Saddam project

Emergence of the global market has heightened the role of trade in world economy and made industrialization as an integral system of global trade and production.

Executive summary Emergence of the global market has heightened the role of trade in world economy and made industrialization as an integral system of global trade and production. Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the textile and clothing industry. After the introduction of Agreement on Textile and Clothing (ATC), the RMG industry of Bangladesh is facing new and unique challenges. The phase out was expected to have a negative impact on the economy of Bangladesh. But recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly. Due to a number of steps taken by the industry (e.g., successful in diversifying products and markets, increased backward integration, high level of investment, and supportive policy regime), Bangladesh still remains competitive in RMG exports even in this post phase-out period. But much more needs to be done (e.g., removal of structural impediments, establishment of training and research institute, sharing of knowledge and technology) in order to maintain the competitiveness in the global RMG market.

Over View of Bangladesh Economy: According to the IMF list of 2007, Bangladesh ranked as the 48th largest economy in the world. The economy has grown 6-7% over the past few years despite inefficient state-owned enterprises, delays in exploiting natural gas resources, insufficient power supplies, and slow implementation of economic reforms. Bangladesh remains a poor, overpopulated, and inefficiently-governed nation. Although more than half of GDP is generated through the service sector, nearly two-thirds of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product. Garment exports and remittances from Bangladeshis working overseas, mainly in the Middle East and East Asia, fuel economic growth. Although one of the world's poorest and most densely populated countries, Bangladesh has made major strides to meet the food needs of its increasing population. The land is devoted mainly to rice and jute cultivation, although wheat production has increased in recent years; the country is largely self-sufficient in rice production.Nonetheless, an

estimated 10% to 15% of the population faces serious nutritional risk, and that food security is at risk for 45% of the population. Bangladesh's predominantly agricultural economy depends heavily on an erratic monsoonal cycle, with periodic flooding and drought. Although improving at a very fast rate, infrastructure to support transportation, communications, and power supply is poorly developed.

Economic history East Bengal--the region that was to become East Pakistan and later Bangladesh - was a prosperous region of South Asia until modern times.It had the advantages of a mild, almost tropical climate, fertile soil, ample water, and an abundance of fish, wildlife, and fruit. The standard of living compared favorably with other parts of South Asia. As early as the thirteenth century, the region was developing as an agrarian economy It was not entirely without commercial centers, and Dhaka in particular grew into an important entrep么t during the Mughal Empire. The British, however, on their arrival in the late eighteenth (18th) century, chose to develop Calcutta as their commercial and administrative center in South Asia. The development of East Bengal was thereafter limited to agriculture. The adminstrative infrastructure of the late eighteenth and nineteenth centuries reinforced East Bengal's function as the primary producer--chiefly of rice and jute--for processors and traders in Calcutta and beyond. Some of the same factors that had made East Bengal a prosperous region became disadvantages during the nineteenth and twentieth centuries. As life expectancy increased, the limitations of land and the annual floods increasingly became constraints on economic growth. Traditional agricultural methods became obstacles to the modernization of agriculture. Geography severely limited the development and maintenance of a modern transportation and communications system.

The partition of British India and the emergence of India and Pakistan in 1947 severely disrupted the former colonial economic system that had preserved East Bengal (now Bangladesh) as a producer of jute and rice for the urban industrial economy around Calcutta.

East Pakistan had to build a new industrial base and modernize agriculture in the midst of a population explosion. The united government of Pakistan expanded the cultivated area and some irrigation facilities, but the rural population generally became poorer between 1947 and 1971 because improvements did not keep pace with rural population increase. Pakistan's fiveyear plans opted for a development strategy based on industrialization, but the major share of the development budget went to West Pakistan, that is, contemporary Pakistan. The lack of

natural resources meant that East Pakistan was heavily dependent on imports, creating a balance of payments problem. Without a substantial industrialization program or adequate agrarian expansion, the economy of East Pakistan steadily declined. Blame was placed by various observers, but especially those in East Pakistan, on the West Pakistani leaders who not only dominated the government but also most of the fledgling industries in East Pakistan.

Following the violent events of 1971 during the fight for independence, the highest rural population density in the entire world, an annual population growth rate between 2.5 and 3 percent, chronic malnutrition for perhaps the majority of the people, and the dislocation of between 8 and 10 million people who had fled to India and returned to independent Bangladesh by 1972. The new nation had few experienced entrepreneurs, managers, administrators, engineers, or technicians. There were critical shortages of essential food grains and other staples because of wartime disruptions. External markets for jute had been lost because of the instability of supply and the increasing popularity of synthetic substitutes.

Foreign exchange resources were minuscule, and the banking and monetary system was unreliable. Although Bangladesh had a large work force, the vast reserves of undertrained and underpaid workers were largely illiterate, unskilled, and underemployed. Commercially exploitable industrial resources, except for natural gas, were lacking. Inflation, especially for essential consumer goods, ran between 300 and 400 percent. The war of independence had crippled the transportation system. Hundreds of road and railroad bridges had been destroyed or damaged, and rolling stock was inadequate and in poor repair. The new country was still recovering from a severe cyclone that hit the area in 1970 and cause 250,000 deaths. India, by no means a wealthy country and without a tradition of giving aid to other nations, came forward immediately with massive economic assistance in the first months after the fighting ended. Between December 1971 and January 1972, India committed US$232 million in aid to Bangladesh, almost all of it for immediate disbursement.

Bangladeshi leaders slowly began to turn their attention to developing new industrial capacity and rehabilitating its economy. The static economic model adopted by these early leaders, however--including the nationalization of much of the industrial sector--resulted in inefficiency and economic stagnation. Beginning in late 1975, the government gradually gave greater scope to private sector participation in the economy, a pattern that has continued. A few state-owned enterprises have been privatized, but many, including major portions of the banking and jute sectors, remain under government control. Population growth, inefficiency

in the public sector, resistance to developing the country's richest natural resources, and limited capital have all continued to restrict economic growth.

Economic outlook Efforts to achieve Bangladesh's macroeconomic goals have been problematic mostly due to corruption within the government. The privatization of public sector industries has proceeded at a slow pace--due in part to worker unrest in affected industries--although on June 30, 2002, the government took a bold step as it closed down the Adamjee Jute Mill, the country's largest and most costly state-owned enterprise. The government also has proven unable to resist demands for wage hikes in government-owned industries. Access to capital is impeded.

State-owned banks, which control about three-fourths of deposits and loans, carry classified loan burdens of about 50%.

The IMF and World Bank predict GDP growth over the next 5 years will be about 6.5%, well short of the 9-10% needed to lift Bangladesh out of its severe poverty. The initial impact of the end of quotas under the Multi-Fiber Arrangement has been positive for Bangladesh, with continuing investment in the ready-made garment sector, which has experienced annual export growth in excess of around 20%. Downward price pressure means Bangladesh must continue to cut final delivered costs if it is to remain competitive in the world market.

Foreign investors in a broad range of sectors are increasingly frustrated with the politics of confrontation, the level of corruption, the slow pace of reform and privatisation and deregulation of the public sector and the lack of basic infrastructure e.g. roads. While investors view favorably recent steps by the interim government to address corruption, governance, and infrastructure issues, most believe it is too early to asepses the long-term impact of these developments.

Agriculture

Map showing the growing areas of major agricultural products.

Most Bangladeshis earn their living from agriculture. Although rice and jute are the primary crops, maize and vegetables are assuming greater importance. Due to the expansion of irrigation networks, some wheat producers have switched to cultivation of maize which is used mostly as poultry feed. Tea is grown in the northeast. Because of Bangladesh's fertile soil and normally ample water supply, rice can be grown and harvested three times a year in many areas. Due to a number of factors, Bangladesh's labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions. These include better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks. With 28.8 million metric tons produced in 2005-2006 (July-June), rice is Bangladesh's principal crop.

By comparison, wheat output in 2005-2006 was 9 million metric tons. Population pressure continues to place a severe burden on productive capacity, creating a food deficit, especially of wheat. Foreign assistance and commercial imports fill the gap. Underemployment remains a serious problem, and a growing concern for Bangladesh's agricultural sector will be its ability to absorb additional manpower. Finding alternative sources of employment will continue to be a daunting problem for future governments, particularly with the increasing numbers of landless peasants who already account for about half the rural labor force.

Manufacturing & Industry Many new jobs - mostly for women - have been created by the country's dynamic private ready-made garment industry, which grew at double-digit rates through most of the 1990s.

By the late 1990s, about 1.5 million people, mostly women, were employed in the garments sector. During 2001-2002, export earnings from ready-made garments reached $3,125 million, representing 52% of Bangladesh's total exports.

Eastern Bengal was known for its fine muslin and silk fabric before the British period. The dyes, yarn, and cloth were the envy of much of the premodern world. Bengali muslin, silk, and brocade were worn by the aristocracy of Asia and Europe. The introduction of machinemade textiles from England in the late eighteenth century spelled doom for the costly and time-consuming handloom process. Cotton growing died out in East Bengal, and the textile industry became dependent on imported yarn. Those who had earned their living in the textile industry were forced to rely more completely on farming. Only the smallest vestiges of a once-thriving cottage industry survived. Other industries which have shown very strong growth include the chemical industry, steel industry, mining industry and the paper and pulp industry.

Investment The stock market capitalisation of the Dhaka Stock Exchange in Bangladesh crossed $ 10 billion in November 2007 and the $15 billion dollar mark. Major investment from foreign investors have led to a massive building boom in Dhaka and Chittagong.

Textile sector Bangladesh's textile industry, which includes knitwear and ready-made garments along with specialised textile products, is the nation's number one export earner. The sector, which employs 2.2 million workers, accounted for 75 per cent of Bangladesh's total exports of US$10.53 billion in FY2005-06, in the process logging a record growth rate of 24.44 per cent. However, since May 2006 the industry has been plagued by on-going industrial unrest, as textile workers, who are among some of the most lowly paid in the world, have staged regular violent demonstrations in a bid to achieve a higher minimum wage, regular rest days and safer working conditions. Following the worst of the unrest in late May, which saw at least one worker killed as police shot live rounds at protesters, the government formed a Wage Commission, ordering it to report on a suitable new minimum wage in three months.

