Earlier last month, Taka fell to a record 94.79 per US dollar even if some money changers in Bangladesh allegedly charged as high as Taka 112 per dollar, a month prior to that.
So, as the freefall of Taka continued, raged a debate as to whether the devaluation of Taka (depreciation of Taka has been long-standing demand of the garment exporters) played to the garment makers’ advantage while affecting the garment workers adversely.
To understand this complex issue better, one has no option but to take into account all the stakeholders’ views.
As per one section, the depreciation of Taka vis-a-vis the US Dollar was a blessing in disguise for the apparel exporters, whose income increased significantly (by Taka 10 to Taka 15 in most cases) from every dollar earned from apparel exports. Even if this be the case, one cannot overlook the increase in production cost due to a host of reasons like fuel price hike and raw material prices shooting through the roof.
And the fact that majority of the raw materials had to be sourced from overseas, weighed further against the garment makers and who better to understand this predicament than an apparel maker himself.
“More than 70 per cent of the raw materials used by the industry come from abroad. Businesses had to suffer on account of it as they had to spend more on buying dollars for raw materials,” elucidates BKMEA Executive President Mohammad Hatem even as BGMEA Vice President Shahidullah Azim on his part claims that around 30 per cent of the production capacity of many factories remained unutilised thanks to inadequate purchase orders, which only add to the garment makers’ woes.
“Besides, the production cost also soared due to gas and electricity crises,” Shahidullah underlines.
It may be mentioned here that as the West continued to struggle with unprecedented inflation, many buyers put on hold fresh work orders as demand for apparels amongst the end users took a hit. The result – dwindling work orders and order cancellations.
Many factories even had to take loans to pay workers’ wages given the situation, claims an industry insider while adding even if production cost went up by around 8 to 10 per cent on one hand, the number of work orders dwindled by 20-30 per cent, on the other.
As buyers in the West continued to struggle against the unprecedented inflation that had a telling effect on Bangladesh apparel makers, garment workers back home had to face the heat too, as rising inflation in Bangladesh ate into their real income, reducing their actual wage, leading to financial strain.
If reports are something to go by, the food inflation in Bangladesh peaked at 8.19 per cent and the non-food inflation was 6.39 per cent, which took the overall inflation to 7.48 per cent even if the commodity prices kept rising after the Government hiked the price of fuel.
Let’s take the example of Maryam Khatun, one amongst the thousands of garment workers in Bangladesh, who found it difficult to make both ends meet.
Maryam had to spend around Taka 3,000 on house rent while the remaining Taka 5,000 from her monthly salary of Taka 8000, got used up to meet other expenses leaving her high and dry by the end of the month even if a couple of months back, she could very easily manage her monthly expenses with the same salary and still managed to save some money.
“The sky-high price of daily essentials is making things extremely difficult now,” claims Maryam.
Meanwhile, a chart created by the Centre for Policy Dialogue (CPD) – CPD is an independent think-tank which strives to bridge the gap between empirical research and policy advocacy through a sustained effort in public policy analyses – underlined that a person residing in Dhaka spends around Taka 5,339 for food and the expense stands at Taka 21,358 for a four-member family, which if at all, makes it amply clear why garment workers like Maryam are facing such financial stress.
Interacting with the media, Research Director of CPD, Khondaker Golam Moazzem claimed the income and expenses of the apparel entrepreneurs were fluctuating due to various reasons, including the dollar price even if the real income of the garment workers has decreased due to inflation.
Given the complexity of the issue, experts have underlined the need to embrace a balanced approach to help provide the garment workers some relief through feasible ways while making sure not to increase the financial burden on the garment workers, who are none the better.
But till the time stakeholders are able to strike that balance, there seems little chance of this debate ending anytime soon.
