Bhattacharya, Debapriya; Rahman, Mustafizur

Working Paper
Female employment under export-propelled
industrialization: Prospects for internalizing global
opportunities in Bangladesh's apparel sector

UNRISD Occasional Paper, No. 10

Provided in Cooperation with:

United Nations Research Institute for Social Development (UNRISD), Geneva

Suggested Citation: Bhattacharya, Debapriya; Rahman, Mustafizur (1999) : Female employment

under export-propelled industrialization: Prospects for internalizing global opportunities in
Bangladesh's apparel sector, UNRISD Occasional Paper, No. 10, United Nations Research Institute
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 Female Employment Under
Export-Propelled Industrialization:
Prospects for Internalizing Global Opportunities
in the Apparel Sector in Bangladesh
Debapriya Bhattacharya and Mustafizur Rahman

Occasional Paper 10, July 1999

ii
 Contents
List of Tables v
List of Annex Tables v
Acknowledgements vi
Summary vii
Abbreviations and Acronyms vi

1. Introduction 1
1.1 Issues of Concern 1
1.2 The Nature of the Study 2
Objective and scope 2
Data and methodology 3
Structure 3

2. Female Participation in Industrial Employment in

Bangladesh 4
2.1 Participation Rate 4
2.2 Manufacturing Employment 5
Sectoral distribution 6
2.3 Wage Differentials 7
2.4 Growth Pattern 9

3. Bangladesh’s Apparel Sector: Growth Correlates 10

3.1 Genesis 10
3.2 Employment Growth 11
3.3 Wages 13

4. The Performance of Bangladesh’s Apparel Sector and

Female Employment: Dynamic Aspects 15
4.1 Strategic Choices 15
4.2 Production Costs 16
4.3 Factor Productivities and Factor Intensities 18
4.4 Wages 18
4.5 The Gender Implications of Technological Improvements 20

iii
5. The Implications of Globalization for Female
Employment in Bangladesh’s Apparel Sector 21
5.1 The Post-MFA Textile and Apparel Trade 21
5.2 The Future of Apparel in Bangladesh 22
5.3 Employment Opportunities Post-MFA 25

6. Conclusion 29
References 31

iv
 List of Tables
Table 1 Participation indicators of women’s employment (1995-96)
Table 2 Trend in female employment and wage in the manufacturing
sector
Table 3 Share of women in employment and wage bill in the
manufacturing sector
Table 4 Inter-temporal compound growth rates of RMG exports (1987-
97)
Table 5 Growth of employment in the RMG sector
Table 6 Gender composition of employment in the textile sector (1991-
92 and 1994-95)
Table 7 Share of female employment in total employment of the textile
sector (1991-92 and 1994-95)
Table 8 Average hourly wage rates in the RMG sector across countries
Table 9 Gender intensity of participation and wage rates in export-
oriented RMB
Table 10 Cost structure and profit margin of RMG units
Table 11 Trend in factor intensity and factor productivities of RMG
units
Table 12 Average monthly employment cost per person by skill level in
RMG units
Table 13 Trend in nominal and real wage in garments by skill category
Table 14 Expected annual growth rate of world trade in textiles and
clothing (1992-2005)
Table 15 Projection of employment in textile sector under normal and
self-sufficiency conditions (1995-2005)
Table 16 Projection of share of female labour in the textile/apparel
sector (1995-2005)
Table 17 Impact of ATC on employment of women in the textiles sector
(1995-2005)

List of Annex Tables

Annex Table 1 Gender composition of manufacturing sector (1991-92)
Annex Table 2 Level of wages and salaries by sex in manufacturing sector
(1991-92)
Annex Table 3 Growth of RMG exports (1977-1997)
Annex Table 4 Projected female employment in textile and apparel sectors
under normal and self-sufficiency conditions (1995-2005)

v
 Acknowledgements
The authors are grateful to Carol Miller, Shahra Razavi, Swasti Mitter and
David Westendorff for comments on an earlier draft. Editorial comments
provided by Jenifer Freedman are also acknowledged. The usual disclaimer
applies.

vi
 Summary
Women entering the industrial labour force in Bangladesh generally find
themselves in low skill/low wage jobs. In fact, the success of the country’s
flagship export-oriented industry — the ready-made garments sector — is
built on a large supply of cheap and flexible female labour.

Nevertheless, increasing liberalization of the global textiles market creates

new challenges for countries and industries that rely on a low skill/low wage
strategy. They eventually find it difficult to increase productivity, and thus
to retain their place in increasingly competitive markets. A second incentive
for change is provided by the phasing out of the Multi-Fiber Arrangement,
which limited inputs of domestic origin in clothing production. In the
current situation, Bangladesh has a unique opportunity to restructure its
domestic apparel sector, introducing new technologies and fostering
domestic production linkages.

Thus the paper argues for public sector allocations combined with private
sector training of the female labour force, which can stimulate women’s
engagement in the apparel sector, raise their productivity and ultimately
improve their livelihoods.

Debapriya Bhattacharya is a senior research fellow at the Bangladesh

Institute of Development Studies; Mustafizur Rahman is a professor in the
Department of Accounting, University of Dhaka.

The paper is based on research undertaken in Bangladesh as part of the

Technical Co-operation and Women’s Lives project.

vii
 Abbreviations and Acronyms
ATC Agreement on Textiles and Clothing
BBS Bangladesh Bureau of Statistics
BGMEA Bangladesh Garments Manufacturers and Exporters
Association
BIDS Bangladesh Institute of Development Studies
BSIC Bangladesh Standard Industrial Code
CAD computer-aided design
CMI Census of Manufacturing Industries
DTA Domestic Tariff Area
EC European Community
EPB Export Promotion Bureau
EPZ export processing zone
GATT General Agreement on Tariffs and Trade
GOB Government of Bangladesh
GSP General System of Preferences
ILO International Labour Organization
ISS Industrial Surveys and Studies
L/C letter of credit
LDC least developed country
LFPR Labour Force Participation Rate
LFS Labour Force Survey
MFA Multi Fibre Arrangement
NGO non-governmental organization
QR quantitative restriction
RMG readymade garments
ROO Rules of Origin
SAARC South Asian Association of Regional Cooperation
SAPTA South Asian Preferential Trading Arrangement
WTO World Trade Organization

viii
 1. Introduction
1.1 Issues of Concern
Current adjustment policies in Bangladesh, coupled with ongoing industrial
restructuring are expected to create employment opportunities in export-
propelled activities. Data on the short-run impact of recent industrialization
efforts in Bangladesh indicate that women constitute the majority of the
incremental labour absorption in the country’s export-oriented
manufacturing enterprises. Available information also suggests that
conventional measures of gender bias (such as wage gaps, access to
employment and lack of job security) are relatively less conspicuous in this
organized segment of the manufacturing sector (Bhattacharya, 1994). These
trends are present in units located in both export processing zones (EPZs)
and the domestic tariff area (DTA). These are characteristics of the labour
force of foreign-owned units in particular—which tend to have the most
advanced technology and the highest productivity levels in the country
(Bhattacharya, 1998). Notwithstanding such ostensibly positive features of
part of the country’s evolving labour market, concerns have been raised
about the real nature and prospects for sustainability of these trends. It is
widely held that “cheap and readily employable” labour underpins the
competitive advantage of the country’s export sector. To begin to
understand the nature of women’s industrial employment in Bangladesh, the
pull and push factors that have contributed to the feminization of trade-
oriented manufacturing employment must be examined. Concretely, it is
important to analyse whether it is the gender gap in the effective wage
structure that underpins the growth of female labour in export-oriented
industries. In other words, given the low opportunity cost of female labour
in Bangladesh, is female labour attractive because women are paid less than
men for similar jobs—even when productivity differentials are accounted
for? This particular concern is heightened by the fact that entrepreneurs
prefer to employ young, single, literate women in export-oriented units.
Accordingly, non-wage factors (such as social docility and amenability to
repetitive process functions) prompt entrepreneurs to opt for a distinctive set
of female labour. Thus non-wage factors clearly influence employment
patterns as well.

From a neoclassical perspective, one would expect that economic reforms

leading to deregulation and liberalization would cause prices in the various
factor markets in different countries to converge over time. Accordingly,
stimulated by an increasingly competitive labour market, a gender-neutral
equilibrium price of labour would gradually evolve, particularly in the
export-oriented industrial sector, since this sector is relatively more exposed
to the dynamics of factor prices in the global market. However, the pattern
of structural changes in employment in the export sector may inhibit the
gradual evolution of gender-neutral wage levels expected from global
integration. This rigidity may be accentuated by women’s lack of
occupational mobility. For example, the introduction of new technologies
may affect women’s employment through automation, de-skilling of workers
and/or increased skill requirements in key jobs. Admittedly, the effects of
such technological shifts have not been uniform either for women or for
men. But persistent functional gender segregation in export-oriented units
 Female Employment Under Export-Propelled Industrialization

may prevent transformation of the structure of the female labour force,

reinforcing a possible gender-based wage differential.

The sustainability of current trends in female labour absorption in the

organized manufacturing sector is linked to the broader issue of
competitiveness of Bangladesh’s industry. The major source of creation and
protection of industrial competitive advantage in the global economy lies in
the adoption and diffusion of new technologies, which lead to growth in the
productivity of factors of production. It is thus important to endow women
workers with basic education and vocational training (including computer
literacy). Female-oriented investment in human resource development may
therefore be the most dependable deterrent to technological redundancies.
Alternatively, with the changing nature of national competitive advantage, a
mismatch may emerge between the skill and quality endowments of female
labour and the skill and quality endowments demanded. Under these
circumstances, if certain supply-side constraints are not addressed through
public policy interventions (e.g., in the areas of skill development and
healthcare), female employment in the export sector cannot be maintained
and enlarged—in absolute or relative terms.

One also needs to take into account that the level of export-supported female
employment is vulnerable to fluctuating global demand. This may be
reinforced by the “footloose” nature of foreign investment (one of the major
promoters of female employment), which may shift production locations in
search of cost effective sources of labour, usually for their “old”
technologies. While global demand may be an exogenous variable
(predicated largely by the economic activity rate in the developed countries),
the extent to which an exporting country can create a niche for itself
depends on the availability of a quality workforce within a conducive policy
framework.

It is thus important to look beyond the immediate benefits accruing to

women workers in Bangladesh through increased access to wage
employment as a result of trade expansion. A new set of issues with far-
reaching implications for the industrial employment of women in the context
of economic globalization requires attention. While women’s short-term
material interests are served by such employment opportunities, fulfilment
of longer term strategic gender interests may only be evaluated in terms of
continued access to such opportunities in the future, coupled with enhanced
gender equity in the labour market.

1.2 The Nature of the Study

Objective and scope
The primary objective of the present paper is to assess the adjustment
dynamics of the export-oriented manufacturing sector in Bangladesh in view
of the opportunities and constraints created by changes in technology and
the economy. This line of investigation has been pursued in the concrete
context of the apparel industry in Bangladesh, which, with a predominantly
female labour force, has experienced significant growth in the recent past.

2
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

An attempt has been made to identify structural changes in Bangladesh’s

manufacturing sector, and in apparel in particular, and their implications for
the burgeoning female labour force. In this context, the paper examines the
firm-level behaviour of readymade garments and knitwear producers and its
implications for the welfare of women workers. Apart from the domestic
factors underpinning the prospects for female industrial employment
growth, the analysis also considers the impact of global demand for textiles.
Finally, the paper highlights the micro-macro linkages of public policies that
affect the sustainability of female industrial employment in Bangladesh.

