory and also to renew the license.  To correspond with various government organizations, employers associations and trade unions for the proper implementation of labour laws.  To co-operate the government for the amendment together with materialization, formulation of labour laws and regulations.  To collaborate closely with ILO on ILO Conventions and recommendations. 93

For details visit DIFE website, Retrieved from accessed on May 8, 2015.

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 To give assistance to international organizations in making survey report on labour inspection, wage administration, condition of work, occupational health and safety.  To determine measures and procedures on inspection.  To promote Occupational Safety and Health (OSH) system in the workplaces.  To carry out promotional and publicity programs to employers, workers and the general public to foster and increase the awareness of occupational safety and health. Recently DIFE has launched a toll free helpline number (0800-4455000) for the RMG workers to place any complain to the government with a view to improving the working conditions of the workers. The Honorable State Minister for the Ministry of Labour& Employment, Mr. Md. MujibulHaque, MP, has inaugurated the toll free helpline service on 15 March 2015 at the Bangladesh Secretariat, Dhaka. 4.3.5 Training for Labour Inspectors The DIFE, after up-gradation has arranged different training programs for the labour inspectors on different issues with the support of ILO. The following table highlights some of the important training programs undertaken by the DIFE so far: Training Title

No. of Participants

Duration

Introductory Course for Labour Inspectors

110

4 Days

Labour Laws and Inspection Technique

96

3 Days

Labour Inspection Induction

123

5 Days

Basic Introductory Course for Labour Inspectors

40

3 days

Training for Master Trainers

20

5 Days

International OSH Regulation Training Course

12

2 Days

In House Refreshers Course

52

2 Days

Labour Law and Labour Inspection Training

37

5 Days

Table: Training of Labour Inspectors Conducted by DIFE 4.3.6 Revision of Minimum Wage After repeated pressure of the workers and other stakeholders The Government has declared the minimum wages for the workers of the readymade garments industry with an increase of 77% from the previous one. The newly fixed minimum wages have been implemented since 01 December 2013. Now the minimum wage of garments workers is about US$ 68 (5,300 73

BDT) which is still not sufficient considering the livelihood cost of cities like Dhaka and Chittagong where most of the garment factories are situated. 4.3.7 Regular Inspection of Factories Guided by the Bangladesh Labour Act, 2006 the DIFE inspectors are carrying out regular factory inspections. Up to 21 April 2015, a total of 7406 factories have been inspected of which 962 are RMG factories. In case of noncompliance, the factory owners are notified to rectify and cases are filed against the factory owners for failing to rectify. In 2015, 330 cases have been filed against the factory owners for non complacence issues. The government has already formulated the Annual Inspection Plan for the year 2015 for the DIFE. The formulation of inspection policy is in progress. 4.3.8 Fire Service & Civil Defense Department (FSCD) Bangladesh Fire Service & Civil Defense Department is a first responder service oriented government organization and remain alert 24 hours a day for the management of any disaster. The Department works under the ministry of Home Affairs. Fire service and Civil Defense Department has a very important role to play in the RMG sector of Bangladesh as we have witnessed number of horrible disasters in the recent past in that sector. The following initiatives are taken by the Government and FSCD with respect to RMG sector:  In principle approval of the proposal for establishing nine new fire stations for Department of Fire Service & Civil Defense by the Ministry of Home Affairs;  Increasing the number of inspectors of FSCD from 50 to 268 by the Ministry of Home Affairs;  Monthly inspection of factories by Ministerial Committee;  Public relation activities by local fire stations;  Mobile court operation for the compliance of fire and other safety rules;  Different awareness programs, such as banner, leaflet, talk show in television, TV commercial, radio telecast, awareness concert etc;  Development of checklist for garment factory safety and distribution for self assessment;  Different training programs, such as professional training, Government & NGO training, media training, garment training, hospital training, community volunteer training, slum training etc;  Proposal to create additional 260 posts of warehouse inspectors; 74

 Creation of a special urban search and rescue team exclusively for RMG sector;  Implementation of a project of training 62,000 community volunteers;  Two projects for procurement of modern operational equipment of 800 million and 600 million BDT;  Training of 40 instructor of BGMEA by FSCD;  Requesting WASA to establish hydrant points in Dhaka city and in RMG dense areas;  Initiative to establish Fire Safety & Training Institute to strengthen fire prevention and mitigation facilities. 4.3.9 Strengthening the Department of Labour Government has taken steps to upgrade the Directorate of Labour to a Department with increased number of manpower. The Department of Labour has been conducting training program for the workers, trade union leaders and employers for capacity building of trade union representatives‘ and employers‘ organizations and promoting effective labourmanagement relations under a project on "Promoting Fundamental Principles and Rights at Work in Bangladesh (FPRW)" funded by United States Department of Labour and implemented by the ILO since January 2012. Till Feb 2015, a total of 2,611 (Female 1,147) workers‘ representatives, 251 (Female 85) employers‘ representatives and 312 (Female 82) government officials from the Ministry of Labour& Employment, Industrial Relations Institute (IRI) and BEPZA have received training on issues of their respective work, i.e., workers‘ rights and responsibilities, negotiation techniques, labour law etc. The Government is working to raise awareness of the employers and workers regarding the trade union rights and responsibilities by organizing training and education program through four Industrial Relations Institutes (IRI) under the Department of Labour.94 4.3.10 Compensation and Rehabilitation After catastrophe incident of Rana Plaza the main obstacle before the government was to compensate and rehabilitate the victims and their families. In this regard the Government of Bangladesh took several initiatives. Each family of 976 deceased persons has been provided 1 to 5 lakh BDT from the Prime Minister‘s Relief and Welfare Fund and 38 workers who lost their limbs has been provided 10 to 15 lakh BDT as grant. In total more than Tk. 22 crore 93 lakh BDT has been disbursed from the Prime Minister‘s Relief and Welfare Fund as financial 94

Steps taken by Government and Other Related Stakeholders after Rana Plaza Collapse at Savar on 24th April 2013: as of 21 April 2015.

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assistance. All sorts of medical facilities were provided by the Government at free of cost to more than 1000 injured persons. With the assistance of the Government of Thailand 107 amputees including 5 of Rana Plaza accident were provided artificial limbs. A total of 50 lakh BDT has been alloted from Prime Minister‘s Relief & Welfare Fund for DNA test of the unidentified dead bodies of Rana Plaza incident. Dhaka District Administration distributed approximately 2 crore 54 lakh BDT among the family of the deceased and injured victims of Rana Plaza incident. Each family of identified 844 deceased persons has received 20,000 BDT for funeral expense and 844 injured workers each received an amount of 5,000 BDT. Except these initiatives of the Government lots of other initiatives were taken by different stakeholders for compensation and rehabilitation of the victims which have already been discussed earlier. 4.3.11 Rana Plaza Coordination Cell (RPCC) On 7November 2013 Rana Plaza Coordination Cell (RPCC) was formed to provide multilevel service to the victims. Till today the Cell is playing a vital role as a contact point for the victims as well as the service provider. Since inauguration RPCC with the support of National Skill Development Corporation (NSDC) secretariat, ILO and other stakeholders has provided different services to the victims of Rana Plaza collapse. The services include medical support, Job Support, Skills Training, Small Business or Entrepreneurship Development, Financial support and Compensation, Information and advices etc. Till April 2015 the Cell communicated more than 4123 people including the relatives of deceased or missing workers, survivors and rescue workers. 4.3.12 Sustainability Compact An agreement called ‗Sustainability Compact‘ with a view to take combined initiatives to improve labour welfare and safety of working environment in the RMG sector of Bangladesh has been adopted jointly by Bangladesh, European Union, United States of America and International Labour Organization (ILO). 4.3.13 Cooperation agreement with Germany Bangladesh Labour Welfare Foundation (BLWF) of Ministry of Labour& Employment, The Deutsche GesetzlicheUnfallversicherung (DGUV) of Germany and The Deutsche Gesellschaft fur InternationaleZusammenarbeit Bangladesh (GIZ) signed a cooperation agreement on 9 December 2014 among to promote an exchange on work injury insurance between Germany and Bangladesh. 76

4.3.14 Letter of intent with Denmark On 19 March 2015 Ministry of Labour& Employment signed a letter of intent with the Ministry of Employment of Kingdom of Denmark to jointly explore the possibility of engaging in a strategic sector cooperation on working environment, focusing in particular on Occupational Safety and Health (OSH) in the Ready Made Garment sector of Bangladesh. 4.3.15 Reduction of Tax & Duty A minimum rate of tax was settled by the Government regarding import of fire extinguishing equipments in the fiscal year 2013-2014. Government has also made provision for duty free import of prefabricated building materials, fire resistant doors, sprinkler system and equipments, emergency light with exit sign double head etc. 4.3.16 Housing Loan A Memorandum of Understanding has been signed between Housing Fund of Bangladesh Bank & BGMEA to provide loan at the rate of 2% interest from the fund to the owners of the RMG factories for construction of Dormitory for the workers. 4.3.17 Composition of Different Committees Government of Bangladesh formed an eleven member ‗Cabinet Committee on Garments Sector‘ headed by the Minister, Ministry of Labour& Employment. The committee has formed two Task Forces namely ‗Task Force in Building and fire safety in Ready Made Garments Industry‘ and ‗Task Force on Expansion and Simplification of Ready Made Garments Industry‘. An eighteen member ‗Committee on RMG factory improvement‘ has been formed headed by the Minister for Jute & Textile to protect safe working environment, prevention of accidents and ensure labour welfare in the RMG factories. The Committee has already submitted their report with recommendation and the Government has already taken steps to implement the recommendations of the committee. A ‗Compensation assessment committee‘ headed by the GOC, Ninth Infantry Division was formed as per directions of the Honorable High Court to determine the exact amount of compensation payable to the deceased and injured workers in Rana Plaza accident. The committee has submitted its report to the Honorable High Court.

