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Bangladesh a 'victim of the mass market sourcing model’

“Bangladesh is a victim of the mass market garment sourcing model, which is all about the next order and how can we get it cheaper,” said Peter McAllister, executive director of the Ethical Trading Initiative (ETI) following allegations of worker intimidation in the country’s ready-made garment industry.

The last edition of the Dhaka Apparel Summit

The last edition of the Dhaka Apparel Summit

The last edition of the Dhaka Apparel Summit

The ETI has joined major retail groups like H&M, Inditex, Marks & Spencer and C&A in pulling out of the upcoming Dhaka Apparel Summit, which is set to take place on Saturday and aims to tackle issues including collaborative and responsible sourcing for sustainable growth and plan the road ahead for Bangladesh’s apparel industry.

The ETI said it has not taken the decision lightly but it was left with no choice following what appears to be an increasingly hard-line response by the authorities and some industry members.

A spokeswoman for H&M told Drapers the group is “deeply concerned by the recent unrest in the Bangladeshi textile industry” and it has chosen not to attend the summit in light of recent events and continued actions towards workers and union leaders in the country.

Inditex, Zara’s parent company, said it is working with IndustriAll Global Union through various actions to try and achieve the reinstatement of rights and jobs of the workers following the Ashulia strikes. Like H&M, it has decided not to attend the Dhaka Apparel Summit.

A spokeswoman added: ”Although our influence among Bangladeshi suppliers is limited, given we source the majority of our products from proximity markets close to Spain, we remain committed to protecting workers in this area and will continue taking the necessary action in cooperation with global unions, brands, NGOs and other civil society representatives to defend worker rights.”

Garment manufacturing is a big part of Bangladesh’s economy, contributing more than 13% to Bangladesh’s GDP and accounting for $26.6bn (£23.1bn) in exports last year. It is the second largest apparel exporting country in the world and employs 4.4m people, 70% of which are women.

At least 26 trade unionists and garment workers in Bangladesh have been jailed for participating in a strike since December last year following demands to increase the minimum wage, according to the Clean Clothes Campaign.

In addition, more than 1,600 workers have been fired and police have filed cases against 600 workers and trade union leaders, including charges of terrorism.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said production was suspended at 59 factories during December, which it estimates cost more than $50m (£39.9m) in lost production and a similar amount in discounts, air freights and lost business.

“We cannot put a value on the reputational damage at the international level for our sector,” the association said in a statement last Sunday.

McAllister said the ETI’s concern extends beyond the prosecution of some individuals, but rather centres on “a wider attempt to suppress conversations around workers’ rights”.

“Bangladesh’s industry needs to be based on good quality industrial relations, which include collective bargaining, the rights to trade unions and wage negotiations, not just being the cheapest in terms of labour costs,” he said.

Feeling the squeeze

This week, UK high street suppliers told Drapers that Bangladesh factories are feeling the squeeze more than most areas as the country tends to produce more basic items in big volumes.

One high street supplier, who did not want to be named, said: “Retailers are refusing to put up prices on basics so the factories can’t increase their prices even with the current exchange rate.

“Bangladesh is feeling it more than most as it tends to produce more basic items in huge volumes, so there is no manoeuvring on price. They are often given an ultimatum – make at this price or we’ll move our business elsewhere. It’s not sustainable: the factories can’t keep going like this. In a lot of cases they aren’t making any margin at all, they are taking the orders to keep the factories open in the hopes the exchange rates will improve.”

Another said: “It’s happening everywhere at the minute, but basics suppliers in Bangladesh will definitely be hit hardest. Retailers are trying to buy at 15% cheaper as they don’t want to put up prices, but something has to give. Retailers are having a tough time on the high street so they are flexing their muscles.

“Suppliers in Bangladesh are in a really difficult position as the factories and volumes are huge and they can be shut down overnight if a retailer pulls out.”

McAllister said Bangladesh’s industry needs to be based on good quality industrial relations, which include collective bargaining, the rights to trade unions and wage negotiations, rather than just being the cheapest in terms of labour costs.

“Of course there will always be pressure from the high street as it tries to cut costs, which is all part of doing business, but the problem is the power imbalance and it is a broad problem with the business model,” he said. “It is easier to squeeze labour than to make the processes more efficient or cut costs from other areas like machinery or electricity.”

He pointed out that some retailers are acting responsibly within their own supply chains, but said Bangladesh’s authorities need to be robust enough to set a level of what it actually costs to produce garments sustainably and the industry needs to work together towards a longer-term plan.

“Bangladesh is a victim of the mass market garment sourcing model, which is all about the next order and how can we get it cheaper,” he said. “It is all very well to point the finger at the factories and the industry, but they are under pressure and where do they go when the model is consistently screwing them?”

 

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