The Commission, which included business and worker representatives finally released its conclusions on October 9, recommending the wage be set at Tk1,662.50, up from the current level of Tk950, but far below initial worker demands for Tk3,000. After initially condemning the unrest as the work of outsiders attempting to capture the nation's share of global markets,

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders appear to have finally accepted the need to raise wages.

Economy of Bangladesh

Economy of Bangladesh Currency Bangladesh Taka (BDT) Fiscal year 1 July – 30 June Trade WTO, SAFTA, D8 organizations Statistics GDP (PPP) GDP growth GDP per capita GDP by sector

$208.6 billion (2007 est.)

6.5% (2007 est.) $1,400 (2007 est.)

Agriculture (19%), industry

Inflation (CPI) Population

services (53.7%) (2007 est.)

10.11% (2008 est.)

41.3% (2007 est.)

below

(28.7%),

poverty

line Labour force 69 million (2006 est.)

Labour force Agriculture (65%), by occupation Unemployment Main industries

industry

services (10%) (2005 est.)

2.4% (2008) jute manufacturing, cotton

(25%),

textiles,

garments, tea processing, paper newsprint, sugar, light engineering, chemical, cement, fertilizer, food processing, iron and steel External Exports Export goods Main

$14.11 billion (2007 est.) garments, jute and jute goods, leather,

frozen fish and seafood export US 31.8%, Germany 10.9%, UK 7.9%,

partners

France 5.2%, Netherlands 5.2%, Italy

Imports Import goods

4.42% (2000) $21.6 billion (2007) machinery and equipment, chemicals, iron and steel, raw cotton, food, crude oil and

Main

petroleum products, import India 10.5%, EU 9.5%, Japan 9.5%,

partners Singapore 8.5%, China 7.4%(2004) Gross External $21.23 billion (31 December 2007 est.)

Debt Public finances Public debt $1.2 billion (June 2005 est.)

Revenues $8 billion (2007 est.)

Expenses $9 billion (2007 est.)

Economic aid $1.575 billion (2000 est.)

Main data source: CIA World Fact book

Major Export Item And Receipt:

Over View of Garments Industry: Industry Large-scale production of readymade garments (RMG) in organized factories is a relatively new phenomenon in Bangladesh. Until early sixties, individual tailors made garments as per specifications provided by individual customers who supplied the fabrics.

The domestic market for readymade garment, excepting children wears and men's knit underwear (genji) was virtually non-existent in Bangladesh until the sixties. Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although; the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom

were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers. In additions to its economic contribution; the expansion of the RMG industry has caused noticeable social changes by bringing more than 1.12 million women into labour force. The economic empowerment of these working girls/women has changed their status in the family. The attractive opportunity of employment has changed the traditional patriarchal hegemony of the fathers, brothers and husbands. Most working women/girls can now chose when to get married or become mothers. The number of early

MARRIAGEs

is decreasing; so is the birth rate; and the working

girls tend to send their little bothers and sisters to school, as a result, the literacy rate is increasing. They can participate in family decision-making. Most importantly, the growth of RMG sector produced a group of entrepreneurs who have created a strong private sector. Of these entrepreneurs, a sizeable number is female. A woman entrepreneur established one of the oldest export-oriented garment factories, the Baishakhi Garment in 1977. Many women hold top executive positions in RMG industry. The RMG industry is highly dependent on imported raw materials and accessories because Bangladesh does not have enough capacity to produce export quality fabrics and accessories. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export.

The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors were required to import the fabrics. However, situation has improved. At present, there are many large firms, which do their own sourcing. The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 15 or so years.

In 1978, there were only 9 export-oriented garment manufacturing units, which generated export earnings of hardly one million dollar. Some of these units were very small and produced garments for both domestic and export markets. Four such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named Reaz Store in DHAKA. It served only domestic markets for about 15 years. In 1973 it changed its name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling 10,000 pieces of

men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first non-equity jointventure in the garment industry was established in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. It had about 120 operators including 3 women trained in South Korea, and with these trained workers it started its production in early 1980. Another South Korean Firm, Youngones Corporation formed the first equity joint-venture garment factory with a Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of thee new firm, named Youngones Bangladesh. It exported its first consignment of padded and non-padded jackets to Sweden in December 1980.Within a short period, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They acquired the expertise of mobilizing resources to export-oriented RMG industries. Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital.

The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw material of the industry. The government assigned high priority to the development of RMG industry.

Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. The number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12 largest apparel exporters of the world, the sixth largest supplier in the US market and the fifth largest supplier of T-shirts in the EU market. The industry has grown during the 1990s roughly at the rate of 22%. In the past, until 1980, jute and jute goods topped the list of merchandises exported from Bangladesh and contributed more than 50% of the total export earnings. By late 1980s, RMG exports replaced jute and jute goods and became the number one in terms of exports. In 1983-84, RMG exports earned only $0.9 billion, which was 3.89% of the total export earnings of Bangladesh. In 1998-99, the export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total export earnings of the country. The net foreign exchange earnings were, however, only about 30% of the figures quoted above because approximately 70% of foreign exchanges earned were spent in importing the raw materials and accessories to produce the garments exported. Both external and internal factors

contributed to the phenomenal growth of RMG sector. One external factor was the application of the GATT-approved Multifibre Arrangement (MFA) which accelerated international relocation of garment production. Under MFA, large importers of RMG like USA and Canada imposed quota restrictions, which limited export of apparels from countries like Hong Kong, South Korea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka and India to USA and Canada. On the other hand, application of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh received preferential treatment from the USA and European Union (EU). Initially Bangladesh was granted quota-free status.

To

maintain

competitive

edge

in

the

world

markets,

the

traditionally

large

suppliers/producers of apparels followed a strategy of relocating RMG factories in countries, which were free from quota restrictions and at the same time had enough trainable cheap labour.

They found Bangladesh as a promising country. So RMG industry grew in Bangladesh. By 1985, Bangladesh emerged as a strong apparel supplier and became a powerful competitor for traditional suppliers in the US, Canadian and European markets. Since 1986, Bangladesh has been increasingly subjected to quota restrictions by USA and Canada. RMG industry suffered setback in a number of countries in the 1980s. Some countries had internal problems, for example, Sri Lanka; and some other countries of Southeast Asia experienced rapid increase in labour cost. Buyers looked for alternative sources. Bangladesh was an ideal one as it had both cheap labour and large export quotas. The EU continued to grant Bangladesh quota-free status and GSP privileges. In addition, USA and Canada allocated substantially large quotas to Bangladesh. These privileges guaranteed Bangladesh assured markets for its garments in USA, Canada and EU. The domestic factor that contributed to the growth of RMG industry was the comparative advantage Bangladesh enjoyed in garment production because of low labour cost and availability of almost unlimited number of trainable cheap labour. The domestic policies of the government contributed to the rapid growth of this sector. The government provided various kinds of incentives such as duty-free import of fabrics under back-to-back L/C, bonded warehouse facilities, concessionary rates of interest, cash export incentive, export processing zone facilities, etc. The government also took a number of pragmatic steps to streamline export-import formalities. There are several weaknesses of the RMG industry of Bangladesh. Labour productivity in the RMG sector of Bangladesh is lower than many of its competitors. Bangladeshi workers are not as efficient as those of Hong Kong, South Korea and some other countries and in most factories, technologies used are not the latest. In addition to the fact that the industry is vulnerable because it is highly dependent

on the imported raw materials, the infrastructure in the country is deplorably underdeveloped.

Problems in power supply, transportation and communication create serious bottlenecks.

Inadequate port facilities result in frequent port congestion, which delays shipment. All these increase the lead-time to process an order, i.e. the time from the date of receiving an order to the date of shipment. The application of MFA had negative impact on many garments exporting countries. The countries, which were adversely affected by quotas under MFA, created pressure to discontinue MFA by integrating textile and clothing industries into GATT system.

As a result, the Uruguay Round negotiations envisaged the phasing out of MFA by the end of 2004. With the phasing out of MFA, the position of Bangladesh in the world market will change as all countries including those under quota restrictions, will enjoy quota free status.

Bangladesh will have to compete with a larger number of established and powerful suppliers of readymade garments. Bangladesh has taken some steps to face the new challenges. Such steps include removing infrastructural bottlenecks, building additional supply capacity, use of cost reduction strategy, and increase in value-addition through backward integration. For RMG sector, the backward linkages are weaving the fabric, spinning the yarn, and dyeing, printing and finishing operations.

Prospects of the RMG Industry: Despite many difficulties faced by the RMG industry over the past years, it continued to show its robust performance and competitive strength. The resilience and bold trend in this MFA phase-out period partly reflects the imposition of ‘safeguard quotas’ by US and similar restrictions by EU administration on China up to 2008, which has been the largest supplier of textiles and apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and product diversification, cheap labour, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below.

Market Diversification Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY06, a successful turnaround was observed in exports to third countries, which having a negative growth in FY05 rose three-fold in FY06, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further analysis.

Region-wise Share of RMG Export Year

Export Share to Export Share to Combined USA

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

42.67 38.02 28.64 30.64 33.67

Export

Share

European

Share of USA & of

Other

Countries

EU (%)

Countries (%)

55.43 57.12 65.42 64.24 49.77

98.10 95.14 94.06 94.88 83.43

1.90 4.86 5.94 5.12 16.57

Product Diversification The growth pattern of RMG exports can be categorized into two distinct phases. During the initial phase it was the woven category, which contributed the most. Second phase is the emergence of knitwear products that powered the recent double digit (year-on-year) growth starting in FY04.

Growth Pattern of Woven and Knitwear Categories Year

Woven

Total

Knitwear

RMG

Export

2002-03 4.28 2003-04 8.59 2004-05 1.70 2005-06 13.50 Source: Export Promotion Bureau (EPB)

13.34 29.88 31.26 35.38

7.16 15.76 12.87 23.11

In the globalize economy and ever-changing fashion world, product diversification is the key to continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have also been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and children’s wear to sophisticated high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future.

Year

Shirt

Jackets

T-Shirt

Trousers

Sweater

2000-01 2001-02

1067.22 871.22

570.33 412.34

593.87 546.28

652.44 636.61

474.04 517.83

2002-03 2003-04 2004-05 2005-06

1019.88 1116.57 1053.34 1056.87

464.51 364.78 430.28 408.97

642.62 1062.11 1349.71 1781.51

643.66 1334.85 1667.72 2165.25

578.38 616.31 893.12 1042.61

Backward Integration RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. However, this vital industry still depends heavily on imported fabrics. After the liberalization of the quota regime some of the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG exports.

