Project Title: The Impact on Covid 19 into RMG Sectors
Employment Opportunities in Bangladesh
Course Title: Manpower Planning and Forecasting
Course ID: HRM360
Section: 02
Semester: Autumn 2021
Submitted to: Dr. A.N.M. Shibly Noman Khan,
Head of Department
Human Resources Management,
School of Business & Entrepreneurship
Submitted byName
ID
MD. LATIFUL KARIM
1921625
RAMISA HOSSAIN
1822126
Date of Submission
15 December 2021
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LETTER OF TRANSMITTAL
15 December 2021
Dr. A.N.M. Shibly Noman Khan
Head of Department
Human Resources Management,
School of Business & Entrepreneurship,
Independent University, Bangladesh
Subject: Report on the impact of Covid 19 on RMG Sector employment opportunities in
Bangladesh.
Dear Sir,
With all due respect, it is a great pleasure and honor for us to be your student and be given
this opportunity to submit this report. We made every effort to compile this report based on
an analysis of Covid 19 on RMG Sector employment opportunities in Bangladesh. To prepare
this final output, we have made sincere efforts to study related materials and documents,
observe, and examine relevant items. In addition, we have provided all pertinent information
about this organization, and we believe and hope that my efforts will help people understand
the subject better.
We tried our best to gather the necessary information while preparing the report. This
insightful report would not have been possible without your cooperation and support. Thank
you for all of your assistance and support, which has been highly beneficial to us.
Sincerely,
MD. LATIFUL KARIM
RAMISA HOSSAIN
Course Title: Manpower Planning and Forecasting
Course ID: HRM 360
Section: 02
Semester: Autumn 2021
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ACKNOWLEDGEMENT
We want to offer our heartfelt gratitude to the course instructor at Independent University
Bangladesh (IUB) School of Business, Department of Human Resources Management, for
providing such a professional but educational platform for showcasing our talents and
potentials in the field of business. Likewise, Dr. A.N.M. Shibly Noman Khan, our Labor
Economics and Compensation Theory (HRM 370) Faculty, has our undying admiration.
We will be eternally thankful to him for sharing invaluable and incomparable knowledge with
us and for leading us through the entire process of producing a successful, neat, and clear HRM
analytical report. This course has been a rewarding learning experience for us because of my
interactions with him. At the same time, I recognize and value our efforts in dedicating our
time and effort to completing this report work; without the help of the course instructors, it
would have been an immensely tough task to finish.
More ever, we acknowledge and value the efforts of the team members who have put their
dedication and sincerity upon completing this report work. Without their contributions, it
would have been a challenging job to accomplish. In addition, we, the group members, have
spent considerable time and effort designing this very HRM analytical report. We hope and
firmly believe that our faculty will be pleased with the work we are presenting.
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TABLE OF CONTENTS
Letter of Transmittal .................................................................................................................. 1
Acknowledgement ..................................................................................................................... 2
1. Introduction ............................................................................................................................ 4
2. Economic Impact of Covid-19 ............................................................................................... 5
2.1 Background ..................................................................................................... 5
2.2 Overall economic contraction .............................................................................. 5
2.3 Agriculture ..................................................................................................... 6
2.4 Financial Markets ............................................................................................. 6
2.5 Science and Technology ..................................................................................... 6
2.6 Unemployment ................................................................................................ 7
2.7 Global FDI ...................................................................................................... 7
2.8 Impact on Bangladesh Economy ............................................................................ 7
3. Impact of Covid-19 into RMG Sector ................................................................................... 8
4. Impact of Covid-19 Table ...................................................................................................... 8
Conclusion ............................................................................................................................... 14
Reference ................................................................................................................................. 15
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1. INTRODUCTION
Because of COVID-19, the RMG industry in Bangladesh is in a severe crisis, with a virtual
halt to new business and mass cancellation of existing orders, resulting in a wave of job losses
and unrest among workers, who are demanding factory closures and payment of unpaid wages.
