Building on the foundation of low wage rate, our RMG sector has popularly been labeled by foreign buyers as a low-cost hub for high volume product sourcing. This is quite ironical that we are proudly selling ourselves as the cheapest human resource to ensure our growth driver RMG to stay competitive in the global market.
Barely, we are thinking of the changes this sector will encounter after the much-talked graduation to a developing economy after 2024. The cultural-shock in the RMG sector involving this paradigm shift will demand proper preparedness and if not doing so, the worst hit will be faced by our 4.5 million workforces in this sector largely due to low productivity coupled with lack of skills development schemes.
Because, Bangladesh will no longer be considered as low-cost labor resource destination due to Africa, Myanmar, Cambodia having similar resources (say for instance).
RMG ecosystem at regional peers
Bangladesh: Largely due to its low wage rates, lower cost of utilities and preferential trade agreement with EU, Bangladesh excels at supplying large quantities of apparel at low costs. Our Specialization ranges mostly in low-value and value for the money price segment. However, Bangladesh has had issues with compliances and on-time delivery.
Vietnam: Due to high foreign investments (predominantly from China) and JVs which bring along technical know-how and expertise, Vietnam has grown its apparel exports significantly. Moreover, these factors coupled with supportive government policies have provided an added advantage for the growth of the textile ecosystem and infrastructure in the country and making it globally more competitive compared to other sourcing destinations.
Sri Lanka: Despite higher living wages, Sri Lanka has emerged as a large player in the global apparel market owing to its product portfolio, which largely accounts for higher-value, niche products.
It has a large skilled workforce, which allows it to produce specialized products. Sri Lankan factories have been focusing on sustainability and compliance for a long time. While these initiatives have helped create better value for the customers, it has also resulted in optimizing the costs of manufacturing.
India: India’s status as an apparel sourcing destination owes to its strengths namely, abundant supply of raw material, vertically integrated supply chain, expertise in value-added apparel manufacturing, availability of skilled manpower and well-established relationship with key global buyers. India, in contrast to most of the other Asian peers – has the advantage of a very rich heritage of Textiles.
Skills development momentum in RMG sector
Competitiveness in the global apparel trade is primarily challenged by a lack of scale in garment manufacturing due to workers’ skillset. Then comes seasonality (manufacture only certain product categories), inadequate capability in the synthetic value chain, a limited number of preferential trade agreements, etc.
Coming to Bangladesh, our garment export industry is seasonality driven, leading to full capacities for season-specific production and evidently, competing nations have different skill regimes to suit their local, cultural and commercial factors. Bangladesh is no exception in this case.
The workers in the garment industry are generally classified as unskilled, semi-skilled, skilled and highly-skilled. Usually skilled and highly skilled workforce at a factory floor performs critical operations such as collar attachment, sleeve placket attachment, etc., which require a certain set of expertise and know-how.
Without the right set of skills, these operations cannot be performed and if performed wrongly, it would result in rejections and wastages. Without the requisite workforce to perform these operations, factories would have face delivery delays, quality issues and bottlenecks at the production floor.
So it is of utmost importance for a factory to have workers across different skill levels right from unskilled to highly skilled workforce to ensure smooth operations, quality and timely delivery.
Studies found that each country has developed certain skill levels to match the product categories they manufacture. The clients place orders for certain product categories with these countries to match the existing skill levels of the workforce in these countries.
India owing to its relatively higher skill levels has catered to value-added products which are low to medium quality with a certain level of value addition. In the case of Bangladesh and Vietnam, the skill levels have been developed over the last 1-2 decades and these countries predominantly cater to basic products.
The case of Bangladesh
Factories in Bangladesh are privately owned with no government entities in the manufacturing sector. Bangladesh has a multi-pronged skill-building approach involving various government agencies, private institutions and industry.
Some of the key initiatives are Centre of Excellence for Bangladesh Apparel Industries (CEBAI), Bangladesh Skills for Employment and Productivity (B-SEP), etc. The skills development system in Bangladesh can be classified into five main segments:
- Public (Delivered to various degrees by numerous ministries)
- Private (Receive a government subsidy e.g. grant)
- Private (Commercial training institutions including madrassas)
- Non-government and Not-for-profit institutions
- Industry-based/Brands (institutions managed by industry and training delivered in the workplace, including apprenticeships)
However, stakeholders are putting their concerns regarding the much-talked shortage of about 1.47 lakh skilled manpower from the floor to the executive level.
This, eventually, compels the factory owner to engage expatriate employees in different positions such as CEO, CFO, general manager, senior manager, head of dyeing, head of washing, and head of quality assurance.
Moreover, industry insiders predict that universities, technical institutions can provide textile and garments-related education to around 25,000 to 30,000 people, which is way too inadequate considering the requirement of the industry.
Another concern is blown by industry leaders that the RMG sector will need eight lakh specialized employees by 2021 which will be very difficult for factory owners to source locally.
Moreover, they suggest that the sector will need 1.89 lakh graduates and textile experts for top positions by 2021 while Bangladesh will be able to produce around 40,000 by the time.
Key findings on skilling initiatives of other sourcing destinations
- Well Structured Vocational Education System to suit the Countries’ Skill needs (i.e. China’s VET system aims at strengthening the manufacturing sector of the country by relocating the workers from other sectors, primarily agricultural sector to the manufacturing sector.)
- Decentralization of vocational training (i.e. Vietnam is providing Bilateral Government Training with the goal of developing a modernized industrial set-up in Vietnam by 2020)
- Participation of Local Enterprises in Skill Development (i.e. In Sri Lanka training institutes are operating under different ministries and several private institutions)
- Participation of Brands/Retailers in Skilling Initiatives (i.e. The government of Vietnam conducts training and skill development at regular intervals with brands/retailers)
- Introduce new component in existing programs for training at High School level within/around Garment Clusters (i.e. few secondary pieces of evidence suggest that China is considering to establish training centers adjacent to RMG clusters)
Areas need special focus in the context of Bangladesh
- Entry-level skills: These should continue in the current form of existing guidelines of the Integrated Skills Development Scheme.
- Up-skilling: Up-skilling is extremely important to drive productivity. Only entry-level training is not sufficient to build productivity and efficiency. The existing workforce needs to work at a better skill level with operational capability across different operations at the production floor to contribute to overall productivity in the factories.
- Training of middle management: Middle management i.e. Supervisors, section in-charges, Quality controllers, industrial engineers, etc. are the backbone of any garment factory and need to be trained on manufacturing best practices, by allocating at least 2 hours on a daily basis.
- Vocational education: Vocational training should be given a high priority and should be accepted as a university degree/diploma for apparel manufacturing.
To combat the aforesaid challenges of our growth driver, there’s no best alternative than re-skilling the whole sector starting from human resources to machine resources.
As a whole, preparing updated curriculum, conduct need-based research, establish teachers’ training centers and knowledge-sharing platforms, capacity development of mid-level managers, make the bridge between industry and academia and adopt paradigm-shift in policy crafting are the building blocks to embrace upcoming changes and shifts.
Note: The write-up produced here is based largely on the findings from a comprehensive study on ‘Garment Sector to understand their requirement for Capacity building’ commissioned by the Ministry of Textiles, India in association with Technopak Advisors.