If Bangladesh wants to enjoy increased market access created by the global open market economy it has no alternative but to produce textile items competitively at home through the establishment of backward linkage with the RMG industry. To some extent the industry has foreseen the need and has embarked on its own capacity building. The trend of back-to-back

import has been declining over the years implying a rising contribution of domestic value addition (Figure 2). This is an optimistic indication that a well equipped and modern backward linkage industry may well prove cost effective and thus helping Bangladesh to meet the challenges in the post-MFA era.

Flow of Investment It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry by establishing modern mills with adequate capacity to meet the growing RMG demand. It is important to have significant flow of investment both in terms of finance and technology. Figure 3 indicates that the investment outlook in this sector is encouraging, although the uncertainties before the MFA phase-out period caused a sluggish investment scenario. In part the momentum in the post-MFA phase-out period is indicative of the efforts underway towards capacity building through backward integration. This is evident in the pace of lending to the RMG sector and in the rising import share of RMG related machinery.

However further progress would be necessary to improve and sustain competitiveness on a global scale.

A Supportive Policy Regime Government of Bangladesh has played an active role in designing policy support to the RMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax holiday and related facilities. At present government operates a cash compensation scheme through which domestic suppliers to export-oriented RMG units receive a cash payment equivalent to 5 percent of the net FOB value of exported garments.

The FY04 budget also lowered the corporate income tax rate for the RMG industry from 30 to 10 percent for the period up to June 30, 2006. From FY05 the tax regime has been further changed, and a 0.25 percent tax at source will be deducted from the value of the export proceeds of Woven and Knitwear category. At the same time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a positive impact on the RMG sector.

Lead Time ‘Lead time’ is a crucial factor maintaining export competitiveness. Bangladesh happens to feature the longest lead time in the RMG world. The lead time for Bangladesh is 120 days on an average, while the corresponding period for Sri Lanka is about 19-45 days and for India it is only about 12 days. Various factors like the distance from major markets, importation of raw materials, port congestion, strikes, poor roads, etc. are some of the factors responsible for this. At present the fashion seasons are becoming short with a changing trend, it would not be possible to compete if the lead time extends beyond 30-40 days. Therefore, bringing down

the ‘lead time’ to about 30-40 days is a major challenge for the country’s RMG sector.

Clearly more business can be captured only if the lead time could be improved.

Infrastructural Impediments The existence of sound infrastructural facilities is a prerequisite for economic development.

In Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong backward linkage in order to reduce the lead time. However, other factors constraining competitiveness of Bangladesh’s RMG exports included the absence of adequate physical infrastructure and utilities (e.g., transportation, telecommunication, stable power supply, efficient seaport, political tolerance, quality control and a smoothly functioning bureaucracy).

According to a recent World Bank-IFC publication (2006) records that a businessman in Bangladesh needs 35 days to export and incurs USD 902 per container, whereas his counterpart in India requires 27 days and spends USD 864 per container. The comparable figures for Pakistan, Sri Lanka and Vietnam are 24 days and USD 996, 25 days and USD 797, and 35 days and USD 701, respectively.

Labor Productivity The productive efficiency of labor is more important determinant for gaining comparative advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly women with little education and training. The employment of an uneven number of unskilled labors by the garment factories results in low productivity and comparatively more expensive apparels. Bangladesh labor productivity is known to be lower when compared with that of Sri Lanka, South Korea and Hong Kong SAR. Bangladesh must look for ways to improve the productivity of its labor force if it wants to compete regionally if not globally.

Cheap Labor Force The strength of a firm depends on its specific comparative advantages, which its competitors do not possess. To date the local industry has flourished in spite of the challenges cited above

(e.g., lead time, infrastructure, and bureaucratic red tape) on the back of cheap female labor.

The wages paid to RMG workers in Bangladesh are the lowest even by the South Asian regional standard. Figure 4 illustrates the comparative average hourly wages in apparel industry of selected developed and developing countries.

Research and Training The country has no dedicated research institute related to the apparel sector. RMG is highly fashion oriented and constant market research is necessary to become successful in the business. Here India has had a head start and Mumbai and Delhi are on line to become fashion centers on a global scale. At present whatever design work is done in the country, these are mostly carried out with foreign workers and experts. BGMEA has already established an institute which offers bachelor’s degree in fashion designing and BKMEA is planning on setting up a research and training institute. These and related initiatives need encouragement possibly intermediated by donor-assisted technology and knowledge transfer.

A facilitating public sector role can be very relevant here.

Introducing HR Department: Most of the garments in Bangladesh have no Human Resource Department. But it is a matter of regret that garments sector of Bangladesh mainly handle with people but here HR division is absence. HR professional can improve the garments sector by solving Human related problem.

Regarding future challenges, majority of entrepreneurs have mentioned about competition with China after 2008 when the safeguard measures against China will be lifted. Besides, implementation of the new wage structure could be a challenge for the sector, since cost of production will increase (Tk.9, 40,000 on average) through implementing the new wage structure. The highest level of burden would be on small knit enterprises, about 6.6 per cent, while the lowest would be on medium sweater enterprises (0.96 per cent) and large enterprises located in EPZ (0.24). Estimates show that with the new wage structure, about 5.3 percent enterprises would earn a negative profit (ranging between -14 per cent and -1 per cent). 7 percent would earn about a 3 per cent profit. During January-August, 2007 Government took a number of initiatives to improve management and worker related issues of the Chittagong port.

U.S. Retailers - US buyers are considering Bangladesh one of the major sources as JC Penny, Wall Mart, GAP, K -Mart and other big buyers are coming to Bangladesh and setting up offices. (New Age, 2004).Recently one of the garments of Bangladesh got order of Tk 100 cr from the Wal-Mart. In past these order goes to India, Thailand. In the quota free regime exports in US market may increase. This is because during the post-MFA period, a restriction was put on the volume of exports to US market.

Lifting of those restrictions would enable knitwear firms in Bangladesh to export as much their capacity allows them to. Bangladeshi knitwear firms, though has always focused on the European markets due to GSP facilities, should explore the US market, which provides a substantial customer base.

Price of Product: Currently Bangladesh serves the lowest end needs of the foreign market by offering the lowest price as evidenced in the following table.

Average Price of RMG Imported in USA by Major Importers, 2007 COUNTRY

MEN’S

WOMEN’S

MEN’S

MEN’S

KNITTED

SWEATERS

WOVEN

AND

SHIRTS

BREECHES

SHIRTS

World

$ 6.14

$ 7.84

$ 6.77

$ 8.94

China

9.35

9.36

8.20

9.49

El Salvador

4.23

Guatemala

4.79

7.55

8.79

Honduras

4.67

5.44

8.99

Hong Kong

10.99

9.65

8.52

10.24

Indonesia

8.18

6.60

8

9.20

Bangladesh

4.12

4.48

5.07

6.55

33.92

28.37

28.15

Italy Malaysia

9.03

9.74

Mexico

4.80

6.44

8.79

Pakistan

5.30

Philippines

8.10

6.94

8.24

9.12

6.14

6.76

South Korea Sri Lanka

8.10

Taiwan Thailand

5.57 8.77

8.28

6.06

8.68

TROUSERS COTTON

Turkey

5.83

India

6.52

In this chart we see that Bangladesh provides lowest price compare with other competitive countries like China, Thailand, India, Hong Kong, Sri Lanka, Indonesia, Hong Kong, Pakistan, Malaysia and Philippines. These prices of the product now become the most considerable for Bangladesh. If Bangladesh can maintain this competitive price it will be able to compete any type of barrier. So, we find here huge opportunities in export in low price.

FDI IN BANGLADESH: A happier news for the nation is that Bangladesh places 65th position among 155 countries in terms of Ease of Doing Business in the world bank report. This ranking is based on 39 indicators grouped into 10 categories. It recognizes Bangladesh as one of the easiest location for doing business in south Asia, better than Sri Lanka and India. Besides, persistent growth in FDI is the best testimony of a favorable business climate prevailing in Bangladesh.

(Doing Business in 2006: Creating Jobs, World Bank 2006) In 2005, total FDI inflow in Bangladesh was increased by 84% amounting US$ 845 Million–highest ever in any year since her independence. The growth is second highest in entire South Asia (Bangladesh Investment Handbook 2007-BOI). Bangladesh now ahead of India in terms of FDI Performance Index being ranked 116th among 200 economies while India is ranked 119th (World Investment Report 2006). A component-wise analysis of FDI inflow in 2005 shows that about 50% of FDI came as equity, 29% as reinvestment, and the rest as intra-company borrowing. The higher reinvestment rate indicates unwavering confidence of foreign investors on overall investment climate of the country and competitiveness.

Table

FDI inflows from1995-2006 (US$ in million) The table shows a fluctuating trend of the FDI inflows over the last 12 years. Data reveals that in 1999 there was a sudden fall in the FDI, and again in 2001, 2002 and 2003 the falling trend continued for many reasons. Among others serious political unrest during the period was a major factor that discouraged foreign investment in these years and it took quite some time to regain the confidence of foreign investors. It stabilized afterwards but remained below the average achieved during 1997-2000. Later on during next two years period it becomes alive again. The following graphical presentation gives us clearer picture of the FDI inflows over the years.

Continued Interests of Foreign Investors The recent year’s tremendous interests of foreign investors are shown to invest in Bangladesh. In FY 2005-06, major foreign investors include Dhabi Group of United Arab Emirates, Singtel of Singapore, Orascom of Egypt, YKK of Japan and Microsoft of USA. Besides, a number of large investment proposals worth about US$ 10.5 billion are at negotiation and or approval stages. These include investment proposals from Tata Group of

India, Toray of Japan, Indorama Group of Thailand, Luxon Global of South Korea, Delta Pacific Mining of United Kingdom, Dawood Group of Pakistan, Kingdom Group of Saudi Arabia and other proposals from China, Malaysia, India, Taiwan, UK, USA, Australia, Singapore, Thailand, Saudi Arabia, UAE and Kuwait.

Incentives for Foreign Investors The foreign investors will choose Bangladesh for their next for investment destination as Bangladesh conducted Bilateral Investment Agreement, Double Taxation, Treaties etc. to protect the interest of foreign investors. The investors will also enjoy the following incentives investing Bangladesh.

