Covid-19 Series

Impact of Coronavirus on
Livelihoods of RMG Workers
in Urban Dhaka
Background

Bangladesh had witnessed its first official soon. Bangladesh Garments Manufacturers workers to their families in rural Bangladesh.
case of Covid-19 casualty on March 8, 2020. and Exporters’ Association (BGMEA) and
Similar to other global counterparts, Bangladesh Knitwear Manufacturers and The advent of coronavirus puts more and
Bangladesh opted for official lockdown from Exporters Association (BKMEA) have each more of the workers powering the RMG
26th March 2020 as a measure to contain reported losing more than US$ 3 billion in sector at risk of losing their livelihoods.
the spread and restrict communal orders by the end of March 2020. A report by There have been multiple developments on
transmission. Penn State University’s Center for Global this front since the completion of the
Workers’ Rights found 58% of Bangladeshi primary data collection for this study,
Due to large scale closure of stores owing to clothing suppliers said they had to stop most including layoff of thousands of workers in
the lock-down enforced by different or all of their operations because of order Dhaka, Ashulia, Savar, Gazipur, Narayanganj
governments, global demand for apparel has cancellations or lack of payment, which does and Chattogram, as reported by several
plummeted. Top exporting countries like not bode well for the sector. rights groups. The vast majority of these
Bangladesh have started feeling the heat workers belong to low-income communities
due to raw material sourcing challenges and If the Covid-19 lockdowns and deflated high and their household income roughly equates
cancelled orders. Global brands have either street demand persist, the situation can be to the monthly expenses associated with
postponed or cancelled orders, with many expected to exacerbate. The performance of maintaining the living costs at urban
global high street brands refusing to the Readymade Garments (RMG) sector peripheries. Any potential job losses can be
compensate contractors for orders placed touches almost all aspects of the difficult to reverse for a sector that is inching
and partially completed before the effects of Bangladeshi economy, since the apparel towards automation, and any large-scale
Covid-19 became apparent in the West. The sector contributes 84% of the country’s unemployment can unleash social and
ensuing media fallout has led to some of the export and employs over 3.5 million economic unrest in Bangladesh. The
larger fashion brands to reverse their workers. The sector has also played a government, too, has realized the dire need
position and take delivery of previously fundamental role in women’s economic of the RMG sector and introduced Tk 5,000
placed orders. emancipation with more than 60% of crore stimulus package in the form of soft
employed workers being women. loans for export-oriented industries - which
However, almost all recent orders have been Furthermore, the RMG sector impacts the are primarily composed of the RMG factories
suspended and new import orders from rural economy as there is significant - and aimed at helping companies to clear
Bangladesh do not look to resume anytime outward remittance from urban RMG outstanding payments of workers.
About the Study
Scope Kishoreganj
In order to understand the impact of
Covid-19 on the livelihoods of RMG workers
in Urban Dhaka and their families,
LightCastle Partners had conducted rapid Gazipur
response surveys across major Low-Income
Communities (LIC) in the greater Dhaka
region.

A total of 34 RMG workers were reached out

via phone call questionnaires and the Dhaka
responses were recorded in order to Narayanganj
evaluate the impact on livelihood and
formulate recommendations to elevate the
most vulnerable group from this economic
calamity.
Munshiganj

This rapid response survey of RMG workers

formed a subset of a larger study on the
effect of Covid-19 on livelihoods of Low- and
Lower Middle-Income Population of Urban
Dhaka. The data collection was conducted
between the 5th and 7th of April, 2020 via
phone calls.

34 RMG Worker Residing in Urban Surveyed via Quantitative Random

Respondents Dhaka Phone Call Survey Sampling

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Survey Demographics

Male Female Household Income Brackets

7,501 - 10,000 5.88%

10,001 - 15,000 38.24%
15,001 - 20,000 32.35%
55% 45% 20,001 - 30,000 20.59%
Above 30,000 2.94%
Age Group of Respondents
Source: LightCastle Partners primary data (N=34)

51 - 60 2.94%
Number of Income Earners in Household
41 - 50 11.76%
1 50.00%
31 - 40 29.41%
2 41.18%
21 - 30 52.94% 3 5.88%
10 - 20 2.94% 4 2.94%

Source: LightCastle Partners primary data (N=34)

Source: LightCastle Partners primary data (N=34)

Mean Age of Size of BDT

Respondents Household 12,863

32 years ~4 members Average monthly income per earner

One income earner was found

BDT
to support the living expenses of
18,735 ~2 other dependents.