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A ‗Tripartite standing committee‘ headed by the Secretary, Ministry of Commerce has been formed to provide all out support to the Cabinet Committee on Garments Industry. Three secretaries of Ministries of Commerce, Labour& Employment and Foreign Affairs and ambassadors and high commissioners of USA, Canada, EU, UK and the Netherlands constituted 3+5 Committee. The committee holds regular meetings to assess the progress of the Government‘s commitment in improving working conditions and labour welfare in Bangladesh. A committee headed by a Director General of the Prime Minister‘s office is functioning to establish a ‗Garments Industry Village‘ on 530 acres of land at Baushia under Gajariaupazilla in Munshiganj district. Government plays an important role either in establishing or facilitating the process of setting suitable codes of conduct by striking a delicate balance between the realistic country scenario and the need for protecting its workers. Enforcement of these conducts will be most important in ensuring the credibility of the official machinery and wining the confidence of buyers and consumers. An effective initiative by the Government in this regard can also provide a basis for negotiating with buyers for a unique set of codes of conduct that is based on national laws and core standards. Taking into consideration of increasing pressures from the buyers, while employers‘ associations in collaboration with various donors and agencies have already taken some steps, without the Government support and cooperation their enforcement and sustainability over the long-run are uncertain.95 Despite all these efforts it is largely criticized that the Government of Bangladesh has failed to improve the situation of the RMG sector specially in developing the living standard of the worker, ensuring their human rights, fixing their minimum wages, in case of giving approval to building, failing to punish the culprits of different disasters, providing support to the victims of incidents etc. In most of the cases the government is unable to control the arbitrary actions of the garment owners. Last but not the least, the cancellation of GSP (Generalized System of Preference) by the United States of America has questioned all the initiatives of the government. Though RMG was not in the GSP list of USA still it was a great threat for

95

Razzaque, Abdur and Eusuf, Abu. ―Trade, Development and Poverty Linkage:A Case Study of Ready Made Garment Industry in Bangladesh‖. UnnayanShamannay, Dhaka, (2007): 11

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Bangladesh to lose the other markets of the world. Still the government could not satisfy the USA to allow GSP facilities of Bangladeshi products in USA markets.

4.4 RMG owners Associations The RMG owners associations play a vital role in the RMG sector of Bangladesh. Currently there are three such associations working for the improvement of the RMG sector. They area) The Bangladesh Garment Manufacturers and Exporters Association (BGMEA); b) The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA); and c) The Bangladesh Textile Mills Association (BTMA). 4.4.1 BGMEA The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is one of the largest trade associations in the country representing the readymade garment industry, particularly the woven garments, knitwear and sweater sub-sectors with equal importance. BGMEA takes care of an industrial sector which is considered the backbone of the economy of Bangladesh. Since the inception in 1983, BGMEA is dedicated to promote, develop and facilitate the apparel industries of Bangladesh through policy advocacy to the government, services to members, ensuring the rights of workers and social compliance at factories.BGMEA works with the vision to developing the economy of the country through RMG industries of Bangladesh. BGMEA has two major missions to fulfill its vision, namelya) to protect and promote the interests of the industry; thus ensuring a sustained growth in the foreign exchange earnings of the country; and b) to ensure all legitimate rights and privileges of the garment workers. The association also strives toward the betterment of the society and environment. Starting its journey with only 12 members currently BGMEA has around 4222 member factories. Around 40% of BGMEA member factories are knitwear and sweater manufactures, and the rest 60% are woven garment manufactures. BGMEA member factories produce 100% woven garment exports of the country and more than 95% of sweater exports while around 50% of the light knitwear exports are made by them. BGMEA works through a 27-member elected Board of Directors who is elected for a twoyear term. The Board elects its President, the highest executive authority of the association who is assisted by four Vice Presidents along with a secretariat of experienced officials in formulating and executing vital policies and programs of the organization. The Board of 79

Directors takes assistance from different Standing Committees headed by a Chairman and composed of members having vast experience in the related fields. BGMEA is responsible for the following activities:96 Trade Facilitation & Promotion  BGMEA provides policy advocacy and dialogues for smooth functioning of trade and industries;  The organization Issues Utilization Declaration (UD) and Utilization Permission (UP) as Entrusted by the Government;  It play the leading role in maintaining harmonious industrial relationship;  It works to keep members side by side on contemporary global business trend;  BGMEA organizes Bangladesh Apparel & Textile Exposition (BATEXPO) since 1989 and the Chittagong Fabric, Apparel and Textile Exposition (CAFAXPO) since 2003 to promote readymade garments sector;  It organizes trade missions to explore the new markets and to facilitate trade in existing markets;  It organizes seminars and symposiums for recommending on key policies for the development of RMG sector.  BGMEA takes part in bilateral and multilateral trade negotiations with different stakeholders. Human Resources Development  BGMEA follows a unique model in skill development. It trains the poor people living in the distressed areas, utilizing the idle capacity of Government‘s technical training institutes and thus works in addressing the skill shortage of the industry;  It runs separate training program for the rehabilitation of the distressed workers;  BGMEA has separate Job placement program for the people with disabilities;  It undertakes different training programs to improve productivity and quality at factory and worker level.

96

For details visit the official website of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), accessed on April 20, 2015

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Watchdogs Workplace Safety & Compliance a) BGMEA regularly monitors member factories to check compliance and workers safety; b) It runs a social compliance improvement project to improve the compliance standard; c) It organizes training for the member factories on social and environmental standards. BGMEA University of Fashion Technology (BUFT) The BGMEA Institute of Fashion Technology (BIFT) was established in 1999 to produce technically competent human resource for the garment industry. In 2012, the institute was transformed to a fully fledged University as BGMEA University of Fashion Technology (BUFT) which offers different short and long courses in apparel manufacturing, fashion design & technology, and merchandising with affordable cost. BUFT has collaborations with the London College of Fashion, UK; Nottingham Trent University, UK; and the Niederrhein University, Germany. BUFT, in collaborations with United Nations Development Program (UNDP), European Union (EU), German Technical Cooperation (GTZ) and the South Asia Enterprise Development Fund (SEDF), is constantly working for further growth and development of the apparel industries of Bangladesh. Green and Clean Production BGMEA always put priority in ensuring green and clean production and conserving the nature and its resources. BGMEA has been making relentless efforts to motivate, guide and support its members to become more responsive toward the environment through energy efficient production, sustainable use of natural resources and green building. It has been running several programs with partners like IFC, SEDF to assist the member factories toward energy efficient and cleaner production. Healthcare for the workers  BGMEA runs 12 Health Centers for the garment workers and their families to provide free medical services and medicines at free of cost to more than 60,000 garment workers per year. The annual expenditure of these centers is around 300,000 USD which is funded by BGMEA‘s own resources.  It run awareness program on HIV/AIDS, tuberculosis, reproductive health and the use of contraceptive devices by its health centers in collaborations with the government and different international organizations;

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 In addition to this, BGMEA runs a full-fledged hospital in Chittagong and constructing a 100 bed hospital in Dhaka which will provide all kinds of outdoor and indoor healthcare facilities at free of cost or at heavily subsidized cost;  Besides, BGMEA provides aid to lactating mothers working in garment factories in collaborations with the government of Bangladesh. In last three years BGMEA spent more than 115 million taka for that purpose. The New Minimum Wages The government has declared new Minimum Wage for the garment workers in November 2013, just after three years of the last review though the Bangladesh Labour Act 2006 permits to review the wage after every five years. Though BGMEA rejected the proposal for minimum wage several times, at last they agreed on 5300 Taka. However criticisms still loom questioning the true intention of the factory owners. It must also be noted that minimum wage in the Bangladeshi Garment Sector is not only the lowest in the world if compared with the same sector, but also the lowest in Bangladesh if compared to other sectors although this sector is the highest foreign currency earner and the biggest employer of the country. However, BGMEA argued that the buyer‘s have no intention to pay them more for their garment and thus the challenge of paying this new higher wage might actually remove many of the factories from the scene. During the period of fixing minimum wage the negative role played by BGMEA was severely criticized nationally and internationally. The Corporate Social Responsibility (CSR) initiatives of BGMEA BGMEA has been actively involved in various CSR activities for the larger good of the society. Despite being a not for profit organization, It has been making significant contribution to the community. BGMEA undertakes a number of regular activities and projects to ensure workers rights, social and environmental compliance and welfare which include implementation of the tri-partite agreement among the workers, factory owners and government authorities. The agreement has achieved a highest success rate, inter alia, of paying minimum wages, appointment letters and maternity benefit etc;  mandatory Group Insurance scheme for the garment workers and staff;  arbitration facilities to the garment workers at free of cost;  organizing annual worker fair;  mandatory building Code for all member units. 82

 regular fire drills and fire safety training program in member factories;  food rationing program for workers since August 2009;  skill development programs for the garment industry through 9 training centers in different regions of the country; and  projects for the rehabilitation of the returned camel Jokies from Dubai;  twelve schools for workers‘ children with free books an study materials and stipends for meritorious students;  construction of a dormitory for 3000 workers in Chittagong jointly by the Chittagong Development Authority (CDA) and the BGMEA. Planning of another one at Ashulia, Dhaka. Better Work Program The International Labour Organization (ILO) and International Finance Corporation announced the establishment of a Better Work Program in the ready-made garment sector in Bangladesh. Better Work will provide assessments of factory compliance with national law and core international labour standards, paired with transparent public reporting on findings. The program will also provide advisory services to factories to improve working conditions and competitiveness, and engage with national partners to promote sectoral changes, including effective industrial relations. Better Work Bangladesh is funded by the governments of the Netherlands, Switzerland, the United Kingdom and the United States.97The government of Bangladesh and the BGMEA has a very crucial role in making the better work a success. Despite the efforts by BGMEA to develop the RMG industries of Bangladesh there are allegations that it is only working for the interest of the factory owners. It is alleged that they are doing very little in improving the working conditions in the factories. As the association of factory owners BGMEA has a noble duty to ensure the rights of the workers, to ensure their safety and security, to protect the environment and to help the country to strengthen its economy by overcoming all the challenges in the RMG sector of Bangladesh. 4.4.2 BKMEA BKMEA is the trade body to represent solely the Knitwear Sector of Bangladesh. BKMEA adheres to innovation and creativity so that the sector based policy-making process becomes 97

See Better Work.―Better Work to Launch Programme accessed on April 24, 2015.

83

in

Bangladesh‖.

