“Productivity to end BD garment woe”

DHAKA: If the country wants to stop Western clothing brands and retailers from shifting their sourcing elsewhere, factory owners must improve productivity so they can afford higher wages and bring an end to recurrent labour unrest, industry experts believe.

“However difficult, Bangladesh has to learn to copy China,” Mike Flanagan, CEO at UK-based consultancy Clothesource, argues.

China has “scarcely added a single worker to its apparel workforce since 2005, though that workforce`s output has more than doubled in terms of numbers of garments produced. This is the reason why it can afford handsome wage rises,” he told just-style.

Flanagan urges Bangladesh to follow suit.

Western buyers are fully aware that working conditions in Bangladesh are a prime reason for the country`s “staggeringly low real productivity,” Flanagan argues. And wage increases “don`t automatically translate into higher prices” when productivity is increased in parallel, he adds.

Practically every other Asian garment-making country has hiked its minimum wage over the past year - on top of rises in the previous year. But in mid-June, protests and violence by Bangladeshi garment workers demanding higher wages led to a week-long closure of 300 factories.

A spokesperson for Swedish based fashion retailer Hennes & Mauritz (H&M) told just-style that its CEO Karl-Johan Erling Göran Persson "will meet with the Bangladesh government" in person to stress the need for workers to be compensated properly by their employers.

The company is a member of the international Fair Wage Network that campaigns for better pay in emerging markets.

Buyers` forum

H&M, along with Marks & Spencer, Walmart, Gap, Carrefour and 15 other clothing brands have already urged the Bangladesh government to set up a buyers` forum to “raise concerns and discuss current topics” with the ministry. They also called for regular review of workers` salaries.

H&M told just-style that by being present in Bangladesh the retailer can influence working conditions more effectively than by pulling out and shifting sourcing elsewhere.

Walmart international corporate affairs manager Megan Murphy adds that “helping people live better has always been core” to its business.

All suppliers have to “accept our own rigorous `Standards for Suppliers` as part of their contractual agreement with Walmart,” Murphy told just-style, adding that as long ago as 2006, nearly 5,000 suppliers from Asia were trained on industry best practices under the code.

However, Clothesource - which has advised clothing brands such as Gap, Marks & Spencer, Next and The Limited in making their sourcing decisions - maintains buyers will have to pull out from Bangladesh “if deliveries get any more unreliable, or if its producers` prices grow any faster than its competitors`.

“For example, American buyers haven`t pulled out of Bangladesh; they`ve just found themselves sourcing from elsewhere more often."

This is because global clothing brands have no shortage of other Asian factories “who`ll offer, from time to time, better overall deals on price, quality and reliability than can be found in Bangladesh,” according to Clothesource. And, the consultancy adds, all of the world`s top 15 buyers have sourcing arrangements in all of these countries.

Viable alternatives

The US based garment sourcing specialist Heart-Hunters Consulting agrees. "There are other Asian [Cambodia] and African locations that, with increased political stability, are becoming viable alternatives," Heart-Hunters president Valerie Cooper told just-style - although a lot depends on textile availability.

At the end of the day what matters is the "quality of the finished product compared with the labour cost," Cooper explains.

“Some locations become specialised in production because of other factors such as quality, component and shipping costs etc. Profit margins have been eroded by rising commodity prices and companies are constantly trying to stay ahead of the curve when it comes to cutting production costs.”

Bangladesh Garment Manufacturing and Exporters Association (BGMEA) president Ismail Shaffiu Mohiuddin ruled out another pay hike as the last increase was in 2010, when the monthly minimum pay was raised to BDT3,000 (US$36). But workers are calling for at least a 30% pay hike saying their wages have not kept pace with rising inflation.

And according to Bangladesh junior labour minister Begum Monnujan Sufian, reviewing salaries alone will not address the issue, with the government planing to implement effective rent control and subsidised food for garment workers.

“These proposals might help" to some extent, Clothesource`s Flanagan says. But given the country`s overall low wage levels, the question is "why should the other 95% of Bangladeshis support, through their taxes, a food subsidy to the best-paid workforce in the country?”

Source: just-style

BDST: 2150 HRS, AUG 13, 2012
Edited by: Abul Kalam Azad, Newsroom Editor