1. Tax Exemptions: Generally 5 to 7 years. However, for power generation exemption is allowed for 15years 2. Duty: No import duty for export oriented industry. For other industry it is @5% ad valorem.

3. Tax law: Double taxation can be avoided in case of foreign investors on the basis of bilateral agreements. Exemption of income tax up to 3 years for the expatriate employees in industries specified in the relevant schedule of Income Tax ordinance.

4. Remittance: Facilities for full repatriation of invested capital, profit and dividend.

5. Exit: An investor can wind up on investment either through a decision of the AGM or EGM. Once a foreign investor completes the formalities to exit the country, he or she can repatriate the sales proceeds after securing proper authorization from the Central Bank.

6. Ownership: Foreign investor can set up ventures either wholly owned on in joint collaboration with local partner.

Problems Regarding Trade Union: A trade union or labour union is an organisation of workers who have bonded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labor. The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labor contracts with employers.

This may include the negotiation of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits, workplace safety and policies.

Present Trade Union Condition: There are 16 unions representing garment workers, according to the Democratic Workers Party "...the level of unionisation among workers is very low. Where unions are involved, they act more like extortionists, taking money from management to keep the employees in line while at the same time collecting dues from their members, with whom they have virtually no contact. Most of the unions have direct or indirect links with local and foreign NGOs, and receiving lucrative grants seems to be their main goal." Most of the trade unions appear to be tools of one or other of the political parties, strikes being used more as vehicles for pursuing political goals against rival parties than improving workers' conditions. The Nation Garment Workers Federation apparently is an exception to this, being a more grassroots organisation, closer to an expression of workers' self-organisation emerging from their own struggles. It would be too easy and simplistic to apply critiques of modern western business unions to such an organisation. 11 years ago the NGWF was an organisation with 3 workers paid a basic garment workers wage operating out of a shed in a workers slum.

Working in conditions more similar for workers in Europe a century or two ago, basic organization for defence and improvement of working conditions is a matter, sometimes, of whether one starves or not. With rapid large-scale proletarianisation of rural workers in many parts of Asia (China, India etc) struggles for unionisation are likely to follow. How institutionalised and bureaucratised organs like the NGWF might have become is unclear at present, and will be partly determined by their success as negotiators. One can predict that official recognition, with a greater budget and status to manage and protect, would accelerate that process.

NGWF was at one time (though apparently no longer) in an alliance with the BGWUC , which has recently shown an eagerness to promise an obedient workforce to the bosses.

Though organising trade unions was banned by employers in the EPZs, this is changing, as one of the concessions won by the revolt. This is anyway a convenient concession for the bosses; a Bill is being introduced into the US Senate which, if passed, would ban all imports produced in sweatshops. This is a form of US trade protectionism and corporate image management expressed as concern for workers' conditions. The Bill would penalise

Bangladesh, Jordan etc and America's big rival China in, for example, the garment industry, by attempting to undercut their present advantage of cheaper labour costs.

Political linkage: In most of the cases we see that types of scenario that, Trade unions are influenced by political parties and politicians. Most of the time, politicians use the trade unions for political and self- seeking purpose. In this view, trade unions are not work independently and can not server the interest of their workers in RMG sector.

Poor organizational Strength: The strength of the trade unions in the RMG sectors in Bangladesh is very weak due to the unemployment problem. The employer can fire any worker at any time if they protest for their demands because in our country manpower supply is very high. In this point of view, commitment is less on the perspective of employers regarding any cases.

Little economic strength: Bangladesh is a developing country for that reason economic condition of this country is not so good. Most of the people of this country living under poverty line. Economic status of People is not so good. That is why they can not continue the strike for a long period of time as a result happen of the striking result will not seriously affect to the employers. If we see the actual scenario of real condition of the RMG sector workers in Bangladesh, the fact of economic condition creating that’s kinds of surrounding environment which will create a fear able position in their mind of the prospect, at this time ultimately they are not interested to create a striking environment that will enforce the employers to provide their rights in an effective and efficient manner.

Educational level: Most of the workers are not educated enough, that is why they are not conscious enough to exercise their roles, rights and responsibilities. They entirely depend on the central leaders. But most of the cases in the RMG sector in Bangladesh, we see that our Trade union leaders always interested to their self interest.

Self-seeking leadership: Majority of the union leaders at all levels; plant levels, Industrial levels and National levels are concerned with their self-interest. They are not aware for the economic and other interests of the workers. If we see the actual scenario of the RMG sector in Bangladesh, we realize that their ethical standard is very low on the perspective of their commitment regarding their duties and responsibilities.

Lack of ideological commitments: Most of the trade unions are loyal to their leaders than to the ideologies that hamper the activities of the trade unions. This actual scenario we observe RMG sector in Bangladesh.

Legal orientation: Trade unions are developed in our country because of the political pressures and politicians. So it was never free from the pressure of the political parties.

Sometimes they use trade unions for their self interest like to bring change in the Government.

Multiplicity of unions: In our country, there are many numbers of trade unions available which indicates one of the weak points of them as when their bargaining with their employers for the demands it can not use its full power for the acceptance of their demands.

In the RMG sector in Bangladesh, there are many numbers of trade unions. They are not united. As result it can not influence the employers to accept their demands. Most of the trade unions are not well organized to maintain the necessary records which can be used for the future references. Most of the time, union leaders are concerned for themselves; as a result, employers are getting chance for unfair labor practice. Most of the trade unions are less concerned to their members; it tries to take its own decision that hampers the rights of the workers as well as the expectations. Most of the trade unions in our country are not able to protect the economic interest of the workers. Most of the time workers are not getting the minimum wages, working environment is not safe.

Problems Regarding Collective Bargaining: Collective bargaining means the negotiation between and employer or group of employers and a group of work people to reach an agreement on working conditions. It is opposite to the individual bargaining.

According to the Bangladesh Labor Code, 2006, - it includes Trade union or trade union federation Works as the agent of the workers in the matter of collective bargaining.

Characteristics of collective bargaining This concept was first identified by Sydney and Webb in UK and also by groups in USA. 1. Where there is only one trade union in an establishment that trade union shall be considered to be the collective bargaining agent for that establishment.

2. Where there are more than one trade union in an establishment the director of labor shall after getting an application made in this regard made by any trade one of that establishment

or by employers holds a secret ballot within 120 days to determine as to which one of such trade unions shall be the collective bargaining agent for the establishment.

Although at the beginning of the Pakistan Period there was no initiative, a structural framework was given to the collective bargaining in the industrial relations ordinances in 1969. Collective Bargaining was prohibited in large government sectors in 1972 although the same government withdrew this decision later. Outsider’s memberships in basic unions and election of CBA were prohibited through industrial relations ordinance in 1975. CBA created a ridiculous situation in the period of General Ziaur rahman due to misuse of labor leaders by the government. General Ershad in 1982 restricted the election of collective bargaining agent and imposed restrictions on the functions of trade unions. These factors made the collective bargaining program inactive and developed unrest among labors. At this stage National federations were united and formed SKOP to keep the interest of the workers and started movement. This situation compelled the government to sign an agreement with SKOP and collective bargaining started its work again.

Reason for the Failure of Collective Bargaining in garments Sector: Collective bargaining may take place at the national, industry or enterprise level. In no country does it take place exclusively at one level only. However in many industrialized countries, especially in Europe, the existence of strong employers, organizations and trade unions have resulted in many important agreement beings concluded at the national or industry level, supplemented by some enterprises level bargaining.

A favorable political climate: If collective bargaining is to be fully effective, a favorable political climate must be existing. In particular, the Government and public opinion must be convinced that collective agreement is the best method of regulating certain conditions of employments. When we see the real conditions of the RMG sector in Bangladesh, political climate is not good. We see that, politicians create a pressure to the trade unions.

Freedom of association: Freedom of association is essential for collective bargaining, where it is restricted, collective bargaining is also restricted. In the RMG Sector in Bangladesh, employers are more powerful because in our country there is an unemployment problem. So, employers frequently create a pressure. In this case ultimately freedom of association is not there.

Stability of workers organizations: Workers may have freedom of association but unless they make use of this right and form and maintain stable unions, collective bargaining will be ineffective. In the RMG sector in Bangladesh, we see that most of the time trade unions are not stable; it is reforming that is why it can not create a huge influence to the employers.

Recognition of Trade Unions: Even assuming that freedom of association is exists and that the workers have established stable organizations, collective bargaining can not begin until employers recognize the organizations for that purpose. In most of the cases RMG sector employers not interested to hear any causes that are raised by the trade unions.

Willingness to give and take: The fact of entering into negotiations implies that the differences between two parties can be adjusted by compromise and concession in the expectation that agreement can be reached. In RMG sector in Bangladesh, Willingness to give and take conditions is very poor. Maximum garments employers not pay minimum amount of wages to their employees, as a result workers are unhappy; ultimately workers productivity is also low.

Constructive Consultations: Constructive Consultations between trade union and management is possible only when the bargaining power of two parties is relatively equal. In the RMG sector in Bangladesh, Employers tendency will always forcing power to the workers. Workers are always feeling fear able conditions because in this country there are lot of people wait to do the work, that is unemployment problem and educational background is not good also. As a result, we see that, ultimately bargaining power of two parties is not equal.

Mutual confidence: Both the parties must have mutual confidence, good faiths and a desire to make collective bargaining machinery success. In the RMG sector in Bangladesh, the workers do not trust their employers as continuously employers are not fulfilling the demands which were accepted by them.

Free from unfair labor practice: The process of bargaining should be free from unfair labor practices. In our RMG sector in Bangladesh, we see that frequently strike is happen because of unfair labor practice.

Positive attitudes: The attitudes of the parties should be positive. In the RMG sector conditions, we see that some of the employers and worker member’s attitude is positive but most of employers and workers attitude is not positive.

Proper representations of rights and responsibilities: Both the parties should represent their rights and responsibilities properly. In RMG sector in Bangladesh, proper representations of rights and responsibilities are not maintained. The workers are not and union leaders are not educated enough to exercise their rights and responsibilities

Employee Grievance as a problem: A grievance occurs when an individual thinks that he is being wrongly treated by his colleagues or supervisor; perhaps he or she is being picked on, unfairly appraised in his annual report, unfairly blocked for promotion or discriminated against on grounds of race or sex. An employee grievance is an indication of his discontent or dissatisfaction. It may be expressed by him or he may not communicate it. It can be real or imaginary, legitimate or ridiculous, stated or unvoiced, written or oral. It must, however, find expression in some form or the other. Dissatisfaction or discontent per se is not a grievance. They initially find expression in the form of a complaint. When a complaint remains unattended and the employee concerned feels a sense of lace of justice and fair play, the dissatisfaction grows and assumes the status of a grievance.

