Unrest at RMG puts exports at risk

Renewed unrest in the ready-made garment (RMG) sector has emerged as a major threat to Bangladesh’s export-led economy, raising fears of order losses, employment disruption and declining confidence among international buyers at a critical time for the country’s trade prospects.

The scale of the disruption became evident when about 800 garment factories across Dhaka, Gazipur, Mymensingh, Savar and Ashulia faced operational disruptions, affecting 987,190 workers, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The unrest, centred on workers’ demand for a minimum monthly wage of Tk 30,000, involved road blockades, vandalism, arson and clashes with law enforcement agencies.

Although factories reopened on Monday, tensions persisted in several industrial areas, keeping manufacturers concerned about production continuity and timely shipment of export orders.

The disruption has raised wider economic concerns as the RMG industry accounts for more than 80 per cent of Bangladesh’s export earnings, contributes around 10 per cent to gross domestic product (GDP) and employs approximately four million people.

Prolonged instability could affect foreign currency inflows, household incomes, banking activities, investment and overall economic growth.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem told The New Nation that instability in the sector could seriously undermine foreign exchange earnings and employment.

“Garment is a major foreign currency-earning industry for our country. If instability emerges in this sector, buyers become concerned and do not want to place orders.

As a result, Bangladesh is deprived of foreign currency and employment is affected. People lose their jobs. The violence in the garment sector is not a good sign,” he said.

Questioning the nature of the violence, Hatem argued that the incidents should not simply be considered a wage movement, as the government had announced the formation of a wage board before the unrest escalated.

“This is not a workers’ movement or a wage movement. The announcement regarding wages had already been made before the incidents took place.

So why did this violence happen? The government should investigate who is behind it and take prompt action. If this sector is damaged, the entire economy will be affected,” he added.

Jamaat-e-Islami Ameer Shafiqur Rahman also expressed concern in a Facebook post, warning that vandalism and arson at industrial establishments could seriously damage the garment industry.

He said neither factory owners nor workers could establish their rights by destroying industrial units and maintained that no genuine worker would engage in such activities.

Alleging that vested interest groups and opportunists were exploiting the situation to provoke unrest and undermine the industry, he urged the government to take a firm stance against those responsible.

Referring to around 600 factories already declared closed, he warned that a possible conspiracy to damage the sector’s prospects ahead of the winter season could not be ruled out.

He also called on factory owners, workers and other stakeholders to remain responsible and vigilant in protecting the industry.

The timing of the unrest has heightened exporters’ concerns, as October to February or March is the peak order-placement season, when manufacturers typically secure around 40 per cent of their annual export orders.

Factory owners fear that continued production disruptions could prompt international buyers to shift orders to competing countries.

Fakir Fashions Managing Director Fakir Kamruzzaman Nahid told the media, “Nearly 40 per cent of our annual export orders come during this period. Such unrest at this time will cause significant damage to Bangladesh.”

BGMEA President Mahmud Hasan Khan Babu also warned that maintaining factory operations would become difficult if workers continued to refuse work or resort to vandalism despite the formation of the wage board.

Meanwhile, the government has formed a six-member minimum wage board, chaired by Senior District and Sessions Judge Sheikh Ashfaqur Rahman, to review workers’ salaries.

The existing minimum monthly wage of Tk 12,500 was introduced in December 2023, while workers are demanding Tk 30,000, citing rising living costs, including food, housing, transport and healthcare.

Prime Minister Tarique Rahman has directed officials to ensure uninterrupted factory operations and protect lives and property. Home Minister Salahuddin Ahmed also met BGMEA and BKMEA leaders at the Secretariat on Monday to discuss the situation.

The dispute highlights the difficult balance between workers’ demands for better wages and manufacturers’ concerns over rising production costs, energy shortages, financing expenses and uncertain global demand.

University of Dhaka economics professor Selim Raihan told the media that workers’ demands were understandable amid persistent inflation, but cautioned that a substantial wage increase could squeeze exporters’ profit margins and weaken Bangladesh’s price competitiveness.

The unrest has also come at a crucial juncture in the country’s preparations for graduation from the least developed country (LDC) category.

On 29 October, the United Nations General Assembly approved a three-year extension of Bangladesh’s preparatory period, shifting its graduation date from November 2026 to 24 November 2029.

The deferment is expected to provide relief to exporters by allowing the country to retain LDC-related trade advantages during the extended preparatory period.

Bangladesh currently enjoys duty-free market access in 38 countries and trade blocs, with around 73 per cent of its total exports benefiting from LDC-specific preferences.

The extension will help the country retain these advantages until November 2029, avoiding the immediate prospect of an average 12.5 per cent tariff on its exports.

The additional time offers an opportunity to negotiate new trade arrangements, improve labour standards, modernise factories, raise productivity and diversify export markets before facing a more competitive trading environment.

However, persistent industrial unrest could undermine these gains by discouraging international buyers and investors.

Bangladesh is already competing with Vietnam, India and Cambodia for a larger share of the global apparel market, while energy supply uncertainties linked to the Middle East conflict, higher shipping costs and changing demand in major markets are adding to manufacturers’ pressures.

Industry insiders said the priority was not merely to reopen factories but to ensure uninterrupted production and restore confidence among workers, employers and international buyers.

They stressed that the three-year LDC deferment had provided valuable breathing space, which the government and industry stakeholders must use to secure sustainable economic gains.