Trade unions have been vocal about workers' rights to fair wages and job security during the
crisis. The government's first financial stimulus package, which covered workers' wages and
was announced on 25 March 2020, was aimed at the RMG export sector. BIGD conducted a
rapid qualitative study based on in-depth telephone interviews to understand better the impact
of the COVID-19 crisis on the RMG industry and the 4.1 million workers it employs, as seen
through the eyes of trade union leaders, and to determine their role in negotiating with various
industry actors to mitigate the crisis.
Bangladesh's workers are one such group. These workers have little or no education, are
unskilled, come from a low socioeconomic background, are often from rural areas, and have
little bargaining power, making them vulnerable.
Urmi Garments Ltd. produces of 30 tons of cloth and 160,000 pieces of garments. Over 8,000
individuals are employed. Over 250 professionals representing a variety of specialties. A total
investment of more than US$ 55 million has been made. In 2018, the company generated a
revenue of US$168 million. Oeko-tex and GOTS certifications. But COVID-19 is a severe
public health threat in both developing and developed countries. Unfortunately, Bangladesh is
in grave danger from this public health emergency due to a lack of preparedness to deal with
the potentially fatal virus.
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2. ECONOMIC IMPACT OF COVID-19
2.1 BACKGROUND
Beyond the disease's spread and efforts to contain it, the COVID-19 pandemic has had farreaching economic consequences. Concerns have shifted from supply-side manufacturing
issues to decreased business in the services sector as the SARS-CoV-2 virus has spread
worldwide. The pandemic triggered the second-largest global recession in history, with more
than a third of the world's population put on lockdown at the time. Due to panic buying,
increased use of goods to fight the pandemic, and disruptions to factories and logistics in
mainland China, supply shortages were expected to affect several sectors during the early
stages of the pandemic. In addition, price gouging has occurred in the past. There have been
widespread reports of pharmaceutical shortages, with panic buying and resulting food
shortages and other essential grocery items in many areas.
Food shortages, price spikes, and market disruption could occur due to the outbreak's potential
instability and associated behavioral changes. Vulnerable populations who rely on markets for
their food and those who already rely on humanitarian aid to maintain their livelihoods and
food access would be the hardest hit. Moreover, the additional inflationary effect of
protectionist policies such as import tariffs and export bans, as seen during the 2019–2020
global food price crisis, could significantly increase the number of people facing severe food
insecurity worldwide.
2.2 OVERALL ECONOMIC CON TRACTION
The COVID-19 recession is a global economic downturn that will occur in 2020 due to the
COVID-19 pandemic. Global stock markets have been in free fall since 1987, and the G20
economies have fallen 3.4 percent year on year in the first three months of 2020. The
International Labour Organization estimated that between April and June 2020, an equivalent
of 400 million full-time jobs was lost worldwide. In addition, workers' income fell 10%
globally in the first nine months of 2020, amounting to a loss of over US$3.5 trillion.
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2.3 AGRICULTURE
Up to 80% of the population in food-insecure countries depends on agriculture for survival. As
a result, further disruptions to food production and related value chains, such as reduced
availability of critical inputs or restricted access to lands or markets, could have disastrous
consequences for vulnerable populations. [15] The agricultural sector has a significant impact
on migratory patterns. Border closures are likely to hit transhumant pastoral populations hard,
as they rely on seasonal livestock movements for food and income. Disruption of traditional
and western patterns and the creation of new ones may result in tensions and even violent
conflicts between resident and pastoralist communities, resulting in local displacement and
increased poverty and food insecurity. In food crises, it is critical to maintain and support the
continuous functioning of local food markets, value chains, and agri-food systems, including
ongoing and scaled-up support for food processing, transportation, marketing, and so on;
strengthening local producer groups to maintain negotiation power and access to markets; and
advocating for trade corridors to remain open as much as possible during COVID-19-related
movement restrictions.
2.4 FINANCIAL MARKETS
The COVID-19 pandemic severely disrupted global financial markets and the real
economy. Significant monetary and fiscal policy interventions were required as a
result of these extraordinary events. The academic community has produced
impressive research in the last year, recognizing the shock's unusual nature. The
impact of epidemics has been analyzed using macro-finance models. The origins and
consequences of disruptions and the impact of policy interventions are investigated
in empirical papers. A new study looks at the current state of financial instability
related to previous financial crises and regulations.
