The World Bank has said the sunny picture of the apparel industry of Bangladesh has changed as the recent deadly accidents revived concerns over compliance in labor standards and workers safety, throwing Bangladesh’s competitiveness at risk.
“The dynamic readymade garments sector has been a key contributor to Bangladesh’s strong economic performance and to women’s empowerment,” said Johannes Zutt, country director for Bangladesh, at a report launching ceremony in Dhaka on Wednesday.
“But this industry is now at a critical crossroads, as recent high-fatality factory fires and a building collapse have exposed the hazards workers face and also severely tarnished the industry’s image,” he said.
He said the most pressing challenges is rebuilding the garment industry’s image and addressing supply bottlenecks.
Bangladesh must act now to articulate and enforce improved standards for building safety and worker health and security so the garments industry could continue to grow and other industries follow the example,he said.
The country director said noncompliance in worker safety is a collective failure of the manufacturers, the buyers, and the government. “Attention to low worker wages, poor working condition and the violation of workers’ rights has become more pronounced.”
The most immediate priority for the government is to ensure enforcement of the steps suggested by foreign buyers, international agencies and domestic regulatory bodies. European and American buyers’ consortiums have announced separate initiatives to improve compliance over the next five years.
The European Union and Bangladesh agreed to a time bound “Sustainability Compact,” which is broadly consistent with action plan provided by the US. Effective implementation of planned actions through coordinated efforts is the need of the hour.
The World Bank said the cost of inaction could be high. Removing Bangladesh’s favored access to the United States market under the Generalised System of Preferences (GSP) program may not hurt Bangladesh’s garment industry unduly, as the benefits to the industry were non-existent, but if the EU were to suspend Bangladesh’s favored access to its markets, Bangladesh could see its total exports fall by as much as 4.1% to 8%, it said.
RMG has been the main driver of Bangladeshi exports in the past two decades. Its shares in total exports increased from 53% in fiscal year 1994-95 to 79.6% in fiscal year 2012-13, reaching a historic high of $21.5bn in exports.