10% of GDP VANISHES DUE TO COVID-19
Pandemic Leads to Destruction of Fast Fashion
20th Century Business Model Miserably Fails with the Arrival of the Pandemic
The cat-walk fashion brands depended on cheap women labor from Bangladesh for the last 40 years.
It so happens that Bangladesh is the pollution heaven for the western multinational brands. Overnight, with the emergence of COVID-19 the demand for cheap labor evaporated leaving 2 million women jobless and ~100 million USD order cancellation
Scene Setting for Rapid Economic Growth in Bangladesh
After Independence in 1971 Bangladesh adopted export-led economic growth strategies. With traditional human skill in textile, tailoring and design put Bangladesh in comparative advantage. Extensive financing support through back-to-back Letter-of-Credit added to that. Conscious decision to rebuild the economy focusing on social sector development led to multiple women empowerment programmes. Women’s participation in the labor force increased manifold over time from 4% in 1974 to 35.6% in 2016 and RMG sector employs nearly 4.4 million people, where around 3.5 million workers are female. RMG, accounts for 84% of all exports and contributes to little over 11% to the GDP and have fluctuated between 15%-11% in past five years . This innovative social development led economic progress agenda provided large-scale employment opportunities to underprivileged and vulnerable women and contributed significantly in their economic and social empowerment in Bangladesh. Global Fashion brand got cheap labor.
The Harsh Realities of Re-orienting Economic Growth
Global Lockdown of non-essentials product market devastated the Global Supply chain. Bangladesh Ready Made Garment (RMG) sector faced severe disruption in supply chains since the crisis first erupted in China. Dependency ratio of Bangladesh on China for raw materials and Physical Capital like machinery is very high. These exclusive exportable goods producing manufacturing units had to close or reduce their activities. In addition, consumption demand contracted in the USA and EU, the major export destinations of Bangladesh’s RMG. Many garment retailers and fashion brands from USA and EU cancelled orders and some denied to pay for the ready produce.
Now, is the time to Re-think and Re-Align — Social, Economic and Environmental Policies
The cancellations of globally determined nonessential fashion products orders effected essential livelihood of millions of women workers creating job uncettainty. Global export supply chain lockdown resulted in increased stress and panic and created more risk and vulnerability to the livelihoods of women garment workers. The large number of women workers are not paid fully or fired. Millions of them returned to their villages empty handed without any financial savings and support.
The economic independence which comes from RMG employment also brought multiple benefits nationwide. Bangladesh is leading among many countries with fast declining fertility rate, increase in marriageable age, decision making power. So, while global demand declines how to re-engage these specially skilled women on a new cleaner development path need to be resolved nationally and the climate conversation and SDGs framework can provide future directions. While reopening the RMG sector national policy packages must make private capital investors comply with social security and environmental regulations along with economic recovery plan to secure future growth.
Women Empowerment in Aftermath of COVID19!
Majority of women garment workers are from rural areas with weak social network. They moved to cities. Covid-19 unveiled the injustice and unfair wage and lack of social security structure for them. These women garment workers generally receive low wages and work for long hours and have no financial savings or security to draw on during crisis. They also struggle with migration risk, job safety and certainty, rented housing upon arrival in urban setting. The job losses of the women workers due to Covid-19 will have significant social impact.
With global wave of inward looking future would there be enough jobs for these women in their old work places with physical distancing in practice or would they become nonessential as fashion product demand becomes non essential in global economic downturn and changed future lifestyle? Many argue this can be taken as an opportunity by Bangladesh to create value through domestic demand expanding to regional market led by women going beyond RMG sector alone and diversification of business. Understanding these new changing business opportunities, global trends with national implications are the imperatives for fast growing economy like Bangladesh.
Recovery Package and Global Solidarity Should Invest on Building Trust
The era of Cheap labour is over. Investment in Retraining of women given their historically acquired skills and strong forte in health care service, water service, energy service can make the country recover on sustainable development pathway. They fit into the 2015 SDGs framework well. These three are traditionally women dominated activities in South Asia.
Straighten up fair wage rules globally in global supply chains. Fire incident of 2012 at Tazreen Fashions and collapse of Rana Plaza in 2013 brought in stringent compliance requirements and restrictions on the part of big brands for the RMG sector of Bangladesh. There in came Accord and Alliance. Those who could comply with new ethics in business stayed back and others who could not comply had to stop operation in the sector.
Building trust is at the heart of social capital where the business need to invest.
5/21/2020 09:26:26 am
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