2.5 SCIENCE AND TECH NOLOGY
The pandemic may have improved or established new forms of scientific communication. For
example, before going through formal peer review, a lot of data is released on preprint servers
and dissected on social media platforms and in the media. Scientists review, edit, analyze, and
publish manuscripts and data at record speeds and large numbers. Scientists may have been
able to work together at an unusually high level of efficiency and collaboration due to this
intense communication.
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2.6 UNEMPLOYMENT
On 7 April, the International Labour Organization predicted a 6.7 percent drop in job hours
worldwide in the second quarter of 2020, equating to 195 million full-time jobs. They also
calculated that 30 million jobs were lost in the first quarter, compared to 25 million during the
Great Recession. During the peak of the epidemic in Wuhan in January and February 2020,
about 5 million people in China lost their jobs. Many of China's nearly 300 million rural
migrant workers have been stranded at home in inland provinces or have become trapped in
Hubei. Non-farm payrolls in the United States, 2005–2021 More than 10 million Americans
lost their jobs in March 2020, prompting them to apply for government assistance. The total
number of non-farm jobs fell from 152.5 million in February 2020 to 130.2 million in April
2020. The United States had 13 million non-farm jobs as of February 2021. Since the country's
lockdown in mid-March 2020, nearly 900,000 people have lost their jobs. In addition, 4 million
French workers applied for temporary unemployment benefits in the second half of March,
while 1 million British workers applied for the universal credit scheme. France and the United
Kingdom have both adopted Germany's short-term work compensation scheme.
2.7 GLOBAL FDI
According to a projection by the United Nations Conference on Trade and Development
(UNCTAD), global FDI would drop by 42% to USD 859 billion in 2020, down from USD 1.5
trillion in 2019. However, the drop in FDI flows was unequal among emerging economies.
Asia performed better due to positive FDI inflows to China and India in the high-tech sectors
of ICT and pharmaceutical mergers and acquisitions, respectively. FDI flows in the ASEAN
and South-Asian economies decreased except for these two countries. The majority of these
investments are in export-oriented garment sectors that have seen a drop in worldwide demand.
2.8 IMPACT ON BANGLA DESH ECONOMY
Despite the global economic slump, the Bangladeshi economy has proven to be quite resilient
to COVID-19-related shocks. Nonetheless, compared to prior years, the trend of FDI inflows
and projected investments has decreased dramatically. While the world economy is expected
to expand at a negative rate of -4.4 percent on average in 2020, Bangladesh is one of the few
economies with positive growth, showing that it is more macroeconomic resilient, according
to an IMF research released in October 2020.
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3. IMPACT OF COVID-19 INTO RMG SECTOR
Bangladesh's economy is still heavily reliant on the ready-to-wear clothing industry for
manufacturing jobs, foreign exchange reserves, and women's empowerment. The industry
accounts for 11.2 percent of the country's gross domestic output. More than 4,600 RMG
manufacturers comprise the country's largest industrial sector, employing 4.1 million people
and accounting for 36 percent of manufacturing employment. Women workers are the
backbone of this sector since they are hardworking, disciplined, and low-cost. The RMG
industry has played a critical role in women empowerment and gender equity, employing 61
percent. COVID-19 has captivated the entire world's attention due to its lethal impact, which
has brought the entire world to a halt. SARS-Cov-2 is the name given to it after that. Some
scientists believe it originated in China's Hubei province's wholesale food sector. Most of those
who became infected during the early stages of the outbreak was connected to the market, such
as stall owners, shopkeepers, employees, and customers. Later, this province was identified as
the source of the Covid-19 epidemic, and the market was closed in January 2020. After about
a month, the virus spread to other countries, including the United States, India, Brazil,
Argentina, Russia, and Spain. Sneezing, coughing (droplet transmission), and touching a
contaminated surface are common ways for this virus to pass from person to person.
