It is not very long when the world hardly knew that a country situated in South Asia called Bangladesh really exists. But over time, this country rose up high and made her place among the few fastest emerging countries in the world. This has happened mostly for her economic exertions. Bangladesh is now the second biggest exporter of readymade garments in the world. Almost 4 million workers are employed in this sector 80% of who are women. They have made revolutionary benefaction in women empowerment. This progress was only possible due to the mass employment of their women in RMG sector.
Looking through the microscopic lens, the only reason we will find for such success of Bangladesh in RMG sector is nothing but its cheap labor. Women coming from the rural areas are mostly employed in those garments factories. They have a very low standard of living and very limited access to proper health and education facilities. So, even this low paying job is like a blessing for them! The minimum wage rate here is 3000taka or 38usd per month which is the lowest in the whole world. This is the basic reason why the buyers are keen to buy readymade garments from Bangladesh. Because they source readymade garments at lowest prices from this country. But things are changing rapidly. Nowadays, the advancement in science has gifted us sophisticated robotic technologies and new machineries that can reduce human efforts significantly. Entrepreneurs are also highly interested to go for automation since it reduces the labor cost to a great extend. In the context of Bangladesh it is more applicable due to the labor strikes, habitual absenteeism etc. Moreover, there are many foreign investors who have less influence over the workers because of language barrier and other cultural differences. So, the owners are more likely to go for automated production even if it requires huge investment. So the aftermath is quite easy. According to the theory of labor economics, unemployment will arise if the investment in capital intensive equipments is higher.
However, statistics show that minimum wage rate in Cambodia is 80usd and in Vietnam its 78- 112 usd. Those two are the biggest competitors of Bangladesh in terms of cheap labor. So comparing to them, Bangladesh is still in a very competitive position to bid in the international RMG market with its 38 usd rate. But, if they switch to automation in next few years it can cause a disaster in the labor market causing large number of unemployment. Most importantly, this will stretch back their female workforce to a point which can cause dreadful consequences to the society.
But what happens if they go for automation and other competing countries also do the same? In that case they still may be able to play the ‘cheap labor’ card to a limited extend. Because the management executives or employees working in higher levels of the hierarchy in the garments factories are also paid less comparing to the other competing countries. But that will not be sufficient to keep the price of the product low and apparently they will lose their monopoly over the market. The buyers will also get upper hand to negotiate and they shall evaluate other factors for maximizing profit. Like, when the competition is intense and the price of product is more or less same then the buyers will consider the working environment of the factories, the compensation structure and lifestyle of the workers, infrastructural strength and facilities, safety measures, political situation of the producing country and more. Unfortunately from that point of view, Bangladesh does not stand a higher chance to bid in the international market for their degraded brand image ((Referring to the accidental incidents took place in the recent past in ‘Rana Plaza’ and ‘Tazreen Fashions’). Moreover, they still lag behind in most of the parameters that are mentioned above.
In past four years 618 garments factories were shut down and last year 318 more companies were about to shut down for various reasons. Many workers have lost their jobs. So, this is the high time the policy makers should muse and go in depth of the problem. They should take necessary actions and decide whether hi-tech production could bring fortune to Bangladesh in the long run or not. Initiatives should be taken for creating or developing new earning sectors rather than depending on a sole sector. Also exporting skilled and unskilled manpower in more countries could be another alternative to confront the unemployment issues. In short, there are ample numbers of options for creating new employment but prompt and proper measures are required to be taken by the concerned authorities and stakeholders.
Author’s – Samuel Christopher Penheiro
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