Data and methodology

The present study builds on analysis of the available empirical information
as well as new evidence on the readymade garments (RMG) sector in
Bangladesh. In particular, sectoral estimates generated by two independent
research studies have been adapted to trace the inter-temporal changes in
operational behaviour in the RMG sector.1 Projections prepared at the
Ministry of Commerce and the Ministry of Textiles, as well as data
maintained by the Bangladesh Garments Exporters and Manufacturers
Association and Export Promotion Bureau, have been extensively used in
the study. Sources of secondary data also include various publications of the
Bangladesh Bureau of Statistics and the General Agreement on Tariffs and
Trade (GATT).

Primary data on the RMG sector were collected for the present study
through micro-surveys and debriefing of key informants. A survey carried
out in February 1997 elicited information on employment structure and
wage rates for different types of jobs in the country’s RMG industry. To
generate the required data, a checklist was completed by the chief
executives of 10 RMG units of average size (i.e., approximately 400
workers). Information provided by the chief executives was cross-checked
through focus group discussions involving 126 randomly selected workers
(mostly female) in the sample RMG units.

Structure
The paper is divided into six sections. Section II analyses the general
features of female employment in Bangladesh’s manufacturing sector.
Section III takes a closer look at the growth trends in the country’s apparel
industry and their implications for female employment. Section IV considers
adjustment behaviour of the RMG units and its consequences for female
employment. Future prospects for female employment in Bangladesh’s
export-oriented apparel sector are assessed in section V, taking into account
the evolving international trade regime and the projected global demand for
textile products. The concluding section draws out some policy implications.

1
One of the two studies reported the extrapolated results of a stratified sample survey
of 1,220 private manufacturing firms, including 72 RMG units. The survey,
sponsored by USAID, was carried out by the World Bank in 1992-93. For details, see
ISS (1993). The other study, based on a sample survey of 38 RMG units, was
conducted in 1995 by one of the authors. For details, see Bhattacharya (1996a).

3
 Female Employment Under Export-Propelled Industrialization

2. Female Participation in Industrial

Employment in Bangladesh
2.1 Participation Rate
Compared to their male counterparts, women’s participation in the formal
economy has remained low in Bangladesh. This mirrors the general trend
observed in the labour markets of developing countries. According to the
most recent labour force survey (1995-96), women’s share in Bangladesh’s
total labour force (i.e., the economically active population over 15 years of
age) is around 38 per cent, or 19 million (see table 1). The labour force
participation rate (LFPR) of women is lower in the urban areas (26.1 per
cent) than in rural areas (40.6 per cent), where women are extensively
involved in household-based and agricultural activities.

However, women’s LFPR increases, particularly in urban areas, in the 15-19

and 20-24 years age categories: 36.4 per cent compared to the overall urban
average of 26.1 per cent. Information on the female economic activity rate
(EAR) reveals a similar trend: the 20-24 years age group in urban areas
demonstrates the highest female EAR—33.1 per cent—in comparison to the
overall urban average of 30.4 per cent. This implies that the rate of female
labour absorption is perceptibly higher among younger women in urban
areas, where manufacturing units in Bangladesh are concentrated.

Less than a quarter (22.6 per cent) of the total number of employed females
in Bangladesh are engaged in non-agricultural activities. While almost 15
per cent of the total number of employed females belong to the
services/commerce sector, only a little over 7 per cent are involved in
manufacturing activities. According to the 1995-96 Labour Force Survey
(LFS), more than 1.5 million women were engaged in the manufacturing
sector, including both formal and informal activities. The present study is
more concerned with female employment in the organized manufacturing
sector—to which almost all the export-oriented processing units in the
country belong. Before we turn to this subject, it may also be noted from
table 1 that the proportions of women occupying professional-technical and
administrative-managerial positions in Bangladesh are 34.7 per cent and less
than 5 per cent, respectively, of total employment in these categories.

Table 1 provides a static picture of the state of female participation in

Bangladesh’s labour force in 1995-96. Have these indicators registered any
improvement over time? Unfortunately, frequent changes in the definition of
the categories used in the LFS do not readily allow comparisons. In spite of
such discrepancies, however, LFS data do suggest that women’s LFPR in
the national economy in general, and in non-agricultural and manufacturing
activities in particular, has improved in recent years.

4
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Table 1
Participation indicators of women’s employment (1995-96)
(per cent)
Indicators Age group (years)
15+ 15-29 15-19 20-24 25-29
1
Women’s Labour Force Participation Rate 37.77 43.28 37.50 48.39 44.00
Rural 40.63 45.45 37.74 50.98 47.54
Urban 26.09 33.33 36.36 36.36 28.57
2
Women’s Economic Activity Rate 55.65 55.73 47.59 59.14 60.04
Rural 63.60 64.03 54.61 67.27 69.26
Urban 30.44 30.80 28.99 33.14 30.56
Share of female employees in total employment (10+ years) 38.10
Share of female employees in total female labour force 97.73
(i.e., not managerial or administrative)
Women’s share in non-agricultural labour force 23.38
Women in non-agricultural activities: share in total employed female 22.60
Women’s share in total manufacturing labour force 36.59
Female-male gap in manufacturing labour force (female per 100 male) 57.69
Women in manufacturing: share in total employed female 7.04
Women’s share in total employed persons in service sector 20.81
Women in services/commerce: share in total employed female 14.90
Women’s share in total employed persons in agriculture 46.67
Women in agricultural sector: share in total employed female 77.40
Women’s share in total professional-technical personnel 34.72
Women’s share in total administrative-managerial personnel 4.92
Notes: (1) share of women in respective age cohort in total labour force; (2) share of
economically active women in respective age cohort.
Source: BBS, 1996b.

2.2 Manufacturing Employment

According to the Census of Manufacturing Industries (CMI), approximately
200,000 women were employed in the manufacturing sector in Bangladesh
in 1991-92 (the latest reference year for which information on sectoral
aggregates is available from an official source). The CMI essentially covers
formal sector registered enterprises with 10 or more employees. These are
usually located in urban areas. However, in addition to being quite dated, the
census estimate suffers from serious undercoverage. For example, in 1991-
92, the RMG sector alone employed 700,000 female workers (as we will see
later), whereas the comparable CMI (1991-92) figure is 150,000. In the
absence of more reliable aggregate estimates, we may still analyse the CMI
data assuming that it provides a representative set of cross-section
information.

According to the figures presented in table 2, women accounted for 15.3 per
cent of the total number of manufacturing sector employees in Bangladesh
in 1991-92.2 More than 88 per cent of the women engaged in the sector were
regular production workers (“operatives”, in CMI terms) and another 9.6 per

2
According to LFS data, in 1995-96 the share of women in total manufacturing
employment was about 36.6 per cent (see table 1). This high estimate is attributable to
inclusion of women involved in small and cottage level processing activities (e.g.
handloom weaving).

5
 Female Employment Under Export-Propelled Industrialization

cent constituted hired casual workers. Less than 1 per cent of the women
employees were involved in administrative and clerical activities, and about
0.3 per cent belonged to the entrepreneur category.

On average, a manufacturing enterprise in the organized sector in

Bangladesh has seven women employees.3 Female employment is highest in
joint ventures (56 female employees per unit), followed by state-owned
enterprises (more than 12 female employees per unit). The figure for the
exclusively locally owned private sector units is a little above seven.4 The
overwhelming majority (98.7 per cent) of the women employees are located
in private sector enterprises (local and joint ventures taken together).

It may be observed from table 2 that, between 1988-89 and 1991-92,

women’s share in total manufacturing employment increased from 14.1 per
cent to 15.3 per cent, whereas operatives increased from 16.4 per cent to
18.1 per cent. The share of female workers in total manufacturing
employment registered a fall between 1990-91 and 1991-92, but the extent
to which this is a statistical artefact or a reflection of recent reform measures
affecting the manufacturing sector remains to be seen.

Table 2
Trends in female employment and wage in the manufacturing sector
Indicator 1988-89 1989-90 1990-91 1991-92
Women’s share in total 14.1 14.20 15.72 15.30
mfg employment
Women’s share in total 16.41 16.55 17.76 18.06
operatives
Female-male wage ratio 0.40 0.55 0.52 0.52
(all employees)
Female-male wage ratio 0.46 0.51 0.47 0.57
(operatives)
Source: BBS, 1996a.

Sectoral distribution
The sectoral distribution of female manufacturing employment in
Bangladesh remains highly skewed, as shown in table 3 and annex table 1.
The wearing apparel sector, categorized under Bangladesh Standard
Industrial Code (BSIC) 323, alone employs about 85 per cent of the female
industrial employees (which is about 12.9 per cent of total manufacturing
employment). This is followed by textiles manufacturing including cotton,
synthetic and jute textiles (BSIC 321 and 322), which account for about 6
per cent of female industrial employees or approximately 1 per cent of total
manufacturing employment. The third most important provider of female
employment is food processing (BSIC 311 and 312), which account for just
over 3.2 per cent of female industrial employees or 0.5 per cent of all
manufacturing employment. Wood work, cigarette manufacturing and
pharmaceutical industries employ about 1.84 per cent, 1.47 per cent and

3
The average employment size of a manufacturing enterprise in the organized
sector is 50 (1991-92).
4
On average, a state-owned enterprise has a total or 1,335 employees, whereas the
corresponding figures for joint ventures and domestic private units are 290 and 40
respectively.

6
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

0.58 per cent of female industrial employees respectively. Annex table 1

shows that this pattern of sectoral distribution for all types of female
employees also holds true for female production workers.

The current state of industrial statistics, unfortunately, does not allow us to

readily relate the market orientation of the enterprises with the gender
composition of their labour force. Nonetheless, it is quite evident from the
above figures that at least 91 per cent of female manufacturing employment
is concentrated in enterprises that either produce for direct export (e.g.,
garments and jute), or that produce outputs “deemed exports”, because they
constitute export linkage industries.

2.3 Wage Differentials

A little more than 8.5 per cent of the total wage bill in Bangladesh’s
manufacturing sector is attributable to all female employees, while the
corresponding figure for women production workers is about 11 per cent
(see table 3). These shares compare unfavourably with their respective
employment shares (15.3 per cent and 17.8 per cent). The divergence
between shares of female employment and their wage bill is an explicit
indication of the female-male wage differential prevailing in the sector. The
compensation packages for female employees are systematically low across
the sub-sectors. The average female-male wage ratio in Bangladesh’s
manufacturing sector in 1991-92 was 0.52 for all employees and 0.57 for
production workers, suggesting a smaller gender differential in wage
determination among production-related workers. The time series data
presented in table 2 indicate that while the female-male wage ratio for
production workers improved somewhat between the late 1980s and early
1990s, the ratio in effect remained stagnant (or deteriorated) when all
employees are accounted for.

It is also worth noting that female-male wage differentials are much lower in
export-oriented industries. While we return to this issue later, it may be
pointed out, based on data presented in annex table 2, that in the wearing
apparel industry (BSIC 323), female wages as a share of male wages
constitute 70 per cent in the case of all employees and 90 per cent in the
case of production workers—both these proportions are higher than their
respective sectoral averages.

