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Compliance Management Practices on Readymade Garment Industry in

Bangladesh: An Exclusive Study

Conference Paper · December 2013

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 “Compliance Management Practices on Readymade
Garment Industry in Bangladesh: An Exclusive Study”

Nazim Ullah1, Md. Misfar Abdulla Sunny2 and Md. Habibur Rahman3

The Readymade Garments (RMG) sector has a greater

potential than any other sector in terms of employment,
reducing poverty and make a contribution to the national
economy. Specially, this sector contributes much more in
creating employment reducing poverty and economic
development in Bangladesh. Basically, the study is
analytical in nature based on the data collected from
published sources. This data were processed by using
descriptive statistical tools. Our main objective is to find
out an overview of the present compliance management
situation, acceptability of the compliance management
practices and problems and prospect of compliance
management practices in the garment industry in
Bangladesh. Bangladesh garments industry
characterized by ineffective compliance practices.

Keywords: Compliance, Compliance Management, RMG

1. Introduction
The Readymade garments (RMG) industry of Bangladesh commenced its journey
in the late 1970s and within a short period of time emerged as an important player in

1.Nazim Ullah, Department of Business Administration, International Islamic University Chittagong E-

mail:[email protected].

2.Md. Misfar Abdulla Suuy, Department of Business Administration, International Islamic University
Chittagong.E-mail:[email protected].

3.Md.habibur Rahman, Department of Business Administration, International Islamic University

Chittagong.E-mail:[email protected].

1
the economy in terms of export earning, employment generation, poverty alleviation
and empowering of women. Bangladesh's garment industry provides employment to
about than 3.6 million workers which 2.8 million are women (Mahmud R.B., 2012).
So it will not be an exaggeration to say the economic progress of Bangladesh hinges
upon the growth of this industry. Readymade garments industry along earned about
78.60% of the yearly foreign exchange earning of the country (BGMEA-members of
directory-2012/13). The growth rate of RMG export was over 17% of the last two
decades (BGMEA- member of directory-2012/13). The prospects of RMG sector,
however, in Bangladesh not only depend on availability of cheap labor and
government liberal policy but depends on compliance practices with its standers
code of conduct. Compliance management means, it is a process which ensures that
a set of people are following a given set of rules. The rules are referred to as the
compliance standard or compliance benchmark. Compliance management can take
many forms. It can be a mix of policies, procedures, documentation, internal auditing,
third party audits, security controls, and technological enforcement. There are
recognized compliance bodies worldwide like International Labor Organization (ILO),
International standard organization (ISO-14001), Worldwide Responsible Accredited
Production (WRAP), Bangladesh Association of Consulting Industry (BAC), Energy
Technology Institute (ETI), Social Accountability International (SAI) and Fair Labor
Association (FLA).

Bangladesh exports its RMG products mainly to the United States of America (USA)
and the European Union (EU). To satisfy the foreign buyers RMG sector of
Bangladesh needs to improve the factory working environment and social issues
related to the industry. Because International buyers are particular about compliance
practices with standers code of conduct before placing any import order. In this
paper, the existing compliance management practices of RMG factory of
Bangladesh, particularly in Chittagong are examined. This paper also tries to reveal
acceptability of compliance management practices on Readymade Garments
Industry of Bangladesh.

Objectives of the study:

The objectives of the study are given below-

I. To provides an overview of the present compliance management situation in the

readymade garment factories in Bangladesh.

II. To find out the acceptability of existing compliance management practices on

RMG among the employers and employees.

