Can the sector bounce back?
On March 11, the World Health Organization proclaimed that Covid-19 was a global pandemic. There are now about 27 million confirmed cases of the coronavirus globally and 325,000 cases in Bangladesh alone.
Countries had to shut everything down to contain the spread of the deadly virus. As a result, many industries took a hit and are still going through a period of recession. Nobody knows exactly how long it will take for these businesses to recover from the loss that they have suffered.
Our textile industry right now is facing the biggest problem. Bangladesh is well known for its RMG sector, as it is the second-largest exporter in the world. Bangladesh has exported to over 132 countries for the last three decades.
Covid-19 has left a great impact on the garments industry, and on the life of the garments workers, especially in regards to their financial crisis and health issues. This pandemic situation has disrupted the whole supply chain.
Brands and companies haven’t paid their dues yet, and for that reason, owners are unable to pay their workers properly, which has resulted in a complete disaster. Besides, foreign buyers are using this pandemic as an excuse to cancel their orders without monetary compensation.
In this situation, online delivery systems are at a high demand, but the problem here is the supply chain. Bangladeshi companies import tons of products from China, but this is not entirely possible now, as both countries have not opened their borders to the full extent.
A story was published in May in a renowned national daily reporting that parents had to sell their newborn baby, as they were unable to pay the hospital bills of Tk25,000.
Both parents were working in a garments factory, and because of lockdown, they had no work to do to support their essential needs. But somehow, the local police played a major role here by saving the child and returning it to the parents.
On March 25, the PM announced an impetus package to deal with the pandemic situation. She made a budget of Tk500 crore for the garments sector, and advised the factory owners to use this to pay the workers.
Unfortunately, they did not pay the full wages for the duration of March and April, which made the workers come to the streets and protest.
Covid-19 has increased the risk of slave labour. The crisis has led to a collapse in the global demand for clothing. A number of brands and retailers are taking advantage of this situation. They are ruling over suppliers and workers by cancelling their orders, delaying payments, and by demanding discounts.
Sad but true -- these companies include well-known brands such as C&A, Primark, and Bestseller. Thus factory owners are facing difficulties in terms of paying wages, and for that, workers are suffering.
Recent forecasts estimate trade volumes are decreasing. Some researchers believe that over 3,600 retail stores are about to close in 2020, and most of them are related to the clothing industry. According to S&P Global Ratings, about 30% of retail stores have a good chance of indulging in their debts, which is equivalent to bankruptcy.
This crisis began in early February, when the fabric supply shortages occurred in China because of Covid-19. As the virus hit China, they had to shut down all their production. Since then, thousands of factories have been fully or partially closed in Asia, because of the US retailer cancelling their products without prior notice.
Countries like Bangladesh, India, Myanmar, Cambodia, Thailand, Sri Lanka, and Vietnam are the main victims of it. More than 3 million people are working in the garments sector and their jobs are now in threat. In Vietnam, companies are working hard to minimize the loss and the impact on their business.
The most important thing now is that companies have to keep good relationships with brands, as they want them to accept their products which are already in the factory. But unfortunately, many brands have shut their doors without explaining anything, and without compensation.
For Cambodia, the pandemic affected its $10bn garments sector, which has more than 800,000 employees. Cambodia has announced a scheme for the workers: Workers will receive 60% of their wages if their factories are closed. In this 60%, 40% will come from the factory owner and 20% from the government.
There is no further need to say how severely this pandemic has affected the economy and garments industry. Factories have to regain the lost revenue if they want to sustain their businesses.
Some factories have started to function again, albeit in a limited manner. Mitigation of losses endured by the RMG sector at both the national and global level is only possible with collective efforts from the relevant bodies of governments and companies around the world directly or indirectly involved with this industry, as otherwise it may very well push the poor garments workers over the edge.
Tazrian Alam is a freelance contributor.