Bangladesh Taking H&M Jobs Away From China

Tens of thousands of workers in Dhaka, most of them women, spend their days stitching T-shirts, pants and sweaters for H&M and other Western retailers and brands. One of the Bangladeshi companies here, the DBL Group, employs 9,000 people making T-shirts and other knitwear. Business has been so good that the company is finishing a new 10-story building with open floors the size of soccer fields, planted with row after row of sewing machines.


Bangladesh has the lowest garment wages in the world, according to labour rights advocates. Akthar, who is relatively well paid by local standards, earns about $64 a month. That compares to minimum wages in China’s coastal industrial provinces ranging from $117 to $147 a month. But Bangladesh has its own challenges to overcome.

China’s combination of a vast population of migrant workers, many with at least elementary school educations, along with modern roads, railways and power grids in its industrial provinces, has bestowed it with manufacturing capabilities that countries like Bangladesh cannot offer. Beijing also provides low-cost loans and other incentives to its industries that other countries have trouble matching for theirs. Most of Bangladesh, meanwhile, suffers blackouts six to seven hours a day because it has not invested enough in power plants and natural gas fields.  The country has a literacy rate of only 55 per cent — compared with more than 92 per cent in China. As a result, workers in this country are only one-fourth as productive as the Chinese in making shirts, jackets and other woven clothes.


Despite its handicaps, Bangladesh nearly doubled garment exports from 2004 to 2009. And the industry now employs about three million people, more than any other industrial segment in this largely agrarian country of 160 million.

In June-November period last year garment exports was more than 80 percent of the country’s total exports of $7.1 billion. And with nearly 70 million people of working age, Bangladesh could probably absorb many more of China’s 20 million garment industry jobs.


But a stronger renminbi could also hurt Bangladesh by raising the price of machinery and fabric imported from China, its biggest supplier. And as in China, workers in Bangladesh have started demanding higher pay. They are demanding a 200 percent increase in the minimum wage, to 5,000 taka (about $71) a month — which is how much workers with several years of experience now earn. In recent weeks, labor protests have periodically shut down garment factories as thousands of workers battled police in Dhaka and other garment hubs like Gazipur. Late last month, police clashed with about 15,000 protesters on a busy Dhaka street lined with garment factories.


In January, H&M and other Western clothing buyers asked the Bangladeshi government to raise the minimum wage and reset it every year, although the group did not specify what the wage should be.

A spokeswoman for H&M, Malin Bjorne, said the company was willing to pay more for clothing to help support higher wages.  But factory owners here argue that a big increase in wages would make them uncompetitive against Vietnam and other big producers, which have higher labor costs but also have better infrastructure and are more efficient producers. If that happend, Bangladesh’s China opportunity could prove all too fleeting, they say.


 

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