III. To find out the problems and prospects of compliance management in

readymade garment industry.
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2. Literature Review
Most significantly ready-made garment sectors is the prime foreign earner
contributing to about 80% of the country’s total exports earning and more to the point
we have to improve our weakness through flowing the standard compliance
practices (Sheikh Hasina-2012). BGMEA is an organization working for the buyers,
workers and entrepreneurs-so that all parties work under some fair trade
conditions/working conditions for the laborers. The RMG sector should give more
rights to laborers in terms of better payment, safer working condition so that it
encourages more people to work in this industry (RAISUL ISLAM-2013). Bangladesh
garment manufacturers and exporters association (BGMEA) and Bangladesh
knitwear manufacturers and exporters association (BKMEA) set standards for
compliance management practices as like, factories must have alternative stairs,
basic fire equipment, approved layout plan from concerned authority for ensuring
safe building construction, group insurance for workers, hygienic sanitation facilities,
first aid appliance as well as ensuring minimum wages and flexible jobs for the
workers. We need to introduce new technology and mechanism in order to increase
our productivity, strength, competitiveness, quality improvement, and exports
diversification so that we can overcome the existing challenges of global economic
downturn (Dilip Barua-2012). The government should put pressures on the buyers
and clearly convey its message to the buyers that the apparel factories of the country
will comply with the rules and regulation of this land the buyers or retailers must
accept it. (Reaz Bin Mahmod-2013 ). German Embassy (2010) stated that progress,
a joint project of the Bangladesh Ministry of Commerce and the German Federal
Ministry, has consequently turned its full attention to the area of social compliance
and assisting the government in the following areas are implementation of the new
labor law, media campaigns, training and retraining measures for compliance
inspectors, advisors, and the introduction of a new monitoring and evaluation
system. Bangladesh gets numerous benefits from garment sector not only that it is
the key source of foring income in Bangladesh; the sector employs a great number
of people from all over the country, lowering the unemployment status. The garments
sector also to boost women empowerment and also said BGMEA is working mostly
for workers and entrepreneurs, trying to create a settlement between both parties to
ensure smooth operation at factories and fair working condition/ facilities for the
workers ( RUHAMA TASNIM -2013). My thinking is quite positive when it is comes
to the garment industry of Bangladesh, since I believe it is one of those important
sectors that have a strong potential to build a better Bangladesh. All of the factories
in Bangladesh should comply with labor practices that ensure the social welfare of
their employees (SIFAT ISLAM-2013). According to Mckinsey perspective - as a
developing country, Bangladesh is under close by nongovernmental organizations
(NGOs) and corporate social responsibility (CSR) stakeholders regarding
3
compliance. Both CSR exports and buyers report improved labor and social
compliance standers, but there is still a board range of compliance seen across
suppliers and as described in the following, many unsolved topics exist. Solving
these issues and achieves ethical labor standers and sourcing practices are key
prerequisites in Bangladesh’s apparel industry. Productivity at suppliers needs to
improve, not only to mitigate rising wages, but also to close the existing productivity
gap in comparison to other sourcing countries. Productivity in Bangladesh’ RMG
factories needs to catch up to the levels seen in India if Bangladesh’s suppliers are
going to be able to deliver on the unit demand growth that Mckinsey forecasts, now
expected to be 2x to 2.5x through 2020. In this era of the globization, Bangladesh
has emerged as a repdly developing nation, over the years. BGMEA leaders have
played a key role in the economic development of the country by generation 36 lakhs
jobs directly. Today RGM sector accounts really 80 percent of the total export
earning of Bangladesh(Quader-2012). In the era of globization, our beloved
homeland Bangladesh is moving rapidly towards becoming a peaceful and
prosperous nation(muhith-2012). A factory works for several buyers, so different
safety requirements of the buyers compel the factory authority to shuffle its safety
and security sets-up with frequent intervals during audits. This only causes hassles
for the factory functionaries and because of this frequent shift of set-ups a factory
often fails to fulfill the compliance requirement of a buyer(Azim-2013). Garments
workers are concerned with long working hours or double consecutive shifts,
personally unsafe work environment, poor working conditions, standard wage with
promotion exposure , gender discrimination, industries do not follow standard code
of conduct, the owner of the industry do not follow code of constructing industry,
improper stairs facilities , improper exiting door and Women workers face physical
abuse and sexual harassment inside as well as outside the factories, though most
work until after dark, there are no safety measures for them and no residential
facilities or transportation facilities provided Kumar (2006). Bangladesh had been
missed a golden opportunity to grab the orders worth billions of dollars(Golam-2011).
According to International Labor Organization (ILO-2010), “buyers make sourcing
decisions based on four factors: price, quality, how long it takes to get produce to the
marketplace and social compliance, including compliance with labor standards (ILO-
2010). Compliance management practices has emerged as a major issue in the
Bangladesh RMG sector. Despite the additional costs these compliance demands
place on the sector, there are sound economic reasons why the Bangladesh
garment industry should meet them. If the RMG Industry fails to implement
compliance practices according to International Labour Standards, it may lose its
global markets. Ignoring social compliance could harm Bangladesh's
competitiveness as a supplier of ready-made garments. This could have dire results:
the closure of most of the garment industry with millions of employees losing their
jobs; the decline of economic growth, and social disorder such as snatching,
kidnapping, robbery, street hustling and prostitution. Alternatively ensuring
compliance practices is very important in Bangladesh's garments industry to both
4
maintain quality of products. In the RMG sector, a compliance Certification System
could be offered through buyers to promote and certify lawful, humane and ethical
working conditions in manufacturing processing, and the working environment as
well as meet international labour standards.

3. The methodology
Descriptive research was conducted to identify different dimension of compliance
management practices in readymade garment industry in Bangladesh. As result of
researchers were prevented from visiting the factory. For this reason, we have
ignored the direct data collection and surveys. Consequently the research technique
has relied on secondary data, collected through Case studies, Journals, Research
articles, Thesis papers, Newspapers, Online news and survey reports, garments
Manufacturing Industries Annual reports, BGMEA Yearly report and Files. The data
was collected through a number of techniques.