4. IMPACT OF COVID-19 TABLE
Table: 1 RMG Exports from Bangladesh in the Fiscal Year 2019-20 (in Millions of USD)
Month
Export
Performance
Growth Rate
Month
Export
Performance
Growth Rate
July
3,310
9.7%
January
3039
-2.98%
August
2,406
-11.46%
February
2784
-4.48%
September
2,341
-4.7%
March
2256
-20.14%
October
2520
-19.79%
April
374
-85.25%
November
2511
-11.98
May
1230
-62.06%
December
2935
1.26%
Only $2.12 billion had been earned during the final month of the previous fiscal year as of
June (2020). The earnings were 11.43 percent lower than the previous year but increased 72.4
percent over the previous month, according to the Bureau, Customs, and Bangladesh
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Garment Manufacturers and Exporters Association (BGMEA). As a result, the RMG saw a
historic low in sales, with earnings of barely $0.37 billion, the lowest since the spurred
booming of four decades ago. Table-1 illustrates the export performance and growth rate for
the 2019-2020 fiscal year.
Source: RMG Revenue Information (Bangladesh) by Statista
On 8 March 2020, Bangladesh reported its first confirmed coronavirus case. Two of them were
Italian returnees, while the third was a family member of one sick person. It was Bangladesh's
first coronavirus outbreak. In late March, the government ordered that all manufacturing
activity in the garment industry be halted, forcing workers to return to their homes. Due to
financial constraints and a drop in consumer spending due to the Covid-19, Bangladesh's
primary customers, including American and European fashion corporations such as GAP,
ZARA, H&M, Primark, and Marks & Spencer, have reduced their imports and orders. Nearly
$6 billion in orders are thought to have been canceled. The Bangladesh Garment Manufacturers
and Exporters Association (BGMEA) estimates that 982 million
units of garment products worth $3.18 billion have already been canceled.
Table 2: Employment in RMG Sector
Year
1983-84
Number of
Factories
134
800
1989-90
759
1000
1995-96
2353
1300
2001-02
3618
1800
2007-08
4743
2800
2010-20
5876
3600
Employment
in Millions
The advent of the RMG industry, which provides abundant employment opportunities,
particularly for women, is one of Bangladesh's best developments. It provided a platform for
women's participation and empowerment. Over 4 million people work directly in the RMG
sector. The number of employees increased by more than 4 million in the fiscal years 20122013. During the following year, employment remained unchanged. Women make up about
90% of the total workforce. A massive supply of cheap female labor has remained a critical
success element in the country's export-flagship industry's early stages.
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Table : 3 Net loss of Export in 3 months during Covid-19 2nd Wave
Month
2019 (millions)
2020 (millions)
Growth
March
$2,825.07
$1,972.24
-30.19%
April
$2,539.28
$761.78
-70.00%
May
$3,243.18
$972.95
-70.00%
3 Months total
$8,607.53
$3,706.98
-56.93%
Loss of Export of 3
$4,900.55
months
40% of loss export
$1,960.22
in a/c
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Last year, when Wuhan's epidemic made international news, RMG was in a similar situation.
While China focused on fighting the virus inside, global trade suffered. The Bangladeshi RMG
sector's supply chains were severely affected due to the country's reliance on China for raw
materials and capital machinery. By February, Covid-19 had made its way into the United
States and Europe, Bangladesh's main RMG export markets, and producers were already
estimating losses. Even though materials were already in the house, brands began to cancel or
delay order delivery by the third week of March. According to the BGMEA, orders worth USD
3.17 billion have been canceled or suspended so far. To make their choice, brands invoked the
force majeure clause, which exempts contracting parties from liability.
Year
Wage Rate
1995-2000
1100 BDT
2000-2005
1800 BDT
2005-2010
3000 BDT
2010-2015
6000 BDT
2015-2020
8000 BDT
2020-2021(During Covid Phase)
7500 BDT (Minimum Wages Decreases)
Table 4: Minimum Wages decreases in Covid -19 Phase
Workers in the textile industry need to be paid at least $470 million a month because they get
paid only Tk 8,000 a month, which is one of the lowest in the world. Urmi Garments, a
company that makes clothes for people in other countries, has asked them to accept delivery of
goods that have already been made and pay only for the wages of those that are still being
made. In addition to the obvious humanitarian and business consequences, a big drop in foreign
exchange inflows would put the outside world at risk. Workers need immediate money for
food, and the industry needs long-term money to help it get back up again. In table-4, you can
see that the minimum wage drops because of the covid epidemic.