It is simply a complaint which has been formally presented in writing, to a management representative or a union official. But for the most people, the word “grievance” suggests a complaint that has been ignored, overridden or dismissed without due consideration. “ILO” defines a grievance as a complaint of one or more workers related to wages and allowance, Conditions of work, Interpretation of service conditions covering such as Leave, Transfer, Promotion, Seniority, Job, and Termination of Service”. The National Commission on Labor Observed that “Complaints affecting one or more individual workers in respect of their workers in respect of their Wage payments, OT, Leave, Transfer Promotion, Seniority, and Work Assignment & Discharges Constitute Grievances”.

Causes of Employee Grievances: There are several reason for employee grievances such as; Amenities, Promotions, Continuity of Service, Fine, Nature of Job, Compensation, Payments, Continuity of work, Safety Environment, Disciplinary action, Super Annuation, Transfers, Victimization.

Effects of Grievance:

The results of these grievances are- Frustration, Alienation, De-motivation, Slackness, Low Productivity, Increase in Wastage & Costs, Absenteeism, In discipline, Labour unrest, Increase in employee.

If we see the actual senario of the RMG sector in Bangladesh, there are lot of grivance occur regarding the causes of wages, physical conditions, working environment, sexual harrasment, safety environment, supervisors behavior, Disciplinary action etc. The fact is that, if the workers raise their voice regarding grievance, they go to employers but we see most of cases our RMG sector employers not willingly try to solve grivance. They always create a pressure to the workers, that’s way workers are unhappy most of the time. If we see different newspapers, sometimes workers are treated unequally because most of the garments factory promotion will be based on the perspective of relatives to the employers. So, basically performance based is ignoring. We see that, most of the garments factory, they terminate their workers without serving a notice. At the time if the employer pursue to negotiate, what are the causes they will terminate, in this condition employers create pressure to the workers.

In the grievance procedure, we see that workers are right to go the labour court; but if we see our economic conditions, education level regarding workers, sometimes they are not able to go the labour court. Government of Bangladesh are not impement their laws effectively because political pressure is there. So, ultimately we see all of the casses employers hold a powerful position in all of the grievance handling procedure..

Problems in quality of work life Quality of Life indicates the favorableness or unfavorable ness of a job environment for people. A QWL aim is to create more satisfied and more productive employees to create more profitable organizations.

Adequate and fair compensation: Gender Division of Labor In the garment industry in Bangladesh, tasks are allocated largely on the basis of gender. This determines many of the working conditions of women workers. All the workers in the sewing section are women, while almost all those in the cutting, ironing, and finishing sections are men (Paul-Majumder and Begum 1997). Women workers are absorbed in a variety of occupations from cutting, sewing, inserting buttons, making button holes, checking, cleaning

the threads, ironing, folding, packing and training to supervising. Duties and responsibilities vary according to the type of work. Women work mainly as helpers, machinists and, less frequently, as line supervisors and quality controllers. There are no female cutting masters.

Unit labor cost Bangladesh has the cheapest unit labor cost in South Asia . It costs only 11 cents to produce a shirt in Bangladesh, whereas it costs 79 cents in Sri Lanka and 26 cents in India. Clearly, Bangladesh’s comparative advantage lies in having the cheapest unit labor cost.

Working hours Though the wages are low, the working hours are very long. The RMG factories Claim to operate one eight-hour shift six days week. The 1965 Factory Act allows women to work overtime up until 8 o’clock at night. To meet delivery deadlines, however, women are virtually compelled to work after 8 o’clock. Sometimes they work until 3 o’clock in the morning and report back to start work again five hours later at 8 o’clock (Jamaly and Wickramanayake 1996). They are asked to work whole months at a time without a single day off, in contrevention of the Factory Act, which stipulates that no employee should work more than ten days consecutively without a break (Jamaly and Wickramanayake 1996; Ahmad 1996; and Hossain et al. 1990).

Occupational mobility Level of education, age, length of service, job position and gender all affect the occupational mobility of workers in the RMG sector. Men have more years of Schooling, are absent less often and their average age is higher than that of women workers. Thus men hold upper level jobs and women are mostly helpers.

Pay Scale Ratio: In garments sector there is a huge difference between the highest pay and lowest pay. So pay ratio is much higher .But we know that the lower the pay ratios the higher the satisfaction exist among employees. So, there should be balance pay ratio to establish the equity.

This includes two facts on is the sufficient amount of wages and another is that this wages has to be comparable that means it has to be equitable. In the RMG sector in Bangladesh, the workers are not getting sufficient amount of wages for the job they are performing in most organizations even they are not getting the minimum wages. So on the job and off the job

both are hampered. Job dissatisfaction is increasing day by day. As a result workers are frequently going for the strikes and public properties are destroyed which are disadvantage for the employers, the economy of the countries and for the workers themselves. The wages workers are getting that is not also comparable with others both in the inside of the organization and outside of the organization. As a result productivity is also decreased because of the increased job dissatisfaction.

Safe and healthy working conditions: Safe and healthy working conditions are not satisfactory in the most of the organization in the RMG sector in Bangladesh. Employers are supposed to comply with The Bangladesh Labor Code, 2006 that gives some guidelines how QWL can be developed in the organizations, it states a " policy of increasing the participation of the labor force, the chief socio-economic force of the country, in the management of enterprises by gradually securing employment opportunities to it, ensuring the right to work, and thus protecting its rights and interests. In compliance of the QWL the Labor Code, 2006 aims to protect rights, interests, facilities and safety of workers and employees working in different enterprises in various sectors. Some of the major provisions are summarized below: Job Classification: Every establishment shall have to classify the job of the workers and employees of the enterprise according to the nature of production process, service or business of the enterprise and shall furnish the information thereof to the concerned Labor Office.

This refers that pay and other incentives of a worker should be explicitly based on the nature of work done.

Change in the ownership: Any change in the ownership of the enterprise shall not be deemed to have any effect on the terms and conditions of service of the workers or employees of the enterprise adversely thus QWL will be increase.

Intermission for Refreshment and Rest: Employees are not supposed to work continuously for more than five hours without providing an interval of half an hour for Tiffin & rest, six hours without providing an interval of one hour break and it is very important for the workers to enhance their productivity with efficiency and will create a good working life.

Minimum Remuneration Fixation Committee: Government shall fix the minimum remuneration, dearness allowance and facilities of workers or employees of enterprises and have to make sure about the implementation. Good salary is an essential element to develop a quality work life.

Annual increments: Any worker or employee employed permanently shall be entitled to one increment each year.

Health and Safety: Have to keep the workplace free from dust, fumes and hazardous chemicals, adequate supply of light and water and other health and sanitation facilities at work places. The Labor Office can give order for maintaining safety standard at the work place.

Compensation: In case of any worker or employee of the enterprise sustains physical injury or seriously hurt or gets impairment due to loss of any part of body or dies in course of his work, the compensation shall be paid to him or to his family, as prescribed.

Power to determine the standards: Government time-to-time may prescribe the standards of safety to develop quality working life for the workers.

Punishment: Very important term to ensure QWL in the work place. Punishment will create proper justice in the workplace, the workers should know if they violate the working life of other workers he/ she have to take punishment.

Appointment of Factory Inspector: One of the duties of the Factory Inspector is to examine building, land, plant, machine, health and security aspects of the factory, to collect and test the samples of finished or semi-finished materials used in the factory or to cause them to be tested, to inspect working environment which has a great impact on QWL. Welfare Officer: The welfare officer will work for different welfare services for the workers.

For example whether the first aid appliances, washing facilities, canteen, restroom, rooms for the children are maintained by the organization according to the code or not, if not taking immediate action.

Investigation undertaken by a group of experts comprising academicians, managers, and plant engineers in 40 manufacturing industries employing 10 to 1000 workers in 1997 revealed the following QWL features in the manufacturing industries (CEMIR, 1993): Physical working conditions: A large number of small scale industries were established in existing building facilities, layouts are not systematically arranged.

Physical and mental efforts required: In these industries jobs are very short-cycled, simple and repetitive and involve conventional low-level technology, dexterity and initiative.

Performance of most of the jobs does not require high physical and mental efforts.

Social security: Workers are not insured against health hazards and the given medical facility is not enough to cover health and sanitation needs.

Skill required in the jobs: About 44 percent of the jobs do not require even reading and writing skills of the workers. 43 percent workers require detail instructions to perform their jobs. Less than 4 percent jobs require close attention, diligence, initiative and a high degree of dexterity and accuracy. 90 percent supervisors working on production floors have no ideas about the principles and practices of modern management, marketing, finance, engineering, auditing and other relevant disciplines.

Accommodation: Only 27 percent workers were having apartment provided by the factories.

The quality of accommodation was very poor from hygiene and sanitation point of view.

They normally stayed in a small room and in most cases; the kitchen would be attached to the bedroom in the corner.

Job responsibility: Only 2 percent workers have some economic and supervisory responsibility on the job.

In a study it is concluded that very few enterprises are following the labour laws and other government policies about the working life and conditions of the workers, from those some very important aspects are pointed bellow, Recruitment: 61 percent organizations had no system of providing appointment letter, 77 percent organizations had not reappointed as permanent even after completing 240 days, 86 percent organizations had no system of advertisement for recruitment and 40 percent organization had no employees contact in permanent basis.

Working hours: Regarding working hours and facilities the survey finds very unsatisfactory results. Only 42 percent of enterprises had implemented minimum wage system, and 36 percent of enterprises had no provision of fixed working hours.

Leaves and holidays: Regarding provision for leaves and holidays, 65 percent had provided sick leaves, 54 percent had provided public holidays, 55 percent had provided compassionate leave, 50 percent had provided sick leave and 33 percent had provided maternity leave.

Collective bargaining: Regarding trade union rights and collective bargaining agreements (CBA), 54 percent of enterprises had CBA atmosphere, 55 percent enterprises had not created obstacle or harassment for CBA, only 64 percent organizations had implemented CBA, 60 percent organizations created problem in the formation of unions and 35 percent organizations were found to be punishing or harassing union activists.