4. Findings
This study has tried to measure the extent to which the garment industries are
maintaning above mentioned objective. Collected data from different sources are
studied properly with the line of the objective of the study. By analyzing all of the
data we can say all that garment industry in Bangladesh they do not follow the
compliance obligation with standards for this reason they have to face several types
of the problems that become the source of the fall in danger. If we see at a glance, in
the sight of the garment industry in Bangladesh, They become bound with problems
such as, workers left their work place, worker do not give their effort to produce the
standards products, supplies do not provides materials in just time, finally, foreign
buyers easily shift or do not place order. As they do not know the legal provisions on
employment contracts an excessive working hour is one of the most common labour
standards problems in Bangladesh. Equally, worker has no choice; they are
compelled to take up the excessive workloads. According to the Factory Act 1965, a
worker being employed for 12 months is entitled to annual leave, casual leave, sick
and medical leave, festival leave and maternity leave with pay (ILO and BGMEA,
2003; ILO, 2005). Women are entitled to leave during pregnancy period. In reality
Pregnant women are worried about loosing their jobs and hide their pregnancy, as
they do not know the legal provisions of their employment contract. The factory
owners dismiss a woman worker if they discover that she is pregnant or if she
applies for maternity leave (majumder- 2009). As a matter of fact garments
manufacturing factories in Bangladesh frequently violate the labour laws of 1965 by
not providing an appointment letter, and in the areas of working hours and breaks,

5
leave, minimum wages and fringe benefits (Begum N., 2008). To avoid unrest in the
RMG sector, Khan (2006) argued for strengthening compliance issues and labour
standards to improve wages, working hours, overtime, job security, the right to form
trade unions, social security and also occupational health and safety. Most of the
factories do not meet the minimum standards prescribed in building and construction
legislation (Factory Rules 1979). As a result, fire is common, buildings often collapse
and faulty building design regularly results in the death of workers. Compensation
following an incident is rare. The Spectrum Factory building collapse the tragedy of
Rana plaza is one of the critical issues here but it occurs due to the negligence of the
compliance management practices. In this tragedy a lot of workers died, some were
left their hand, some were left their leg and some were badly injured. It is not only
there several accidents in the Bangladesh but also Tzaneen fashion. For this
reasons foreign buyers do not want to place orders or they want to swift to the
competitors or they want to hardly impose the roles and regulation in the garment
industry. Most of the garments workers are not satisfied with their present job in the
RMG sector. The level of wages is the most significant source of dissatisfaction for
workers in the RMG industry. RMG owner often deny that they have the power to
improve the wages or conditions of workers. On the other hand, prospects of
promotion in the RMG industry of Bangladesh are uncommon. Without full payment
or being paid on time, worker often worry and are anxious about the future. This
results in low work productivity and job dissatisfaction (ILO, 2005; Morshed, 2007).
There are many other labour sectors; unlikely child labour is a serious and growing
problem within this sector. Although the RMG is a formal sector, there is no
acceptance of the right to organise at the factory level and owners fear trade union.
As a result labour unrest is common in the RMG sector.Finally; we can say that if we
are able to avoid ineffective compliance practices rather than proper compliance
practices in the garment industry all of the problems will be minimized.

In the Table-1 showing three category garments, they are A, B and C category
garments. A category garments are foreign garments and the overall performance of
A category garments are excellent than B and C. B category garment are consisted
by foreign and Bangladeshi entrepreneurs and B category garments performance
are also similar to A. C category are totally Bangladeshi garments which
performance is not good than A and B because there have some reasons which are
low price, poor technology, and lack of good compliance management. The rating of
Compliance management taken from Md. Mohshin Chowdhury (joint Secretary)

However, factors that are fallen in the compliance practices should be given much
more concentration. They are as follows:

1. The operation are handled efficiently

6
 2. Organization improves monitoring and controlling system to minimize mistake.

3. Organization provides the equal employment opportunity

4. Organization removes fatigue to keep workers alert and productive

5. Organization does not have workplace violence.

6. Organization should provide the entertainment to the workers.

5. Conclusion
Compliance management should be compromised by current HR and IR practices.
An approach that pays attention to labour rights, global labour standards, fair labour
practices, safety workplace as well as decent work in improving working conditions is
needed (ferdous-2009). Further the Fair Labour Act, the Factory Act, the
Occupational Health and Safety Act, Core Labour Standards, Code of Conduct, the
ILO and the WTO Conventions are all contribute to a better work environment.

