Diversify manufacturing base

Bangladesh will fall behind its competitors if it does not break free of the cheap-labour mindset and diversify its manufacturing base away from garments, an analyst and rights advocate said.

Sabina Dewan, president and executive director of JustJobs Network, a global research organisation focused on the creation of more and better jobs, said a lot of countries like Bangladesh are stuck in low-end manufacturing and unable to diversify.

“As an economy if you specialise in low-end manufacturing alone, without diversifying your sectors, you will remain stuck in the mindset that cheap labour is your only competitive advantage," she said.

Other countries are improving their value-added sectors, diversifying manufacturing and developing skills of their workforce. Without diversification and investing in workers, Bangladesh will ultimately fall behind.

“As a result, you will not be able to raise the living standards for your country. At the end of the day, that is not politically, economically, or socially viable,” she said.

Dewan spoke to The Daily Star on the sidelines of the Asian Development Bank's annual meetings in Baku, the capital of Azerbaijan, on May 4.

Bangladesh's manufacturing sector is dominated by the garment sector, which accounts for 80 percent of the country's $31 billion annual exports.

JustJobs Network works with policymakers, business leaders, and civil society to help define a new kind of economic growth -- one that puts people first, recognises the value of work, and fosters the creation of just and equitable societies, according to its website.

Dewan, also a senior fellow at the Centre for American Progress, said a number of countries are engaged in a manufacturing game as they are rushing to set up and expand their manufacturing sectors.

“Different countries are trying to figure out the best strategies to claim their share of the global value chain.”

She thinks the rush of the companies to become more competitive and grab their share in the global value chain has an impact on workers.

Governments and companies need to recognise that labour is not just a cheap commodity, rather the well-trained workers are an asset.

“When we talk about productivity and efficiency, we think about capital investments. If companies invest in skills development, workers' safety, and health and education for workers, it will ultimately improve productivity and efficiency.”

“What happened with Tazreen Fashions and Rana Plaza shows how competitiveness can actually be hurt when you don't invest in workers and think about labour, capital and efficiency altogether, not one or the other -- all three are important.”

She said all stakeholders -- from buyers and governments to factory owners to unions -- have to work together to make factories safer and raise living standards of workers.

“People wrongly think that the entire responsibility is on governments alone. That is not right. I think responsibility is a shared one. Big brands are equally responsible and have a role to play. I think it is more than a moral imperative.”

She said companies need to realise that improving working conditions and respecting labour rights is an economic imperative.

The responsibility does not end there. “I think companies also need to recognise that if workers are being paid a fair wage, it generates more demand. And as you raise demand, it has a positive impact because more people will be able to afford their products and services.”

Dewan said consumers in developed countries are becoming much more aware of workers' rights and where their products are being produced.

“I would be reluctant to buy clothes when I know that the workers are being exploited.”

JustJobs tries to inform people of the importance of making sure that workers are being treated fairly and are getting fair wages.

“We advocate for this because it makes economic sense.  Higher living standards mean greater demand. If you have a healthier and more productive workforce, it ultimately helps GDP,” Dewan said.

She thinks the role of the media is extremely important in changing the mindset of companies, the government and policymakers that cheap labour is Bangladesh's only competitive advantage.

She also said Bangladesh's growth model riding on low-end manufacturing has taken heat after the recent industrial disasters.

Bangladesh's competitor Vietnam has a more successful model so far in the manufacturing sector. “In terms of diversification of industries, Vietnam has a more successful model, and part of that is because they have been able to move up the value chain.”

Dewan said the minimum wage in Bangladesh is increasing but the rise is not fast enough, and it is among the lowest in the world. “Bangladesh has a long way to go if you look at the living wage.”

She said there has been progress in improving worker safety in Bangladesh following the collapse of the Rana Plaza building.

One thing upsets her.

“It takes a disaster like Rana Plaza collapse before the international community mobilises. Once the cameras are switched off, everybody forgets. We have to keep the pressure on -- not just in times of disaster but on a long-term basis.”

Dewan said all eyes are on Bangladesh to see how joint efforts among political parties, the government, unions and brands in fixing problems, particularly in the garment sector, are paying off.

“There are lessons we can learn from what is happening in Bangladesh. I hope the government in Bangladesh takes this issue seriously and starts to see low-cost labour more than just a competitive advantage in boosting their manufacturing sector.”

She has witnessed many challenges people face as she travels various parts of the world as the executive director of JustJobs.

“I think employment is one of the most important issues for humanity,” said Dewan, who has also worked with the International Labour Organisation.