Occupational health and safety: Only 13 percent organizations had provision for life insurance and 22 percent organizations had provision for accidental insurance. The survey reveals that only 37 percent enterprises had provisions for pay during accident and injury, 62 percent had provided medical treatment in the accidental injury, 49 percent organizations had provision for first aid. Furthermore, only 15 percent enterprises had provided pay during sick time, 23 percent had provision for medical treatment and 15 percent had medical check up facilities.

Formation of Labor Relations Committee (LRC): Only 7 percent of organizations having LRC to facilitate labor management relations and 24 percent of organizations had their own regulations of enterprises. The situation of garment industry is worst in terms of labor relations where almost 98 percent of enterprises had no LRC. In a recent study undertaken in the garment industries the following features of QWL are noticed: Pay system mechanism: The amount of salary, wage and allowance is based on personal whims of the entrepreneurs. No standard pay system is developed across the industry. There is no link between workers' productivity and wages.

Training and development: A large number of the employees were trained on-the-job.

However, employers began to think that such training only increases operational costs. It was due to the experience in the past with female workers who failed to develop their skills despite the training given to them.

Performance evaluation: No industries have formal system of performance evaluation and therefore no promotion is done on the basis of work performed.

Job security: Almost 70 percent of employees are employed on daily wage contract or piecerate basis. Only 14 percent are employed under the permanent contract basis. Appointment letters are issued only for permanent employees. Temporary employees are not provided appointment letters because employers fear that after 240 days of employment they are entitled to claim for permanent jobs. Almost 25 percent of garment factories are paying wages below the wage fixed by the government which is against the provision of the Labor Code.

Retirement and other benefits: Although few industries have claimed that they have provisions for provident fund, gratuity and accident insurance, many of them have failed to comply with Labor Code in this matter.

Safety and comfort at work place: Garments and fire are closely related to each other in Bangladesh. Outbreaks of fire in garments factories have become acceptable. We learn some lessons after a disaster, and most often forget about them. People had been dying but authorities were not that much concerned until overseas buyers took exception to the large number of deaths and injuries. It is a matter of great shame that we had to be warned by the importers about the safety concern for our workers. Despite improvements in the area over the past decade, even today many a garments factory owners are found paying minimum attention to the issue of fire safety. Even if fire fighting equipments are installed in a factory, albeit arbitrarily, none can ensure that they will not malfunction at the time of emergency.

Although the factories are not hazardous by their nature they need to take few more safety measures to improve the quality of work. The study explores that factories need to exist some safety measures such as provision for fire-exists, fire-alarms, safe drinking water and regulate temperature.

Problems Regarding Foreign Direct Investment (FDI): Infrastructure Better infrastructure of the host country attracts foreign investors. Inflows of the FDI depend mostly on quality and quantity of physical infrastructure like roads and highways, transport, power, telecommunications and so on. Banking and other financial services also affect the FDI inflows significantly. Good transport facilities-road, rail and air, including developed port systems, energy and water and low cost utilities like telecommunications are important

infrastructural factors in attracting FDI. Business has to incur excess cost to collect information in a country with poor infrastructure. But it can be done easily and with minimum cost in a country having good infrastructure that makes FDI financed projects cost efficient and competitive in the global market.

Macro Economic Environment Macroeconomic factors such as fiscal policy, monetary policy and exchange rate policies, political stability and business climate have a serious influence for FDI. Foreign investors choose a location where there is evidence of success and availability of favorable macroeconomic conditions. Investment is generally driven by profit, and foreign investors always prefer a country with a rich business sector measured in terms of GDP growth rate, rate of inflation, level of industrialization etc. than one, where the macro economic environment is sluggish.

Governance Governance of a country comprises economic and business policy and regulations Such as taxation system and tax rate, interest and Bank rate, drive against corruption etc. All this factors are related with the cost business and profit. Foreign investors very consciously consider the governance of a country to invest. An important aspect of governance is the ease with which investors can enter and exit a market. It is and important determinant of productivity, investment and entrepreneurship.

The Journal of Nepalese Business Studies International integration International integration is another determinant that drives investment. Countries that aggressively pursue integration with the global economy grow more quickly than those that did not. The low level of incoming FDI in indicates poor integration with the global economy.

Political stability Political factors like change of government, attitude of opposition group, transparency in bureaucracy, degree of nationalism, corruption, terrorism etc. are seriously considered by the investors in pre-investment decision making. For example, in case of Bangladesh the

most sensitive issue for discouragement of the FDI is political unrest and corruption and redtapism.

Human resources Skilled workforce leaves a country at an ease to attract investment. Development programs financed by the FDI may be interrupted for the absence of skills and adequate knowledge infrastructure. Low growth that takes place in trade and investment is the result of the use of unskilled cheap labor. Bangladesh is a country where there is ample scope for development of human resources. It is a shame for the planners that thousands of Indians and other foreign nationals are employed in the top positions of most of the multinational and national corporations.

Technology infrastructure Economic growth of a country largely depends on technological progress, which stimulates FDI. It includes more modest advances, implementation of better business processes, and involves the adoption of new technologies. In this area, again, Bangladesh lags behind in comparison to its competitors.

Complicated Bureaucracy The country has a bureaucratic system that is not at all compatible with an investment environment. The concrete implementation of investment related policies are prolonged to obstruct both local and foreign investors. An inefficient and dishonest bureaucratic system is extensively responsible for the absence of FDI in the country.

Political Unrest The political situation in Bangladesh is extremely vulnerable because of the continuous hostility among the political parties, which in turn pollutes the entire investment environment.

It is unfortunate that Bangladesh is an exception where most of the political violence centered on industries. Even EPZs are not exempted by any means. However, the situation has been apparently improved since the present interim government has taken over.

Foreign Direct Investment in Bangladesh: Problems and Prospects Corruption Culture and society have become corrupted through sick politics. The bureaucrats and regulatory bodies are steeped in corruption. For business enterprise, corruption works as taxation or lubrication cost. Many companies regard bribery as just one of the costs of doing

business (‘Lubrication Cost’) and show these payments as legitimate business expenses.

However the current situation in this regard is as gloomy as it was in the past.

High Inefficiency Cost Government control and management has been extremely ineffective and inefficient.

The country is suffering from inefficiency of state-owned entities in telecommunication, energy, ports, aviation, railways, banking and many other sectors. All these sectoral inefficiencies push the total cost of local and foreign businesses extensively high.

Absence of Autonomous Regulatory Bodies The politically influenced government agencies are functioning as regulatory bodies without any operational autonomy. So an effective and rapid response towards providing the necessary services to investors is apparently absent in Bangladesh.

Differential Treatment Though are regulations to provide equal treatment of local and foreign investors, certain inequitable conventions are practised with the foreign investors. Such inequalities are evident in cases of authorization necessities for foreign investment, barriers against capacity expansion, supplier’s credit, etc.

Insufficient Power Supply Bangladesh faces a system loss often more than 40% of the gross power generation probing with the lowest per capita power consumption and network coverage of electrification among developing countries. This creates immense discouragement for investment in the power intensive industries.

Inconsistent Policy Implementation Bangladesh provides various favorable investment facilities and incentives under Liberalized industrial policy. Bodies like the Export Processing Zones are there to promote export orientation and privatization based growth strategy. However, in reality, none of these favorable policies and strategies are implemented, thus foreign investors are being discouraged.

Tax Authority’s Discretion

The government of Bangladesh has given its tax administrators discretionary authority and they unduly apply it to bother businessmen and investors. This authority has made many of the officials highly corrupt. At present Bangladesh is trying to get red of from this scandal.

Lack of effective cooperation of Board of Investment (BOI) The BOI of Bangladesh has a One Stop Service cell to serve and assist with various investment facilities, mostly FDI. But, materializing the service in reality is still an illusion.

The least capable and least productive government personnel working for the cell naturally fail to improve the situation.

The Journal of Nepalese Business Studies Legal Absurdity The system of legal suits and actions prolonged over the years puts business investors in a dilemma about placing their precious capital in businesses in Bangladesh.

Disrupting Fiscal Policy Each year the government declares Fiscal Policy that quite often goes adverse to the Investors and disrupts their regular business and operations plans and strategies both in short and long run.

Administrative coordination problem Policies and the implementation processes are not materialized simultaneously because of lack of administrative communication and coordination among the government agencies.

This situation results in high business costs and hassles for investors.

Time wasting customs processing The inefficient and corrupt customs system quite often takes more than twenty signatories to discharge a shipment along with physical inspection by the authorized personnel. There are many other problems such as poor leadership quality, ignorant labor forces, and unorganized financial or capital markets that damage the national image of the country to the foreign investors.

Functional Requirements for Sound Industrial Relations in RMG Sector (Bangladesh): History of Good Industrial Relations: A good Industrial Relations means harmonious relationship between the management and workers. On the other hand, a bad history is characterized by militant strikes and lockouts. Both have perpetuating tendency that does not mean that they cannot change their attitude. The probability of conflict is greater when conflict has been accepted as normal. The probability of peaceful relations is greater when mutual understanding is expected to continue as a part of standard operation.

In our country, there is a bad history of Industrial relations, because we see that frequently strike is there, and we also see that, workers not get a safety environment and not get minimum wages. A significant number of readymade garment factories do not even pay the minimum wage of Tk 1, 662.50, let alone overtime bills. In June 2007 the Bangladesh Garment Manufacturers and Exporters Association released the report of a survey, amid much fanfare, claiming almost 83 per cent of its member factories go by the minimum wage stipulation. So, we see that strike is there and an employers-employees relation of the RMG sector of Bangladesh is not good.

Economic Satisfaction of workers: The demands of the workers were rightful, rational and indeed justified, as they had been on previous occasions. They demanded such basic provisions as payment of wages within the first week of every month, regular payment of overtime. A large number of companies enforce workdays much longer than the standard eight hours, as stipulated by labor laws. A significant number of readymade garment factories do not even pay the minimum wage of Tk 1, 662.50, let alone overtime bills. But minimum wage is only part of the labor rights and just one of the ten points of the tripartite agreement that was struck by the owners, workers and the government following the violent demonstrations by garment workers in May 2006. To help the garment exporters and allow them to remain competitive despite the ever deteriorating terms of trade, successive governments, including the current military-controlled interim regime, have ensured that the value of taka against dollar remains devalued at such levels so as to lure foreign buyers.