This article has investigated compliance management conditions in the Bangladesh

ready-made garments sector. It found the compliance management conditions are
poor and challenges facing Social compliance, despite Bangladesh labour laws and
the country's membership of the WTO and ILO. These include an inadequate
application of labour standards and labour rights, law and enforcement, collective
bargaining activities, fair labour practices as well as the government of Bangladesh
and entrepreneur’s role in implementing the decent work in the RMG sector. It
suggested monitoring was needed to ensure compliance with these laws. Lastly it
suggested improved human resource management in RMG factories could ensure
compliance management. The article looked at the roles of the main actors in HR
and IR systems: non-government and government and the roles of the international
community, civic society and stakeholder groups including the BGMEA, BKMEA, ILO
and the WTO. Bangladesh government infrastructure was found to be poor, due to
limited financial resources. The government also seems to lack the political
commitment to improve working conditions in the RMG sector. The Bangladesh
government needs to pay more attention to monitoring compliance. In addition a
Code of Conduct and effective compliance monitoring cell are also required. The
international textile business is tremendously competitive in the context of growing
competitive among RMG exporting countries and consumer preference for products
that meet internationally recognized standards , it is essential for Bangladesh RMG
suppliers to improve compliance in there factories.

7
Acknowledgement
At the very beginning, we humbly acknowledge our heartful gratitude to the Almighty
Allah, the most gracious, the benevolent and the merciful who has given us
opportunity and strength to complete this great task within the desired time, than we
would like to give thanks to secretary of the International conference on Business
innovation entrepreneurship and engineering (ICOBIEE-2013). We are greatly
delighted as a participant of this program. This is a great opportunity for us to write a
paper. We have collected more reliable data related to the compliance management
practices on readymade garments industry in Bangladesh and also we have
expressed more innovative ideas and speeches of honorable persons who are
related in this sector. In the mean time we faced some problems but we have
become able to overcome that problems. We have tried our best level to collect data
from different sources. We expect this paper will be published in the Journal by
which we able to share our knowledge to the world and the reader will get real
knowledge about compliance management practices on readymade garments
industry in Bangladesh. We give author to ICOBIEE- 2013 to publish this paper and
oblige thereby..

References
Ariful Rahman-2010 articles: Compliance Practices on the Garment Industry in
Dhaka
Abul Maal A. Muhith-2012. “The Chittagong Apparel Fabric & Accessories
Exposition”
Bangladesh Garment Manufacturers and Exporters Association-BGMEA; available
From http://www.bgmea.com.bd.
Bangladesh Knitwear Manufacturers and Exporters Association- BKMEA available
From http://www.bkmea.com.bd.
Begum, A.-2008. Poor Rural Migrants to the City of Dhaka: A Study of Expectations,
RSP Documentation Centre, http://docs.google.com/viewer?
BGMEA. 2012/13. Bangladesh Garment Manufacturers and Exporters: Members
directory book.
Dilip Barua. -2012. Minister of industry. “The Chittagong Apparel Fabric &
Accessories
Exposition”
Ferdous Ahmed. -2009. “Improving Social Compliance in Bangladesh Readymade
Garment Industry “
German Embassy Dhaka.- 2010. “Social and Environmental Standards in the
Bangladesh Ready-Made Garment Sector” Available from:
www.dhaka.diplo.de/.../Bekleidungsindustrie-Seite.html.Accessed June
15,2010
8
Golam Muhmmed Quader. -2012. The Chittagong Apparel Fabric & Accessories
Exposition
ILO. -2005. “Promoting fair globalization in textiles and clothing in a post-MFA
environment”, ILO Publications, International Labour Office, CH-1211
Geneva 22, Switzerland.)
Joint secretary: -BGMEA, Chittagong regional office; personal interview
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rights, Issue No. 249, August 05, 2006, http://www.thedailystar.net/law,
viewed on 15/8/2009
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viewed on 05/09/2008)
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http://www.newstoday.com.bd
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triple
In 10 years “
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Exporters Association (BGMEA)”
Rezaul Hasanat. -2013. “Apparel Story, Bangladesh Garment Manufacturers and
Exporters Association (BGMEA)”
Ruhama Tasnim . -2013.”works at Unilever Bangladesh Limited”
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Fabric &
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Appendix
Table-1
Rating of Compliance management

SL Statements A B C
No. Category Category Category
Garments Garments Garments
9
 1 Housekeeping storage 95/100 85/100 70/100

2 Operation efficient 95/100 86/100 71/100

3 Monitoring & 96/100 82/100 72/100

Controlling

4 Flexible jobs 92/100 81/00 71/100

5 Minimizing Mistake 95/100 85/100 72/100

6 Production layout 96/100 84/100 71/100

7 Equal employment 92/100 81/100 66/100

Opportunity

8 Workplace Violence 90/100 80/100 69/100

9 Using of technology 95/100 87/100 70/100

10 Entertainment 92/100 80/100 70/100

10

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