Pay.rmg Collections Net: Because of the high transaction costs associated with mobile banking, workers in the RMG industry are hesitant to accept their paychecks in digital form, reversing the trend toward digital wage payments. According to the results of a poll, the percentage of Bangladeshi garment workers who got digital payments gradually fell over the following months after a significant change in May.
In collaboration with Microfinance Opportunities, SANEM, a non-profit research organization, conducted surveys on Bangladeshi textile workers. The surveys are part of the Garment Worker Diaries Project, which has been revolutionary in its technique of boosting supply chain transparency as well as its efforts to help people better understand how the COVID-19 pandemic has affected garment workers’ life, according to a press release. The key objectives of this study are to examine working conditions, income, expenditure, and the usage of financial tools by employees in the global garment supply chain.
Through regular and credible data collection and analysis, the major purpose of this project is to promote informed policy-making and brand activities that can have a positive impact on the lives of garment workers. Visitors to the project’s website can keep up with the latest developments through blogs and bulletins. Monthly data gathered between April 2020 and October 2020 was used to investigate “Factory Wage Digitization Trends” in Bangladesh. A total of 1,377 Bangladeshi factory workers, most of whom were women, were questioned over the phone in Bangladesh’s five main industrial areas: Chattogram, Dhaka city, Gazipur, Narayanganj, and Savar.
They Pay Salaries in cash or Digitally
During the interview, participants were asked about their current employer, the salaries received, and whether they were paid in cash or digitally. The researchers divided the factories into “brand-facing” and “non-brand-facing” categories. A factory is considered brand-facing if it is included on a brand’s supplier list or on the Mapped in Bangladesh or Open Apparel Registry websites as a supplier to a brand. Mapped in Bangladesh is a directory of export-oriented RMG manufacturers in Bangladesh who all employ fundamental RMG methods and are identified as members of important associations.
The Open Apparel Registry is a source map for finding garment manufacturing and their associations. According to the research, some factories were computerized before May, others for a short time, and still others were never digitized at all. One of the investigation’s most striking conclusions is that factories with strong brands are more likely to have paid their employees digitally before May 2020. Furthermore, organizations that had previously paid their employees in cash were more likely than those that had not to switch to digital payment methods between April and May.
In April 2020, more than a quarter (27%) of nonbranded businesses and 37% of brand-facing manufacturers were paying their employees digitally; by May 2020, the numbers had risen to 57 percent and 85 percent, respectively. The number of non-brand-facing factories that pay digitally peaked at 60% in June before declining. The percentage dropped significantly from 60 percent in June to 54 percent in July, and then to 45 percent in August. Meanwhile, the highest percentage of manufacturers paying digitally was recorded in July, and it dropped to 76% in August for factories facing the brand.
According to a report in an English-language financial publication in the country, the proportion declined to 55.80 percent in the first half (H1) of fiscal 2021-22, as net RMG exports were $11.10 billion versus $19.90 billion in exports and $8.79 billion in raw material imports.
Reduced payroll processing costs and Production Time
According to the report, only 40% of non-brand-facing manufacturers and 73% of brand-facing companies will still be paying employees digitally in September 2020. According to statistics, the government stimulus package created in response to the Covid-19 lockout to support temporarily laid-off workers through digital payments accelerated the digitization process in factories. Despite the many benefits of digitization, such as reduced payroll processing costs and lost production time, as well as greater security associated with digital payments, factory workers are returning to cash payments.
According to the study, the benefits of digitization were not immediately apparent to the factories, owing to the fact that they had not completely replaced cash payments with electronic payments. Some employees, for example, have reported receiving their regular paychecks as digital payments but their Eid bonus payments as a check. Manufacturers may return to in-cash payment systems due to workers’ unwillingness to accept digital payments. Most employees are hesitant to get their paychecks online due to hefty transaction costs and a lack of knowledge about mobile finance and banking services.
The value addition of the RMG industry in Bangladesh varies
Bangladesh’s ready-made garment (RMG) sector has had a rocky ride in recent years, with exporters citing high raw material costs and a lack of long-term policy support. The value addition of domestic RMG commodities remained nearly unchanged during fiscal years 2012-13 and 2018-19, according to Bangladesh Bank data. It fell to 56.49 percent in the fiscal year 2019-20, then climbed to 59.13 percent in the fiscal year 2020-21. (FY21). Bangladesh exported RMGs worth $27.94 billion in 2019-20 and imported raw materials for $12.26 billion. As a result, the country’s net RMG exports in that fiscal year totaled $15.67 billion, reflecting a value increase of 56.49 percent.
The value-added in the fiscal year 2018-19 remained lower than the pre-pandemic level of 64.32 percent. Bangladesh, although exporting large amounts of RMG, is reliant on imported raw materials such as cotton, petrochemicals, and chemicals. Knitwear has a higher added value than woven since it is 80 percent made from local raw materials, whereas woven is largely made from imported fabrics.
The $3 billion RMG payout is causing some concern
According to exporters, the readymade garment business may not realize or risk deferred payment of US$3.0 billion due to the Covid-19 pandemic. Local apparel exporters lost $3.18 billion in work orders during the outbreak. European Union purchasers canceled or held $1.93 billion in work orders, followed by US buyers with $574 million and Canadian buyers with $ 52 million. Non-traditional consumers also withdrew an additional $ 620 million in canceled or pending orders. RMG export revenues declined by US$5.28 billion from March to June this year compared to the same period last year, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
On Saturday, the Bangladesh Malaysia Chamber of Commerce and Industry (BMCCI) held a virtual debate in which the BGMEA presented its findings. Faisal Samad, senior vice president of the BGMEA, spoke at the event, which was presided over by Raquib Mohammad Fakhrul, president of the BMCCI. The impact on the RMG industry, according to Samad, will not be limited to the sector and may have spillover effects on other industries, consumers, and service sectors.
He went on to say that for the first time in history, garment export growth fell by 18 percent, calling the current situation “difficult” for all industries, domestic and foreign. Anwar Shahid, senior vice president of the BMCCI, proposed diversifying markets and products, as well as enhancing worker productivity and manufacturing value-added commodities. His additional suggestions included looking into the challenges and figuring out how to keep duty-free access to locally-made items, including RMG after the LDC status is lifted.