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Number of buyers
Production loss (in a
million)
Primark
$273
C&A
$166
INDITEX
$109
Mothercare PLC
$62
BestSeller
$59
KIABI
$57
VF CORP
$56
TESCO
$50
Others
$77
Current Condition
H&M $166 Million (now
agreed to pay)
Marks & Spencer $39
Million (now agreed to pay)
PVH Corp $33 Million (now
agreed to pay)
Table 5: Production loss in RMG Sector in Bangladesh 2019-2021(Covid Phase)
Clothing production during the COVID-19 epidemic should not proceed without a thorough
review of the system and the preparation of a plan to protect workers' health and safety. Finally,
the United Nations Development Programme has launched an immediate assessment for global
trades to conduct human rights due diligence in response to the COVID-19 pandemic. The
Bangladesh government and the RMG business must take notice of this warning.
Type
Total Unemployed during the Covid-19
324,684 Workers
RMG factories were shut down
1,900 Factories
Workers who had no savings during Covid-
80%
19
Workers who had reduced food expense
27%
Workers who were fired
26500
Machine loss
122000
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During the Covid-19 outbreak in Bangladesh, 324,684 ready-made garments (RMG) workers
lost their jobs, according to research by the Bangladesh Institute of Labour Studies (BILS).
During this time, more than 1,900 RMG factories were shut down, or workers were laid off,
according to the research. In addition, 80% of workers had no savings during the pandemic,
while 27% had lowered their food expenses as their monthly paychecks grew more sporadic.
Since March of this year, 87 firms have fired around 26,500 garment workers without following
labor regulations. It is also showing a total loss of 122000 machines from different factories all
over Bangladesh.
Stimulus Package Information
Amount
Method
Total Stimulus package Value
TK 72,750 Crore
Banks
SME's allocated working
TK 20,000 Crore
Depending on SME's
capital
condition
Pre-Shipment Credit
TK 5,000 Crore
Refinance Scheme
RMG and other export-
TK 5,000 Crore
Previously Declared by
oriented business
the government itself
To combat the effects of COVID-19, the government launched a Tk956 billion ($11.2 billion)
stimulus package, or 3.3 percent of GDP, to help the economy recover. The economy will be
strengthened by boosting the social safety net, export sectors, SMEs, and other essential
sectors. The package includes Tk50 billion for RMG and other export-oriented firms, which
can only be utilized to pay workers and employees' salaries and allowances. The Development
Fund's volume of exports, which provides short-term assistance, has been boosted from $3.5
billion to $5.0 billion. Importing raw materials for export-oriented enterprises is made easier
with these facilities.
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CONCLUSION
COVID-19's impact is just beginning to be felt, and it will continue to overgrow. The full
impact will become apparent in the following months or years. Staying ahead of the curve and
preparing for proper emergency and post-crisis support in many forms is necessary to reduce
the impending economic and probable social crises. For greater efficacy and long-term
sustainability, the ADB's sovereign and non-sovereign operations may need to be sequenced
in a risk-adjusted way. COVID-19 has a noticeable impact on various economic sectors in
addition to the RMG business. Assistance to the RMG business, which is the most significant
contributor to urban poverty reduction, may benefit other related supply chain industries,
allowing the economy to normalize greatly and more quickly. As a result, all actors in the
Bangladesh RMG sector, including global health communities, BGMEA, international
brands/retailers, the GoB, and the International Labour Organization, must act quickly to
protect workers' health and overall well-being, as well as the health of people in other countries,
during the COVID-19 pandemic. In addition, to ensure Bangladesh's economic sustainability,
the global supply chain and RMG trade must be tenured for the long term. Clothing production
during the COVID-19 epidemic should not proceed without a thorough review of the system
and the preparation of a plan to protect workers' health and safety. Finally, the United Nations
Development Programme has launched an immediate assessment for global trades to conduct
human rights due diligence in response to the COVID-19 pandemic. The Bangladesh
government and the RMG business must take notice of this warning.
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