GreenGrade Stories - The unspoken reality of two

garment hubs Bangladesh & Cambodia

Posted 2014-01-27 10:44:58 UTC by GreenGrade Staff Member

https://www.greengrade.co.uk/blogs/the-unspoken-reality-of-two-garment-hubs-bangladesh-
cambodia

Executive Summary (GreenGrade, 2014)

The retail industry contributes to wealth generation and employment in developed and
developing countries and is known for its extensive global reach and high level of price
competition which puts downward pressure on prices throughout the supply chain. Today the
working conditions in global supply chains have come under heavy scrutiny due to insufficient
monitoring of both social and environmental conditions. Most reputation-conscious buyers only
associate with factories with adequate compliance standards. (GreenGrade, 2014)
Both countries have access to large workforces of low-wage labourers making them attractive
options for western buyers

The media highlights the unfortunate conditions of the factories situated in these countries but
fails to analyse the vicious cycle leading to these conditions. This study is based on our
experiences working with our clients factories based in both countries and a literature review of

various available reports and articles.

International Funding Agencies

Since the 1980s, Bangladesh has been under the structural adjustment program imposed by
International Financial Institutes. The rise of structural adjustment and neo-liberalism had a
debatable impact on the developments of the state.

Bangladesh realised its potential as a garment exporter when it underwent the structural
adjustment program in the 1980s and became export-oriented nation.
.
Dynamics of Vulnerability and Dependence

The era of neo-liberal economy promoting globalisation created dependency on the global
market. Such dependencies exposed these Least Developed Countries to a vulnerable
environment.
Then the business houses and factory owners are vulnerable to their position in the supply chain.
They are exposed to a market where they have to beat their counter-parts to maintain their

business.

The other major factor causing overtime and other ethical violation in this factory is overbooking
orders up to 20% of their actual capacity, which is a regular practice among the garment
factories. We have noticed that factories located in both the countries overbook orders
approximately by 10-15%. In 2011, few of the factories in Bangladesh even exceeded their
capacity by 25%.

Social and Cultural Impact

Factory owners use this situation in their advantage and prefer employing young women for easy
control and low price. These women leave the factory at the event of their marriage.

Conclusion

Today, the garment industry is highly debated around the world. Tragic incidents of Rana Plaza
and Tazreen in Bangladesh followed by continuous lockouts in Cambodia have put this industry
under close supervision in the international arena.

The international media has been criticising the sweatshops, fire and building safety measures
and more but very few of them report the reasons forcing such unethical and non-compliant
behaviour of the factories situated in developing countries. Such non- compliance and pressure
on labour standards is created by the increasing competition among global suppliers on the basis
of pricing or labour cost in order to cater to a small group of powerful buyers.

Therefore, globalisation did promote these countries and gave them the necessary recognition
on the world economy but at the cost of competing in a highly vulnerable environment. The
different code of conducts established by international organisations and retailers or any other
effective solutions can only achieve some success if they are in accordance to the price-
competition and buyer-pricing dynamics.

Glossary

BDT- Bangladeshi Taka

BGMEA Bangladesh Garment Manufactures & Exporter Association

ETI Ethical Trade Initiative

GMAC Garment Manufacturers Association

IMF International Monetary Fund

MFA- Multi fibre Arrangement

PRSP Poverty Reduction Strategy Papers

SAP- Structural Adjustment Program

UNDP United Nations Development Programme

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