7
 Female Employment Under Export-Propelled Industrialization

Table 3
Share of women in employment and wage bill in the manufacturing sector
Ind Sub-sectors Total Female Total Female Total Share of Total Share of
Code employees as % opera- as % of wage bill female operative female in
(no.) total mfg tives total (000 Tk.) in total wage bill total
employ- employee opera- wage bill (000 Tk.) operative
ment (no.) tives (%) wage bill
(%)
311 Food mfg. 44005 0.30 32609 0.34 774081 0.12 448017 0.16
312 Food mfg. 62099 0.19 42649 0.19 1777793 0.14 1071183 0.10
313 Beverage ind. 1715 0.01 873 0.01 55071 0.00 20026 0.01
314 Cigarettes 32829 0.22 30240 0.26 358954 0.04 296521 0.06
315 Animal feeds 63 0.00 42 0.00 886 0.00 416 0.00
321 Textiles mfg. 563969 0.80 500750 0.90 12634680 0.49 10001408 0.60
322 Textiles mfg. 19203 0.11 16390 0.13 348607 0.04 280379 0.05
323 Wearing apparel 215838 12.9 201074 15.18 2865818 6.78 2428562 9.45
324 Leather & its prod. 10802 0.00 8807 0.00 244659 0.00 156023 0.00
325 Footwear except 5290 0.01 4224 0.01 281313 0.00 157641 0.00
rubber
326 Ginning pressing 3997 0.00 3188 0.00 63968 0.00 38576 0.00
327 Embroidery of 529 0.04 510 0.05 3240 0.01 3156 0.02
textile goods
331 Wood & cork prod. 13252 0.28 11357 0.32 213588 0.10 156371 0.13
332 Furniture mfg. 2304 0.00 1930 0.00 41841 0.00 30897 0.00
341 Paper & its prod. 16743 0.02 11138 0.01 945490 0.26 516360 0.00
342 Printing & 15447 0.01 10646 0.00 442984 0.01 263093 0.00
publishing
351 Drugs & pharma. 18103 0.09 7847 0.09 913031 0.19 316354 0.22
352 Industrial 9766 0.03 5609 0.01 572957 0.16 266581 0.02
chemicals
353 Other chemical 15306 0.03 11794 0.03 688702 0.05 363504 0.04
products
354 Petroleum refining 889 0.00 620 0.00 150157 0.00 98366 0.00
355 Misc. petroleum 204 0.00 113 0.00 5019 0.00 2243 0.00
prod.
356 Rubber prod. 3663 0.00 3057 0.00 69042 0.00 54466 0.00
357 Plastic prod. 3214 0.00 2391 0.00 90918 0.00 59752 0.00
361 Pottery & 3387 0.00 2598 0.01 57128 0.00 36040 0.00
chinaware
362 Glass & its prod. 2051 0.02 1746 0.02 72664 0.01 43214 0.01
369 Non-metallic 20567 0.03 18054 0.02 260746 0.02 153156 0.01
mineral prod.
371 Iron & steel basic 14795 0.00 10689 0.00 590386 0.00 392604 0.00
indus.
372 Non-ferrous metal 459 0.00 324 0.00 15772 0.00 10410 0.00
ind.
381 Structural metal 13155 0.01 10949 0.01 219282 0.00 161279 0.00
prod.
382 Fabricated metal 6155 0.00 5342 0.00 121005 0.00 89123 0.00
prod.
383 Non-electrical 6594 0.01 4366 0.00 241794 0.01 128283 0.00
machinery
384 Electrical 13021 0.03 9733 0.03 359781 0.04 214736 0.04
machinery
385 Transport 12588 0.00 9530 0.00 434463 0.01 248502 0.00
equipment
386 Scientific precision 172 0.00 130 0.00 3328 0.00 2481 0.00
etc.
387 Photographic 117 0.00 91 0.00 1764 0.00 1204 0.00
optical goods
389 Mfg of sports 198 0.00 170 0.00 3920 0.00 3238 0.00
goods
391 Decorative 135 0.00 120 0.00 1279 0.00 1088 0.00
handicrafts
393 Other mfg. 3312 0.09 2870 0.11 41913 0.03 32234 0.04
industries
394 Other mfg. 286 0.00 220 0.00 4139 0.00 2806 0.00
industries
Total 1156222 15.30 984790 17.76 25972163 8.52 18550293 10.96
Source: BBS, 1996a.

8
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

2.4 Growth Pattern

Prospects for growth in women’s industrial employment are clearly
conditioned by the pattern of manufacturing growth in Bangladesh. Bakht’s
1993 study of the performance of the country’s manufacturing sector in the
1980s found that the top 10 sub-sectors in terms of growth in value-added
were the following (in descending order of their trend rate of growth):
readymade garments, silk and synthetic textiles, dyeing and bleaching
textiles, compressed liquefied gas, soft drinks, fertilizer, hand and edge
tools, china and ceramic wares, fish and seafood, and tanning and finishing.
In the best-performing sub-sector (RMG) women constituted 70 per cent of
all employees. In other sub-sectors female employment was negligible, with
the exceptions of fish and seafood (10.4 per cent), silk and synthetic textiles
(4.4 per cent), fertilizer (2.1 per cent) and china and ceramic wares (1.5 per
cent). The top three in terms of female employment are export-oriented
industries, while the other two have recently been demonstrating their export
potential.

A more recent investigation (Bhattacharya, 1996a) found that two sub-

sectors with significant weight in the manufacturing structure demonstrated
robust growth in output between 1988/89 and 1995/96: RMG and
pharmaceuticals. In pharmaceuticals (BSIC 351), 5.7 per cent of all
employees and 12.5 per cent of production workers are women.

In sum, the economic activity rate of women in general, and the share of
women in manufacturing employment in particular, are quite low in
Bangladesh. However, there is evidence that both these indicators are
experiencing an up-turn, particularly in the urban areas, and among
relatively young women. The sectoral distribution of female manufacturing
employment remains highly concentrated in RMG, although virtually all
sub-sectors demonstrating growth in recent years are important from the
point of view of the female-intensity of their labour force. There are
substantial female-male wage differentials in the country’s manufacturing
sector, but these gaps are lower in the export-oriented industries. Wage
differentials are also lower among production workers, and there are
indications that the situation is improving. It is possible that such apparently
positive trends in industrial employment of women in Bangladesh are a
result of the increasing integration of the national economy into the global
trade circuit. This, in turn, has been propped up by the deregulation and
liberalization measures that characterize current macroeconomic policies.
The mechanisms that have led to such positive outcomes must be identified
rather than assumed.

9
 Female Employment Under Export-Propelled Industrialization

3. Bangladesh’s Apparel Sector:

Growth Correlates
3.1 Genesis
Female workers in Bangladesh were traditionally linked to global markets
through export of tea and raw jute.5 It is only with the emergence of the
RMG sector in the late 1980s as Bangladesh’s leading export industry that
the country’s female labour force was integrated into international markets
in a more direct and intense way. The transition from traditional to non-
traditional export-oriented activities is of considerable significance, because
it brings out some critical dimensions of the evolving pattern of female
employment in Bangladesh. First, export-oriented RMG, a manufacturing
activity, differs from the previous agro-based exports. Second, RMG units
are concentrated mostly in urban areas, whereas earlier female-intensive
processing activities were located in rural areas. Third, the rapid growth of
the apparel sector and its increasing share in the export basket testifies to the
importance and potential of female employment in exports, as well as
industrialization, in Bangladesh. These three distinguishing features, inter
alia, have important implications from a gender perspective, particularly in
terms of employment opportunities, skill development and wage level.

Bangladesh’s RMG industry has come a long way since 1977 when Reaz
Garments made its first shipment of products to France. The Desh-Daewoo
collaboration in 1978 catapulted Bangladesh’s unknown RMG industry onto
a trajectory of fast growth. Several factors contributed to this remarkable
success. In 1980, the Bangladesh Bank (the central bank of the country)
granted back-to-back letters of credit (L/C)6 and bonded warehouse
facilities7 to RMG producers/exporters, decreasing their working capital
requirements and allowing duty-free access to inputs for the sector. Quotas
imposed on some neighbouring countries compelled intermediate buyers to
shift sourcing of RMG products to countries like Bangladesh where
prevailing low wages ensured competitive prices. Moreover, in the US and
Canadian markets quotas imposed on imports of apparel meant guaranteed
access for developing countries like Bangladesh, while in the countries of
the European Union preferential treatment under various schemes, such as
the General System of Preferences (GSP), provided crucial price support
and, consequently, a competitive edge for RMG exports from Bangladesh.

5
Women constitute almost 90 per cent of all workers in the tea plucking stage, while
the percentage of women in processing and blending varies between 10-25 per cent.
Women also account for a significant share (46.7 per cent) of the agricultural labour
force.
6
Under the “back-to-back” letters of credit extended by commercial banks, the
exporters of RMG are able to import inputs (i.e., fabrics and accessories) against the
export orders placed in their favour by the RMG importers. Given this provision,
Bangladeshi exporters do not need to invest their own resources to finance working
capital.
7
Under the bonded warehouse facilities, the imported inputs can be cleared through
the customs against export orders without paying any import duty. This ensures that
the export-oriented RMG units can access imported inputs at zero-tariff.

10
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

According to a recent study (Bhattacharya, 1996b), knit and woven RMG

accounted for 7 per cent of units, 11 per cent of fixed assets, 21 per cent of
annual investment, 30 per cent of the employment and wage bill, and 23.5
per cent of gross value added and returns on capital attributable to the
private manufacturing sector in Bangladesh in 1992. More than 95 per cent
of the output of the RMG units and about 90 per cent of that of the knitwear
units catered to foreign markets.

Table 4
Inter-temporal compound growth rates of RMG exports (1987-1997)
Exports Last 10 years In the 1990s Last 5 years
(FY 1987-FY 1997) (FY 1990-FY 1997) (FY 1992-FY 1997)
Woven RMG 21.6% 19.5% 14.7%
Knit RMG - 75.5% 45.0%
Total RMG 25.4% 24.4% 19.4%
Source : Computed from Export Promotion Bureau (EPB) Data Base.

Annex table 3 shows that, in just over 15 years, the share of RMG in total
exports increased from less than 2 per cent to about 66 per cent. Table 4
provides information on export growth rates registered by Bangladesh’s
RMG sector. Between 1987 and 1997, the compound growth rate of RMG
exports was more than 25 per cent. The annual compound growth rate of
exports between 1992 and 1997 was a robust 19.4 per cent, four times
higher than the GDP growth rates registered in the country over the same
period.

3.2 Employment Growth

The rapid growth of Bangladesh’s RMG exports also meant a very high rate
of employment expansion. In 1995-96, about 1.3 million workers were
employed in approximately 2,350 RMG factories in the country. Table 5
presents information about the growth of employment in the RMG sector
between 1981/82 and 1995/96. In 1991-92 (the most recent year for which
activity-specific data are available), about 92.4 per cent of all employees in
the RMG sector were production workers. It is of critical significance that
women constitute the majority of this workforce. According to the
Bangladesh Garments Manufacturers and Exporters Association (BGMEA),
in 1996 almost 1.2 million female workers (i.e., 90 per cent of total
employment in the industry) were employed in the export-oriented RMG
units.

As can be seen from table 6, in 1994-95 about 46.7 per cent of the total
workers employed in the textile sector of Bangladesh were women. It is
interesting to note here that in almost all countries, irrespective of the level
of economic development, women on average constitute almost three
fourths of the total labour force in the textile sector. In contrast, in
Bangladesh it is only in the export-oriented RMG industry and the silk sub-
sector that women constitute the majority of the workforce: 9 out of 10 in
the export-oriented RMG sector and almost 1 in 2 in the silk industry. The
other notable female-intensive sub-sector is the handloom sector, where
women constitute a little less than half of the workforce. In the spinning and
knitting sub-sectors, the female participation rates are not significant.

11
 Female Employment Under Export-Propelled Industrialization

A substantial discrepancy in the female participation ratio is discernible

between local and export-oriented RMG (see tables 6 and 7). This is
explained by the fact that, in Bangladesh the RMG units catering to the local
markets are mainly small tailoring outfits with a majority of male workers,
while the export-oriented RMG units are relatively large units with a
predominance of female labour.

Table 7 also shows that between 1991-92 and 1994-95, the share of women
in total employment has registered an increase from 5 per cent to 10 per cent
in spinning and from 4 per cent to 14 per cent in knitting. Ministry of
Commerce projections (presented in section 5) envisage a substantial
increase in the share of women in the workforce of these sub-sectors in the
near future. But given the relatively low share of female workers in the non-
export-oriented sub-sectors in Bangladesh’s textile industry, these must be
viewed with some scepticism.

