TDS Desk

The garment, textile, and knitwear sectors in Bangladesh are in crisis, with industry leaders citing the energy shortage, labor unrest, and instability in the banking sector as the primary causes. These challenges have had a devastating impact on the industry. In the past year alone, 140 factories have closed, including 76 in the garment sector, 50 in knitwear, and 14 in textiles.

As a result, 94,000 workers have lost their jobs, with major layoffs including around 40,000 workers by BEXIMCO Group from its 15 garment factories. In total, 134,000 workers have been displaced due to the closure of 155 factories.

Industry experts highlight several contributing factors: labor unrest, high bank interest rates, difficulties with letters of credit (LC) for raw material imports, ongoing gas shortages, rising gas tariffs, unreliable electricity supply, and escalating wages. These issues have led to many factory owners being unable to pay their workers, forcing them to shut down.

At the same time, neighboring countries are taking advantage of Bangladesh’s instability in the garment industry, a crucial sector for the nation’s export earnings. Factory owners are increasingly concerned that these disruptions could have long-term repercussions on Bangladesh’s export revenues. Notably, garment exports to the U.S. have been declining.

From January to October this year, Bangladesh’s garment exports to the U.S. dropped by 3.33%, while imports from India, Pakistan, Vietnam, and Cambodia have increased. India’s apparel exports, for example, surged 35% from April to October compared to the previous year. Traders are closely monitoring these changes in U.S. buying patterns, with many experts urging Bangladesh’s garment sector to adopt new strategies to remain competitive in the evolving global market.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) reported that 76 of its member factories have closed over the past year, resulting in the loss of 51,000 jobs. Additionally, at least 158 factories are struggling to provide adequate wages for their workers.

Similarly, the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) revealed that more than 50 factories in its sector have shut down during the same period, leaving over 35,000 workers unemployed.

Meanwhile, the Bangladesh Textile Mills Association (BTMA), representing textile mill owners, stated that 14 large factories have closed, impacting around 8,000 workers. The BTMA attributed these closures to financial losses in the manufacturing industries, particularly the textile sector, driven by the depreciation of the Bangladeshi taka against foreign currencies. This has escalated the cost of importing raw materials, leading to a critical shortage of working capital.

BEXIMCO Industrial Group has laid off around 40,000 workers across 15 garment factories amid a crisis in Bangladesh’s vital garment sector. This sector, a major contributor to the country’s export revenue, has seen a sharp decline, leaving export-focused textile factories in Gazipur without new work orders.

Although workers report that new orders were placed, factory owners allegedly rejected them and shut down operations. A notification issued on December 15 confirmed the layoffs of all employees, effective December 16.

Tanzina Begum, 36, a worker who lost her job at a BEXIMCO factory, expressed her distress: “I’ve worked here for five years. While life was tough, my salary supported my family of five. Now that the factory is closed, that income is gone. My elderly parents and school-age daughters in Rangpur depend on my remittances. Without my support, they won’t have food, their medical needs will go unmet, and my daughter’s education will stop.” She added, “I came here hoping to hear that the factory might reopen.”

Amirul Haque Amin, president of the National Garments Workers Federation, called on the government to seize the assets of BEXIMCO’s owners and ensure the factories resume operations to protect workers from further harm.

AHM Shafikuzzaman, secretary of the Ministry of Labor and Employment, explained that despite government intervention, the factory could not continue operations. As a result, workers’ wages remain unpaid, and the closure was officially announced. The government, which has had to absorb a liability of about Tk 300 crore over the past four months to cover unpaid wages, has also raised concerns about BEXIMCO’s alleged misappropriation of Tk 24,000 crore from a state-owned bank.

The garment industry in Bangladesh was expanding rapidly, with Desh Garments in Chittagong leading the way. However, the city itself is witnessing a decline in garment factories. In the last four months, four factories have closed, one each month from August to November, leaving approximately 3,000 workers unemployed. In response, BGMEA leaders have called on the government to create a task force to investigate and address the growing crisis.

Mohiuddin Rubel, former director of BGMEA, revealed that 76 garment factories have shut down nationwide this year, over 50 of them in the past six months alone. This has resulted in the loss of over 51,000 jobs. Rubel explained that many factory owners, particularly those struggling economically, have been unable to survive due to factors such as labor unrest, rising production costs, and external challenges. Small and medium-sized companies have been hit hardest by gas shortages, high interest rates, and issues with letters of credit, while some larger companies have closed due to political instability. Moreover, unsustainable wage levels have made it difficult for many factories to remain viable. Rubel warned that any disruption to the garment sector—an essential contributor to the country’s exports—could destabilize the economy, with competitor nations poised to benefit from Bangladesh’s challenges.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), reported that over 50 knitwear factories have closed in the past year, with more closures expected in the next three to five months. This has led to the loss of more than 35,000 jobs. Factory vandalism has further exacerbated the crisis, with some factory owners facing legal action for unjust closures. Hatem noted that some displaced workers have resorted to criminal activity, while labor dissatisfaction continues to undermine the sector. Canceled shipments and banks halting benefits for factories have added to the strain. Many businesses are also grappling with unethical practices from certain buyers.

Labor leaders emphasize that the impact of job losses extends far beyond the economy. They argue that the social and emotional toll on workers is profound, with significant consequences for society as a whole.

Razekuzzaman Ratan, leader of the Sramik-Karmachari Oikya Parishad (SCOP) and president of the Samajtantrik Sramik Front, stated, “When workers lose their jobs, the subsequent halt in housing rent payments and market activity affects not only the workers but also the local economy. This leads to both economic hardship and personal risk. For instance, workers laid off from BEXIMCO Group’s factories are owed Tk 7 crore in wages every month. Who will shoulder this burden? In another factory, if wages go unpaid for two to three months, it signals the owner’s inability to sustain operations. Continuing production while neglecting worker payments, despite paying for electricity and raw materials, is unacceptable.”

Ratan further emphasized, “Job cuts in garment factories have become an ongoing issue. Workers can no longer expect long-term or permanent employment, which benefits factory owners who avoid paying higher salaries and deny workers benefits like gratuity. Layoffs also remove skilled workers, and employers use this as a tactic to instill fear of job loss and foster dissatisfaction among the workforce.”

Rakibul Alam Chowdhury, Vice President of BGMEA, noted, “Instability in the country’s garment sector has led to a 30% reduction in purchase orders. This volatility has deterred buyers, who once favored Bangladeshi garment manufacturers but are now turning to other countries. To address this, we must actively pursue new buyers and markets. In the past four months, four BGMEA member factories in Chittagong have closed due to financial losses. The government must form a task force to identify the root causes and work towards solutions.”

Azhar Khan, Chairman of Mithila Apparels, added, “The crisis could be alleviated significantly if the government ensures a stable supply of gas and electricity. We can survive as long as we are not forced to rely on expensive LP gas, which makes it impossible to sustain production.”

Syed Sultan Uddin Ahmed, Chief of the Labor Reforms Commission and Executive Director of the Bangladesh Institute of Labor Studies (BILS), warned, “If workers’ wages remain unpaid, protests will continue. Authorities only respond when workers take to the streets. Our priority is to ensure that wages are paid on time. The Labor Reforms Commission is working on developing recommendations through careful, coordinated efforts.”

He also stressed, “To overcome the current crisis, we must create opportunities for bargaining, foster a fear-free environment in the garment sector, and allow union activities.”

Courtesy- Kaler Kantho