Retrieved

from

realistically and strategically perfect and gives off the result that expedites its developmental phase. BKMEA has started its journey in 1996 and soon after the formation it undertook activities to look after the interest of the knitwear sector of the country. It previously worked to create a common platform for the entrepreneurs from which they could move for their common interest. Nowadays, BKMEA has given highest priority in the specialization of resources. About 1990 knitwear manufacturers and exporters are members of BKMEA. The organization works closely with national and International bodies and maintains close relationships with all stakeholders. On areas of common interest, it also works with similar organizations like, International Apparel Federation (IAF), Global Alliance for Fair Textile Trade (GAFTT) and American Manufacturing Trade Action Coalition (AMTAC). To boost up trade and to enhance cooperation between countries, BKMEA has signed agreement with concerned associations like China Yunnan Light & Textile Industry Association on June 10, 2005, Botswana Manufacturers & Exporters Association on October 8, 2009 etc. To lead the world apparel market, BKMEA is putting diligent efforts to diversify export market, and ensure better market access of the country's knitwear products to EU, USA, China, South Africa, Japan and other potential countries across the world. To promote the knitwear sector, BKMEA is implementing development projects with German Technical Cooperation (GTZ) and other international organizations in this regard. The association has signed MoU with GTZ on March 16, 2005 and Metro Group, Germany on 26 April, 2010. The development works include enhance productivity and improve social compliance status of its member factories, promote workers welfare through centralized day care centre health care centre, prepare sector related research and publication, organize trade promotion missions and fairs in home and aboard. At Present BKMEA plays important role in policy-making process, framing sector-support rules, market expansion program, research initiatives, productivity campaign, making green and environmentally-friendly industrial belt etc.98 4.4.3 BTMA Bangladesh Textile Mills Association (BTMA) is the national trade organization of Primary Textile Industry i.e. Yarn Manufacturing, Fabric Manufacturing and Dyeing-PrintingFinishing Industry of the country under private sector. It was registered in 1983 with a view

98

BKMEA.―BKMEA at a Glance‖. (2015). Retrieved from accessed on April 25, 2015

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to promoting and protecting the trade, commerce and manufacturers of Bangladesh in general and of the textile related trade in particular. BTMA has its own study on how to be more competitive in the world market and where our weakness lies. BTMA is responsible for the following activities99 BTMA provides three kind of certificates to its member Mills, i.e. certificate of production and processing to avail GSP facilities, certificates for alternative cash assistance and certificates for availing exemption and concessionary facilities with regard to duties & taxes from Custom Authority ;  BTMA constantly works with different Government departments and other related Agencies like Finance Ministry, Commerce Ministry, Textile & Jute Ministry, Labour& Employment Ministry , NBR, Bangladesh Bank , Department of Environment and other high officials to settle the issues relating Primary Textile Sector(PTS) ;  It provides budgetary proposal regarding tax, VAT and other custom related matter to National Board of Revenue (NBR) with view to furthering the Primary Textile Sector (PTS).  It meets with Foreign Dignitaries to discuss the bilateral matter of natural interest of the Textile Sector.  BTMA regularly organizes two recognize fair name as Tex-Bangla (bi-annual) and DTG (Annual). The main objectives of Tex-Bangla exposition are to create awareness among the Policy Makers of Government, buyers at home and abroad and the general public about the role and contributions made by the PTS (Primary Textile Sector) and to show the progress and development being taken place in textile arena. DTG event showcase the latest fashion trends, new technology and material services for textiles in trade and help local entrepreneurs to acquaint themselves with latest technology in the Primary Textile Sector and also provide opportunity for participating International suppliers to find new business with our country. As the representative bodies of the Bangladesh garment industry the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) are powerful and influential organisations, with the potential to make a real difference to the way the industry works.

99

For details visit the official website of BTMA, accessed April 25, 2015

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They therefore have a great responsibility to ensure that their members are fully aware in regard to safety standards and labour conditions and are agreed to implement them at any cost.

4.5 Brands and Retailers and Their Associations Although brands and retailers themselves are no directly responsible for the safety and security of the RMG sector of Bangladesh, they cannot avoid their liability in jeopardizing the environment of the factories by seeking the products in an extremely low cost which contributes to a situation where the life of the workers are being placed at risk. According to a BSCI report the expansion of production in Bangladesh has led to wild extensions of buildings,especially the construction of new stories.100 Generally the purchasing practice of most of the buyers is short term in nature and their relationships with the factory owners are unstable. Moreover, constant price cutting and short lead times also contribute to a lack of investment in the safety and security arrangement within factories and the factory owners attempts to produce more than the capacity of the factory allows for because of the continuous pressure of the buyer. There are also allegations that the buyers do not bother to investigate the working conditions and capacities of the factories. The audit system of the buyers is extensively criticised because more often they are unable to revealing labour rights violations, to monitor supplier adherence to codes of conduct and are also unsuccessful to enforce corrective actions in regard to health and safety. Their failure to work in collaboration with other buyers and with local stakeholders, in particular with trade unions representing the garment sector in this regard represents a serious breach of due diligence. The brands and retailers have a lot to do in developing the conditions of the RMG sector of Bangladesh for their own benefit. It is believed that Bangladesh is the most suitable market for the brands because of its low production cost. To stimulate this profitable market the buyers can work with other stakeholders including the Government of Bangladesh. Before making a contract with the factory owner the buyer should make full and rigorous review of building and fire safety standards and regulations of that factory and immediately report to the BGMEA and to government in case any irregularity is found. They must follow the purchasing practices and pricing that allow a specific part of it for factory renovations and investments in worker safety. They should also observe that the workers are trained and aware about their rights in collaboration with trade unions, the factory is well equipped health 100

See BSCI.―Annual report‖.(2006): 21

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and safety equipments. Working with other buyers, factory owners, the BGMEA and the Government of Bangladesh they may establish a compensation fund to help the victims of any unwanted accidents. Although some of the brands are making their heartfelt efforts to boost up the RMG sectors of Bangladesh, many of them are either silent or resisting to accept any responsibility about the incidents. For example, years after Spectrum incident two of the biggest buyers, ‘Inditex’and ‘KarstadtQuelle’ were forced to contribute significant amounts and others buyers also contributed smaller amounts. Unfortunately some other large buyers, in particular ‘Carrefour’ continued to resist such initiatives. The preferred more on the principles of humanitarian relief rather reparations for injury caused by their action. In Garib and Garib incident none of the buyers have shown deliberate intention to provide compensation so far. H&M, the main buyer at Garib and Garib has followed Carrefour's example and attempted to set up their own scheme that falls well short of best practice and fails to recognize victims‘ right to redress.

Most of the buyers of ‗That's It’ Sportswear have contributed to

compensation schemes for the families of the dead, but shown no interest to compensate the injured workers for loss of income. Despite all these dubious actions of the brands and retailers the silver lining is that following Tazreen and Rana Plaza tragedy some of the European and American buyers started their intense efforts to ensure safety and security of the RMG factories of Bangladesh. Currently two great initiatives of those brands namely accord and alliance are constantly working in ensuring the building and fire safety and he safety of workers of the selected garment factories of Bangladesh. In last two years they have achieved mentionable success in their tasks.

4.5.1 The Accord on Fire and Building Safety in Bangladesh (The Accord) The Accord on Fire and Building Safety in Bangladesh is a 5-year independent, legally binding agreement between apparel brands and retailers and trade unions for the purpose of building a safe and healthy Bangladeshi Readymade Garment (RMG) Industry signed on may 15th 2013. In June 2013, an implementation plan was agreed leading to the incorporation of the Bangladesh Accord Foundation in the Netherlands. The Foundation was incorporated in

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October 2013.101 Over 190 apparel companies from over 20 countries in Europe, North America, Asia and Australia including two global trade unions, IndustriALL and UNI Global; and eight Bangladeshi trade unions are the signatories of Accord. The agreement is also signed by several NGO witnesses, namely Clean Clothes Campaign, Worker Rights Consortium, International Labour RightsForum and maquila Solidarity Network. The aim of the Accord is to make the RMG sector in Bangladesh safe and sustainable, where no worker needs to fear fires, building collapses or other accidents that could be prevented with reasonable safety and health measures.102 Currently more than 1500 factories and 2 million workers are under the umbrella of Accord. The six key components of the agreement are following:  A five year legally binding agreement between brands and trade unions to ensure a safe working environment in the Bangladeshi RMG industry  An independent inspection program supported by brands in which workers and trade unions are involved  Public disclosure of all factories, inspection reports and corrective action plans (CAP)  A commitment by signatory brands to ensure sufficient funds are available for remediation and to maintain sourcing relationships  Democratically elected health and safety committees in all factories to identify and act on health and safety risks  Worker empowerment through an extensive training program, complaints mechanism and right to refuse unsafe work. Independent Inspections The Accord has an independent Chief Safety Inspector (CSI) by whom a thorough and credible of safety inspections program is run regularly. Factories that are producing RMG products for the signatory companies are subject to independent inspections on fire, electrical and structural safety. Factories are inspected against the Accord Building Standards. These standards are mainly based on the Bangladesh National Building Code and the results discussions organized by the ILO among the Accord, the National Tripartite Plan of Action (NTPA) and the Alliance for Bangladesh Worker Safety (Alliance). After inspection if any immediate and critical danger is found due structural integrity of the building, the CSI 101

See Introduction to the Accord on Fire and Building Safety in Bangladesh, Retrieved from accessed on May 5, 2015 102 Ibid

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requires the owner to immediately evacuate the building and stops production of Accord companies until the building is regarded safe. AT the same time the CSI also requests the Bangladesh government to order the evacuation of the building until additional strength testing has taken place or immediate remedial measures are taken. The Accord started its initial safety inspection program in February 2014 with the aim to complete the initial inspections of the listed factories by September 2014. Factories listed after 15 August 2014 were not included in the initial round. Those factories are being inspected currently starting from January 2015. There are some factories which are listed by Accord as well as by the Alliance for Bangladesh Worker Safety (Alliance) as they produce for Alliance companies too. The Accord was requested by BGMEA, factory owners, and the Government of Bangladesh to avoid duplicate inspections by both Accord and Alliance. Accordingly the Steering Committee of the Accord took a decision in August 2014 not to inspect those factories to avoid such duplication. The Alliance inspected a total of 226 of these joint factories. The Accord is now working with the Alliance to obtain their inspectors‘ full inspection reports in the effort to develop Accord formatted reports and Corrective Action Plans (CAPs) and to implement Accord remediation requirements with signatory companies, factories and labour partners.103

Chart: Inspection Update of the Accord (Up to November 2014)104

103

The Accord.―Quarterly Aggregate Report on Remediation Progress at RMG Factories Covered by the Accord, Statistics as of November 30, 2015‖.(February 15, 2015): 3, Retrieved from accessed on May 5, 2015. 104 See Ibid

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However, since the beginning of 2015 accord has inspected another 150 newly listed factories and by April 17, 2015 more than 1250 factories have been inspected by the Accord.105 Corrective Action Plans After the initial inspections are completed, the Accord and the signatory companies initiate the remediation process. Once a company has been inspected for fire, electrical and structural safety the inspection reports are shared with factory owners, the active Accord brands and worker representatives. Then a Corrective Action Plan (CAP) is settled by the factory owners and the brands, and submitted to the Accord for approval. The CAP details the remedial actions to be taken with a clear timeline and a financial plan to ensure that it‘s financially feasible for the factory to maintain safe workplaces and comply with upgrade and remediation requirements. The following chart shows information on CAP development, publication and CAP updating progress till December 1, 2014.

