Independent University, Bangladesh

Course code: HRM360

Section: 02

Submitted by

Name ID
A.S.M Mohim 1630486
Zarin Taslim 1620157

Submitted to
Name: Dr. A N M Shibly Noman Khan
Date of Submission: 20th January, 2021
The Impact of Covid-19 into RMG Employment Opportunity in Bangladesh.

Introduction
The ready-made garment (RMG) industry in Bangladesh is facing a serious crisis because of
COVID-19, with a virtual freeze on new business and mass cancellation of existing orders. The
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has been appealing to
the buyers to continue ordering. Some trade unions have asked for a shutdown of the factories,
while most others are working with government bodies and BGMEA to ensure that the factories
remain open and people have jobs and salaries. According to a report published by Penn State
University’s Centre for Global Workers’ Rights and the Worker Rights Consortium (WRC),
more than one million garment workers in Bangladesh have already been fired or furloughed as a
result of order cancellations and the failure of buyers to pay for those cancellations. Millions of
RMG workers are going to be affected economically by the COVID-19 crisis. In the face of the
concerns raised by the trade unions and the RMG employers, on March 25th 2020 the
Government announced a BDT 500 million stimulus package, of which the majority is allocated
for workers’ wages and benefits. The majority of these workers are female, coming from poor
socioeconomic backgrounds, and mostly working at a low wage in garments factories
predominantly producing low-price garments. But it is extremely important that the poor,
vulnerable workers get a fair share of the support package.

The garments we had chosen was also facing a lot of losses during the lockdown since the
production was stopped and there were a lot of pending orders. Some orders even were
cancelled. Maybe all of the garments will need some time to get back to their normal profit
making.
Economic impact of COVID-19
The Coronavirus pandemic, which was once first detected in China, has contaminated humans in
188 countries. It’s unfolded as left agencies round the world counting charges and thinking what
healing should appear like. The ongoing unfold of the new Coronavirus has come to be one of
the largest threats to the world economic system and economic markets. Major establishments
and banks have reduced their forecast for the international economy with the organizational for
economic co-operation and development being one of the modern days to do so. While there is
no way to inform precisely what the monetary injury from the world COVID-19 novel
coronavirus pandemic will be, there is considerable settlement amongst economists that it will
have extreme bad effects on the world economy. Early estimates predicated that, need to the
virus come to be a world pandemic, most main economies will lose at least 2.4 percentage of the
fee their gross home product (GDP) over 2020, main economists to already decrease their 2020
forecasts of world monetary increase down from round three percentage to 2.4 percent. The
economic catastrophe unleashed by using capacity of the outbreak of COVID-19 is hurting
economies, regardless of revenue level. COVID-19 ought to have an effect on the world
economic system in three principal ways: with the aid of immediately affecting production, with
the aid of growing provide chain and market disruption, and through its economic have an
impact on corporations and monetary markets.

COVID-19 ought to have an effect on the international economic system via three channels.

• Direct impact on production- Chinese manufacturing has already been extensively

affected by using the shutdown in Hubei province and different areas. Some other
international locations are additionally starting to experience a direct have an effect on as
their authorities put in region comparable measures
The slowdown in China has outcomes on exporters to China. China’s biggest sources of
imports are Korea, Japan, and different Asian countries, in accordance to the World
 Bank.2 Thus, even barring new outbreaks of the disease, these areas will in all likelihood
journey gradual increase in the first half of 2020.

• Supply chain and market disruption - Many manufacturing companies

remember on imported intermediate inputs from China and different nations affected with
the aid of the disease. Many groups additionally depend on income in China to meet
economic goals. The slowdown in monetary activity—and transportation restrictions—in
affected international locations will in all likelihood have an influence on the
manufacturing and profitability of precise international companies, mainly in
manufacturing and in uncooked substances used in manufacturing. For organizations that
count on intermediate items from affected regions, and that are now not capable to
without difficulty change sourcing, the dimension of the have an impact on can also rely
on how rapidly the outbreak fades. Small and medium-sized companies may also have
higher problem surviving the disruption. Businesses tied to journey and tourism are going
through losses that are probable now not recoverable.

