Repeated unrest in RMG leads to 30% orders shift to other countries

The recurrence of protest causing shutdown of dozens of factories in the last two days took the apparel industry owners by surprise as they started feeling the pinch as 30% orders for the next season have already shifted to other countries.

Just a week after apparel industrial zones in the suburbs of capital Dhaka returned to normal operation from two weeks of unrest, a section of workers in Ashulia and Gazipur stopped working and started protests from Sunday, demanding Tk25,000 as minimum wage.

Repeated protests since 29 August put apparel exporters in a complex situation as they claim to be clueless why the unrest continued even though most of the workers' demands were already met or agreed upon.

Emerging from an emergency meeting Monday evening, BGMEA President Khandoker Rafiqul Islam told The Business Standard that the orders lost or shifted to other countries for the next season would be around 30%.

He hoped the labour situation would improve as the labour industry is expected to make a joint statement on the issue today.

After the first wave, industry owners agreed to increase workers' attendance bonus and tiffin allowance. But now the number of demands grew from 12 to 18 and factories are facing shutdown again.

As a result, some buyers are moving their orders out of Bangladesh to India, Vietnam, Sri Lanka, Indonesia and Pakistan, sources at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said.

Majority of buyers' representatives are not willing to visit Bangladesh considering the unrest situation, according to the industry insiders.

They also mentioned that about 30% of orders for the next summer, scheduled for deliveries between December and March, have already moved out to competitor countries, they feared.

"Buyers are also worried as they would not sustain without Bangladesh as there is a big question about price and capacity," said Nafis Ud doula, director of Impress-Newtex Composite Textiles Ltd.

At an emergency meeting on Monday evening, readymade garment manufacturers disagreed to two demands – a review of the new wage board and an annual 10% increment, placed by labour leaders.

However, earlier in the afternoon, 16 of the 18 demands placed by the worker leaders were resolved during a tripartite meeting at the labour ministry.

On Sunday, worker rights leaders placed 18-point demands to the secretary of the labour and employment ministry. The demands include reconstruction of wage board, payment of all wage arrears, provident fund in all factories, workers' ration and compensation for those who were killed and injured in July movement against the previous regime.

The labour ministry held a tripartite meeting on Monday, where all parties discussed the demands and 16 of them were resolved.

While some demands were accepted instantly, different deadlines were set for compliance with most other demands, with all parties agreeing on the additional time required to meet those, meeting sources said.

It was also decided in the meeting that the owners will pay all dues by 30 October, and in case they fail to meet the deadline, the ministry will take legal action as per the law.

Besides, owners agreed to increase the attendance bonus by Tk225, tiffin allowance by Tk10, and maternity leave from 112 days to 120 days in all factories.

The labour ministry will independently investigate the blacklist of workers, which has been made by the owners. BGMEA representatives accepted the decision.

Regarding the wage hike and annual 10% increment instead of 5% now, labour leaders said that if owners cannot afford a new wage board, they can implement dearness allowance as the country is facing severe high inflation.

BGMEA President Khandoker Rafiqul Islam, however, said they cannot accept any demand regarding wage hikes until the trade body's members approve the matter in a general meeting.

Later in the evening, BGMEA called an emergency meeting, where RMG makers disagreed to accept the two demands.

On 7 November 2023, the Awami League government set the new minimum wage for the RMG workers at Tk12,500, of which 63% was basic pay and the new minimum wage was effective from January 2024 with their December wages.

The basic wage was then increased by 56.25% with a 5% annual increment.

The development came at the end of the day after workers from several factories in Gazipur and Ashulia demonstrated on Monday, pushing for several demands including payment of unpaid salaries, higher wages and benefits, leading to blockades of the Dhaka-Mymensingh and Dhaka-Tangail highways for nearly an hour in the morning.

The workers also voiced concerns over issues ranging from attendance bonuses to unpaid wages.

Tensions escalated as some workers forcefully entered one of the factories and vandalised property. Joint forces later dispersed the protesters and arrested three individuals for inciting violence and damaging factory property.

Industry sources said 39 factories in Ashulia and three more, including a food product maker, in Gazipur area suspended production on Monday as workers came out of factory premises.

Agitators blocked Dhaka-Tangail and Dhaka-Mymensingh highways, causing traffic congestions in the morning, prompting the police and the army to intervene. At least nine people were detained from Gazipur industrial areas.

Industrial police said factories announced suspension of production as workers started a protest demanding Tk 25000 as minimum wage and left factory premises.

However, some workers were agitating for dues. "We are not yet paid wages for August. We cannot pay rent and grocery shop dues," said a female worker of Generation Next, whose workers were demonstrating at Narsinghapur blocking Baipail-Abdullahpur road in Ashulia.

Exporters clueless

Talking with TBS, a large exporter based in Chittagong said, "We are worried about the future of the industry. As none have any idea when this situation will improve.

"Every day buyers are inquiring when this issue will be resolved, but we are not able to give an exact answer."

Global buyers are splitting next season's orders into alternative countries to sustain their supply chain, industry sources said.

An executive of a leading multinational buying house said, "We have not been able to receive any PO over the last one and a half months. Now it's a major challenge for buying houses and some small exporters."

The buying house executive said some banks were not financing raw materials payments, creating another pressure on the supply chain.

A leading exporter based in Ashulia said they have some US buyers who have already spotted Ashulia as a "risky zone" and planned to move out.

"A leading US buyer has been giving us guaranteed orders for about 10 million pieces of bottoms every year, but now they are shifting a part of that," said the exporter.

Surma Garments Ltd Managing Director Faisal Samad said Sharmin Group would face a loss of Tk900 crore due to factory closure for the repeated labour unrest.

On the other hand, Ananta Garment has faced a backlog of about 1 million pieces of garments as it missed shipping deadlines. The exporter will have to go for air shipment when the air freight charge marks a sharp increase, the exporter said.

TBS Savar correspondent Noman Mahmud contributed to the report.