Chart: Status of Corrective Action Plans (CAPs) When a CAP is received by the Accord, it is reviewed and approved by the Chief Safety Inspector (CSI) before publication in the website. The difference between the number of CAPs approved and the number of CAPs published online depends on a technological uploading process with the Fair Factories Clearinghouse (FFC) database. The information provided above on CAPs updated indicates those factories where Accord engineers have conducted follow-up inspections and verified corrective actions were properly completed. 105

See The Accord. ―Monthly Update April 2015‖. from accessed on May 5, 2015.

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Retrieved

Review of Findings The Accord found 52,605 safety issues that need to be resolved based on the 500 CAPs published up to December 1, 2014. The process of tracking the status of the findings only starts once the CAP is published, not after the CAP is received. So, this number of issues does not represent the total findings for all 1103 inspected factories because only 500 CAPs were published out of 714 CAPs received.

Chart: Distribution of Total Issues Based on Published CAPs (52605) Factories requiring Detailed Engineering Assessments (DEAs) Among the inspected factories more than 550 are required to undertake a structural Detailed Engineering Assessment (DEA). DEAs are submitted to the Accord by the brands and factories and the reviewed by the Accord engineers. If the assessment is generally acceptable, a meeting is arranged with the factories where the structural engineer presents the findings of the assessment. The result of the presentation meeting is either an acceptance or a requirement for more information. Till November 2014 a total of 133 DEAs were submitted to Accord out of which 31 were presented in the meeting and 11 were approved by the CSI.

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Chart: DEA Status (Up to November 2014) Factories submitted to the Review Panel In case of 19 building structure inspections, the Accord found that the structural integrity of the building fell so far below the acceptable level of safety that there was a severe and imminent risk of structural failure. As a result Accord submitted its inspection results of those factories to a Review Panel constituted by the Government of Bangladesh. The Review Panel was established to determine whether a building evacuation or suspension to operations is required. In these cases, it was decided that the Accord signatory companies shall require the factory owners to temporarily suspend their production and temporarily evacuate the factory until immediate measures are taken to ensure the factory safe under the Accord safety standard. Another 7 factories listed by both Accord and Alliance were submitted to the Review Panel by the Alliance. Remediation and Verification Following table provides an overview of the status of findings that are in the published Corrective Action Plans (CAPs), and progress of remediation and verification by the Accord engineers. The progress and verification process are divided into the following three categories: a) In progress: It means that the factory is in progress of remediation of the specific hazard. b) Pending verification: This means the Accord has obtained information that the actions have been corrected but the Accord is yet to verify this.

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c) Corrected: Means that the actions have been verified by the Accord engineers as being corrected through their follow-up verification visits. Issue

In Progress

Pending Verification

Corrected

TOTAL

Electrical

14206

4869

603

19678

Fire

15691

3255

43

18989

Structural

11678

2124

136

13938

41575

10248

782

52605

TOTAL

Table: Remediation and Verification Status of Findings (In Published CAPs)106 Follow-up inspections The Accord engineers are responsible for monitoring progress and verifying implementation of CAPs. They conduct daily follow up inspections to verify whether the factories are complying with the corrective actions properly. Currently, 20 factories are inspected each week. The Accord usually conducts 2 to 3 visits to each factory to verify all issues are adequately remediated. In addition, one team of structural engineers inspects factories with major structural concerns. Currently, they are performing this follow up at 20-25 factories per week. The reasons for the structural follow-up inspections are to verify whether or not required immediate actions were taken, to verify the information provided in the Detailed Engineers Assessment (DEA) is correct, and to verify retrofitting works. Furthermore, eight special inspections have been conducted as a result of safety complaints and fire incident investigations.

Chart: Accord Follow-up Inspection (Total 455) 106

The Accord.―Quarterly Aggregate Report on Remediation Progress at RMG Factories Covered by the Accord, Statistics as of November 30, 2015‖. February 15 (2015): 7, Retrieved from accessed on May 5, 2015.

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CAP progress monitoring and Factory Status Designation The Accord is currently in the process of developing the technological capability to designate the status of progress of each CAP. Once the progress is defined the status of each CAP will be published online so as to allow all stakeholders to monitor whether a particular factory is on track in implementing the CAP in accordance with the set timelines. For this purpose the factories will be designated into four categories. The factory status designation will provide an incentive for factory owners to keep to the agreed timelines for remediation and avoid being publicly identified behind schedule. The factory status designation will also help the Accord team to set up priority in follow up inspections at those factories where timelines have passed. Factory Status CAP in progress CAP behind schedule CAP completed CAP not implemented

Explanation The CAP is in implementation and all timelines have so far been met. The CAP is in implementation but some timelines have not been met and no justification has been given for the delay. All issues identified in the Accord CAP have been resolved and verified by the Accord engineering team. The factory does not agree to implement the CAP and as a result Accord signatories have terminated business with the factory following a notice and warning process. Table 2: Factory Status Designation107

Inspection after the Earthquake of April 25, 2015 After the terrible earthquake shook Dhaka on April 25, 2015 the Accord inspectors inspected 61 factories. Among the inspected factories three were found structurally unsafe. Accord required those three factories to stop production till the buildings are assessed by their expert engineers.108 Workers Participation and Training Program A Comprehensive worker participation program with workers and factory owners is an integral component of the Accord. The object of this program is to empower workers and support factory owners to take initiatives for making and keeping their factories safe which include making an effective contribution to the inspections, monitoring and implementing 107

Ibid, P. 8 For details The Daily Prothom Alo. ―Accord Found Hazardous Garment Factories‖.(May 6, 2015). Retrieved from accessed on May 6, 2015 108

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CAPs, building functioning Safety and Health Committees, having access to a credible safety and health complaint mechanism, and being protected to refuse unsafe work if necessary. Safety Improvements The accord is achieving fire, electrical and structural safety at the listed factories by taking the following measures:  Installation of certified fire doors in all doorways from the factory to the stairwells;  Installing of automatic fire alarm systems;  Ensuring adequate and unobstructed fire exits;  Removal of excess flammable material (fire load) from areas where workers are working;  Rewiring and sealing of electrical wiring and removal of dust and lint from electrical components;  Installation of additional circuit boxes;  Strengthening of columns;  Developing management load plans to avoid excess concentrated weight in the building;  Requiring sprinkler systems in buildings over 23 metres in height; etc. 4.5.2 The Alliance for Bangladesh Worker Safety (The Alliance) The Alliance is a group of 26 major global apparel retailers founded by a group of North American apparel companies and retailers and brands to develop and launch the Bangladesh Worker Safety Initiative, a binding, five-year undertaking that will be transparent, resultsoriented, measurable and verifiable with the intent of improving safety in Bangladeshi readymade garment (RMG) factories. Collectively, these Alliance members represent the overwhelming majority of North American imports of RMG from Bangladesh, produced at more than 580 factories.109 However, the number of factories producing for Alliance is raised to 598 in 2015. The Bangladesh Worker Safety Initiative was announced by the Alliance on July 10, 2013. The Initiative is focused mainly on fire and building safety inspections, worker training, and worker empowerment. The Alliance provides apparel companies and retailers the unique opportunity to act together and put forward concrete solutions to issues that affect the global apparel and retail 109

The Alliance.―About the Alliance for Bangladesh Worker Safety‖.Retrieved from accessed on May 5, 2015.

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industries. The current group of 26 includes the following companies: Ariela and Associates International LLC; Canadian Tire Corporation, Limited; Carter‘s Inc.; The Children‘s Place Retail Stores Inc.; Costco Wholesale Corporation; Fruit of the Loom, Inc.; Gap Inc.; Giant Tiger; Hudson‘s Bay Company; IFG Corp.; Intradeco Apparel; J.C. Penney Company Inc.; The Jones Group Inc.; Jordache Enterprises, Inc.; The Just Group; Kohl‘s Department Stores; L. L. Bean Inc.; M. Hidary& Company Inc.; Macy‘s; Nordstrom Inc.; Public Clothing Company; Sears Holdings Corporation; Target Corporation; VF Corporation; and Wal-Mart Stores, Inc.; YM Inc.110 The Alliance supporting associations include: American Apparel &Footwear Association, BRAC, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and United States Association of Importers of Textiles & Apparel. In addition, Li & Fung, a major Hong Kong-based sourcing company which does business with many members of the Alliance, will serve in an advisory capacity.111 Alliance Activities at a Glance Till 2014 Alliance has inspected all the 598 listed factories out of which 17 Factories were fully or partially closed by the government of Bangladesh based Alliance inspections report. 50% of the Alliance factories are now under different stage of remediation process. During this time Alliance has trained approximately 1.1 million workers on basic fire safety which is 87% of the total workers working for the factories producing for Alliance companies.112 Factory Inspection and New Factory Approval The immediate goal of Alliance was to inspect all factories from which Alliance Members source with keeping the safety of workers firmly in mind. At the end of 2014, all the 598 factories producing for Alliance Members has been inspected. After inspections the Alliance brought 19 immediate risk cases to the review panel established by the Bangladesh government, which determines whether a factory ought to be closed or continue operating under reduced capacity. The panel decided to fully close five factories, partially close 12 and allow two to operate with reduced loads. Currently, all factories are in the process of addressing safety concerns and updating safety equipment. It is the duty of the factory owners to display that they are making progress on remediation, or they jeopardize Alliance Members ending their sourcing relationship. From January 1, 2015, the Alliance officially 110

Ibid Ibid 112 For details visit the Alliance website 111

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launched the pre-approval policy which requires all new registered factories to be inspected and evaluated by the Alliance inspection team before making contract with the Alliance companies. If the factory is proved sufficiently in compliance with key building and fire safety standards set by the Alliance after inspection, only then Alliance members will source from them. This policy will help assure that Members are not doing business with factories that have poor safety records.113 Remediation Once initial inspections are completed, the Alliance commences the remediation process. To complete this process recently Alliance has tripled the number of staff and appointed a new Chief Safety Officer to oversee fire safety operations and training. Currently Alliance is working with factories to develop detailed corrective action plans (CAPs) and complete the remediation process. Factory representatives, Alliance engineers and member companies meet together in the Cap meetings to review each CAP issue and the plan of action and the timeline for completion. One of the objects of these meeting is to affirm that all parties fully understand each step of the process. The next step in remediation process is periodic visits of the factories with a view to ensure that the factories are making progress and completing the remediation process in accordance with the standards and timeline mandated by the Alliance. Up to January 2015, the Alliance approved about 300 CAPs to factories in meeting and conducted more than 100 verification visits to factories. After the verification visit if the Alliance engineers report that a factory has completed all remediation requirements, an independent qualified assessment firm will conduct a final inspection. Alliance is planning to complete final inspection of 10% factories by July 2015 and 100% by 2017 at its four years anniversary.114 Supplier Financing Several Alliance member companies established bilateral supplier finance programs for the factories producing for them by providing affordable loans, or changing the factory payment terms to reduce the cost of remediation. Some of the factories have already enjoying this benefit under the supplier finance loan programs.

