Improving Social Compliance in Bangladesh's Ready-Made Garment Industry

Topics: Working time, International Labour Organization, Labour law Pages: 29 (9150 words) Published: June 19, 2013
Improving Social compliance in Bangladesh's Ready-made Garment Industry

Author FERDOUS AHAMED, Ph.D Faculty of Business, Economics and Law, La Trobe University, Australia Bachelor of Arts and Master of Arts in General History University of Dhaka, Bangladesh Master of Business Administration in Marketing and HRM Northern University, Bangladesh Master of Commercial Law (Studying), La Trobe University, Australia 42 Wilcox Street, Preston, Victoria 3086, Australia E-mail: Tel: 0610433051172


More than 78% of Bangladesh’s export earnings come from the garment industry. The ready-made garments (RMG) sector has a greater potential than any other sector in terms of employment and foreign exchange earnings to reduce poverty and make a contribution to the national economy. However working conditions in this vital sector are poor. Bangladesh’s RMG factories fall short on 'social compliance 1'. That is, they do not comply with labour practices that ensure the social welfare of their employees. This article reviews the literature on working conditions in Bangladesh's RMG sector and the failure of its existing labour laws. It proposes that impediments to establishing social compliance in the sector can be overcome by a combination of international pressure, better monitoring and better human resources management (HRM) citing Cambodia as an example.

Key words

Social compliance, WTO, ILO, Decent work, Labour standards, HR/IR, Fair Labour practices, Readymade Garment (RMG), BGMEA, GDP, Multi-Fibre Agreement (MFA), General Agreement Tariff and Trade (GATT). Social compliance in the RMG sector generally defined by the building standard of the factories, working conditions, workers rights, workers’ health and safety measures, and environmental safety issues. 1


Introduction The RMG industry has been Bangladesh’s key export industry and a main source of foreign exchange for the last 25 years. As a result of an insulated market guaranteed by Multi-Fibre Agreement (MFA) 2 of General Agreement Tariff and Trade (GATT) and supportive policies of the Government of Bangladesh (GoB), it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to the GDP within a short period. In less than a decade it increased its exports, foreign exchange earnings, and contribution to the GDP by 4.39 %. RMG exports reached a steadfast figure of USD 17.91 billion in fiscal year 2010-2011; accounting more than 78% of national export earnings, which was about 4%-5% of the global total of such exports. It further contributes 10% to the country's GDP (Mahmud R.B., 2012). RMG products are exported mainly to the United States of America and the European Union. Bangladesh's garment industry provides employment to about than 3.6 million workers which 2.8 million are women (Mahmud R.B., 2012). Workers in these garment factories are almost always illiterate. They have very limited knowledge of human rights, working conditions and labour standards. Despite the phenomenal success of the RMG sector, poor working conditions in the factories and a lack of Social compliance 3 are serious concerns which have, since 2006, led to labour unrest and damage to institutions and property. As a result, there is a rising fear in Bangladesh that the readymade garments sector may face a decline in demand. Social compliance in the RMG industry is a key requirement for most of the world’s garments buyers. It ensures labour rights, labour standards, fair labour practices and a Code of Conduct.

Literature Review

Many researchers have investigated working conditions in the Bangladesh garments industry. In fact Working conditions in the RMG sector are below standard and do not meet the ILO standards. Labour standards and rights are commonly ignored in the RMG factories in Bangladesh: poor practices include the absence of trade unions, Multi-Fibre Agreement [International trade agreement under...

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