Average monthly income per household

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Income has declined for a vast majority of RMG worker households

Overall

Average Income of Households 56%

of RMG workers had lost at least one-third
BDT BDT of their income due to Covid-19

18,735 12,986
Before Covid-19 After Covid-19 88%
of households are currently
residing in Dhaka
Change in income after Covid-19 -31%
Only 9%
of respondents had received
external of support

Covid-19 has had an overwhelmingly negative Retreating to their home districts, which is usually At the time of study, external aid and support were
impact on RMG workers and their households the solution when the going gets tough, is no longer not effectively reaching these workers and their
with approximately 60% of workers reporting a an option for most as a combination of the families, as only 3 respondents (9%) had reported
reduction in income when the study was transport lockdown, uncertainty over factories receiving any form of aid and the majority of these
conducted in early April. Due to factory shutdown, opening and being called back to work anytime and were in-kind contributions by their RMG employers.
many workers were left to wonder if they would better hopes of receiving aid in Dhaka keeps almost
be able to receive wages for the coming months. 4 90% of workers and their families in Dhaka. Among
workers (12%) had reported losing all their those staying back in Dhaka, all but 2 workers (i.e.
household income after the Covid-19 lockdown, 93% of respondents) indicated that they either had
and more than 50% reported losing at least no plans to return to their home districts, or did not
one-third of their incomes. know when they would be able to do so.

Note: The survey was conducted between the 5th and 7th of April, 2020. 3
Household Spending Trends Before Covid-19

9% 44% 12%
Households saved on a regular basis Respondents send remittance Respondents have loan
back home repayment obligations

Average Monthly Spending per Household

559 15,110

441
1,500

1,647

506
378
5,971
1,780

4,109

176
Overall
Saving Rent Food Healthcare Transport Education Remittance Loan Miscellaneous Total
repayment

Source: LightCastle Partners primary data (N=34)

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Transport and education spending categories see biggest declines post-Covid

79% of overall households had reported a

reduction in transport costs, which is to be
Spending Percentage of households expected given the ban on public transport that
Categories adjusting their post-Covid spending accompanied the lockdown. Education costs, too,
12% had seen a large reduction due to closures of
35% schools and other education institutions
21% Increase No Change Decrease
(including coaching centres). Due to Covid-19’s
Rent 3% 97% 0% impact on income, remittances for 26% of
households had to be sacrificed. Large
Food 29% 41% 29% fluctuations were seen in trends on food
32% spending, where 29% of households had reported

Healthcare an increase in food spending, attributed to higher

12% 82% 6%
food prices and 29% other households who had
reported lower expenditure of food as a
Transport 3% 18% 79%
consequence of reduced income. Healthcare
Cannot continue anymore spending, at the time of survey, had not varied
Education 0% 59% 41%
2-3 weeks significantly due to effects from Covid-19. Rent

A month was the most stable spending head, with 98%

Remittance 0% 74% 26% reporting that their rents had stayed static since
Few months
the Covid-19 lockdown.
Loan installment 5% 94% 6%
More than one in every three respondents had
Savings 0% 94% 6% reported having no financial means to help
sustain their expenses in the short-term. 32% of
Miscellaneous 3% 79% 18% respondents reported having enough savings to
help them survive the next few weeks and only
Source: LightCastle Partners primary data (N=34) 33% respondents reported that they may survive
for a month or more considering the current
financial conditions.

Note: The survey was conducted between the 5th and 7th of April, 2020. 5
Recommendations

Expand alternate G2P channels, via DFS, to workforce reduction is an inevitable option for and bring the vulnerable workforce under the
factories, the odds of inexperienced workers being insurance umbrella in order to cushion such
ensure direct support to beneficiaries
laid off is much higher than the experienced economic shocks.
Government should augment G2P workers. Hence, GoB needs to bring these
(Government-to-Persons) channels to ensure direct vulnerable workforces under the economic safety Collaborate with BGMEA and BKMEA to
payment of salaries to workers of impacted sectors net through proper measures. create databases of vulnerable groups and
like RMG and other export driven sectors. Such a
mobilize support funds
model has already been initiated by a2i and the use Ensure positive behavioral change among The government should collaborate with BGMEA
of Digital Financial Services (DFS) to facilitate this
workforce once operations resume and BKMEA in order to create databases through
process would ensure effectiveness and reduce
which vulnerable worker groups, can be identified
system loss. Government should also facilitate LIC Safety measure guidelines should be provided to
and reached.
members to open and maintain their respective the private factories by the respective health
digital accounts. Private sector should also be departments and be exhaustively enforced by DIFE
(Department of Inspection for Factories and
Join forces with development agencies
encouraged to continue the payroll of its blue-collar
workforce through digital channels. Establishments). The factories must work on positive based on specialization and work closely to
behavioral change of workers regarding hygiene, reach the last mile beneficiaries and
Enact policies to protect RMG workers by awareness and repercussions of Covid-19. Such a ultra-poor population
change can be brought through audio visuals,
encouraging companies to retain their
extensive training, support of supervisors and line Government should work closely with development
employees, in lieu of receiving benefits from agencies/NGOs and collaborate based on
managers. Collaboration with development agencies
the stimulus package to create the awareness materials could be a specialization to cater to immediate needs of the