113

See generally, Alliance for Bangladesh Worker Safety.―Alliance 18-Month Update‖.(March 9, 2015). Retrieved from accessed on May 7, 2015. 114 Ibid

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Currently a new credit facility is under process in partnership with national and international finance institutions to enhance financing to more suppliers. During late 2014, investment firm Movement Partners visited Bangladesh to assess the local banking sector of Bangladesh and determine the main obstacles to provide affordable finance to the factories. Once the obstacles were identified, the Alliance began to develop potential schemes for financing the factories in collaboration with partner institutions. Training in the Factories Everyone working in a factory has his/her significant role in preventing fires in the factory and ensuring safety evacuation during an emergency. Within one year of its journey, the Alliance trained about 1.1 million workers under its Basic Fire Safety Training Program which is considered to be the largest training program on fire safety in Bangladesh. The basic model of the training was ―train the trainer‖ with a view to spread the training facility to the maximum number of persons in minimum time. The University of Texas, Austin and the University of Dhaka are jointly conducting an in-depth assessment of the training to make it more effective. The Alliance has also started comprehensive training program for security guards in more than 600 factories. This training focuses on fire safety and the distinctive roles and responsibilities of security guards in case of an emergency. Worker Helpline The Alliance has launched a worker helpline named ‗AmaderKotha‘ or ‗Our Voice‘ for the workers of the factories so that they can report any imminent risk to health and safety ‗twenty four hours a day and seven days a week‘. The purpose of the helpline is not to undermine the existing mechanism but to provide an alternative channel for the Alliance to work with factory management and member companies to assure immediate safety concerns and address them as quickly as possible. Currently the helpline receives an average of 300 calls per month reaching over 500,000 workers of more than 300 factories. The helpline also receives the concerns of the workers about non-safety related calls like extra working hours, low wages, let works etc. The goal of this program is to train 100% workers of the factories as how to use the helpline by the end of the third year of alliance (July 2016). Occupational Safety and Health Committees (OSH) Another goal of Alliance is to require that each factory establish Occupational Safety and Health Committee (OSH) where formal representations of worker will be ensure so that workplace safety and health concerns can be raised to the management formally. For this 98

purpose Alliance is pressing the government of Bangladesh from the very beginning and the government is yet to finalize critical regulations though the Labour Act 2006 has already been amended in that regard. The Alliance has recently joined with the Accord to pursue the government of Bangladesh to finalize and circulate the regulations. The Alliance has also launched an initiative with the Better Work Program of the ILO to pilot OSH Committees in 10 factories by June 2015. The introduction of Accord and Alliance by the brands and retailers are two milestones in the development of the RMG sector of Bangladesh. But it is unfortunate that not all the buyers of Bangladesh RMG are the members of Accord and Alliance. Out of thousands of buyers only 216 are the member companies of either accord or Alliance. Accord and Alliance cannot implement their plans and policies to those factories that are not producing for their member companies. It is the moral duty of all the retailers to make the market safe. So, all the brands and retailers who are not a member of Accord or Alliance should either join one of them or to form new associations like accord and alliance for the greater interest of the world RMG.

4.6 Trade Unions Human beings are recognized upon creation as having certain rights that they are guaranteed regardless of what their government is, and their life and liberty, as well as property. 115 These rights also include right to equal treatment, regardless of gender, origin and appearance, religion, sexual orientation. Worker‘s rights advocates have worked to improve workplace conditions, health and safety issues, fair labour practices and combat child labour, which meet established standards.116 In most cases, employers do not draw attention to workers‘ rights and ignore labour standards and discard fair labour practices. As a result labour unrest is common and can leads to demonstrations, processions, strikes, termination and layoffs. Trade unions can play a valuable role in developing jovial relations between owners and workers in RMG sector of Bangladesh. Trade unions can help owners solve problems of their workers, make them aware about their rights as well as duties, and create a better working environment inside the factories. Trade unions can bargain for employees‘ rights and benefits

115

Ahamed, Ferdous.―Can Trade Unions play an effective role in defending workers‘ rights in the Bangladesh Ready-made Garment industry?‖.Middle East Journal of Business ,Volume 7, Issue 3,(July 2012): 12, Retrieved from accessed on April 25, 2015 116 International Labour Organisation (ILO). ―Seventeenth Synthesis Report on Working conditions in Cambodia‘s Garments Sector‖.Kingdom of Cambodia and International Labour Organization (ILO), Better Factory Cambodia, ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland (2006).

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with the management. If the management does not respect their demand, the trade unions can stand up and draw attention from society, government and other stakeholders. Therefore, trade unions can be an effective tool in the RMG sector of Bangladesh by which the workers can raise their voice against the arbitrary decisions of the factory owners and protect the rights of the workers. At the same time, the workers must understand that meaning of trade union is not going to the street for realization of their demands for silly reasons. Trade union should be a platform for working regarding holding negotiations with owners for solving their demands. Establishment of trade unions has opened up a new era for ensuring rights of workers of the garments sector. Such steps would bring a big change in the apparel sector of Bangladesh. Despite the fact that Bangladesh has ratified the ILO Convention No.87117, and No.98118, in 1972 and that the constitution and national law provide for the right to join unions, these rights are not respected in practice specially in RMG sector. Therefore governments should take affirmative action to ensure that the right can be exercised by examining the content of laws and the associated legal structure to protect freedom of association, which should boost the government‘s effort and effectiveness in implementing the laws, and permitting freedom of association. As of 20th April 2014, 140 new Trade Unions in the RMG Sector have been registered with the Bangladesh Department of Labour (DoL).119 Currently there are a total of 437 trade unions in the RMG sector of Bangladesh as of March 2015 whereas the number was 132 at the end of 2012.120

4.7 Factory Owners It is often alleged that it is the factory owners who are mainly liable for different incidents in the factory yet they are the most benefitted stakeholder in the RMG sector. In most of the cases they are reluctant about the building and fire safety, liable for paying low wages, restraining the workers to form trade unions and requiring the workers to work for extended hours. Most of them are also unwilling to pay compensations to the victims of incidents for

117

Convention Concerning Freedom of Association and Protection of the Right to Organise, 1948 Convention Concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, 1949 119 International Labour Organisation (ILO).―Chronology of recent events in the Bangladesh Ready Made Garment (RMG) sector‖.Retrieved from accessed on April 25, 2015. 120 See ILO.―Rana Plaza: Two Years On, Progress made & challenges ahead for the Bangladesh RMG Sector‖.(April 2015). Retrieved from accessed on May 5, 2015 118

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their negligence. Yet the silver lining is that there are some factory owners who are trying to comply with the labour laws, inspecting the factories regularly for safety and security concerns, providing supports to their workers, and also paying compensations to the victims. A few factories have also introduced day care centers for the workers inside the factory premise so that the mother can work with a sound mind. They are also arranging different training programs for enhancing the capacity of their workers at their own cost. Factory owners themselves must ultimately be held accountable for their negligence in regard to the upholding of adequate safety standards in the workplaces they own and run. Simply expressing regret or even, in some cases, providing compensation to workers once an incident has occurred is not sufficient when it is their decision to cut corners in regard to building safety, electrical and equipment maintenance that has put the lives of their own workers at risk.121 As the most benefited stakeholder in RMG sector, each individual factory owner needs to take responsibility for ensuring the safety of his employees by taking adequate steps to resolve the problems. All buildings, including extensions to the factory, must meet legal standards and electrical equipment should be properly maintained. At the same time they must ensure that managers, supervisors and workers are properly trained in fire and safety procedures, that exit routes are sufficient for the number of workers employed in the factory, that these remain unblocked at all times. Factory gates should be kept unlocked whenever workers are in the building. It is also vital that factory owners start taking a more positive attitude to dealing with concerns of workers by allowing proper workplace representation and recognise the role that trade unions and workplace safety committees can play in upholding safety standards for workers.122

4.8 Workers It is the workers who are bleeding everyday inside the factories of Bangladesh providing their heartfelt efforts to develop the economy of the country without objecting about their miserable life. They are sacrificing their life everyday for ludicrous wages and providing handful of benefits to the factory owners. Currently an approximate numbers of 4 million workers are serving in more than 5000 RMG factories of Bangladesh of which 80% are female. The garments workers are earning their breads by very hard labor. They render to the owners from the dawn to midnight. Sometimes, they have to work even for more than 24 121

Clean Cloth Campaign. ―Hazardous Workplaces: Making the Bangladesh Garment Industry Safe‖. November, (2012): 7 122 Ibid

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hours without rest (they get breaks for their snacks, which are arranged by the authority) during the emergency shipment. Of course they are still ill paid, notwithstanding the different labor revolution for various times.123 Most of the RMG workers are not fully aware of their legal rights and entitlements. Occupational health and safety is a major concern for them. Female workers are a majority in the RGM industry and become victims of various kinds of violence, including sexual harassment. Although statistics from government departments indicate improvement in working environment and workers‘ rights industry, survey findings and focus group discussions do not corroborate that fact.124 Absence of trade unions in the RMG industry is another major concern. No formal communication or dispute settlement mechanism exists between the workers and the owners of the RMG factories. Extreme sense of deprivation or suffering causes the workers to adopt violent means for expressing their frustration.125 It is necessary that the RMG workers will be aware about their rights for the sake of the development of RMG sector. They should not destroy the properties of the factory, block the roads, and call strikes for the sake of enforcement of their rights. There are proper mechanisms for raising their voice. They should solve the problems by negotiations with different stakeholders through trade unions. They should regularly participate in different training programs including fire and building safety trainings organized by the factory owners, government and other stakeholders. They should remember that destroying factories will rather create more problems than solving them and it is not the solution. It is a matter of great hope that after Tazreen and Rana Plaza incidents all the stakeholders are giving priority for developing the working conditions in the RMG factories. We wish that the RMG sector of Bangladesh shall not witness any further unfortunate and unexpected incident and no single life of RMG worker will be lost for nothing.