Table 5
Growth of employment in the RMG sector
Year Workers Supervisors Managers Total
1981-82 4200 315 28 4543
1982-83 6400 480 44 6924
1983-84 24000 1800 172 25972
1984-85 99350 7451 720 107521
1985-86 323200 24240 2348 349788
1986-87 346850 26014 2520 375384
1987-88 362250 27169 2632 392051
1988-89 391950 29396 2848 424194
1989-90 405700 30428 2948 439076
1990-91 514050 38554 3736 556340
1991-92 729100 54683 5300 789083
1992-93 - - 804000
1993-94 - - 827000
1994-95 - - 1200000
1995-96 - - 1294000
Source: BGMEA.

Table 6
Gender composition of employment in the textile sector
(1991-92 and 1994-95)
(million person-years)
Sub-sectors 1991-92 1994-95
Male Female Total Male Female Total
RMG
Local 0.720 0.080 0.800 0.752 0.084 0.836
Export-oriented 0.080 0.720 0.800 0.120 1.080 1.200
Dyeing/finishing 0.200 0.004 0.204 0.212 0.005 0.217
Weaving 0.191 0.006 0.197 0.100 0.003 0.103
(powerloom)
Handloom 0.572 0.455 1.027 0.409 0.324 0.733
Silk 0.100 0.100 0.200 0.110 0.120 0.230
Knitting/hosiery 0.043 0.002 0.045 0.044 0.007 0.051
Spinning 0.115 0.006 0.121 0.120 0.013 0.133
Total 2.021 1.373 3.394 1.867 1.636 3.503
Source: Ministry of Commerce, Government of Bangladesh (1996).

12
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Table 7
Share of female employment in total employment of the textile sector
(1991-92 and 1994-95)
Sub-sectors 1991-92 1994-95
RMG
Local market-oriented 1/10 1/10
Export-oriented 9/10 9/10
Dyeing & finishing 1/50 1/50
Weaving (powerloom) 3/100 3/100
Handloom 11/25 11/25
Silk 1/2 13/25
Knitting & hosiery 1/25 7/50
Spinning 1/20 1/10
Source: Ministry of Commerce, Government of Bangladesh, 1996.

3.3 Wages
Female participation in the RMG sector in Bangladesh is confined mainly to
the low-paid segments of the production process. In general, the level of
wages in the RMG sector is low, for both males and females. The daily
wage rate of RMG workers compares unfavourably with that of similar
categories of workers in both the public and private sectors.8 Low wages go
a long way in explaining the attractiveness of Bangladesh-made garments to
foreign buyers.9 Table 8 gives an indication of comparative wage levels in
the RMG sector in some of the major textile producing countries. As can be
seen from the table, Bangladesh’s wage level is relatively low, even by
South Asian standards. For instance, the average hourly wage in the RMG
industry in Bangladesh is 50 per cent, 42 per cent and 33 per cent of those of
Nepal, India and Sri Lanka respectively.

Table 8
Average hourly wage rates in the RMG sector across countries
Country Wage/hour (US$)
Germany 25.00
USA 16.00
South Korea 5.00
Mexico 2.40
Poland 1.40
Sri Lanka 0.45
China 0.35
India 0.35
Nepal 0.30
Bangladesh 0.15
Source : The Financial Express, Dhaka, 15 June 1995.

8
For example, according to the wage data provided by the BBS (1995) we find that the
average monthly wages of skilled factory workers in textile and other sectors is 1.4 to
2.0 times that of similar workers in the RMG factories.
9
However, it is to be noted here that there is a limit to the extent to which low wages
can be translated into low unit costs of production. Since the productivity of labour is
also relatively low in Bangladesh, the cost of production per unit of output tends to
be on the high side despite low wages. Bangladesh’s apparel sector enjoys
comparative advantage mainly because the sector is labour intensive and low
productivity is somewhat offset by low wages.

13
 Female Employment Under Export-Propelled Industrialization

Abundant, readily available labour and its low opportunity cost lead to low
wage levels, providing a comparative advantage to female labour in
particular operations in the RMG production cycle. At the same time, inter-
industry wage differentials indicate a depressed wage situation in the export-
oriented RMG sector. This needs to be interpreted in the light of structural
rigidities (e.g., enforcement of national minimum wages) that characterize
the wage determination process in other formal manufacturing units,
particularly in the public sector. In other words, wage rates in the RMG
sector can be interpreted as market clearing wages established in a more or
less flexible labour market.

Substantial differences in wage levels between male and female workers for
comparable jobs are not discernible in the RMG sector. However, there is a
caveat to this observation. In RMG production, female workers are
predominantly concentrated in “low-skill/low-wage” operations and, thus,
are low paid. As shown in table 9, most women are either production
workers or “helpers” (female workers constitute 40-60 per cent of the total
workforce in the latter category).10 Women employed as production
managers, supervisors, finishing and machine operators, and “in-charges”
(drawing salaries varying from 2-10 times that of the average operator,
depending on the type of operations) are extremely rare.

Export-oriented RMG entrepreneurs in Bangladesh argue that low wages in

the RMG sector reflect the low productivity of workers in the sector.11 Yet it
is noteworthy that the overwhelming majority of the workforce in the RMG
sector are non-unionized women, which has also enabled entrepreneurs to
keep the wage levels depressed. Moreover, workers in RMG factories in the
export processing zones (EPZs) are barred by law from organizing trade
unions of their own. Workers often try to complement their low wages by
working overtime, which, in effect, is a mandatory practice in Bangladesh’s
RMG factories. As labour standards and labour rights are gaining
prominence on the WTO’s agenda (in addition to that of the ILO, which has
long treated such issues), the working environment in Bangladesh’s RMG
sector is likely to undergo substantial changes. Furthermore, complaints by
some US NGOs and the Harkin Bill (which calls for sanctions on imports to
the United States from countries using child labour) forced Bangladesh to
take urgent measures to enforce a Memorandum of Understanding on the
phase-out of child labour in the RMG industry.12 The threat of similar
sanctions and measures underscores the need to implement policies to
improve the working environment for all RMG employees in Bangladesh.

10
According to the tripartite agreement signed in January 1994 (Statutory Regulatory
Order No. 14 - Minimum Wages Ordinance) workers in the RMG sector are
categorized into seven grades. Most of the female workers are concentrated in Grades 5
and 6 (junior sewing and knitting machine operators, and general sewing and knitting
operators). Minimum wages fixed for these two types of operators are Tk. 1,000 and
Tk. 900, respectively.
11
A technical evaluation of a joint ILO/UNDP project (BGD/85/153) computed that
person-minutes required per basic product in Bangladesh’s RMG sector is 25.0, while it
is 14.0 in the United States, 19.7 in Hong Kong, 20.7 in the Republic of Korea and
24.0 in Sri Lanka.
12
For details, see Bhattacharya (1996b).

14
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Table 9
Gender intensity of participation and wage rates in export-oriented
RMG
Wage/pay per month Average female
participation rate
Taka
Production workers
Plain and overlock 1200-1600 80-95%
Flat lock 1500-1800 40-60%
Helper 500-700 40-60%
Supervisors 2000-3500 10-20%
Finishing in charge 4000-5000 0-5%
Production manager 12000-25000 Extremely rare
Source: Based on (i) debriefing of chief executives of 10 RMG units and (ii) focus
group discussions involving 126 RMG workers (mostly female). The Survey was
carried out for the present study.

The global textile and apparel markets are becoming fiercely competitive. In
the coming years Bangladesh’s reliance on low paid labour-based, low
productivity-induced, low value-added intensive exports, such as RMG, will
be severely tested. With countries such as China, India and Viet Nam with
higher productivity, albeit with somewhat higher wage rates, expected to
offer stiff competition in the quota-free post-Multi Fibre Arrangement
(MFA) phase, Bangladesh must ensure the competitiveness of its RMG
exports through critical policy interventions and firm-level adjustments.

4. The Performance of Bangladesh’s

Apparel Sector and Female
Employment: Dynamic Aspects
Growth of the apparel sector in Bangladesh has been supported by a
regulated international trade regime and a proactive domestic policy
framework. But there is growing concern that in a more liberal trading
environment, as envisaged by the post-Uruguay Round provisions,
Bangladesh’s RMG sector may not be able to sustain and enhance its export
capacity. The other concern for the sector relates to the fact that the
potential for Bangladesh to assert its cheap labour-based competitive
advantage is circumscribed by the modest share of labour in the cost
structure of RMG products and the marginal presence of backward linkages
in processing activities. The present section identifies changes in the RMG
sector in the face of competitive pressure; the implications for the sector of
further globalization will be discussed in the subsequent section.

4.1 Strategic Choices

Bangladesh’s RMG sector is encountering growing competition on a number
of fronts: the threat of new entrants, the bargaining power of suppliers and
buyers, and rivalry among existing competitors. If the country is to retain its
competitive advantage (and, by implication, female industrial employment is
to grow) Bangladesh will need to restructure its RMG sector at an
accelerated pace. This would entail developing appropriate backward and
forward linkages; substantially improving its capital, labour and managerial
efficiency; and formulating and implementing product and market
diversification strategies. In truth, prospects for expanding female

15
 Female Employment Under Export-Propelled Industrialization

employment in the RMG sector lay in implementing any or all of the

following corporate approaches:

· a marketing approach (i.e., more international subcontracting and

transition to direct sales abroad);
· a product approach (i.e., more production for the profitable high-value
international apparel market and diversification into leather- and silk-
based garments);
· a production approach (i.e., increasing value added by decreasing
dependence on imported raw materials, particularly fabrics).

It has been argued elsewhere (Bhattacharya, 1996b) that current structural

changes in the RMG sector encompass elements of all three approaches.
Analysis has revealed that the competitiveness of RMG firms in Bangladesh
is being shaped more than ever before by their ability to exploit modern
technologies. In other words, the ability of Bangladesh’s RMG sector to
improve its global market share will largely depend on the technological
capability of firms to build the human skills required to set up and operate
industries efficiently over time. Clearly, generating such technological
capability implies endowing female workers, who constitute the
overwhelming majority of the workforce, with the necessary capacity.

4.2 Production Costs

Sample surveys show that RMG units in Bangladesh have experienced
robust growth during the 1990s in terms of number of employees and wage
bill, stock and flow of capital, and output. It is also documented that growth
in the cost of employment exceeded the rate of employment expansion,
indicating an increase in the wage level. The high levels of investment and
export growth suggest substantial capacity expansion and some
technological upgrade (Bhattacharya, 1996b).

Such positive trends in employment, output and gross capital formation are
usually underwritten by changes in the structure of production costs, such as
economies of scale and increased technological endowment per unit of
labour. Consistent time series data tracing the evolution of firms are lacking,
but the two sector studies referred to earlier can be used to trace adjustments
in the RMG sector in Bangladesh.13 Table 10 presents the shares of different
items in the gross value of output as revealed by the two surveys.

13
See ISS (1993) and Bhattacharya (1996a).

16
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Table 10
Cost structure and profit margin of RMG units
Indicators ISS study BIDS study
(1992) (1995)
Value of output 100.00 100.00
Costs: 87.00 76.00
1
A. Industrial costs (excluding wage) 73.00 64.00
2
B. Non-industrial costs 03.00 05.00
C. Employment cost (wage bill) 11.00 07.00
Gross value added 23.00 31.00
Profit margin 13.00 24.00
Notes: (1)Industrial Costs include expenditures on raw materials, packaging
materials, fuel and electricity, spares and sub-contracting. (2) Non-industrial costs
include expenditures on overheads, i.e. costs other than direct material and labour
expenditures. These costs include advertisement and facilitation expenses, selling
and distribution costs, interest payments and taxes.
Source: Adapted from the survey results of 72 RMG units in 1992 (ISS, 1993) and 38
RMG units in 1995 (Bhattacharya, 1996b).