Social and Psychological satisfaction: Identifying the social and psychological needs of workers is very important step to determine the good industrial relations. It has been reveled

by the Hawthorne Experiments that a man has several other needs besides his physical needs.

Employment relationships are not only an economic contract; supportive climate is more required than economic rewards. The supportive climate of organizations is essentially built around social and psychological rewards. Workers participation in management, job enrichment, suggestion schemes, redressal of grievances, effective two ways communication are some of social and psychological rewards. When we see the research paper of different expertise, the present situation of RMG sector regarding social and psychological perspective is not good, worker’s participation is not there, worker’s not get chance to raise up there voice regarding wages, or any surrounding physical environment. When we see that, workers are happy if she/he get proper environment to done their jobs, but we see that supervisor’s behavior is not satisfactory level, when supervisors deal with the employees. So, ultimately we see the workers are not psychologically satisfied; another things is that most of the RMG sector in Bangladesh not maintain to give minimum wages to the workers, so workers not maintain their minimum social status because due to the increasing rate inflation rate is high, so worker are not capable to buy their necessary

of this wages. So, ultimately social

satisfaction is not their in RMG sector in Bangladesh.

Off the Job Conditions: For good IRS it is not enough that the workers factory life alone should be taken care of. His home life is not totally separable from his work life and his emotional condition. Each affects the others. For these reason workers off the job conditions should also be improved. Through the readings of different papers, we see that; minimum wages is not provided most of the garments in Bangladesh. So, they are not capable to meet up their family demands, so ultimately their family members are not satisfied. This impact is create big influence on the performance of the workers, as its affect there attitude towards the job (Motivation is declined). So, frequently strike is happen.

Enlightened Labor Unions: Strong and enlightened labor movement can help to promote the status of labor without hampering the interest of management. Labor unions always talk much of the employer’s obligations to the workers but say very little about the workers responsibility to the employers. Trade union activities are not satisfactory level in the perspective of RMG sector in Bangladesh because proper utilization of leadership capability is not there. The leaders of the trade unions should have proper educational background, so that they can understand what are their rights as well as responsibilities, while they negotiate

for their workers to the perspective of problems facing regarding RMG sectors in Bangladesh.

Negotiating skills of management and workers: Good industrial relations depend on the ability of employers, organizations and trade unions to deal with their mutual problems freely, independently and with responsibility. From the perspective of different literature it is clearly identified in the RMG sector in Bangladesh, there is a involvement of weakness of different trade union activities and finally we see that workers do not get chance to give their opinions independently regarding their wages, physical environment, psychological conditions and their health and hygiene, so we easily understand negotiation skills of management and workers is really poor in the RMG sector in Bangladesh. The educational backgrounds of the trade union leaders are not satisfactory that reduces the chance for a better solution.

Urge on the part of employers: Good industrial relations depend on the realizations and urges on the part of employers for the promotion of their workers welfare. From the different scenario of the RMG sector in Bangladesh, we find out that employers are not interested regarding workers welfare because most of the cases they are not properly give the wages and other facilities of workers. Think of this scenario we can easily understand willingness of give and take perspective is absent most of the RMG sector in Bangladesh Genuine sympathy of the public: Good IRS depends on the genuine sympathy of the general public towards labor. Sometimes we see that very small portion of columnists, write regarding the different problems of the workers such as wages, physical conditions, working environment, psychological satisfaction, trade union activities, employers unethical decisions and so on.

Public policy and Legislation: Government becomes a third major force in determining IRS. It regulates the behaviors of both labor and management. In our country we see that Government regulates the laws and policies to proper maintaining industrial relations of the RMG sector in Bangladesh but many of the cases implementation is not there and Government not enforce to maintain the rules and laws to the employers. That means there is not monitoring mapping is there.

Better Education: Better education provides proper sense of responsibility and thus they will be less influenced by outside forces. When we see that different conflicts in the RMG sector

in Bangladesh that most of the cases conflict is happen because of the lack of education of the workers.

Collective Bargaining: Collective Bargaining is the cornerstone of good industrial relations through the assistances of appropriate Government agencies might be necessary in public interest. We know that collective bargaining is the negotiation of different parties but in the actual scenario of the RMG sector in Bangladesh that there is a poor understanding of relationship between the workers and the employers, so proper negotiations is absent.

Compliance Standard for Garments Sector: Factory Level Compliance Standard: Ergonomic Balance: Factory level ergonomics indicate appropriate balance between factory space, installed machines and workers. This refers to size of floor space available for doing work, ratio between floor space and number of workers, workers and machines used workers and production lines, adequacy of air and light inside the factory, etc. Floor space available for working in the surveyed factories was, on average, about 50,000 sq ft, while spaces for setting up a production line was about 6128 sq ft. Available space for each worker on average was 52 sq. ft. It appears that large and medium enterprises provided relatively more space for setting up production lines and for workers working in the factory. Average worker-machine ratio was 1.74, indicating that every operator of a machine took support of 0.74 additional workers (usually these workers are called 'helpers'). Enterprises, directly dealt with buyers, (which also tended to be large and medium enterprises) were operated by higher number of workers in production lines and also provided higher space to the workers. In other words, ergonomic standard was better in enterprises which worked directly with buyers. A majority of large enterprises were purpose-built, while the proportion of such enterprises in the case of medium and small units was relatively low. Factories established in earlier periods were behind in terms of complying with factory level compliance standards, perhaps because of government's “soft look� towards apparel sector in the earlier stage of its development when these standards requirements were either mildly dealt or overlooked by concerned offices. In general, factories established in more recent periods were relatively better compliant in terms of factory standards.

Worker's Job-related Compliance Standard:

Factory management, in most of the cases, checked the minimum age of workers that they were recruiting. It appeared from the survey that entrepreneurs are very strict on this issue, a considerable change compared to the 1990s. With the introduction of Harkin's Bill in the US Senate in the early 1990s, both the government and the entrepreneurs had taken steps to eliminate child labour in the export-oriented RMG sector of the country. Buyers are at present very strict in terms of ensuring that they do not place orders to factories that have any child labor. Majority of sample enterprises did not provide appointment letters to the workers, according to the data collected through survey in 2006. A high proportion of large enterprises provided appointment letters to their workers; about 53 per cent of knit, 51 per cent of woven and 40 per cent of sweater enterprises did so. The proportion of sample EPZ enterprises that provided appointment letters to workers was about 69 per cent, while the proportion of nonEPZ enterprises providing appointment letters to workers was 22 per cent. A formal appointment letter, where all important aspects of employment, were mentioned, would give confidence to the workers regarding job security which could lead to higher levels of retention in the factory. According to entrepreneurs, most of the enterprises paid workers' wages within first and second week of the month; more than 90 per cent of the enterprises did so. The practice of payment of workers' wages in the third week of the month was evident not only in small enterprises, but also in medium and large enterprises. Getting income in the first week of the month was felt to be critically important by the workers since they had to pay their monthly dues including room rent, utility charges, etc. in the first week of the month.

Irregular payment was a major inducement for switching jobs and a high turnover. In most of the sample enterprises, normal working hour (excluding overtime working hours) was 8.28 hours, which was more than the stipulated working hours set by the law. In general, normal working hour in 2005 was marginally lower (-0.2 per cent) compared to that in 2004. From workers' point of view, reduction of normal working hour was less important compared to effective working hour which included overtime working hour along with normal working hour. Length of overtime working hour was considerable - it averaged about 13.9 hours per week or more than two hours a day. In general, overtime working hour has increased by about 3 per cent after the MFA phase out. It was argued by entrepreneurs that managing bulk volume of production orders was often difficult within a predetermined schedule of work as production was often hampered due to electricity outage, strikes, etc. Thus factories had to operate for longer hours to compensate for these disruptions. However, in most instances longer working hours in factories was dictated by the pattern of orders placed by buyers which necessitated production of certain volume within a strictly stipulated time –line. As

maintained by workers, longer working hours and high load of work in the factory, especially in sweater and knit factories, have reduced workers' leisure hours. Besides, pressure from the production managers to fulfill high production targets also made their lives very stressful.

This often led to deterioration in relationship between workers and the management people directly involved in production. Workers maintained that in many instances workers' unrest was caused by deterioration of relation between workers and management. Most of the enterprises, according to their owners, maintained a weekly holiday. Workers maintained that in view of long working hours a weekly holiday was essential for them. Most of the sample enterprises provided maternity leave to their female employees. More than 80 per cent enterprises provided maternity leave; the ratio was higher in the case of sample sweater units.

Most of the factories did not have day-care and canteen facilities. Workers had to take their meal sitting in the stairs or in the corridors or by going back home. Day-care or canteen facility was available in 53 per cent woven factories; the share was very low in the case of sweater and knit factories. In general, the trend is for all types of enterprises to provide such facilities in increasingly greater numbers in recent years. Because of having no day care facility in most of the factories, female workers had to leave their children at home or in many cases in their villages. Monthly wage of a female worker was 28 per cent less than that of a male worker with identical characteristics. However, the field survey indicated that situation has improved in recent years and large enterprises tended to provide relatively better facilities compared to medium and small enterprises. Analysis indicates that compliance standard of large enterprises was about six points higher than medium enterprises; while the standard of small enterprises was three points lower than medium enterprises and both are significant at a high level. It was also found that initial investment was very important for the level of compliance standard that was maintained by enterprises.

Workers' Health and Safety Related Compliance Standard: There were, on average, more than two emergency exits in a sample factory. More than 600 workers could use one exit in large factories, while the number for medium and small factories was 353 and 170 workers respectively. Number of emergency exits was relatively higher in EPZ-factory compared to non-EPZ factory. However, availability of emergency exits did not necessarily ensure worker's safety in full measure. The width of the exit, landing space available etc. was also important factors from the perspective of safety. There were, on average, 0.8 doctors available in every factory, which indicates a good number of factories have no in-house doctors. In other words, one doctor was available for 1,088 workers.