4.9 The International Labour Organization (ILO) and other International Organisations The ILO responded quickly to the Rana Plaza tragedy with a high level mission to Dhaka at the start of May 2013, which agreed immediate and medium term actions with the 123

Bhuiyan, Md Zafar Alam.―Present Status of Garment workers in Bangladesh: An analysis‖.IOSR Journal of Business and Management (IOSRJBM), (Sep.-Oct. 2012), P. 41 124 Odhikar.―Labour rights in the readymade garments industry in Bangladesh‖. Retrieved from accessed on May 8, 2015. 125 Ibid

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Government of Bangladesh and employers‘ and workers‘ organizations. These were integrated into the National Tripartite Plan of Action on fire safety and structural integrity (NTPA), which was developed following the Tazreen factory fire in November 2012. The ILO since launched a US$27.8 million, three-and-a-half year program funded by Canada, the Netherlands and UK to support implementation of the NTPA and improve working conditions in the ready-made garment (RMG) sector.126 The key initiatives include building and fire safety assessments; labour inspection reforms; occupational safety and health; rehabilitation and skills training as well as the launching of Better Work Bangladesh. Following are the majors roles played by the ILO in developing the RMG sector of Bangladesh: 4.9.1 Ensuring safe RMG factories In 1,800 RMG factories ILO is supporting the national initiative of the Government of Bangladesh to carry out structural, fire and electrical safety inspections of some. After Rana Plaza tragedy two initiatives were taken by the international brands and retailers: the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety who have already inspected 1687 factories. The Bangladesh University of Engineering and Technology (BUET) inspected 471 RMG factories under the national initiative in 2014. In January 2015, two private sector companies TUV-SUD Bangladesh Pvt Ltd., and Veritas Engineering & Consultant were entrusted to conduct structural, fire and electrical safety inspections of the remaining national initiative factories. The inspections have been commenced on 22 January 2015. The ILO is playing a significant role in all these activities by helping to coordinate inspections and providing technical support, including training and logistics. 4.9.2 The labour inspectorate After the Tazreen and Rana Plaza disasters it became obvious that the labour inspectorate required a complete reformation to be fully effective. As a result, the Government of Bangladesh made a series of major commitments to rebuild the Department of Inspections of Factories and Establishments (DIFE). The inspection service was upgraded to a department in January 2014, high level leadership installed, positions for 392 new inspectors created and

126

The International Labour Organization (ILO).―Bangladesh, Improving working conditions in the readymade garment industry: Progress and achievements‖.(21 April 2015). Retrieved fromhttp://www.ilo.org/dhaka/Whatwedo/Projects/WCMS_240343/lang--en/index.htm, accessed on May 3, 2015

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budget boosted from US$900,000 in 2013-14 to US$3 million in 2014-15.127 By April 2015, the total number of inspectors turned to 276 after appointment of 197 new inspectors including 54 female. ILO is entrusted to train these inspectors as well as to enhance governance and accountability of the labour inspection system under road map agreed between ILO and the Ministry of Labour that forms the basis for ILO support to this reform process. ILO is also providing basic equipment such as motorcycles, office and inspection equipment to DIFE so that it can function effectively. 4.9.3 Improving the fire service Fire Service and Civil Defense Department (FSCD) of Bangladesh has a very important role in fire related incidents in RMG factories. With the help of ILO the Government of Bangladesh has enhanced the strength of the FSCD by increasing the number of fire service staff up from 55 to 265 working as inspectors. With support from the US Department of Labor, ILO is supporting this process by providing comprehensive training. After these initiatives fire service staff can now more effectively inspect factories, develop emergency action plans and carry out evacuation drills to ensure factory occupants evacuate buildings safely when the alarm sounds. 4.9.4 Strengthening occupational health and safety Occupational Safety and Health and the skills to implement it is a major challenge for the RMG sector of Bangladesh. ILO is constantly working to reinforce the capacity of workers, supervisors and managers to improve the safety of their workplaces. Workers and employers can benefit from improved safety practices and be able to fulfill the objectives of the National Action Plan on Fire and Building Safety through training and education and the support of broad awareness campaigns and materials. In late 2014, 100 master trainers from the Bangladesh Garment Manufacturers Export Association (BGMEA), Bangladesh Knitwear Manufacturers Export Association (BKMEA), Bangladesh Employers Federation (BEF) as well as the private sector were trained under the ILO‘s RMG program. Later on, these trainers train 7,500 supervisors who will in turn train up to 750,000 workers.

127

Ibid

104

4.9.5 Launching a Better Work Program for Bangladesh Better Work is a collaboration between the ILO and IFC. The objective of the Better Work Program is to improve working conditions and promote competitiveness in the global garment industry. It does so by promoting compliance with international labour standards and national law in global supply chains as a basis for building socially responsible export strategies, and by enhancing enterprise-level economic and social performance. Better Work Bangladesh has completed initial work while factory and buyer outreach is ongoing through learning seminars for interested factories. In the initial stages emphasis is being placed on self-diagnosis and advisory processes to help factories review their management systems and develop action plans. In 2015 it is expected that the Program will reach 100 factories from the overall target of 300 factories by the end of the first phase of the Program.128 4.9.6 Rehabilitation for Rana Plaza survivors ILO in collaboration with GIZ and Action Aid Bangladesh is carrying out an assessment of the needs of Rana Plaza victims. ILO has already supported 300 injured workers who received counseling and livelihoods training in collaboration with NGOs Action Aid and BRAC. 4.9.7 Compensation for Rana Plaza survivors In September 2013, representatives of the Government, the garment industry both locally and internationally, trade unions and non-governmental organizations (NGOs) came together to form the Rana Plaza Coordination Committee (RPCC). The purpose of the Committee was to develop a comprehensive and independent process that would deliver financial and medical support to the victims, their families and dependents. As a neutral chair, ILO has played a major role in this process undertaking a coordination role as well as providing technical expertise on the design and operation of a compensation scheme. ILO is also a trustee of the Rana Plaza Trust Fund set up to manage donations. By late 2014 more than 2,800 claims had been received from over 5,000 injured workers and dependents of the deceased. A total of around 24 million USD has been received from brands, retailers as well as other donors as compensation by April 2015.

128

Ibid

105

4.9.8 Establishment of an Employment Injury Insurance Scheme ILO actively promotes policies and provides assistance to countries to help extend adequate levels of social protection to all members of society. The experience of setting up a mechanism to deliver compensation in the aftermath of the Rana Plaza highlighted the need for an Employment Injury Insurance (EII) Scheme to be established. This would benefits employees, spread the financial risk amongst employers and enhance the image and reputation of the Bangladesh RMG sector in the eyes of the world.129 On 24 January 2015, ILO explained and discussed the operation of an EII scheme with stakeholders representing government, employers, unions and civil society in an event in Dhaka. ILO proposed that a more detailed viability study will be carried out as the next step in order to determine with more accuracy what the actual costs would be as well as to better highlight what benefits to employees and employers would be delivered. 4.9.9 Coordination and collaboration ILO has played a leading role to help coordinate the response to the Rana Plaza collapse. The Government of Bangladesh formally asked the ILO to assist in the implementation and coordination of the NTPA. The ILO works with the National Tripartite Committee that is the government, workers‘ and employers‘ organizations, the Accord and Alliance to help ensure coordination. ILO serves as the neutral chair of the Accord and also cooperates closely with the Alliance on issues relating to factory inspections and remediation. Moreover, ILO is part of the ―3+5+1‖ group. This group brings together three Bangladesh Secretaries: Labour, Commerce and Foreign Affairs; five Ambassadors: US, EU, Netherlands, Canada and a 5th EU member state filled on rotation, and the ILO. This group follows progress made in commitments made under the National Tripartite Plan of Action and the EU Compact. 4.9.10 Enhancing workers’ rights Working with the Government of Bangladesh and employers' and workers' organizations, ILO is constantly trying to strengthen dialogue and improve working conditions. ILO is running two projects addressing specific challenges faced by workers‘ and employers‘ organisations by building local capacity in relation to freedom of association and collective bargaining funded by the US Department of Labor and the Royal Norwegian Government. 129

Ibid

106

These initiatives target workers in the RMG sector as well as other major export orientated sectors such as shrimp and leather. ILO has trained over 2,500 workers‘ representatives, trade union organizers, mid-level managers and employers‘ organization members through various training programs. ILO also trained women trade union leaders and organizers on key labour rights recognizing that the majority of garment workers are women. Practical knowledge and skills are also being provided that will enable women leaders to educate and organize workers at factory level in order to improve working conditions in the RMG sector. Except International Labour Organization (ILO), other international organizations including the World Bank, European Union, organs of the United Nations are also playing a vital role in overcoming the challenges of the RMG sector of Bangladesh by providing technical supports, training and opening dialogue with different stakeholders.

4.10 Non-Government Organizations, Non-State Actors and Civil Society The role of NGOs and civil society in promoting trade-poverty nexus in Bangladesh cannot be overlooked. Currently, several national and international NGOs are constantly working for the better environment of the RMG sector of Bangladesh in cooperation with the government, buyers and other stakeholders. The activities of NGOs and civil society include disseminating knowledge about labour standards in different level, campaigning the need for good working environment, facilitating dialogues and exchange of ideas amongst different stakeholders, pressing the government and other stakeholders to take necessary measures for the development of lifestyle of garment workers, education, compensation for the victims of accidents etc. They can also extend technical assistance with regard to the improvement of standards. Many small and medium scale RMG factories find it difficult to comply with the codes of conduct. Helping these enterprises can be a crucial in lifting the decent work record of Bangladesh. They can also work with the employers in pursuing the buyers about offering generous incentive packages to the factories complying with labour laws and standards.

