Defying predictions, Bangladesh's garment factories thrive

Their exports grew by $500 million last year, despite an unfavorable change in trade law and competition from China.

If the global economics gurus had got it right, Sokina Begum would have been one of over 2 million garments workers in Bangladesh to become the casualties of globalization.

When Bangladesh lost its quota to export garments to the US under new international trade rules in January 2005, thousands of garments factories here were widely expected to buckle under fierce competition from cheaper Chinese exports. The UN predicted in a 2004 report that over a million women workers might be laid off from these factories.

"I attended many meetings where we were told we will lose our jobs because the treaty that helps Bangladesh to sell its goods abroad will be cancelled," says Ms. Begum.

But tallies of export figures for the first year since quotas were lifted tell a brighter story. Garments exports from Bangladesh grew by half a billion dollars last year, with most of the increased sales in the US market. The mass layoffs have not materialized.

"I didn't lose my job, nor did any of the girls at my factory," says Begum. "Instead I got a $1.40 raise last year, and a day off today because we just finished our first big export order for 2006," she says proudly inside her single-room Dhaka shanty.

"Although some small factories have been irregular in their payments, and have made unfair dismissals, we haven't seen the mass layoffs we feared," says Rokeya Sultana with the Dhaka-based worker rights group Karmajibi Nari.

The garments sector is crucial for poverty-stricken Bangladesh, as it accounts for more than 80 percent of the country's foreign exchange earnings and employs mostly migrant women.

"The principal reason we didn't lose out to China as everyone had predicted is because labor in Bangladesh is cheaper than anywhere else in the world," says Tipu Munshi, head of the Bangladesh Garment Manufacturers and Exporters Association.

According to Mr. Munshi, large buyers such as Wal-Mart and the British company H&M continue to "do business here because we offer the best combination of skilled work for cheap, cheap prices."

"But in many of the smaller factories, which mostly export on contract and don't have large buyers such as Wal-Mart, workers' wages have taken a hit to cut prices," says one leading exporter.

"The factory where I work has reduced our overtime pay, and often refuses to pay overtime unless it is more than one hour," says Shaju Begum, who works in a garments factory in Dhaka's Mirpur area.

But labor leaders point out that this is standard for many smaller companies and has little to do with the rule changes.

Instead, most agree that the US-China textiles deal last November that limited Chinese garments exports to the US has largely benefited Bangladeshi firms.

For three decades, the Multi-Fibre Agreement (MFA) had limited apparel exports from China, South Korea, and Taiwan to global markets. Although the MFA was initially intended to protect domestic textiles industries in the US and Europe, it helped less developed countries like Bangladesh and Vietnam find lucrative export markets.

Women's groups have lauded Bangladesh's "garments revolution" of the last three decades, crediting it with helping an estimated 15 million women.

"But just because there has been no fallout [from the MFA's demise], we cannot assume there will be none," says Kutubuddin Ahmed, a large garments exporter to the US. "Buyers don't move out of a country in a day. It can take years. So it may still be a question of when, not if."