• Financial impact on firms and financial markets-Temporary disruptions of

inputs and/or manufacturing would possibly stress some firms, in particular these with
insufficient liquidity. Traders in monetary markets may additionally or may additionally
no longer efficiently assume or recognize which companies may be vulnerable. The
ensuing upward push in hazard may divulge that one or greater key economic market
gamers have taken funding positions that are unprofitable underneath modern conditions,
in addition weakening have faith in monetary devices and markets. A feasible (likely
low-probability) match would be an extensive economic market disruption as
contributors turn out to be involved about counterparty risk. A fairly greater probable
opportunity is a large decline in fairness markets and company bond markets, with traders
preferring to preserve authorities’ securities (particularly US treasuries) due to the fact of
the uncertainty created via the pandemic.
 Countries that enforce comparable CDC-style pointers in relation to COVID-19 can also
trip much less dislocation, even though there may additionally nevertheless be a financial
impact. School closures and social distancing would possibly minimize the on-hand labor
pressure in a region.

Impact of Covid-19 into RMG sector

Deadly COVID-19 has unfold round the globe, affected a hundred and eighty nations sending
billions of human beings into lockdown as fitness offerings conflict to cope. Bangladesh
additionally did no longer break out from its outbreak. Due to its huge expansion, the country’s
garment area regarded as the backbone of the financial system has been paused.

The financial effects of the COVID-19 pandemic is now being witnessed at all stages and the
irrevocable economic damage, which may additionally be regarded secondary to things of fitness
and safety, in the close to future may additionally show simply as detrimental. The UN estimates
the outbreak of this lethal virus should at least value a trillion greenbacks and may want to
slowdown the world financial system to beneath two per cent this year. Bangladesh will
additionally have to share a good sized section of this loss. As we estimate the proportion of the
international loss that we will have to bear, the authorities must become aware of the specific
sectors that will be affected the most. When we discuss about Bangladesh's association in the
world of international business, the first element that comes to our minds is our ready-made
clothes (RMG) industry, which is with the aid of a ways the largest export-earning quarter -
contributing over eighty four per cent to the country's annual export. Ready-made clothes
comprised eighty four percentages of Bangladesh’s whole exports, well worth $34 billion, in its
2019 fiscal year. These people are enhancing the country’s economy. More than two million
Bangladeshi RMG employees will be affected if trend manufacturers do no longer help
immediately.

The RMG enterprise in Bangladesh is dealing with a serious disaster due to the fact of COVID-
19, with digital freeze on new commercial enterprise and mass cancelation of present orders,
main to a wave of job losses and unrest amongst workers, who are worrying the closure of
factories and price of due wages. Trade unions have been vocal about workers’ rights to wages
and job protection amidst the crisis. The first monetary stimulus package deal introduced through
the Government on March twenty fifth 2020 to cowl workers’ wages, was once aimed at the
RMG export sector. The readymade garments (RMG) quarter is the greatest remote places
foreign exchange producing organization in Bangladesh, on the other hand this quarter is
confronted with the undertaking of mass cancellations of orders from buyers in the face of the
COVID-19 pandemic, with greater than one million garments sector human beings already being
dismissed. In this examine about BIGD will come to be conscious of the function of alternate
unions in negotiating the rights of RMG personnel as the quarter is experiencing the worldwide
catastrophe created by way of skill of COVID-19. Bangladesh Garment Manufacturers and
Exporters Association (BGMEA) has been pleasing to the customers to proceed ordering.
BGMEA has shaped challenge forces to reveal the situation, to gather facts on order cancellation,
and to work with the Government to supply aid so that the enterprise can manage to pay for to
pay the workers. Some of the change unions have requested for a shutdown of the factories, most
of the others are working with authorities our bodies and BGMEA to make certain that the
factories continue to be open and humans have jobs and salaries. In the face of the worries raised
by means of the change unions and the RMG employers, on March twenty fifth 2020 the
Government introduced a BDT five hundred million stimulus package, of which the majority is
allotted for workers’ wages and benefits. There is an opportunity that the smaller factories and
subcontracting factories will shut down and people will be let go, with or except the warranty of
getting jobs back. It is now not clear whether or not they will be paid their due in both cases.