According to sample workers, most common diseases from which they suffered were headache, cold fever, etc. Most factories did not have adequate ventilation and exhaust fans and few workers use masks. As a result, there was strong possibility to be affected by serious diseases, such as tuberculosis. Incidence of accidents while working in the factory was not found to be very high. Other than accidents, in-house doctors usually diagnosed the patients and prescribed medicines free of cost, but workers had to bear all costs of medicine. Trade union activities were almost non-existent in the garment sector. There were very few factories where workers were allowed to have trade unions at the factory premise. As is known, following long debates over the issue of allowing trade union activities in EPZ factories, the government agreed to allow formation of Workers Welfare Committee (WWC) in the RMG factories located in EPZs. The WWC is usually comprised of representatives of workers and factory management, which regularly met and discussed worker related issues. About 52 factories were found where WWC activities prevailed. Fifty five per cent of EPZ factories were found to have WWC, while only 20 per cent of non-EPZ factories had WWC. Prevalence of WWC activity has marginally increased in 2005 compared to that in 2004.

Entrepreneurs were more or less divided as regards the issue; one group supported such a negotiating body while the other group was against it. A regression analysis was carried out to understand the impact of different factors on workers' health and safety related compliance standards maintained by the sample enterprises. It is found that large enterprises were better compliant as the value of index of these enterprises was 9.6 points higher compared to medium enterprises, while small enterprises were less compliant compared to medium enterprises: score of the former was 5.5 points lower than the latter. Highly compliant enterprises were 57 per cent more productive compared to less compliant enterprises and 65 per cent more productive compared to moderately compliant enterprises. Thus, maintaining compliance with the required standards was found to have a positive impact on productivity, indicating the need to enforce compliance at the factory level for the good of the RMG sector itself. Sample entrepreneurs were of the opinion that for enhancing labour productivity a number of measures should be taken: organize training for workers, improve compliant situation, diversify production, provide entertainment facility, increase workers' wage and provide other incentives, and ensure good behavior with workers, etc.

Code of Conduct Followed by Major Buyers and Bangladesh's RMG Industry: Codes of conduct have been an important part of efforts to improve labor standards in global supply chains. Over the past ten years, these codes and systems put in place to ensure their

implementation have seen a large scale proliferation. Brands and retailers are faced with multiple industry standards and suppliers are confused by the numerous codes and initiatives.

There is lack of harmony in the Code of Conducts of the different brands, particularly in the cases of minimum age requirements, wages and benefits and overtime payment. However, there are some common concerns and standards and Bangladesh will need to be very careful in addressing the norms established by the brands. Both legislation of appropriate laws and their enforcement are important. Lack of uniformity in the brands' requirements often gives rise to confusion among suppliers. A large number of suppliers do business with several brands. Moreover, although all buyers talk about following the code of conduct which refers to maintaining and adherence to local legislation as a minimum requirement, when monitors appointed by buyers or an independent monitor conducted audit of firms, they tended to follow detailed checklists provided by respective brands which were usually local legislation plus; suppliers were often not aware about the additional requirements. Better coordination and cooperation is essential to address this confusion and agents of the brand, government regulators and RMG industry should work towards a tripartite understanding. In this context, a local clearing house of standards and compliance could be thought of to streamline the situation. It is also important to develop a shared understanding about the important contribution that voluntary codes of conduct could make towards better working conditions in the factories and also towards higher productivity of labor.

Recommendations 1. Good governance can bring about efficient and productive government, necessary reformation in judicial system, fiscal policy, infrastructural reforms and eradication of corruption, bureaucracy and dishonesty to lead a country to achieve handsome investment.

2. To make the business environment and activities smooth and efficient, coordinated government agencies (ministries, departments, regulatory bodies, etc.) are a must.

3. More dynamic government agencies can facilitate investment in Bangladesh. So, Bangladesh Bank, Investment Promotion Agencies, Bangladesh Board of Investment escape essentially suggested enhancing FDI in Bangladesh.

4. More accountability and transparency are recommended for the development, efficiency and competence Government and regulatory bodies in the work of investment.

5. Bangladesh should maintain a good relation with the developed countries as well as with developing countries for significant share of FDI by developing countries.

6. In recent years foreign investments are going to RMG, telecommunication, power and energy or other profitable areas. Bangladesh should provide appropriate attention to attract more FDI in the industrial and infrastructural areas like construction of roads and highway (especially in building large bridges, flyovers, underground ways etc.), assuring enough inducing competitive advantages to investment in these sectors.

7. Nowadays Bangladesh is badly suffering for lacking of power supply and it is a great obstacle in the smooth inflow of FDI. So the recipient country has to ensure required supply of power and energy.

8. Wages need to be increased substantially, but at least to a level that permits workers to address basic needs. “The women workers interviewed see housing, transportation, food, health and security as basic needs which can be improved if wages are increased�.

9. Introduction of an area-based ration-provision system could lessen the frequent relocation of workers and encourage residential and employment stability. Workers would like rationing cards to buy everyday needs such as rice, flour, lentils, sugar, salt and edible oil at subsidized prices from ration-stores. Approximately ten years ago a ration system was popular among low-income people government employees because it provided them some reasonable food security. Some garments are now practicing this ration-provision system. This system should follow all the garments.

10. Our informants join those of many other studies to highlight the importance of a healthier and safer working environment, including such specific things as wide emergency exits, readily available emergency medical care and facilities, and some form of insurance in the event of injury.

11. Friday (Islamic holy day) clinics should provide free but mandatory weekly health checks and vaccinations. Such services should be made available to all garment workers in the interest of improved living standards and control of the spread of disease. These clinics may also serve as information distribution sites for health and birth control education.

12. There continues to be an urgent need for medical facilities to serve garment workers.

13. A most critical need cited by the workers in our study is for provision of safe night time transportation from the factories to home. Safe travel is such a prominent need for women

garment workers that it obviates the urgency for a special subsidized morning and nighttime bus service for women workers only.

14. Subsidized low-cost housing targeted to garment workers should be considered seriously, and additionally should be accompanied by schools, day care centres, a women’s cooperative and other nearby shops.

15. Primary schools for children and young dependents of workers (e.g., brothers or sisters) are funded by the Government of Bangladesh, International Labour Organization (ILO), United Nations International Childrens’ Emergency Fund (UNICEF) and BGMEA, and operated by Bangladesh Rural Advancement Committee (BRAC), and Gana Shahajya Sangstha (GSS).

16. Finally, an important contribution to the health and well being of workers would be the supply of umbrellas and raincoats for the rainy season. As an obligation of employers, this slight humanizing gesture would likely be returned many times over in better health among workers.

17. Employment generation programs, including “backward linkages” related to a thriving textile and garment industry, need to be launched in rural areas in order to encourage garment workers to return to villages. Infrastructure barriers to such projects are disappearing, as rural electrification and road communication in rural Bangladesh has become adequately developed in recent years. These projects need the support of international donors, and both national and international NGOs. 18. Stimulation of alternatives to garment industry employment needs attention from both the public and private sector in Bangladesh. BRAC launched a vocational training and credit program for workers who are either dismissed or lost job due to closure of factories. A worker must first register as a member of BRAC. Second, BRAC assesses each worker’s potential, capacity, skill and job preferences.

19. Need to establish deliberate links between garment workers and women’s groups, trade unions and advocacy groups to promote rights issues both nationally and internationally, and to build solidarity among and with women workers.

20. Bangladesh economy at present is more globally integrated than at any time in the past.

The MFA phase-out will lead to more efficient global realignments of the textile and clothing industry. The phase out was expected to have negative impact on the economy of Bangladesh. Recent data reveals that Bangladesh absorbed the shock successfully and indeed

RMG exports grew significantly both in FY05 and (especially) in FY06. Due to a number of steps taken by the industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period.

21. Cheap labor is no longer seen to be a mainstay of comparative advantage. The need for establishing strong backward linkage was appropriately realized and accordingly necessary steps were taken by all quarters of the RMG industry, which has been reflected in the decreased pattern of back-to-back import supported by increased domestic value addition.

However further progress is in order, and a strong public sector role is necessary to mediate the establishment of textile mills with global standards. An appropriate policy regime is needed to encourage the importation of technology, intermediate and raw materials, so that the local industries get a chance to reduce its average cost to international level and narrow the lead time.

22. Presently, Bangladesh’s apparel sector operates mainly at the lower-end segment of the international market. Although knitwear products achieved tremendous growth but these are low-value products with small profit margins. Bangladesh can enhance its value addition capacity substantially through diversification of apparel products and by moving into more value-added, high-priced, high-fashion products. Woven category can be more attractive via large capital investment. If cost effective investment can increase in the spinning and weaving sub-sectors, as it has been in the past few years, Bangladesh has the possibility of building a competitive export-oriented RMG sector with strong backward linkages in the textiles sector.

23. Training is always considered as an effective instrument for upgrading skills and raising efficiency of human resource, which eventually ensures increased productivity. Some initiatives have been taken by the entrepreneurs of the relevant sector but much more needs to be done. Necessary steps should be taken both by the public and the private sectors, and development partners to establish appropriate fashion and technology institutes. Improvement in working conditions and organizational environment can also result in increased productivity, which eventually renders these.

24. A Sector wide approach for protection and insurance arrangements complemented by a robust institutional framework for design and implementation rather than an individual enterprise based approach is required.

25. The existing institutional arrangement is that of supervision and control while the social protection and social insurance schemes can be implemented through Public Private Partnerships.

26. It is evident from the available level and type social protection that much ground is yet to be covered.

27. There is a need for setting up a more sustainable and meaningful integrated system of social protection for RMG workers in Bangladesh. Whereas, Social Assistance is a State responsibility met from revenue.

Social Protect System has to be participatory with

contribution from all the Stakeholders - Government, Employers and Workers.

30. Under informal employment conditions SP is unlikely to be successful without focusing on the social capital aspect at the family level.

31. However, this approach cannot be taken up by the industry alone.

Key Elements of SP System: • Sectoral Approach for Sustainable Long Term SP System • Tripartite Approach in Management • Empowerment of Women and their Families through Enhancement of Employability and Stabilization of Family Income 32. Long Term Social Protect System 1. Continuing education (part time) cum skill development 2. Design and implementation of insurance schemes for covering the risks that include accident cum life and medical care.

33. Continuing education classes for RMG female workers so as to enable them to acquire certification of thresh hold level of education - 5 / 7 years of schooling. This expected to help this semi illiterate worker to acquire better and diversified skills for future.

34. Organized skill development classes so as to acquire marketable skills in diversify occupations focusing on the workers as well as their family Members.

Bibliography: www.jstor.org www.bgmea.com www.dailystar.com Banglapedia- Detail information for RMG sector. www.cpd-bangladesh.org www.epzbangladesh.org.bd

www.wikipedia.com