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Building a Plan B to RMG industry: Arrested transitions?

| Updated: July 27, 2019 21:07:06

Building a Plan B to RMG industry: Arrested transitions?

There is reason for pride in how Bangladesh's RMG (ready-made garment) industry plucked the country's economy from out of its agricultural moorings, transformed the country's future and fate, and kept the growth climbing, as if the sky sets the limit. Plenty of applause must go to its entrepreneurs in making the breakthroughs and forging new connections for over a generation. Every time one felt the end of its growth had come (after the Multi-Fibre Arrangement (MFA) had expired in 2004, then with all the global economic slowdowns and recessions in this century), the country's RMG resuscitation helped it scale higher, and reap greater profits.

When all is said and done, not many countries can point to its RMG sector impacting the national economy so profusely and protractedly as Bangladesh's has done. To be sure, not all catalysts were domestic: every recession, seemingly, only fuelled up global demand, and thereby our export income, particularly during the 2008-11 Great Recession. As imports of many developed countries plunged, our RMG sales doubled during that time (from $10 billion to $20 billion): low-waged exports, particularly of clothing, seemingly defy economic downturns, in part because basic consumption cannot be eliminated. No wonder the first industrial revolution (in late 18th century England), was all about clothing, the first RMG producers in the world.

Tiptoeing Britain's pathway into an industrial power and a pre-eminent developed country might do Bangladesh a world of good. Of course, circumstances have changed enormously since then: demand has automatically and independently become more globalised (rather than being forced through colonial policy initiatives), and the tentative mechanical start with the spinning jenny then finds multifarious counterparts today, so much so that any RMG-concentrated economy easily becomes a recipe for stalled growth, retarded innovation, and missed critical transitions. England quickly shifted to mixing iron ore and coal to produce steel (the second industrial revolution), and since it did so amid intense global competition by late 19th century (France, Germany, Japan, and the United States were suddenly making more noise behind protectionist trade policies than Britain was with still supreme free-trade), it set the pattern still influential today: of the most competitive producer pushing more open trade, while those on its heels maximising protectionist returns. That was one critical upward threshold movement that still keeps Britain ticking today under more strenuous circumstances.

Bangladesh cannot but continue with its RMG production at this stage: the demand keeps escalating, and we are putting infrastructures in place that could help us even make waves as a globally competitive producer. While doing so, however, it must thoroughly examine two arenas of growing concerns: worker maltreatment, and the imperative of building a Plan B strategy, that is, shifting up the production value-chain to keep pace with counterpart moves on the consumption front (for instance, our import bill, especially the "luxury" components, keeps ever-escalating, even faster than our RMG income, a wrinkle that must be kept from blowing into a broader economic trauma or ultimately showing industrial senescence).

Maltreatment has less to do with RMG wages. We have had many days lost to labour unrest already this year. Spotty arrangements have been made, but the almost 4.0 million workers do need a better deal. This need not at all be monetary: even supplying free education and health benefits would keep workers just as competitive abroad as now, but perhaps with even more energy, vitality, and purpose since their essential needs have been taken care of. Since over three quarters of them happen to be women, child-care and job-longevity would strengthen our economy immensely: their purchasing power would expand, and they would put in more hours of work than otherwise; and their children would get the education desperately needed for an inevitably cut-throat future.

Most of the maltreatment concern stems from another source. As is becoming evident in many countries along China's Belt Road Initiative trail-ways, local workers or simply residents have faced differences with their Chinese counterparts, and often end up on the short-end. Mechanisms must be put into places where Chinese investments have brought Chinese workers, as in Payra power plant. On the one hand is China's willingness to fund our projects when other foreign investors were deserting Bangladesh after the Holey Bakery incident, or refusing to give the needed money for critical projects, as the World Bank did in the case of Padma Bridge construction. We cannot scare the Chinese off from these projects, but without having mediation teams everywhere, we may also be encouraging groups whose bids for those projects were bettered by Chinese companies to foment trouble. A fragile situation must be deliberately controlled, otherwise the loans we are borrowing will come back to haunt us even more than World Bank repayment plans. Many cases support how the BRI projects have been generating debt-traps. This conversation and remediation strategies are of vital interest to us, sustaining our growth, facilitating cordial bilateral Chinese relations, and ultimately facilitating proper consummation.

The other restructuration dimension demanding attention is the increasingly critical need to build a Plan B to our RMG industry. This industry will, quite likely, carry us through another decade or so by itself, at the least, which is when we should be higher up the very middle-income ladder we just began climbing. That requires we build middle-income jobs, meaning the low-wage dependence must begin to ease. Already special economic zones (SEZs) and exclusive economic zones (EEZs) have opened up assembly manufacturing plants, ranging from hardware production, such as automobiles or ships, to software output, as with many ICT (information and communications technology) contraptions. Many of these already do what the RMG sector does: supply competitively priced finished products globally with low-wage workers. Those markets are also expanding, and to not start training workers to move up the skill-chain, that is, from garments to ICT products, would leave us flat-footed. Only when the lower social rungs move up the social ladder (without necessarily shedding their relatively "lower" status), can the middle-income climb be genuinely underway.

Sliding from a low-waged RMG worker to a low-waged ICT worker carries many benefits: the skill level will be far higher, as too the relative wage; the latter is as women-friendly as the former, thus providing the critical post-RMG job outlet for so many women who might have otherwise been left stranded or open to regressing to household work; not only would women empowerment be facilitated, but women footings would be stronger given how their children's intellectual horizons are being catered to and capable of matching at least their mother's skill-level; and all of these reflecting a middle-income Bangladesh more commensurately than imaginatively.

Bangladesh stands at many crossroads concurrently, or we will have to cross many crossroads, at the least, involving too many aspects of our life to stop here or to squander opportunities such as these. It would be fitting that the industry that got us into this economic playing-field also pave the way out of it, and upwardly, for its giant's claim to fame as the key driver of an ultimately developed Bangladesh.


Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.


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