Millions of RMG employees are going to be affected economically via the COVID-19 crisis.
Majority of these people are female, coming from negative socioeconomic backgrounds, and in
most cases working at a low wage in clothes factories predominantly producing low-price
garments. Historically, the clothes people have been regularly denied their rightful benefits.
RMG is the most vital enterprise for Bangladesh; as a result, the enterprise leaders can negotiate
for guide with the authorities in disaster conditions like this. There is a danger to the existence of
small and medium-sized businesses in this enterprise all through this situation. As shoppers are
already cancelling orders amounting to hundreds of thousands of dollars, this dire country has
the possible to persist for a huge size of time; specialists have advised the financial aftermath of
this virus outbreak ought to at least final a year. As a result, with inadequate volumes of orders,
it is surprisingly in all likelihood that small and medium-sized corporations will be compelled to
shut down due to the failure of improving the fees of business.
It is excessive time the authorities stepped in earlier than the state of affairs worsens further.
Policymakers ought to sit down with industry stakeholders and gadget insurance policies that
may want to efficaciously guard the RMG sector. Governments round the world are proposing
trillion-dollar stimulus purposes for their economies to help fighting the pandemic coronavirus.
Certainly, the RMG industry, which is the country's predominant incomes sector, is certified to
get a region in the government's pinnacle precedence listing at this time of outstanding peril.

Impact of Covid 19 of Pacific Jeans Pvt Ltd

• Before Covid-19, Pacific Jeans Pvt Ltd, produced 1200000 pieces of woven shirts per
month. They had revenue of approximately 5 core per month on average.

Revenue Production Employee

5 – 3 crore per month 1200000 pcs of woven 1100 employees

shirts

• Due to covid-19, there has been a huge loss on the RMG industry. S Six Fashions Pvt
Ltd, has a loss of their entire revenue during April and May due to lockdown. The
workers were paid 100% salary from the retained earnings of the company. However,
there has been a full production from May to July as the lockdown was taken off. There
has been pending orders as well. September/ October have been a little dull due as there
was less order due to the poor economic condition worldwide.

Month Production Profit/ Loss

April 0 Complete loss

May – July 100000 approx. Breakeven

Sept- Oct Less compared to 1 core loss

previous month
 • There hasn’t been any wage decrease till now, however if this continues, the company
might have to take measures to minimize their cost. There hasn’t been any retrenchment
as well, however 35% employees have left on their own. There has been production loss
from Sept- Oct whereas this is the busiest time during the year.

Revenue Wage Production Employee

1-2 core No Deduction 90000-100000 715-730

Impact of government stimulates package on employment

opportunity
The Covid-19 pandemic has forced the economic activities of the world to come at a halt. To
save the world from a devastating recession, different countries are announcing stimulus
packages for various sectors. As of April 15th, the Government of Bangladesh has introduced
stimulus packages of a total of BDT 1,000 billion which is 3.3% of the total GDP.

Package Amount Beneficiary Fund Cost of Fund

Number (In Sourcing
BDT
crores)

1. 30,000 Industries As loans 4.5% by the beneficiary and 4.5% by the

and Service- from government as subsidy
sectors as commercial
working banks
capital loans
2. 20,000 Cottage, As loans 4% by the beneficiary and 5% by the
micro, small from government as subsidy.
and medium commercial
enterprises banks
(CMSMEs)
as working
capital loans

3. 12,750 To facilitate Bangladesh 2%

raw material Bank Export
imports Development
under back- Fund
to-back LCs

4. 5,000 Pre- Bangladesh 7%

shipment Bank
Credit
Refinance
Scheme for
local
products
alongside
the export
sector
Conclusion
The crisis has pushed the Bangladesh Garment Manufacturers and Exporters Association into a
difficult position, not knowing whether or not to close factories. On one hand, there has been
pressure from suppliers to keep the factories open, and on the other hand, trade unions and
activists from around the world are worried for the lives of the garment workers. Workers too
face a dilemma: whether they are safer in a factory at risk from COVID-19, or in the street at risk
of starving and at risk from COVID-19.

The exchanges in the RMG sector in Bangladesh have always been characterized by a culture of
finger-pointing between different stakeholders, where everyone highlights the responsibility of
the other. Currently, this behavior is continuing. What is still missing is a real discussion on what
makes the sector more sustainable in a new post-pandemic world of shopping and producing
textiles. If we do not live up to searching for and contributing to this new RMG future, the lives
and livelihood of workers are at high risk to be overlooked again and again. This is a wake-up
call for the industry; we have to use it to shape a better future for work in the RMG sector.