feasible way of tackling this challenge. vulnerable population. Many national level NGOs
GoB must tie in the stimulus packages to companies
have in-depth experience of supporting ulta-poor
with conditions for retaining jobs. Any company
Introduce micro-insurance schemes to population during natural calamities, which can be
breaching the condition must immediately be
leveraged for designing effective level livelihood
removed from any stimulus packages. Workers with protect workers subject to lay off
interventions in the RMG sector.
less than one year of work experience face the
Currently insurance companies like Pragati
highest risk of lay off as companies are not entitled
Insurance and development agencies like SNV have
to provide compensation for employees employed
already introduced micro health and life insurance
for less than one calendar year as per Section 16 of
for LIC workers. The government, in collaboration
Bangladesh Labor Law 2006. Furthermore, if
with these players need to scale up the coverage

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Maintain diplomatic ties with foreign buyers
to maintain payment schedule and direct
CSR funds towards livelihood assistance of
the workforce
Government needs to ensure that the foreign
buyers pay off the due bills and not cancel the
placed orders in order to avoid further economic
calamity. Diplomatic ties should also be maintained
in an attempt to direct the CSR funds of major brand
towards supporting the livelihood of the vulnerable
LIC workforce.

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The Team

Zahedul Amin
zahedul.amin@lightcastlebd.com
Director, Finance, Strategy and Consulting Services
Entrepreneur, market analyst and sustainable business consultant, with almost a decade of experience in banking, non-profit, entrepreneurship, market
research and market development consulting. Areas of expertise include inclusive business, market analysis, financial modeling, agro and power. Leading
team for delivering data driven solution for clients in private, development and public sectors. Prior to founding LightCastle, he worked as an Assistant
Vice President in HSBC for 4 years.

Saif Nazrul
saif.nazrul@lightcastlebd.com
Senior Business Consultant

Management consultant with 4 years of experience, having worked across a number of development sectors including ICT4D, public financial
management, health & nutrition, agriculture and livestock, education, economic empowerment and WASH. He is currently engaged in projects related to
market research, strategy consulting, and MSME and startup development.

Sanjir Ali
sanjir.ali@lightcastlebd.com
Senior Business Consultant
Business consultant bringing 4 years of project management experience, having managed multidisciplinary projects across Bangladesh, Vietnam,
Cambodia and Uzbekistan, with a portfolio total of approx. $6 million. Currently working in projects on nutrition, WaSH and investment climate.
Completed BBA from Institute of Business Administration, University of Dhaka.

Khandaker Muhtasim Rafi

khandaker.muhtasim@lightcastlebd.com
Business Analyst
Has a keen interest in helping businesses with data-driven solutions. Has an interest in finding innovative solutions to real-world business cases. He is
passionate about developing his skills in diversified areas. Rafi has completed his Bachelor's in Business Administration (BBA) with dual major in Marketing
and Finance from North South University (NSU).

Md. Tanjim Morshed

tanjim.morshed@lightcastlebd.com
Creative Design Associate
Specialized in visualization, UI/UX design, content generation and A/V for branding with an experience of 2 years encompassing a portfolio consisting of
both local & multinational clients. Completed Bachelor's in Computer Science from American International University-Bangladesh (AIUB).

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Disclaimer:
All information contained herein is obtained by LightCastle from sources believed by it to be accurate and reliable. Because of the possibility of human or
mechanical error as well as other factors, however, all information contained herein “As IS” without warranty of any kind.

LightCastle adopts all necessary measures so that the information it uses is of sufficient quality and from sources LightCastle considers to be reliable including,
when appropriate, independent third-party sources. However, LightCastle is not an auditor and cannot in every instance independently verify or validate
information received in preparing publications.

LightCastle Partners
Level 5, House 10/12, Road 1, Block B, Niketan
Gulshan 1, Dhaka 1212, Bangladesh.

Email: info@lightcastlebd.com
Mobile: +88 01711 385988, +88 01747 353438
Web: www.lightcastlebd.com
Data on Demand Platform: databd.co