Table 10 indicates that between 1992 and 1994, the proportion of costs in
the gross value of output has decreased from 87 per cent to 76 per cent,
leading to an increase in the profit margin from 13 per cent to 24 per cent.
Concurrently, the share of industrial cost (excluding salaries and wages) has
fallen from 73 per cent to 64 per cent, resulting in a growth of the share of
gross value added from 23 per cent to 31 per cent. During the corresponding
period, within the gross value of output, the share of non-industrial cost has
gone up from 3 per cent to 5 per cent.

The shift towards a higher share of non-industrial costs is characteristic of

products of high market value, which is corroborated by the increase in the
share of value added. The fall in the share of employment costs does not
signify a decrease in the wage rate in real terms, but it does point to an intra-
firm redistribution of income from workers to owners. Since owners tend to
be males and workers mostly females, there would also appear to be an
inter-gender redistribution of income in the RMG sector, away from
females. The cost structure comparison reveals the price-restraining
measures deployed by firms and a concomitant increase in both capital and
labour productivities, though they remain low in comparison to regional and
global standards. Once again, this price restraint appears to have been
largely realized by denying the teenage female labour force wage gains
commensurate with productivity growth.

Table 11
Trend in factor intensity and factor productivities of RMG units
1
Indicator ISS study (1991-92) BIDS study (1994-95)
2
Capital-labour ratio
(‘000’ Taka/worker) 31 29
Gross value added capital
ratio (dimensionless) 1.34 3.5
Gross value added labour
ratio (‘000’ Taka/worker) 40 79
Notes: (1) In 1991-92 Constant Price. (2) Capital cost excludes value of land and
building.
Source: ISS (1993) and Bhattacharya (1996b).

17
 Female Employment Under Export-Propelled Industrialization

4.3 Factor Productivities and Factor Intensities

Comparison of the two surveys reveals that the factor intensity, or capital-
labour ratio, may have gone down marginally in the RMG units in the early
1990s, whereas capital and labour productivities have registered a
significant increase although they remain low in comparison to regional and
global standards. Once again, this price restraint appears to have been
largely realized by denying the teenage female labour force wage gains
commensurate with productivity growth (see table 11). It is worth noting
that the samples drawn for the 1992 survey were biased toward larger firms
(in terms of employment), which explains why upward movement of the
output-labour ratio was not associated with a similar change in the capital
labour ratio. But a higher rate of capacity utilization may also explain the
situation. Higher factor productivities of the units sampled for the 1995
survey may also reflect performance behaviour by size class following a
path shaped like an inverted U. In other words, productivity registers growth
as the scale of production increases and then falls for enterprises beyond a
certain size.

Analysis of the time-series data on investment, employment and output

generated by the two surveys reveals that the firms producing RMGs for
export have replenished and expanded their capital stock, leading to higher
partial factor productivities.14 However, in regard to changes in the two
measures of partial factor productivity, the gains accruing to capital were
notably higher than those accruing to labour. From a gender perspective, the
relative growth in the capital- and labour-output ratios suggests that the
redistribution of incremental income did not favour women workers.

4.4 Wages
Evidence of increasing wage rates in various skill categories is shown in
table 12. During the period 1991/92-1994/95, the average monthly
employment cost in a RMG unit increased from Tk. 1,608 to Tk. 1,717 (in
constant terms)—implying a real increase in unit employment cost of about
6.8 per cent. In fact, wages across various categories of employees have
increased by the same extent (just over 6.7 per cent). This suggests that,
while benefits to female labour may not have been proportional to growth in
the RMG sector, the modest rise in real wages may have marginally
mitigated the situation. But it is not possible to infer from the data whether
these increases have been eroded by the longer working hours demanded of
these workers. Nonetheless, with the large reserve of unskilled labour in
Bangladesh, real income growth is certainly a “pull” factor, influencing
female employment expansion in the RMG sector.

Statistical evidence thus points to some positive processes at work in

Bangladesh’s RMG sector, although reality is a bit more complex. For
example, favourable changes in wage rates have been accompanied by

14
For example, according to ISS (1993), the sample RMG enterprises invested toward
gross capital formation an amount equivalent to 19.13 per cent of annual output. More
than 70 per cent of this amount was attributable to investment in machinery and
equipment.

18
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

restructuring of employment composition in terms of skill categories of the

workers.

Table 12
Average monthly employment cost per person by skill level in RMG units
Taka per month
Category ISS study BIDS study Growth rate
1
(1991-92) (1994-95) (%)
Professional 5643 6025 6.74
Skilled worker 1781 1901 6.74
Semi-skilled worker 1377 1470 6.75
Unskilled worker 923 985 6.71
Clerical staff 2665 2846 6.79
Support staff 1932 2063 6.78
Workers outside factory 772 - -
Labour-all types 1608 1717 6.78
Note: (1) In 1991-92 constant price.
Source: ISS (1993) and Bhattacharya (1996b).

In their bid to retain markets in the face of competitive pressures, RMG

entrepreneurs in Bangladesh have made both price and non-price
adjustments to their products. Because exogenous factors (e.g., the state of
infrastructure) influence non-price adjustment behaviour (e.g., timely
shipment of goods), entrepreneurs seem to have opted for a more active
price adjustment strategy. The latter has entailed production of the existing
range of outputs at lower cost, as well as product diversification in favour of
high-value products. Both strategies precipitated an apparently contradictory
situation in the RMG units. On the one hand, labour costs were kept down
by hiring more unskilled workers and, on the other, demand for skilled
workers increased due to the introduction of high-value products in the
output range. Since the supply of unskilled labour is more elastic than that
of skilled workers, the latter group benefited more, at least in terms of wages
and possibly also in terms of employment, from the restructuring process
(see table 13). Because female employment in the RMG sector is
concentrated in low-skill jobs, the bulk of female workers could not benefit
from restructuring at the firm level.

Table 13
Trend in nominal and real wage in garments by skill category
Taka per month
Worker 1980 1985 1988 1990 1993 1997 (%) change
category (1980-1997)
Trainee/helper
- Nominal 130 300 400 500 500 500 -
- Real 195 300 267 337 296 242 24.10
Semi-skilled
- Nominal 300 500 600 800 1000 1000 -
- Real 423 500 420 540 591 484 14.42
Skilled
- Nominal 500 800 1000 1500 1800 2200 -
- Real 760 800 762 1012 1064 1065 40.13
Note: Figures indicate the highest wage offered to different category of workers, and
real wage rates are in 1984-1985 constant price.
Source: Based on memory recall of 17 chief executives and senior executives of 10
RMG units. The interviews were carried out in 1997 for the present study.

19
 Female Employment Under Export-Propelled Industrialization

4.5 The Gender Implications of Technological

Improvements
Recent changes in the composition of outputs in the country’s RMG sector
have led to a diffusion of technological innovations. These innovations, such
as computer-aided design (CAD) systems for grading patterns and marking,
have been concentrated in the pre-assembly (pre-sewing) phase of garments
manufacture, where female employment is marginal. As a result, if gender
segregation in the manufacturing process cannot be dismantled, women
workers will simply be bypassed by the introduction of these new
technologies. The key to breaking down this gendered division of labour lies
in enhancing the skills of the female workers in the RMG sector, particularly
through:

· increased formal schooling (to improve language and mathematical

skills);
· enhanced availability of RMG-oriented training facilities at an affordable
price (such as a market-responsive, publicly funded training programme);
and
· greater possibilities for on-the-job training (geared to facilitate upward
occupational mobility).

Thus, developing the capacity of female workers will allow them to take
advantage of the opportunities offered by the introduction of new
technologies in garments manufacturing. For example, the computer-
controlled automated cutting systems replacing manual cutting techniques
are more gender friendly but require special training. Such techniques
diminish the need for physical strength and, thus, will not drive away female
workers from this segment of the garments processing chain. Similar
examples may be cited for the post-sewing phase.

In other words, enhanced educational qualification coupled with targeted

skill development of the female workers in the RMG enterprises constitutes
the real basis for sustained access to more remunerative jobs. Incidentally,
success in the unfolding global economic scenario will increasingly require
firms to foster such skills; those failing to do so will have to accept an
erosion in their market share and depressed rates of return. The inability of
entrepreneurs (and the government) to elaborate forward-looking (positive)
restructuring strategies based on enhancing the skills of female labour will
lead to redundancy for their workers.

Thus the response to this fast-evolving situation in the RMG sector must
come from both government and entrepreneurs. It is imperative that the
government increase gender equity-sensitive allocations, particularly social
sector expenditure targeted toward female education and skill development.
The picture emerging in countries where industrial restructuring has taken
place without attention to gender concerns is a swing back from female
intensity in manufacturing, where women have been effectively replaced by
male workers (Joekes, 1995; Pearson, 1998). Entrepreneurs, on the other
hand, will have to appreciate that they tend to lose out in the long run by not
investing in the capability development of women workers. However,
entrepreneurs can argue for a cost sharing arrangement with the government

20
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

in order to underwrite the risks of seeing trained female workers desert to

their competitors.

5. The Implications of Globalization for Female

Employment in Bangladesh’s Apparel Sector
As indicated above, the phenomenal growth of the export-oriented RMG
sector has led to a high degree of feminization of formal manufacturing
employment in Bangladesh. The sector retained its growth momentum in the
face of stiff competitive pressure and, in fact, has been able to offer
increased wage rates to its workforce over time. However, the female
workers remain trapped in the low-skill/low-wage segment of processing
activities in RMG factories. Whether current RMG growth rates will be
sustainable in the future, whether women will be able to continue to access
employment opportunities stimulated through such growth, and whether
there will be transfer of technology and increase in productivity to the extent
that will lead to wage increases in real terms are important issues of concern
for Bangladesh’s RMG sector. Some of them are taken up in this section.

5.1 The Post-MFA Textile and Apparel Trade

The dynamics of global trade in textiles and apparel has important
ramifications and implications for Bangladesh’s export-oriented RMG
sector. World trade in textiles and apparel developed since 1974 under the
restraining rules of the MFA. The nine developed-country signatories to this
agreement were Austria, Canada, the European Community (EC), Finland,
Norway, Sweden, Switzerland and the United States. During negotiations of
the GATT Uruguay Round, it was decided to integrate the MFA into the
GATT (WTO) over a transitional period of 10 years (in four phases)
beginning on 1 January 1995. According to the Agreement on Textiles and
Clothing (ATC) of the Uruguay Round, the MFA phase-out schedule is as
follows:

1. at the beginning of the first phase on 1 January 1995, each country would
integrate products from the specific list in the Agreement accounting for
not less than 16 per cent of its total volume of imports in 1990;
2. at the beginning of the second phase on 1 January 1998, products
accounting for not less than 17 per cent of the 1990 import volume would
be integrated;
3. in the third phase starting on 1 January 2002, products accounting for not
less than 18 per cent of the 1990 import volume would be integrated; and
4. the remaining 49 per cent of the volume of 1990 imports would be
integrated at the end of the transition period on 1 January 2005.

Following full integration, trade in these products will be governed by the

general rules of the WTO. In each of the four phases, products for
integration are chosen from the following categories: tops and yarns, fabrics,
made-up textile products and clothing. Importing countries determine the
schedule of integration.

