Fahmida Khatun, Mustafizur Rahman, Debapriya Bhattacharya, khondaker Golam Moazzem

Published in February 2008

Price  200Tk

The export-oriented ready made garments (RMG) sector of Bangladesh has made significant contribution to the economic development of Bangladesh since the mid eighties. The sector has played a crucial role in earning foreign exchange for the country; improving the balance of payments situation, and alleviating the economic status of a large number of people, a significant proportion of them, women. The economic and social implications of all these have been documented in the relevant literature. Growth in the sector has also fostered various multiplier linkages, including forward and backward linkages to activities in other sectors, which have had a significant impact on the economy.

The expansion of this sector has not been without challenges. The sector continues to face many problems as it strives to survive and grow in an increasingly competitive global environment. While trade liberalization has helped Bangladesh to integrate into and reap benefits from the global economic system, the country also had to accommodate adjustment costs associated with liberalization. Bangladesh has been facing the challenges emanating from quota phaseout since January 2005, which was an important phase of liberalizing the global trade regime. Global trade liberalization in apparels manifested through quota phaseout is having important impact on the sector’s price and profitability. China’s entry in the global apparel market following its accession to the World Trade Organization (WTO) in 2001 has intensified the competition. Competition from other low-price suppliers, such as Vietnam and Cambodia, is also putting pressure in this regard. As a result of falling profits, suppliers are trying to adjust costs through improved production processes, technological upgradation and changes in employment pattern. The post-MFA developments have exposed Bangladesh to more intense competition in the global textile and apparel market. The prospect of removal of quotas on Chinese export of apparels, from January 2008 in the EU and January 2009 in the USA, is also expected to deepen the emergent challenges facing Bangladesh’s export-oriented RMG sector.

The impact of adjustments originating from the changing dynamics in the global apparels market on women and men requires careful examination. In view of the sector’s importance for Bangladesh economy, the Centre for Policy Dialogue (CPD) has a continuing interest in research on the RMG sector.

This research monograph presents the findings of a research project on “Gender and Trade Liberalization in Bangladesh: The Case of the Ready-Made Garments”. The study explores the gender-differentiated effect of trade liberalization in the RMG sector in Bangladesh. The present study was an endeavour to take the effort at examining the developments in the RMG sector forward. In order to understand the emerging dynamics of the sector a limited survey was complemented with the debriefing sessions with key informants to elicit useful insights. To investigate how adjustments occurred in response to the new competitive global environment, the study has analyzed changes in the cost of production, profitability, wages and employment during the post-Multi-Fiber Agreement (MFA) period. The study examined key trends that are expected to have short and medium term impact on the sector. In this connection the study has examined the impact of the MFA at the firm level, the nature and extent of gender-differentiated consequences of the MFA phaseout, and factors related to their income earnings. The research has come out with a set of policy recommendations.

The study concludes that the sector is trying to reposition itself in the global market through restructuring and productivity enhancing measures. However, female workers appear to be facing a number of disadvantages in the context of the emerging scenario. While concentration of female workers in the lower category of jobs due to lack of skills training is a major reason for their lower income compared to male workers, gender discrimination is also found to play a role since wage differentials is observed between male and female workers in the same types of jobs. The changing dynamics of the RMG labour market will have negative consequences for existing women workers in the industry and also in terms of absorption of women workers if appropriate measures are not taken on an urgent basis. The study draws attention to the need for women-focused training and skill upgradation activities to address the emerging situation.

It is hoped that the findings of the study will be useful to all stakeholders including entrepreneurs, workers, researchers, NGOs and policymakers who have an interest to advance in the export-oriented RMG sector of Bangladesh.