4.11 National Media Global competitions are becoming fierce day by day. To compete and sustain in the global market, we must create and manage strong brand image representing the country. The brand value will become a vital factor in creating a pool of loyal customers which would pose a

107

formidable defense in the competitive market.130 Although Bangladesh marching rapidly in different development areas, our RMG exports are still generally concerted in the EU and the North America regions, which is around 86%. But it is great that a remarkable progress has been achieved in exports to non-traditional markets over the last three years. Bangladesh is not the only RMG country in the world and thus we have our competitors. India, Vietnam and Cambodia are observing us very keenly and making their strategies accordingly. As we are progressing toward the higher level of the value chain it does not only need to fulfill these requirements, but also Nation Branding comes into play here. So branding Bangladesh is an inevitable part to go forward and to compete in the global market. Here comes the role of media. The national electronic and printing media can play the most significant role in Branding Bangladesh RMG products in the world market. Very often we see that our media publishes reports in a negative manner rather than in a constructive approach. The international media always give importance to the national media of a country in publishing a report. Because of a negative report the RMG sector may lose a number of buyers although it may not represent the entire sector. Whereas a constructive report may persuade the buyers and the other stakeholders to press the government and owners to take necessary measures to eradicate the problems. So, it is very significant for to develop a good rapport between the RMG and the media. This may lead to formulation of consensual code of conduct that may ensure constructive criticism by the media and beneficial investigation. Media must take collaborative approach in country branding and changing mindsets. Media should not broadcast disturbing details of any industrial catastrophe that gives a bad name to the country and spawns social unrest. The positive aspects of RMG sector should also be highlighted in the form of articles, documentaries and symposium. And eventually media may benefit from projecting the positivity of the RMG sector and contribute in country branding and the RMG may benefit from imminent and potential research insights of the media.

4.12 The National Human Rights Commission Bangladesh (NHRCB) The National Human Rights Commission Bangladesh is also playing a vital role in promoting and safeguarding the human rights of RMG workers under the leadership of its current Chairman Prof. Dr. MijanurRahman. NHRC regularly organize different seminars, symposiums, round table discussions with different national and international bodies and 130

Hassan, Faruque.―Media‘s role in taking the RMG sector sustainably forward‖.The Daily Independent,(November 30, 2014). Retrieved from accessed on April 25, 2010

108

different stakeholders for development of the working conditions in the RMG factories of Bangladesh. The Commission is also constantly pursuing the Government of Bangladesh and other stakeholders to take necessary measures in different areas including amendment of labour laws, improving labour conditions inside the factories, raising the wages, facilitating the trade unions, promoting the rights of female workers etc. The Commission is also publishing study reports on different issues of RMG sector in regular intervals. NHRC frequently visits the garment factories to monitor the labour conditions inside the factories and recommend the stakeholders to take necessary measures if there is any non-compliance. NHRC is also planning to create a monitoring cell and form a high level committee with other key actor including civil society, garment workers‘ representative to monitor and oversee the garment related issues. This Committee will also extend its help to the ILO monitoring process. As the core human rights watchdog of the country NHRC needs to continue its efforts in future to create a bridge between the RMG workers and the other stakeholders so that the RMG sector continues to thrive the economy of Bangladesh even stronger than ever before without affecting the fundamental human rights of the workers.

4.13 Overall Status of Assessment by NTPA, Accord and Alliance (up to April 30, 2015)131 After Rana Plaza incident on 24 April 2013, National Tripartite Plan of Action (NTPA) for Building and Fire Safety was adopted and under that initiative, BUET was engaged in conducting building assessment on structural integrity, fire and electrical safety with a target of covering around 1500 factories. Besides national initiative the Bangladesh Accord on Fire and Building Safety (Accord) and Alliance for Bangladesh Workers Safety (Alliance) have also undertaken building assessment on structural integrity, fire and electrical safety. Following table shows the targets and completion status by each initiative as of 30 April 2015. Assessing body National Initiative Accord Alliance Grand Total

Total Number of Factory 1,355 1,530 744 3,629

Assessment Completed 893 1,281 737 2,911

Assessment Due 462 249 7 718

Table: Factory Assessment Status by NTPA, Accord and Alliance 131

See DIFE.―Status of Building Assessment‖.(2 May 2015). Retrieved from accessed on May 8, 2015

109

A total number of 98 factories located in 48 buildings were referred to the government Review Panel out of which 22 factories in 10 buildings were referred by NTPA, 45 factories in 21 building by the Accord and 31 factories located in 17 buildings were referred by the Alliance. A total of 32 factories located in 14 buildings were closed by the review panel (1 factory in 1 building referred by NTPA, 26 factories of 10 building referred by the Accord and 5 factories of 3 buildings referred by the Alliance). 27 Factories located in 14 buildings were partially closed (11 factories of 5 buildings referred by NTPA, 8 factories of 5 building referred by the Accord and 8 factories of 4 buildings referred by the Alliance) and the other 39 factories located in 20 buildings were allowed to continue production (10 factories of 4 buildings referred by NTPA, 11 factories of 6 buildings referred by the Accord and 18 factories of 10 buildings referred by the Alliance. NTPA Actions

Accord

Alliance

Total

Factory

Building

Factory

Building

Factory

Building

Factory

Building

Partially Closed

11

5

8

5

8

4

27

14

Closed

1

1

26

10

5

3

32

14

Allowed Operation

10

4

11

6

18

10

39

20

Total

22

10

45

21

31

17

98

48

Table: Review Panel Actions to Factories referred by NTPA, Accord and Alliance

Chart: Review Panel Actions to Factories referred by NTPA

110

Chart: Review Panel Actions to Factories referred by Accord

Chart: Review Panel Actions to Factories referred by Alliance Some of the reports of the review panel have already been published by Accord and Alliance in their website. Other reports of the completed assessments are also in the finalization stage and will be published very soon.

4.14 Conclusion Sometimes a big mistake in past shows us the lesson to avoid the bigger mistakes in future. The incidents of Rana Plaza, TazreenFasion and others were the results of our mistakes. The RMG sector has strengthened our economy year after year yet we had to pay its value with 111

the lives of thousands of workers. So it is the hard time for the government, factory owners, brands & retailers and other stakeholders to join their hands together and do the right thing taking lessons from the mistakes of the past. We hope one day the RMG sector will help the Bangladesh to reach its goal of emerging as a develop country in the world map, we hope one day ‗made in Bangladesh‘ will be the symbol of readymade garments in the world market.

112

Chapter Five Recommendations 5.1 Introduction Despite all the challenges that exist in the RMG sector of Bangladesh, still there are unlimited prospects. How much the RMG sector of Bangladesh will flourish in future mostly depends on how the stakeholders act. If all the stakeholders work together in near future we can easily become the world‘s most RMG exporting country eliminating all the obstacles. This chapter suggests some recommendations to each of the stakeholders of what actions to be taken for the proper development of RMG sector of Bangladesh.

5.2 Recommendations for Government and Government Institutions Since the last two decades the RMG industry of Bangladesh has been playing a crucial role in the Economic development of country. But it is now a critical crossroad in front of the country as the recent tragedies have tarnished the reputation of the sector and infrastructure bottlenecks undermined its global competitiveness. The Bangladesh Government must formulate a long term strategic plan to overcome the challenges existing in the RMG sector in order to achieving the middle income status country by 2021. The following recommendations are suggested for the government and government offices to eradicate the challenges of the RMG sector:  The Labour Act of 2006 and its amendment made in 2013 are well short of international labour standard set by the International Labour Organization (ILO). So the government should immediately amend the Labour Act to ensure that the Act comply with the international labour standards and the Convention No. 87 on freedom of association and Convention No. 98 on the right to organize and bargain collectively.  Establish a comprehensive and long term strategic plan to overcome the infrastructural challenges existing in the RMG sector, including the barriers in transport and energy supply.  Development of local supply chain could be an important development in the RMG sector of Bangladesh. Most of the factory owners import their raw materials from China which makes their production dependable on the supply chain of other countries. As a result production time is stretched and production value is increased. 113

Raw materials of knitted products can be made available inside the country. So, short term and long term plan development of development of local supply chain could benefit the RMG industries in a significant way. If necessary, government can give subsidies for that purpose.  There is no alternative of development of infrastructure for the further growth of RMG industries. Road, deep sea port, commercial buildings for storing products need to established by the government to strengthen the RMG sector.  A separate EPZ for the largest foreign exchange earning sector is now the demand of time for its sustainable growth. In Bangladesh, everything is centralized either in Dhaka or in Chittagong and garment factories are not an exception too. As a result political instability, social disturbance, traffic jam or anything that interrupts social life affects the production of RMG factories significantly. Therefore, a separate EPZ can help boost the production of RMG factories and help the country earn more foreign exchange in a disturbance free environment.  Create a separate ministry for the highest foreign exchange earning sector of the Country which can help to find out the challenges of the sector more rapidly and work to mitigate them more effectively. 

Conduct a full and rigorous review of building and fire safety standards and regulations for RMG enterprises which can help to undertake urgent review of all multi-story buildings currently housing the garment factories to ensure the overall safety;

 Ensure that factory inspectorate is equipped with necessary manpower and other resources to conduct regular inspections for ensuring workplace safety in line with labour legislations and National Building Code and Factory Act.  Set up a high level investigation committee to investigate accidents at factories. The committee would conduct a thorough investigation into the causes of each incident and issue a public report of the investigation. The government should pursue all applicable actions including criminal charges against the owners and other liable persons in case any negligence is found.  Provide emergency short term compensation to the families of workers killed or permanently disabled due to workplace accidents and provide free medical treatment to injured workers in such accidents.