21
 Female Employment Under Export-Propelled Industrialization

During the transition period, quotas are increased for items remaining
outside the integration process according to the following schedule:

1. from 1 January 1995, the annual growth rates applicable to these quotas
would be increased by 16 per cent;
2. from 1 January 1998, the annual growth rates applicable to these quotas
would be increased by 25 per cent; and
3. from 1 January 2002, the annual growth rates applicable to these quotas
would be increased by 27 per cent.

In 1994, the GATT Secretariat projected phenomenal growth in world trade

in textiles and apparel once the restraining rein of the MFA was phased out.
Annual growth rates from 1.2 per cent to 4.3 per cent for textiles, and 4.1
per cent to 8.6 per cent for apparel are projected through 2005. As table 14
shows, global trade in textiles and apparel combined is expected to increase
from approximately US$ 199.5 billion in 1992 (base year) to between US$
289.2 and 469.9 billion by 2005. The table also indicates that the global
trade in apparel is expected to rise from around US$ 105.6 billion (in 1992)
to between US$ 178.9 and 307.9 billion by 2005, and that of textiles from
US$ 93.9 billion to between US$ 110.3 and 162.0 billion over the same
period.

Table 14
Expected annual growth rate of world trade in textiles and clothing
(1992-2005)
Projections 1992 2005 Growth rate Annual growth rate
(billion $) (billion $) (percentage during 1992-2005
change) (%)
Version 1
Textiles 93.9 110.3 17.5 1.2
Clothing 105.6 178.9 69.4 4.1
Total 199.5 289.2 45.0 2.9
Version 2
Textiles 93.9 111.4 18.6 1.3
Clothing 105.6 197.6 87.1 4.9
Total 199.5 309.0 54.9 3.4
Version 3
Textiles 93.9 162.0 72.5 4.3
Clothing 105.6 307.9 191.6 8.6
Total 199.5 469.9 135.5 6.8
Source: GATT (1994).

5.2 The Future of Apparel in Bangladesh

Will Bangladesh be able to share in the gains from the expansion of the
global apparel market? This will depend, in part, on the extent to which
MFA phase-out affects the performance of the country’s textiles and apparel
sectors. At present, a quota is imposed on Bangladesh’s apparel exports in
only two of the nine countries signatories to the MFA: the United States and
Canada. Market access is restrained on 31 categories of RMG exports in the
US market and nine categories in the Canadian market. These two markets
currently account for about 60 per cent of total RMG exports from
Bangladesh. Quota utilization in these countries has been around 85 per cent
and 65 per cent respectively, indicating that the quotas did not have a
restrictive impact on Bangladesh’s RMG exports (World Bank, 1993). As a

22
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

matter of fact, the quotas have played an important role in providing

Bangladesh with a guaranteed market in these two countries.

With the phasing out of the MFA and the elimination of quotas on these
major categories of exports, some of the traditional RMG exporters, such as
Bangladesh, are expected to face serious competition from a number of
newcomers, which, under the MFA, faced restricted entry in the US and
Canadian markets (Blackhurst et al., 1995). Bangladesh’s RMG firms
currently import a large proportion of their raw materials (grey fabrics) from
countries such as India, China and Thailand under back-to-back L/Cs. In a
quota-free environment, however, these countries may increase exports of
finished apparel to North American markets. Whether Bangladesh’s RMG
sector will be able to withstand the challenge from these countries in the
post-MFA period is thus an issue of critical significance for the future of the
industry. The key issue here will be the competitive strength of
Bangladesh’s textiles sector in general, and its RMG sector in particular.

If we juxtapose the phase-out programme on the structure of apparel exports

from Bangladesh, we find that most items of export interest are to be
integrated into the WTO in the last year of the phase-out (2004). Bangladesh
thus has about five years to prepare for the post-MFA trade regime.

Other market access problems may also threaten the future performance of
Bangladesh’s RMG sector. For example, Bangladesh’s exports enjoy
preferential access in many European markets under the EC’s Generalized
System of Preference (GSP) schemes. These provide Bangladesh access to
the EC market at zero tariffs. It is notable that, although substantial across-
the-board reductions in tariff rates were negotiated in the Uruguay Round,
reductions on textiles and apparel were relatively shallow. For example,
tariff rates on imports of textiles and apparel by EC countries have remained
relatively high, at about 12.5 per cent. Preferential treatment under the GSP
allows EC importers to claim a duty rebate equivalent to 12.5 per cent of
import value on imports of garments from Bangladesh. In recent years this
preferential treatment has contributed to robust growth of Bangladesh’s
apparel sector through substantial market expansion in the EC market. The
EC accounts for about 35 per cent of Bangladesh’s global exports of
apparel.

However, problems of market access recently faced by Bangladesh indicate

that such facilities cannot be expected on a guaranteed basis. For example,
access to the EC’s GSP scheme is subject to compliance with “rules of
origin” (ROO) requirements. Under these requirements, a two-stage
transformation is required for woven RMG and, for knit RMG, a three-stage
transformation (cotton to yarn, yarn to fabric, fabric to RMG) is required.
Since Bangladesh’s indigenous capacity in spinning is negligible (about 5
per cent of total requirement), it is not possible to comply with the three-
stage criterion. At present, most of the yarn used by the knit RMG factories
of Bangladesh is imported (mainly from India). Although the EC ignored
this non-compliance until recently, it has had to revise its position under
pressure from Bangladesh’s competitors. In October 1997, the government
of Bangladesh reached agreement with the EC under which Bangladeshi
entrepreneurs would refund the duties (amounting to about US$ 60 million)

23
 Female Employment Under Export-Propelled Industrialization

previously waived by the EC. Although the EC has agreed to a flexible

approach to this issue,15 the incident reveals the types of problems countries
like Bangladesh may encounter in the global market—despite trends toward
liberalization in the post-MFA phase.16

There is every indication that Bangladesh’s apparel sector currently stands

at an important crossroads. As we have seen, the wages of RMG workers in
Bangladesh are the lowest in South Asia. But because backward linkages in
the RMG sector are few, the local value addition has so far been very
small—only 25-30 per cent of gross exports. Bangladesh can produce
locally only 4 per cent of the 2.2 billion square metres of fabric required by
its RMG factories. With quotas phasing out, and preferential treatment for
exports coming under threat, continued vibrant growth of Bangladesh’s
apparel exports hinges on the creation of backward linkage in the textile
sector. It has been estimated by the Ministry of Textiles (1993) that the
country needs to set up, by the year 2000, 146 yarn units to meet 40 per cent
of related demand, 109 fabrics units to meet 100 per cent of domestic
demand and 199 dyeing/finishing units to fully absorb locally made fabrics.
This would require an investment of more than US$ 4 billion.

Relevant in this context are the composite textile mills that have recently
been commissioned by the private sector in Bangladesh. A number of
export-oriented textile mills are also being set up. Import data supply
evidence of this trend: in 1995-96, Tk. 5,579 million worth of L/Cs were
opened for textile machinery; the corresponding figure for 1996-97 was Tk.
5,776 million. Between 1994-95 and 1996-97, Tk. 12,061 million-worth of
(both woven and knit) textile-related machinery was imported by the private
sector (CPD, 1998). This is an indication that the private sector is indeed
responding to opportunities for enhancing backward linkages in the textile
sector in Bangladesh. Furthermore, negotiations under the aegis of SAPTA
(the South Asian Preferential Trading Arrangements) also envisage duty-
free access of Bangladeshi products (including textiles) to the SAARC
countries, which may be expected to expand markets within the region.

The Ministry of Textiles projects that, if sufficient investment is made in the

spinning and weaving sub-sectors, Bangladesh can build a competitive
export-oriented RMG sector with strong backward linkages to the textiles
sector. Bangladesh will thus need to pursue a pro-active industrial policy if
such investments are to be realized by 2005. If Bangladesh is indeed able to
make such investments, opportunities for absorption of additional female
workers in the textiles and apparel sector can be expected to improve. In the
absence of a pro-active policy favouring establishment of backward linkage
industries, however, Bangladesh may be marginalized in the global apparel
trade, leading to an erosion of the country’s current share in the global
market. And because female employment has failed to expand in other
sectors, collapse of the RMG exports would have a disastrous impact on
female employment in Bangladesh.

15
The EC agreed to a two-stage conversion (the so-called derogation). However, the
derogation will be time-bound. Moreover, there is a possibility that a quota will be
imposed on exports exceeding a certain amount. For details, see Rahman (1997).
16
For example, under the current rules of SAPTA, a 40 per cent local value addition is
required to benefit from a preferential import tariff.

24
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

5.3 Employment Opportunities Post-MFA

From the above discussion, it is clear that withdrawal of the quota system,
erosion of GSP margins, and increasing competition from both “old”
(previously restrained by MFA) and “new” (such as China, Viet Nam,
Cambodia) competitors are three major factors with serious implications for
Bangladesh’s apparel sector in the foreseeable future. Capacity to translate
the static comparative advantage of cheap labour into dynamic competitive
advantage is severely constrained by the textile and apparel sector’s narrow
production base with low technological capacity.

However, there is also a brighter side to the story. Projections confirm that
adequate investments in backward linkages in the textile sector have the
potential to enhance Bangladesh’s apparel exports significantly. Bangladesh
can remain competitive in the global market, and potentially increase its
share in the global textile and apparel trade, provided appropriate policy
initiatives are undertaken.

In the above context and with competition likely to increase once the textiles
sector is fully integrated under the WTO, enhancing the competitive strength
of Bangladesh’s apparel sector is critically important. When local value
addition is low, the scope for reducing the cost of the final product by using
cheap labour is limited—since the inputs that constitute the major part of the
cost are sourced at global price. On the other hand, when backward linkages
are established (in spinning and weaving) and inputs are produced at lower
prices domestically, the relatively low wage level of a country can play a
more important role in enhancing competitiveness of the final product in the
global market. However, this approach also requires taking adequate steps to
raise the level of productivity in upstream activities.

The Ministry of Commerce (1996) recently carried out a study on prospects

for the country’s textile sector in the post-MFA period. The study made
projections from two perspectives. In the “normal scenario”, production in
the sub-sectors of dyeing-finishing, weaving, handloom, silk, knit-hosiery
and spinning is expected to grow at 5 per cent per year during 1995-2005,
while consumption/use of fabrics in the export-oriented RMG industry is
assumed to increase at the rate of 10 per cent per year during 1995-2000 and
5 per cent per year during 2000-2005. Under the “self-sufficiency scenario”,
40 per cent of the domestic and export-oriented requirement of yarn will be
locally produced by 2000; by 2005, the level of local sourcing will reach
100 per cent.

Estimates made by the Ministry of Commerce also show that employment in

the textile and apparel sectors may rise from 3.5 to 6.2 million under the
“normal” scenario, and to 9.7 million under the “self-sufficiency” scenario
(see table 15). A large part of this increase is expected to be constituted by
women (see annex table 4).

25
 Female Employment Under Export-Propelled Industrialization

Table 15
Projection of employment in textile sector under “normal” and
“self-sufficiency” conditions (1995-2005)
(million person years)
Sub-sectors 1995 2000 2005
(Base
year)
Normal Self- Normal Self-
sufficiency sufficiency
Conditions Conditions Conditions Conditions
RMG
Local 0.836 1.071 1.071 1.366 1.366
Export-oriented 1.200 1.935 1.935 2.469 2.469
Dyeing-finishing 0.217 0.279 0.634 0.356 1.282
Weaving 0.103 0.129 0.425 0.165 0.991
(powerloom)
Handloom 0.733 0.938 0.938 1.197 1.197
Silk 0.230 0.296 0.296 0.375 0.375
Knitting and 0.051 0.065 0.065 0.083 0.083
hosiery
Spinning 0.133 0.170 0.622 0.217 1.985
Total 3.503 4.883 5.986 6.228 9.748
Source: Ministry of Commerce, 1996.

