The fourth industrial revolution is underway and is bringing with it a series of upheavals. Robotics, automation, machine learning, and artificial intelligence are gradually making their way into the production process all over the world. Such major breakthroughs in the production process will have adverse effects on the job market and the Bangladesh economy. As a result of automation the demand for workers in the RMG sector is declining and the future for RMG workers is rather bleak. The introduction of machinery in the production process has a higher probability of affecting unskilled and semi-skilled workers adversely compared to the skilled workers.
The Ready-Made Garments (RMG) industry is the main source of manufacturing employment in the country. However, according to government's a2i project and International Labour Organisation (ILO) around 60 per cent (5.38 million) of garment workers in Bangladesh will become unemployed by 2030 and be replaced by robots due to automation in the RMG sector.
Bangladesh has always been known for having an abundant supply of cheap labour. The garments sector has played an important role in uplifting the economy of Bangladesh. The sector has created numerous jobs, pushed down the number of people living in poverty and fostered women empowerment. The garment sector was a major reason why female labour participation increased in the country. On the downside a major drawback the country faces is that a large portion of the workers employed in the RMG sector are unskilled. Therefore, the unskilled workers are losing out since as a result of automation the demand for skilled workers is increasing.
Bangladesh is known as the second largest garment and textile exporter in the world and the garments sector has created jobs for over four million people. Yet the country lacks the capacity of transferring workers from the apparel industry to another industry. The country also cannot create sufficient jobs for the workers who will be laid off as a result of automation.
Despite a large amount of surplus labour in the country, the advances in technology have made it more lucrative for producers to opt for automation. Garment owners in the country are now focused on integrating automatic machinery in the production process. However, automation will affect different countries differently, depending on the stage of development they are in. In a country like Bangladesh it will take time for the RMG sector to become completely automated and there are huge costs involved in the process. Fourteen steps are involved in transforming fabric to ready-made garments. Driven by technological innovation automation has been introduced almost at all stages of apparel making and in turn reducing the dependency on labour. Due to technological transformation throughout the value chain a number of challenges throughout the production process has been overcome.
According to Bangladesh Garments Accessories and Packaging Manufacturers and Exporters' Association (BGAPMEA), every year around 100 new factories are beginning operation and are using advanced technology in the entire apparel making process. Furthermore, these new factories also maintain compliance and factory rules and regulations strictly. Approximately 250 factories in the country are fulfilling orders with the use of latest technology and machinery. The use of advanced technology assists in cutting down production costs significantly (30-40 per cent) and has spill-over benefits in terms of higher productivity and helps cut down on lead time.
Introduction and use of automatic machinery in the RMG sector is costly but will help the sector reap benefits in the long run in terms of higher efficiency. However, automation leaves the threat of production being redirected to the industrialized countries. Reshoring may also take place, since producers demand a skilled labour force.
Since automation in the RMG sector is in progress and Bangladesh has no other option other than embracing automation to take the apparel sector to the next level, the country needs to face the inevitable challenges along with the opportunities brought about by the fourth industrial revolution. Automation has employment implications. Automation may result in a two-way effect for Bangladesh. Therefore, automation may lead to layoffs and job cuts. Since workers will be replaced by technology and robots. On the other hand, automation may also lead to job creation. Machines need supervision, experience wear and tear, therefore, repair work is necessary and maintenance is required. As a result, some new jobs may be created led by automation. However, the type of jobs created as a result of automation requires skill and education. Since the country has a scarcity of skilled labour it will be challenging to fill these posts. One positive side of automation is improvement in the quality of jobs in the RMG sector and a rise in productivity, however, the quantity of jobs will be lower.
In order to address the issue of job displacement brought about as a result of automation the government and policy makers need to step in. The fourth industrial revolution has given rise to the need for skill development of workers. Automation will lead to creation of new jobs in the service sector and the government needs to divert some of the workers to the service sector. However, this will require investment in education and training. Furthermore, the government needs to ensure favourable labour laws, take intiatives for skills development and provide social protection. There is a dire need for training for raising labour market skills to ensure job retention and assist the terminated workers to find alternative ways of making a living. Bangladesh also has the advantage of realising the demographic dividend. In order to avail the benefits of the demographic dividend, investment in training and education is mandatory. Restructuring of the education system and reducing the gap between the education system and the industry needs to be addressed. This will reduce our dependence on expatriate managers and help curb youth unemployment. Moreover, the government has a target of raising export earnings from the RMG sector to US$50bn by 2021. Therefore, the government must take immediate action to prepare our labour force and the economy for the challenges that lie ahead and facilitate the smooth transition of the RMG industry to a higher value added industry.
Sunera Saba Khan, Research Economist, SANEM.