114

 Incase factories are closed due to accidents or a failure to meet safety standards, ensure that the workers are provided alternate income support equivalent to their previous average earnings.  Take steps to operate mobile courts in factory level regularly to ensure occupational safety and health.  Establish a disaster relief and emergency plan under direct ministerial responsibility with adequate funding.  Arrange regular training programs for officers and workers on fire safety and other issues to ensure minimum damage in case of accidents.  Carry out effective and impartial investigation into workers‘ allegation of mistreatments, threats and other abuse, and prosecute those who are responsible;  Develop and implement a plan to increase the number of labour, fire and building inspectors, improve their efficiency by training programs, establish clear procedure for independent and credible inspections, and expand the resources at their disposal to conduct effective inspections.  Establish an effective compliant mechanism so that workers can raise their voice against violations of safety regulations and workers‘ rights without fear of retaliation.  Strengthen the Department of Labour so that it has greater power to impose penalty to the owners and unions for unfair labour practices, instead of just relying on the judiciary to address grievance.  Ratify ILO Convention No. 121 on benefits to workers in workplace accidents.  Encourage the national companies by ensuring different facilities and imposing restrictions to foreign companies.  Periodically disclose the number of factories inspected, key safety rules and labour rights violations and enforcement action status.  Periodically disclose the names and number of garment factories that are registered with the ministry so that these may be cross verified by different stakeholders by inspections;  Take all possible measures in collaboration with other stakeholders to regain the GSP facilities in the USA market.  Explore new and alternative markets of RMG products in collaboration with BGMEA, BKMEA and BTMA and other stakeholders.  Provide low interest bank loan for the investors in the RMG sector.

115

 Establish effective coordination among various government agencies working for the RMG sector to implement the strategies more effectively and efficiently.

5.3

Recommendations

for

Garment

Owners’

Associations

(BGMEA/BKMEA) As the representative bodies of the Bangladesh garment industry the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) are powerful and influential organisations, with the potential to make a real difference to the way the industry works.132 Therefore, they have a great responsibility to contribute towards the development of the RMG sector of Bangladesh. In this regard the following recommendations are made for BGMEA and BKMEA:  Ensure that the respective members of BGMEA and BKMEA are fully aware and informed in regard to safety standards and they are compliant to those standards.  Provide full and comprehensive inspections of member factories working with the government and other stakeholders.  Revoke the export license working with the government and cancel the membership of the organization of those factories that do not meet the standards.  Work with unions and factory owners to ensure that workers‘ right to freedom of association is upheld and publicly support the right of the workers to form trade unions;  Ensure that each member factory strictly follows the labour legislations.  Work with the ILO to motivate the factory owners to respect labour rights nad trade unions.  Provide training to the officers, workers and others on different issues in collaboration with other stakeholders.  Provide compensation to the families of workers killed or injured due to workplace accidents and manage special fund in this regard.  Pursue all applicable criminal charges against the factory owner or employers in case of negligence.

132

Clean Cloth Campaign.―Hazardous Workplaces: Making the Bangladesh Garment Industry Safe‖. (2012): 7. Retrieved from accessed on April 25, 2015

116

 Work with the government to expand the market of Bangladesh RMG products all over the globe.  Encourage local supply chain management and motivate the factory owners in this regard.  Open dialogue with different stakeholders including the government for the betterment of the RMG sector.

5.4 Recommendations for Brands and Retailers Although brands and retailers are not directly responsible for the safety of the RMG workplaces and labour situations inside the factory, still it is clear that their demand of seeking low cost, a bulk of product in a short time often encourages the factory owners to produce in unregulated environments where the workers‘ life may be placed at high risk. At the same time their audit system is severely criticized for their weakness in uncovering labour rights violations, violations of safety standards, failure to take corrective measures by the factory owners. Though the brands and retailers currently are taking lots of initiatives for the development of the RMG sector of Bangladesh, yet the following recommendations are suggested for them:  Ensure that a rigorous and comprehensive review of fire and building safety standards and regulations is conducted for RMG sector, including benchmark for compliance.  Conduct full, independent and transparent building and fire safety inspections of all suppliers in the RMG sector and remediate the issues uncovered in the process.  All time ensure fair purchasing practices and pricing a significant part of which allows for factory renovations and investments in worker‘s safety.  Ensure that properly functioning and independent health and safety committees are installed at each factory.  Effectively implement policies and practices to ensure that all RMG factories respect labour rights, in particular the rights of freedom of association and collective bargaining.  Publicly disclose all authorized production units on a regular basis including any subcontracts. Indicate the level of production and disclose when the unit was most recently inspected by independent monitors.  Join the Accord and Alliance, two agreements formed by the brands and retailers that seek to involve factory workers in ensuring the safety of factories. It is to be

117

mentioned that all brands and retailers of Bangladesh RMG products are not members of Accord and Alliance.  Take long term initiatives for building and fire safety and workers safety after the expiration of the Accord and the Alliance.  Ensure that unauthorized subcontractor factories are formally reported to the Ministry of Labour and Employment for monitoring and enforcement actions.  Ensure that pricing and sourcing contracts properly reflect and include the cost of labour, healt and safety compliance in consultation with labour right lawyers, trade unions and other stakeholders. This should include the cost of minimum wage, overtime payment and all other legal benefits.  Ensure that working conditions of the contracting factories fully comply human rights standards of workers, including provision for rest and breaks. Ensure that production target is not set at such a level as to violate such standards.  Work with all the other buyers, factory owners and their associations, donors, government and other stakeholders to establish a compensation fund.  Negotiate directly with labour groups representing affected workers to establish exact calculation and implementation of compensation agreements.  Work with other stakeholders to identify the exact cause of any incident and support the improvements required.  Work with labour right organizations, trade unions and other stakeholders to achieve the above mentioned recommendations.

5.5 Recommendations for Factory Owners Factory owners work at the core of the RMG sector of Bangladesh. They have a great responsibility to run the sector smoothly. Very often the factory owners are reluctant about labour conditions and safety of workers inside the factory. Following are the recommendations for the factory owners:  Ensure that all buildings, including extensions to the factory meet the appropriate legal standards according to Bangladesh National Building Code and fire safety guidelines.  Review the safety situations inside the factory by an independent inspector, and ensure that any safety issue identified during the process is properly remedied.

118

 Form participatory fire safety committee and occupational safety and health committee in each floor, provide proper training for then and keep them active all time.  Ensure that when a factory is closed during renovations, workers do not lose their jobs and do not suffer any loss of payment.  Ensure that managers, supervisors and workers are properly trained in fire and safety concerns, and exit routes are sufficient for the number of workers employed in the factory, and that these remains unblocked all the times. Also ensure that factory gets are kept unlocked whenever the workers are inside the building.  Ensure availability of fire defense materials in each floor.  Install health and safety committees in accordance with the Labour Act. Each committee should consist of workers and managers, with workers representing no less than 50% of the members.  Take more positive attitude in dealing with concerns of workers by allowing proper workplace representation and recognize the role that trade unions and workplace safety committees can play in upholding safety standards for workers.  Ensure that workers are paid the minimum wage fixed by the government and proper compensation is paid for overtime.  Ensure that workers have information about and access to credible grievance mechanisms in order to report information about health and safety hazards.  Not to subcontract with any factory without authorization of the brands.  Take liability for any incident caused in the workplace for their negligence and provide compensation to affected workers.  Establish day care centers and educational institutions for the children of workers.  Provide all time medical service for the employees and workers.

5.6 Recommendations for Workers  Not to engage in destructive activities in the name of establishing their rights and freedoms.  Regularly participate in training programs organized by the owners, government agencies and other stakeholders.  Actively participate in forming trade unions.  Express the grievance and dissatisfaction trough trade unions and not in a destructive way. 119

 Solve the problems by negotiation, conciliation and other amicable ways through trade union with the help and support of other stakeholders.

5.7 Recommendations for ILO  Ensure that the government of Bangladesh amends its labour laws in compliance with all ILO conventions ratified by Bangladesh.  Provide technical assistance to ensure that all inspections comprehensive and transparent, and result in effective regulatory enforcement in accordance with the law.  Press the international labour groups and all brands and retailers to support full compensation for the workers or families of workers killed or injured in the Rana Plaza collapse and Tazreen Fashion fire and other recent incidents.

5.8 Recommendations for Donor Countries  Introduce legal measures to require the brands and retailers registered in the country to periodically disclose and update their global suppliers and subcontractors together with an indication of the volume that is sourced from each supplier and subcontractor and the status of inspection by an independent monitor on the date of disclosure.  Provide funds and technical guidance to strengthen the capacity, transparency and accountability of the Ministry of Labour and Employment and other agencies of the government.  Press the government of Bangladesh to take necessary measures for the loss of life caused by negligence.

5.9 Recommendations for the NHRC  Regularly inspect the RMG factories to observe human rights conditions of the workers and recommend the government to take appropriate measures if any human rights violation is observed.  Arrange different awareness programs relating to fire and safety issues together with other stakeholders.  Open dialogue with different stakeholders for the overall development of human rights situation of RMG workers.

5.10 Conclusion The main three stakeholders of RMG sector of Bangladesh- the government, the factory owners and the buyers together can accomplish the potential development of RMG sector of 120

Bangladesh. The most important thing is that they need to work together on their continued efforts in various measures involved in improving the image of RMG industry of Bangladesh. There is a need for a new level of collaboration among the government, factory owners, buyers and other stakeholders on compliance issues. The future development of Bangladesh‘s RMG sector mostly depends on addressing these issues immediately. Only if wholehearted efforts are led by all stakeholders together, will the stage be set to support a future ―rebranding‖ of Bangladesh.133

133

McKinsey & Company, Ibid. P. 21.

121

Chapter Six General Conclusion Despite considerable improvement in the RMG sector by the government and other stakeholders, Bangladesh still remains way behind its major competitors like India and China on all accounts. Bangladesh‘s RMG sector is currently passing through a transitional period where she needs to address both economic and social upgrading. This has become more significant following the tragic incidents of the fire at the Tazreen garment factory and collapse of Rana Plaza. The government and all the stakeholders need to make significant investments in improving workplace safety and in areas of social compliance and ensuring higher labour productivity and capital efficiency, which would help the sector to ensure compliance with the more stringent compliance demands of buyers and increase its market share in the medium and high-end segments of the value chain. Recent initiatives toward the improvement of physical compliance in the RMG sector undertaken by global buyers and retailers such as the Accord and the Alliance along with the International Labour Organization (ILO) have to address the weaknesses properly without any kind of discrimination and provide the proper remedial measures. Timely implementation of these initiatives has emerged as an urgent task. Addressing these challenges will not be easy without using the appropriate policy instruments and ensuring their effective implementation. In this context, major stakeholders in the value chain, particularly the government of Bangladesh, trade bodies, buyers and retailers, factory owners and development partners, should work closely to find out the challenges existing in the RMG sector and to take appropriate measures to overcome those.

122

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