According to projections, the share of female employment (90 per cent) in

the export-oriented RMG sector will be protected, and the proportion of
female workers would register some increase in the non-export-oriented
RMG sub-sectors (see table 16). As mentioned earlier, the proportion of
women in the total workforce of the textile sector is very low in Bangladesh,
even when compared to other developing countries. As most of the
incremental labour force is expected to be employed in the upstream textile-
related activities (part of which caters to local demand), women will not be
able to fully exploit the potential employment opportunities if present
patterns of female employment in the textile sector persist. By 2005, the
share of female employment is projected to rise from 10 to only 20 per cent
in non-export-oriented RMG, while in the dyeing/finishing sub-sectors the
share is expected to rise from 2 to 10 per cent, in the knitting/hosiery sub-
sectors from 4 to 30 per cent, and in the spinning sub-sector from 5 to 20 per
cent. However, Ministry of Commerce projections do not say whether
specific policies will be required to provide employment, or whether low
relative wages are expected automatically to ensure enhanced female
employment.

26
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Table 16
Projection of share of female labour in the textile/apparel sector (1995-2005)
(in percentages)
Sub-sectors 1995 (Actual) 2000 (Projected) 2005 (Projected)
RMG
Local 10.0 15.0 20.0
Export-oriented 90.0 90.0 90.0
Dyeing and finishing 2.0 5.0 10.0
Weaving (powerloom) 3.0 80.0 15.0
Handloom 44.0 47.0 50.0
Silk 52.0 55.0 60.0
Knitting and hosiery 14.0 20.0 30.0
Spinning 10.0 15.0 20.0
Source: Ministry of Commerce, 1996.

Ministry of Commerce projections also foresee female employment rising

from 1.6 million (in 1995 base year) to between 3.4 million (under normal
conditions) and 4.0 million (under self-sufficiency conditions) (see table
16). However, for such projections to materialize, substantial resources will
have to be directed toward the textiles sector through both public and private
investment, and foreign direct investment. Moreover, the protection of
quantitative restrictions (QRs) on imports and high levels of tariffs may also
need to be continued until 2005. Projections show that if QRs on imports of
textile products are withdrawn (as stipulated in the ATC), then about
180,000 women workers will be retrenched immediately. Table 17 suggests
that if the protection enjoyed by the textile sector is withdrawn, employment
creation for women will be 250,000 less in 2000 and 360,000 less in 2005
compared to the projected figures of female employment in the textiles
sector under normal conditions.

Table 17
Impact of ATC on employment of women in the textiles sector (1995-2005)
(million person-years)
Sub-sectors 1995 2000 Normal conditions 2005 Normal conditions
(Base
year)
With ATC Without With ATC Without
ATC ATC
RMG
Local 0.084 0.161 0.161 0.273 0.273
Export-oriented 1.080 1.742 1.742 2.222 2.222
Dyeing and finishing 0.005 0.007 0.014 0.018 0.036
Weaving 0.003 0.005 0.010 0.013 0.025
(powerloom)
Handloom 0.324 0.221 0.441 0.300 0.599
Silk 0.120 0.147 0.163 0.203 0.225
Knitting and hosiery 0.007 0.007 0.013 0.013 0.025
Spinning 0.013 0.026 0.026 0.043 0.043

Total 1.636 2.316 2.570 3.085 3.448

Source : Ministry of Textiles, 1996.

Bangladesh’s policy makers are thus faced with a dilemma. If the

phenomenal growth of the RMG sector is to be sustained, and if the scope
for women’s employment in the manufacturing sector is to be enhanced,
resources must be found and committed to the development of the textile
sector. The textile sector must also be given some protection in the interim

27
 Female Employment Under Export-Propelled Industrialization

period. As a least developed country (LDC), Bangladesh is granted some

leeway as regards protectionist policies which are WTO-legal; however,
such protection may become untenable in the medium and long term.

The projected investments also imply substantial transfers of technology

into the country’s textile-related sectors. Tomorrow’s competitive factories
in Bangladesh will require more skilled and semi-skilled workers, with
higher literacy rates and the capacity to carry out mechanical operations and
quality control in the production process (CPD, 1998). If conscious policy
interventions and training programmes are not undertaken by the
government to educate and train women, they cannot be expected to fully
exploit the opportunities which will open up in the backward linkage
industries. Women workers are currently concentrated in the low skill-
intensive operations, and the projected industrial restructuring will demand
an important shift from this structure of employment.

Even if tomorrow’s competitive factories do become more skill-intensive,

there is no guarantee that women will be trained and hired for these more
demanding jobs. In developing countries such as Bangladesh, gender norms
and biases regiment the definitions of skilled and unskilled labourers, the
value given to work experience, the delegation of workers for on-the-job
training, etc. In such a context, there is genuine apprehension that women
may be marginalized as technologies transform factories and working
methods. Bangladesh will thus need to combine structural, institutional and
human resource development strategies to ensure that current women
workers, as well as new female entrants, possess the necessary skills and
training to service the changing labour requirements of the emerging textile
and apparel industries.

A concerted and conscious effort by both public and private sectors will be
called for. The government will need to design appropriate incentive
packages to encourage the private sector to promote gender-sensitive,
action-oriented activities. Translating such an approach into macroeconomic
policies is a challenging task in itself, but a few policy measures in this
respect do present themselves.

First, there is a need to reconsider public expenditures with a view to a

gender/equity-sensitive allocation pattern. Emphasis has to be placed on
social sector expenditures targeted toward female primary education, as
entrepreneurs prefer to hire literate and numerate female workers. The
demand for basic educational competency will increase further as new
technologies spread throughout the apparel sector. Such expenditures must
be protected in the face of pressures to balance budgets under stabilization
and adjustment policy requirements.

Second, a mechanism has to be devised to share the costs of on-the-job

training of female workers between the government and entrepreneurs. The
public contribution would underwrite the potential risk of workers leaving a
firm after receiving training. It is unlikely that the task of skill enhancement
of female workers would meet with success if left to any one of the two
actors exclusively.

28
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Third, the government’s labour market policies will have to be guided by the
goal of promoting flexibility. Under no circumstances should labour market
intervention make female labour costlier to the employer (e.g., by
emphasizing maternity benefits and restrictions of women working at night)
than male labour. However, this is not to underplay the need to enforce the
current statutory provisions relating to female industrial employment.

Fourth, in order to counteract gender discrimination based on social

prejudices, the government must step up the public information campaign
aimed at changing people’s perception of women’s role in society,
particularly in the workplace. Such an awareness-building exercise aims to
counteract perceptions that contribute to a “compartmentalization” of female
participation in production processes and perpetuate wage biases against
female workers. Involvement of trade unions and NGOs should strengthen
this sensitization exercise.

6. Conclusion
Large-scale entry of women into the labour market has been one of the most
striking features of recent industrialization in Bangladesh. A supply of cheap
and readily available female labour has provided Bangladesh with a
competitive edge on which the success of its flagship export-oriented
industry, RMG, was built. The growth rate of the RMG sector over the last
decade was almost 25 per cent; in the 1990s the sector has registered an
average growth rate of about 20 per cent. Creation of employment
opportunities, mainly for the women constituting about 90 per cent of the
sector’s workforce (i.e., about 1.2 million people) has been a striking feature
of the rapid expansion of the RMG sector in Bangladesh.

However, the female labour in this sector is concentrated mainly in the low-
skill/low-wage segment of the production process, limiting local value
addition in, and future growth of, the sector. Globalization of the textiles
market is likely to test the limits of such low skill-intensive export-oriented
manufacturing activities in developing countries such as Bangladesh. At the
same time, unshackling of global markets provides Bangladesh with a
unique opportunity to capitalize on expanding market access by
restructuring its domestic apparel sector through introduction of new
technologies. Diffusion of such technologies is expected to further increase
the growth momentum of the RMG sector and, consequently, female
industrial employment in the country.

The phasing out of Multi-Fibre Arrangement is expected to bring new

challenges as well as new opportunities for Bangladesh in the medium to
long term. Analysis shows that in order to remain competitive in the apparel
market, Bangladesh must build backward linkages in the RMG industry.
And evidence suggests that investments in upstream activities have indeed
been picking up in recent years. However, if female workers remain
concentrated in the low-skill/low-wage segment of the production cycle,
even if the number and share of female workers in the labour force
increases, this is unlikely to result in income growth for the female workers.
A conscious public policy package aimed at encouraging skill development,
facilitating technology transfer and raising of the productivity level of

29
 Female Employment Under Export-Propelled Industrialization

female workers thus needs to be put in place to translate Bangladesh’s

comparative advantage into competitive advantage. This will facilitate
sustainable improvement of the earning opportunities of the female labour
force in the country’s textiles and apparel sector.

The feminized labour force in the export-oriented RMG sector of

Bangladesh is perhaps at a threshold between significant reduction in market
share under pressure of competition and globalization, or enhanced market
opportunities induced by a move toward higher value-added products. The
actual outcome hinges on the efficacy of the policies implemented to steer
the outcome in the country’s medium- to long-run interest. Such
interventions will have to embody women-oriented social sector allocations
and must be supported by a conscious effort by the private sector to train the
female labour force in order to raise their productivity and stimulate
backward (e.g., spinning and weaving) and forward (e.g., fashion and
design) linkages in the apparel sector. The effectiveness of these measures
will depend on the ability of the government to develop policies aimed at
dismantling the gender segmentation of the labour market. Our analysis has
shown that, irrespective of humanitarian considerations, gender-sensitive
interventions are justified because of the revealed comparative advantage of
female labour in textile-related activities, which can be enhanced if
appropriate policy inducements are put in place.

30
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

References
BBS (1996a)
Census of Manufacturing Industries 1991-92, Dhaka.

_______ (1996b)
Report on the Labour Force Survey in Bangladesh 1995-96,
Dhaka.

Bhattacharya, Debapriya (1994)

Women and Industrial Employment in Bangladesh: Challenging
and Opportunities in the Era of New Technologies, report
prepared for United Nations University—Institute of New
Technology, Maastricht.

_______ (1996a)
Search for Breakthrough: Twenty Five Years of Bangladesh’s
Industries, paper presented to the international conference on
Bangladesh 1971-96: Past, Present and Future, held at Institute of
Commonwealth Studies (London, 13-15 December 1996).

_______ (1996b)
Climbing up the Value Chain: RMG Sector in Bangladesh;
paper presented in the Seminar on Export Competitiveness in
Bangladesh Industry: Achievement and Policy Agenda, Dhaka, No.
10-11.

_______ (1996c)
“International trade, social labelling and developing countries: The
case of Bangladesh’s garments export and use of child labour”, in
Annuaire Suisse-Tiers Monde 1996, IUED, Geneva.

_______ (1998)
Export Processing Zones in Bangladesh: Economic Impact and
Social Issues, Multinational Enterprises Programme, Working
Paper No. 80, ILO, Geneva.

Bangladesh Garments Manufacturers’ and Employers’ Association (1997)

Quarterly Reports of the BGMEA.

Blackhurst, R., A. Enders and J. François (1995)

The Uruguay Round and Market Access: Opportunities and
Challenges for Developing Countries; paper presented at World
Bank Conference on The Uruguay Round and the Developing
Economies, Washington, D.C.

Centre for Policy Dialogue (1998)

“Governance of the external sector”, in Crisis in Governance: A
Review of Bangladesh’s Development 1997, University Press
Limited, Dhaka.

31
 Female Employment Under Export-Propelled Industrialization

Export Promotion Bureau of Bangladesh (1996)

Annual Report on Export Performance.

_______ (1997)
Monthly Report on Export Performance, May.

GATT (1994)
The Results of the Uruguay Round Multilateral Trade
Negotiations: Market Access for Goods and Services—Overview
of the Results, GATT Secretariat, Geneva.

