The Rupp Report: Bangladesh: Will The Story Ever Come To An End?

It seems that the status quo in the Bangladeshi textile industry hasn’t changed that much. However,
the increasing pressure from some international nongovernmental organizations (NGOs) through social
media and newspapers has caused some changes in the minds of the responsible people in this

Important Industry Sector …

The same pressure comes from the International Labor Organization (ILO), which just presented
a study on Bangladesh focusing on growth with equity, titled “Seeking better employment conditions
for better socioeconomic outcomes.” The big study takes into consideration that the textile sector
in general, and the apparel sector in particular, is one of the pillars of the country’s gross
domestic product (GDP). As the study reports: “Average annual GDP growth rates rose from an average
of 3.2 percent in the 1980s to 4.8 percent in the 1990s and then to 5.8 percent in the past decade.
This improved economic growth performance stems from a series of economic reforms carried out in
the late 1980s and early 1990s in an effort to achieve economic integration with the global
economy, mainly through the intensification of export-oriented production.”

… Specializing In Apparel

With its increased specialization in the apparel sector, ILO reports the country became “one
of the main exporters of ready-made garments (RMG). As a result, in 2011, Bangladesh accounted for
4.8 percent of global apparel exports, compared with only 0.6 percent in 1990. Over the same
period, total exports as a share of GDP increased from around 5 percent in 1990 to over 23 per cent
in 2011. Even during the financial and economic crisis, exports remained rather resilient, only
falling by 2 percentage points at the height of the crisis, i.e. between 2008 and 2010. This was
mainly due to the fact that consumers in the advanced economies substituted towards lower-priced
apparel goods.”

Growth At Any Price …

“The growth in the last two decades has created jobs, but with harsh working conditions and
low pay, including in export-related industries,” ILO reports. “This expansion has brought a lot of
problems in the country, with two fatal events: first, in November 2012, a factory fire in which
117 workers died; and second, in April 2013, the collapse of a building that housed a number of RMG
manufacturers, leaving 1,129 workers dead.” The rest is history. This year, the Rupp Report has
informed in different articles about the severe labor conditions of the textile workers, the
unacceptable housing situation and their implications on the global textile industry. Promises have
been made here and there; however, not many things have changed since the Rupp Report started this
series earlier this year
(See ”
Rupp Report: Cheap Textiles Paid For With Human Lives
,”, April 30, 2013).

… But With Low Wages …

The ILO further reports: “Bangladeshi workers earn some of the lowest wages in the world. For
example, as of August 2013, the monthly minimum wage for entry-level workers in Bangladesh’s
garment sector was US$39 per month — about half of the lowest applicable rate in other major
garment-exporting countries, such as Cambodia (US$80), India (US$71), Pakistan (US$79), Sri Lanka
(US$73) and Viet Nam (US$78). And while other countries revise their minimum wages on an annual
basis, Bangladesh has adjusted the RMG minimum wage only three times since it was first set in

… And No Social Protection

“Bangladesh’s social protection coverage is among the lowest in the region. Even among the
poorest quintile, less than 40 per cent are covered by social assistance. Urban poor tend to be
left out of social assistance,” the report continues. “In fact, a large fraction of social
assistance goes to non-poor households. (close to 10 percent of the social assistance spending goes
to the richest quintile).”

What Is One To Do?

The ILO gives some suggestions for how to get out of this virtually vicious circle: It
writes: “The most important objective of labour market and social policies in Bangladesh in the
short run should be to focus on improving employment prospects and working conditions at home. If
concrete measures are not taken in this direction, the country risks losing its main source of
export-led growth — namely, the RMG sector. For example, the United States recently suspended trade
privileges for Bangladesh (breaks on tariffs under the Generalized System of Preferences of the
WTO), other countries could follow suit. The severity and frequency of industrial accidents in the
sector has increased to the point that it may be acting as a deterrent to international buyers and
investors. The establishment of a National Tripartite Plan of Action on Building and Fire Safety in
the Ready-Made Garment Sector (NAP), negotiated during a high-level mission by the ILO to Dhaka
after the Rana Plaza building collapse, and the ‘Accord on Fire and Building Safety in Bangladesh,’
signed by international retailers and trade unions could begin to address these challenges if they
are fully and promptly implemented. The objective of these agreements is to ensure a safe garment
sector where workers can work without fear of fire, building collapse, or other such accidents.”

Relocate Production Sites

Furthermore, the ILO writes: “There is an urgent need to inspect all existing factories in
the RMG sector. As the ILO’s high-level mission to Dhaka pointed out, some of the factories will
need to relocate to safer buildings while the existing ones are being inspected and repaired to
ensure safety and reliability. … [M]any factories in Bangladesh are unprepared to deal with fire
or other potential dangers. The National Tripartite Committee established to carry out the NAP will
establish a technical sub-committee to focus on the structural integrity of buildings and fire

The study also mentions the need for a strengthened capacity by the Bangladeshi government to
inspect the factories: “The ILO negotiated agreement calls for 200 labor and factory inspectors to
be appointed by the end of 2013 and the recruitment of another 800 inspectors in 2014; the
upgrading of the Department of Chief Inspector of Factories and Establishments to a Directorate
with an annual budget to run its regular activities; and the necessary infrastructure for its
proper functioning.”

International Standards

Most of all, as the ILO states: “The country should adopt international labor inspection
standards, particularly allowing inspectors to initiate civil proceedings against violators.
Countries in the region such as Indonesia, Malaysia and Vietnam, where the inspectors are trained
and can initiate civil proceedings and levy fines against violators, could serve as models for

As mentioned above, compared to other major RMG exporting countries, Bangladesh has the
lowest wages in that sector. “Wage adjustments in recent years have remained infrequent and
unpredictable. In the interim, inflation erodes the purchasing power of workers’ wages,” the ILO
reports. As the past few months revealed, “In the garment sector, in particular, adjustments are
usually adopted only after mass protests and strikes that disrupt the industry. Both workers and
employers would gain from more regular and predictable revisions that bring wages in line with
workers’ needs and industry standards world-wide,” the ILO concludes.

Pressure Needed

The list of suggestions could be easily extended. However, as has been demonstrated in the
past months and years, all the suggestions and advice don’t help if there is no strong pressure
from the outside world. There is an old saying: “People only start to move when it hurts their
wallet.” In the very end, it is only the market that dictates success and failure. On the one hand,
the big purchasing companies should put more pressure on the local governments instead of sticking
their head in the sand and proclaiming “this is not our business.” They shouldn’t squeeze the local
producers, but should pay fair prices and communicate with their customers about all these
problems. Then, perhaps, all those people from Main Street and the NGOs shouting against the
retailers would stop canting their accusations. It is exactly these people who are buying the
cheapest apparel, which is produced by workers earning US$39 per month.

November 26, 2013