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9 Feb 2023

Rezaul Karim, The Business Standard

Bangladesh: Exporting industries forced to lay off workers due to crises

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"As production falls, businesses start to shed workforce", 9 February 2023

As job cuts in global tech industries make headlines, a much more low profile workforce reduction has started at home, striking fear among the mass of low-skill workers in the country.

Industries attribute the downsizing to plummeting imports and the resulting crisis in raw materials, thanks to the current dollar crisis.

The greenback shortage-led belt-tightening in July last year has also reduced production by almost 50% over the past couple of months, according to entrepreneurs who were forced to lay off workers subsequently in the December-January period...

The current situation is affecting not just the steel industry, but a wide range of sectors including garments, textile, pharma, and chemicals that heavily depend on imported raw materials.

Manwar Hossain, president of the Bangladesh Auto Re-Rolling and Steel Mills Association, said a number of small factories have already laid off workers while some others sent their employees on furlough...

Hit by the plummeting import and production, a number of industries trimmed their workforce in December. They were hopeful about recalling the employees once the situation improved.   

But the future does not look bright. Factories say they will run out of raw material stocks in February. The humming production lines will come to a grinding halt in March if the tight dollar market does not ease up...   

Preferring anonymity, the official said slumping production due to import issues forced the textile miller to lay off 200 workers out of a total of 1,500.

Monsoor Ahmed, the additional director & CEO of Bangladesh Textile Mills Association (BTMA), said, the input shortage due to the dollar crunch has turned quite severe with no end in sight, forcing many of the mills to limit production...

A business group operating four garment factories in Ashulia and Gazipur, Bangladesh laid off 2,700 workers in January and plans to cut another 8,000 jobs by March. 

The factories are facing capacity issues due to a decrease in export orders. To stay afloat, the group is looking to reduce its monthly operating expenses from Tk30 crore to Tk15 crore.

A senior executive of the group...attributed the job losses to external factors such as the prolonged Russia-Ukraine war and slumping demands in the Western market and stated that the job cuts were for survival. 

The Business Standard talked to people of least one dozen sectors. They said the job cuts evolved mostly in the low-skilled segment...

Small and medium enterprises led the job cuts, while big ventures and established conglomerates were found stable...

However, Bangladesh's home appliance sector, which heavily depends on imported raw materials, did not face notable job retrenchment. 

As the sales drop amid pinching inflation, the firms witness sales plummeting and pressure weighing on the balance sheet, but still, sit on "quite full inventories".

The readymade garment sector, the top employer of unskilled and semi-skilled labour in Bangladesh, also looks steady so far.

... Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the garment local industry is yet to feel the import shock as factories are now clearing their raw material inventories.

But if the situation persists, garments will be affected and owners will be forced to lay off workers, Faruque Hassan commented.

... Rashedul Haque, a machine operator at Rafiq Textile Ltd who lost his job in December, said his termination was abrupt. Some 200 workers including him were notified on 30 November that they were being terminated in December.

Rashedul returned to his village in Taraganj, Rangpur and took to farming.  

Although the company has promised to call back its workers once the situation improves, the workers are yet to get the legally mandated severance package.

Bay Tanneries (Unit-2) Limited, located in the Savar tannery estate, notified its workers of layoff in December as the tanner bid farewell to 60 workers after clearing their dues. 

Kazi Shahjahan, assistant manager (HR & Admin) of the company, said all the Savar tanners were in trouble as they were struggling to get foreign orders....