Industrial Surveys and Studies (ISS) Program (1993)

The Structure and Performance of Bangladesh Manufacturing,
1992, World Bank and USAID, Dhaka.

Joekes, S. (1995)
Trade-Related Employment for Women in Industry and
Services in Developing Countries, UNRISD/UNDP Beijing
Occasional Paper Series, No. 5, UNRISD, Geneva, August.

Pearson, R. (1998)
“‘Nimble fingers’ revisited: Reflections on women and Third World
industrialization in the late twentieth century”, in Cecile Jackson
and Ruth Pearson (eds.) Feminist Visions of Development:
Gender, Analysis and Policy, Routledge, London.

Ministry of Commerce, Government of Bangladesh (1996)

The Impact and Implications of the Agreement on Textiles and
Clothing, report prepared for the Uruguay Round Study Project,
Dhaka.

Ministry of Textiles, Government of Bangladesh (1993)

Textile Industry of Bangladesh: Problems, Issues and Sixteen-
Point Programme, TSMU, Dhaka.

Rahman, M. (1997)
EU GSP Scheme and Market Access Problems of Bangladesh’s
RMG Products, paper presented at the conference on Trading Out
of Poverty, London, March, 1997.

Stichele, M.V. (1995)

A Gender Perspective on International Trade, report of ICDA
1995 Annual Conference, Brussels, October, 1995.

World Bank (1993)

Study on Export Prospects of Garments Industry (mimeo),
Dhaka.

_______ (1995)
Bangladesh Labour Market Policies for Higher Development,
Report No. BD-13799, Washington, D.C.

32
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Yang, Y. (1993)
The Impact of MFA Phasing Out on World Clothing and
Textiles Markets, National Centre for Development Studies,
Australian National University, Canberra.

33
 Female Employment Under Export-Propelled Industrialization

Annex Table 1
Gender composition of manufacturing sector (1991-92)
Ind Industry name All employees Operative
Code
Male Female Male Female
No. % No. % No. % No. %
311 Food mfg. 40575 4.14 3430 1.94 29239 3.61 3370 1.93
312 Food mfg. 59892 6.12 2207 1.25 40744 5.03 1905 1.09
313 Beverage ind. 1569 0.16 146 0.08 731 0.09 142 0.08
314 Cigarettes 30232 3.09 2597 1.47 27661 3.42 2579 1.47
315 Animal feeds 63 0.01 0.00 42 0.01 0.00
321 Textiles mfg. 554762 56.65 9207 5.21 491853 60.73 8897 5.09
322 Textiles mfg. 17903 1.83 1300 0.73 15106 1.87 1284 0.73
323 Wearing apparel 66062 6.75 149776 84.68 51584 6.37 149490 85.4
324 Leather & its prod. 10786 1.10 16 0.01 8791 1.09 16 0.01
325 Footwear except 5155 0.53 135 0.08 4089 0.50 135 0.08
rubber
326 Ginning pressing 3986 0.41 11 0.01 3177 0.39 11 0.01
327 Embroidery of 17 0.00 512 0.29 7 0.00 503 0.29
textile goods
331 Wood and cork 10004 1.02 3248 1.84 8163 1.01 3194 1.83
prod.
332 Furniture mfg. 2303 0.24 1 0.00 1930 0.24 0.00
341 Paper and its prod. 16512 1.69 231 0.13 11060 1.37 78 0.04
342 Printing and 15368 1.57 79 0.04 10639 1.31 7 0.00
publishing
351 Drugs and pharma. 17079 1.74 1024 0.58 6981 0.86 866 0.50
352 Industrial 9474 0.97 292 0.17 5475 0.68 134 0.08
chemicals
353 Other chem.- 14947 1.53 359 0.20 11487 1.42 307 0.18
products
354 Petroleum refining 875 0.09 14 0.01 620 0.08 0.00
355 Misc. petroleum 204 0.02 0.00 113 0.01 0.00
prod.
356 Rubber prod. 3635 0.37 28 0.02 3029 0.37 28 0.02
357 Plastic prod. 3185 0.33 29 0.02 2363 0.29 28 0.02
361 Pottery and 3336 0.34 51 0.03 2547 0.31 51 0.03
chinaware
362 Glass and its 1835 0.19 216 0.12 1534 0.19 212 0.12
product.
369 Non-metallic 20250 2.07 317 0.18 17858 2.21 196 0.11
mineral prod.
371 Iron and steel 14781 1.51 14 0.01 10689 1.32 0.00
basic indus.
372 Non-ferrous metal 459 0.05 0.00 324 0.04 0.00
ind.
381 Structural metal 13086 1.34 69 0.04 10880 1.34 69 0.04
prod.
382 Fabricated metal 6113 0.62 42 0.02 5300 0.65 42 0.02
prod.
383 Non-electrical 6526 0.67 68 0.04 4366 0.54 0.00
machinery
384 Electrical 12671 1.29 350 0.20 9426 1.16 307 0.18
machinery
385 Transport 12543 1.28 45 0.03 9530 1.18 0.00
equipment
386 Scientific precision 162 0.02 10 0.01 120 0.01 10 0.01
etc.
387 Photographic 117 0.01 0.00 91 0.01 0.00
optical goods
389 Mfg. of sports 198 0.02 0.00 170 0.02 0.00
goods
391 Decorative 120 0.01 15 0.01 108 0.01 12 0.01
handicrafts
393 Other mfg. 2276 0.23 1036 0.59 1834 0.23 1036 0.59
industries
394 Other mfg. 286 0.03 0.00 220 0.03 174909 0.00
industries
Total 979347 100.0 176875 100.0 809881 100.0 174909 100.0
Source: BBS, 1996a.

34
 Prospects for Internalizing Global Opportunities in Bangladesh’s Apparel Sector

Annex Table 2
Level of wages and salaries by sex in manufacturing sector (1991-92)
Ind Industry name Total wages and salaries paid (000 Tk.) Per employee (Tk.)
Code
All employees Operative All employees Operative
Male Female Male Female Male Female Male Female
311 Food mfg. 743914 30167 418845 29172 18334.29 8795.04 14324.87 8656.38
312 Food mfg. 1740736 37057 1052188 18995 29064.58 16790.67 25824.37 9971.13
313 Beverage ind. 54066 1005 19085 941 34458.89 6883.56 26108.07 6626.76
314 Cigarettes 347791 11163 285531 10990 11504.07 4298.42 10322.51 4261.34
315 Animal feeds 886 416 14063.49 9904.76
321 Textiles mfg. 12506641 128039 9889202 112206 22544.16 13906.70 20106.01 12611.67
322 Textiles mfg. 338586 10021 270714 9665 18912.25 7708.46 17920.96 7527.26
323 Wearing apparel 1104935 1760883 675294 1753268 16725.73 11756.78 13091.15 11728.33
324 Leather and its prod. 244381 278 155745 278 22657.24 17375.00 17716.41 17375.00
325 Footwear except 280916 397 157244 397 54493.89 2940.74 38455.37 2940.74
rubber
326 Ginning pressing 63886 82 38494 82 16027.60 7454.55 12116.46 7454.55
327 Embroidery of textile 182 3058 127 3029 10705.88 5972.66 18142.86 6021.87
goods
331 Wood and cork prod. 188808 24780 132548 23823 18873.25 7629.31 16237.66 7458.67
332 Furniture mfg. 41784 57 30897 18143.29 57000.00 16008.81
341 Paper and its prod. 877810 67680 515957 403 53161.94 292987.01 46650.72
342 Printing and 440940 2044 262831 262 28692.09 25873.42 24704.48 37428.57
publishing
351 Drugs and pharma. 863469 49562 276255 40099 50557.35 48400.39 39572.41 46303.70
352 Industrial chemicals 532667 40290 263471 3110 56224.09 137979.45 48122.56
353 Other chem. 675147 13555 356217 7287 45169.40 37757.66 31010.45 23736.16
products
354 Petroleum refining 149312 845 98366 170642.29 60357.14 158654.8
355 Misc. petroleum 5019 2243 24602.94 19849.56
prod.
356 Rubber prod. 68743 299 54167 299 18911.42 10678.57 17882.80 10678.57
357 Plastic prod. 90585 333 59468 284 28441.13 11482.76 25166.31 10142.86
361 Pottery and 56188 940 35700 340 16842.93 18431.37 14016.49 6666.67
chinaware
362 Glass and its 70954 1710 41687 1527 38667.03 7916.67 27175.36 7202.83
product.
369 Non-metallic mineral 255789 4957 151611 1545 12631.56 15637.22 8489.81 7882.65
prod.
371 Iron and steel basic 589925 461 392604 39911.03 32928.57 36729.72
indus.
372 Non-ferrous metal 15772 10410 34361.66 32129.63
ind.
381 Structural metal 218736 546 160733 546 16715.27 7913.04 14773.25 7913.04
prod.
382 Fabricated metal 120519 486 88655 468 19715.20 11571.43 16727.36 11142.86
prod.
383 Non-electrical 239340 2454 128283 36674.84 36088.24 29382.27
machinery
384 Electrical machinery 349662 10119 207543 7193 27595.45 28911.43 22018.14 23429.97
385 Transport equipment 432524 1939 248502 34483.30 43088.89 26075.76
386 Scientific precision 3238 90 2391 90 19987.65 9000.00 19925.00 9000.00
etc.
387 Photographic optical 1764 1204 15076.92 13230.77
goods
389 Mfg. of sports goods 3920 3238 19797.98 19047.06
391 Decorative 998 281 842 246 8316.67 18733.33 7796.30 20500.00
handicrafts
393 Other mfg. industries 35072 6841 25393 6841 15409.49 6603.28 13845.69 6603.28
394 Other mfg. industries 4139 2806 14472.03 12754.55
Total 23759744 2212419 16516907 2033386 24260.80 12508.38 20394.24 11625.39
Source: BBS, 1996a.

35
 Female Employment Under Export-Propelled Industrialization

Annex Table 3
Growth of RMG exports (1977-1997)
Year RMG exports (million US$) Share in total exports (%)
1
All RMG Knit RMG All RMG Knit RMG
1976-77 0.07 - 0.02 -
1979-80 0.67 - 0.09 -
1982-83 10.8 - 1.58 -
1984-85 116.2 - 12.44 -
1986-87 298.7 - 27.81 -
1989-90 624.1 14.8 40.95 0.97
1992-93 1444.9 204.5 60.64 8.58
1994-95 2228.2 393.3 64.17 11.32
1995-96 2547.1 598.3 65.61 15.41
2
1996-97 3001.2 763.3 67.92 17.28
Note: 1. Exports include both woven and knit-RMG. 2. Exports of 1996-97 are
estimates based on export performance between July-April, FY 1997.
Source :Export Promotion Bureau, Annual Report (various years).

Annex Table 4
Projected female employment in textile and apparel sectors under
normal and self-sufficiency conditions (1995-2005)
(million person-year)
Sub-sector of textiles/ 1995 2000 2005
apparel industry (Base
year)
Normal Self- Normal Self-
conditions sufficiency conditions sufficiency
conditions conditions
RMG
Local 0.084 0.161 0.161 0.273 0.273
Export-oriented 1.080 1.742 1.742 2.222 2.222
Dyeing and finishing 0.005 0.014 0.032 0.036 0.128
Weaving (powerloom) 0.003 0.010 0.034 0.025 0.149
Handloom 0.324 0.441 0.441 0.599 0.599
Silk 0.120 0.163 0.163 0.225 0.225
Knitting and hosiery 0.007 0.013 0.013 0.025 0.025
Spinning 0.013 0.026 0.093 0.043 0.397
Total 1.636 2.570 2.679 3.448 4.018
Source : Ministry of Commerce, 1996.

36