RMG makers with huge orders hiking workers’ salary

Apparel makers – burdened with a shortage of skilled manpower while facing high volume of orders – are increasing their workers’ salary in a bid to curb migration and meet shipping deadlines.

With the reopening of EU and US economies, readymade garment owners have received orders surpassing the pre-Covid volume. So, the industry is now focusing on hiring more workers and retaining their existing skilled workforce, insiders told The Business Post.

The RMG industry was one of the most affected sectors during the Covid-19 restrictions, which had also severely impacted their workforce. Many garment workers had lost their jobs, furloughed or changed their profession to make ends meet.

Bangladesh is currently playing a vital role in fulfilling the RMG demands of European and US buyers, as they are actively looking for alternative sourcing for these items due to supply chain disruptions in China, closure of factories in Vietnam and political unrest in Myanmar.

The Q3 2021 report of The Quality Inspection Management (QIMA) shows that Bangladesh’s order growth from US-based buyers had reached 88 per cent in August and 108 per cent in September compared to the corresponding month of 2019.

Under the circumstances, the demand for skilled RMG workers is now higher than ever, which has led to a higher than usual migration rate too. Industry owners are trying to tackle the situation by giving their workers a raise.

On the issue, Bangladesh Garment Manufacturer and Exporters Association’s (BGMEA) President Faruque Hassan said, “We took some initiatives to encourage workers and increase their efficiency.

“Almost every RMG owner has raised wages, and the factories are setting up training centres to develop workers’ skills. We are even welcoming newbies to join our factories. We will train them to become operators.”

Faruque – also the managing director of Giant Group – added that he has increased workers’ wages in his factories too.

“We are optimistic about meeting our shipment deadlines, which will encourage the buyers to place more orders. It is time to get new buyers and increase our export volume further,” he added.

‘Currently under pressure’

Khosru Chowdhury, managing director of Nipa Group said his factory’s migration rate had increased last September, but it later stabilised after he increased workers’ wages.

Khosru – also the director of BGMEA – added, “We are currently under pressure. When the migration rate increased, I raised the workers’ salary in secret. I had also set a corner for trainee operators, which helped 40 workers get trained.”

A higher than average migration rate disrupts smooth operation of a factory and could prevent a company from meeting their shipment deadlines. When a worker switches jobs, the factory hires another one. But this causes inefficiency in the production process.

Providing more details on the issue, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice President Fazlee Shamim Ehsan said, “The problem with a new worker is he/she needs time to get adjusted to his current workplace and assigned duties.

“Such issues hamper our efficiency and negatively impact our production schedule.”

Md Nurul Amin, assistant general manager of Silver Apparels said their worker migration rate usually hovers around 5 per cent to 6 per cent, but since last July, it has increased to around 10 per cent. We have raised the salary of some skilled workers to discourage them from switching jobs. We have also assured workers of hiking their pay as per existing laws.”

Managing Director of Incredible Fashion – a LEED-certified green factory, Mohammad Bid Quasem said they are paying around 20 per cent more salary compared to others.

“We are now happily accepting orders from our buyers. Migration rate of my factory has dropped after I raised my workers’ pay.”

Jahangir Hossain, factory manager of Patriot Garments, said they are now paying an additional Tk 200 to Tk 500 to the skilled workers. “The sector is facing a big shortage of skilled workers, so we are hiring unskilled people too. We are working to develop their skills,” he said.

Speaking to The Business Post about his recent raise, garment operator Robiul Islam who works in Dakshin Khan area said, “I used to get a monthly salary of Tk 12,000. The company increased my wages by Tk 300 last September and asked me not to speak about it.”

Another worker in Gazipur, Mahfuzur Rahman said, “I received a Tk 500 increment when I told my company about my decision to resign. I have been working in this sector for around seven years and other factories are now asking me to join them.”

What is next for the RMG sector?

A number of RMG owners however criticised the decision to raise workers’ wages.

On the issue, Managing Director at TEAM Group Abdullah Hil Rakib said, “ Buyers are currently placing more orders to meet their high demands, as they now lack enough stock due to the Covid-19 pandemic.

“The situation will not remain the same in the coming days. The order volume will decrease after the buyers finish restocking. The factories that increased wages and recruited more workers will face a crisis.”

Meanwhile, optimistic about the current situation, some industry owners are accepting export orders with a minimum profit margin or at prices just enough to cover the production cost. They are planning to raise prices in phases after the buyers become regular customers.

Some RMG leaders however think that this is a perfect time for the garment factories to seek fair prices from their buyers.

Bangladesh Garment Buying House Association’s President Kazi Iftekhar Hossain said, “Some of the manufacturers are still exporting RMG products for prices below production cost. I am urging everyone to stop this practice.

“Please improve the quality of your [RMG manufacturers] products, and learn to seek better pricing.”

Echoing the same, BGMEA’s Director Faisal Samad said, “If we fail to ensure fair prices now, the buyers will not increase the prices in the coming days. We should focus on developing workers’ skills and diversifying our products.

“This sector can only be sustainable through an increase in worker efficiency and R&D.”