Published: 08:20 AM, 28 June 2025
Why Bangladesh’s Factories Are Shutting Down and What It Means for Workers
Dr. Rubel Amin and Md. Rezaul Karim
For a long period, the Ready-Made Garments (RMG) sector has supported Bangladesh’s economy. Many people are employed in this industry which also plays a key role in export revenue for Bangladesh. However, a lot of RMG factories and businesses have closed down lately. The result has been a rise in crime and more unemployment. What is the reason behind all the closures? So, what should Bangladesh do to solve this problem?
What is Happening?
It is reported in 2024 that around two hundred garment factories and businesses in Bangladesh have either closed or stopped working. Because of this change, thousands of workers are losing their job. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), during the last year, at least 300 garment factories closed or encountered financial issues. Many jobs depend on this sector which employs some 4.5 million people and millions more indirectly.
Why Are Factories Closing?
The shutdown of factories in the Ready-Made Garments (RMG) sector is caused by several linked factors. Problems in the Garment Industry, Many workers in Bangladesh’s garment factories deal with stressful working hours, unsafe surroundings and getting paid little. A lot of protests have been taking place in recent years, calling for improved wages, regular workdays and increased safety at workplaces. Workers in labor unions have been staging strikes that go on for days or even weeks at a time. Though these protests demonstrate employee issues, regular work interruptions upset production calendars and encourage buyers to look for stable supply partners. Because of a rise in the cost of living, the government increased the minimum wage for garment workers a few times in the past five years. Augustine believes this is good news for employees, yet factory managers say these pay rises happened too fast and didn’t coincide with improved productivity. At the same time, raw materials, especially imported fabrics and threads, are getting more expensive because of inflation and issues in the supply chain after COVID-19. High fuel prices have raised the cost of getting goods to ports. So many expenses build up, making the process more expensive and the profit more difficult to see. Tensions in global trade, especially between major countries like the US and China, have caused large areas of the global market to feel uncertain. Tariffs or other constraints on exports by other countries may cause the number of orders from Bangladesh to drop. Additionally, Europeans and North Americans are being more careful with their money and being less enthusiastic about buying fashion which has lowered sales. Fewer orders are coming in for Bangladeshi factories because of the slower economy. Regional countries like Vietnam and Cambodia have improved infrastructure, skills of their workers and trade alliances, making their entry into the market tougher. As an example, because Vietnam takes part in free trade deals, it can export garments without tariffs to various places which attracts brands wanting to save money and ship products quickly. Bangladesh is trying to arrange deals like these, but it is not there yet. Because of delayed payments from overseas buyers, factories in China have faced difficulties with their cash flow. Due to bad news about the economy, orders were cancelled and factories had products left over and no money to cover payroll or supplier bills. Concerns for Safety in Factories, International buyers now pay more attention to factories’ safety and compliance with the environment. Factories that do not go along with global standards may not get new contracts. Some businesses find it difficult to carry out improvements or earn professional certifications which causes many of them to be shut down or left without buyers.
The Effects: Unemployment and Crime on the Rise
When factories close, it not only affects the businesses but also strongly affects workers and those who live around the factories. Due to factories closing, unemployment and poverty are rising because many people lose their jobs. Unemployment grew from 4.3% in 2023 to around 5.2% in 2024, most of this rise due to the garment sector, the Bangladesh Bureau of Statistics said. Several of these workers do not attend school often and have very few alternative jobs which causes poverty for many. Closing a factory is hard on the workers and it also causes difficulties for their families. Families often cannot meet the cost of school fees and uniforms which leads some children to drop out. There is more food insecurity and this can make health issues become more common. Many communities which rely on factory employment start to experience economic challenges. Rising crime in Bangladesh seems to link to more unemployment, the data from the Bangladesh Police indicates. Where factories shut down, there is an increase in theft, robbery, drug abuse and violence. Men without regular employment and no prospects are more likely to get involved in crime or join criminal gangs to live. Because of unemployment, people may have to deal with mental problems such as depression and anxiety. An increase in domestic violence and substance abuse is also commonly seen in areas with many job losses which puts more stress on social services and policing.
What Can Be Done? Practical Solutions
In order to handle factory closures, unemployment and increasing crime, Bangladesh needs a range of solutions. Facilitate Social Dialogue and Industrial Harmony, the government must work to keep an ongoing dialogue between factory owners, workers and trade unions. Labor and management working together on some issues can bring down the risk of strikes and strengthen trust among workers. Labor rights and negotiation training for managers may improve the balance of power between them and the workforce. Invest in Technology and Invent new Processes to Raise Factory’s Competitiveness. This process covers buying new technologies, making the supply chain digital and using information from data analytics to plan and improve the way products are made. With technology, Bangladeshi products can see their costs lowered, their quality improved and their delivery times reduced which makes them more appealing to overseas customers. A government can reach separate agreements for raw materials and set up subsidies for main inputs which helps reduce expenses. Better infrastructure for energy can help prevent power outages and make electricity cheaper which is good for factories.
What is Happening?
It is reported in 2024 that around two hundred garment factories and businesses in Bangladesh have either closed or stopped working. Because of this change, thousands of workers are losing their job. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), during the last year, at least 300 garment factories closed or encountered financial issues. Many jobs depend on this sector which employs some 4.5 million people and millions more indirectly.
Why Are Factories Closing?
The shutdown of factories in the Ready-Made Garments (RMG) sector is caused by several linked factors. Problems in the Garment Industry, Many workers in Bangladesh’s garment factories deal with stressful working hours, unsafe surroundings and getting paid little. A lot of protests have been taking place in recent years, calling for improved wages, regular workdays and increased safety at workplaces. Workers in labor unions have been staging strikes that go on for days or even weeks at a time. Though these protests demonstrate employee issues, regular work interruptions upset production calendars and encourage buyers to look for stable supply partners. Because of a rise in the cost of living, the government increased the minimum wage for garment workers a few times in the past five years. Augustine believes this is good news for employees, yet factory managers say these pay rises happened too fast and didn’t coincide with improved productivity. At the same time, raw materials, especially imported fabrics and threads, are getting more expensive because of inflation and issues in the supply chain after COVID-19. High fuel prices have raised the cost of getting goods to ports. So many expenses build up, making the process more expensive and the profit more difficult to see. Tensions in global trade, especially between major countries like the US and China, have caused large areas of the global market to feel uncertain. Tariffs or other constraints on exports by other countries may cause the number of orders from Bangladesh to drop. Additionally, Europeans and North Americans are being more careful with their money and being less enthusiastic about buying fashion which has lowered sales. Fewer orders are coming in for Bangladeshi factories because of the slower economy. Regional countries like Vietnam and Cambodia have improved infrastructure, skills of their workers and trade alliances, making their entry into the market tougher. As an example, because Vietnam takes part in free trade deals, it can export garments without tariffs to various places which attracts brands wanting to save money and ship products quickly. Bangladesh is trying to arrange deals like these, but it is not there yet. Because of delayed payments from overseas buyers, factories in China have faced difficulties with their cash flow. Due to bad news about the economy, orders were cancelled and factories had products left over and no money to cover payroll or supplier bills. Concerns for Safety in Factories, International buyers now pay more attention to factories’ safety and compliance with the environment. Factories that do not go along with global standards may not get new contracts. Some businesses find it difficult to carry out improvements or earn professional certifications which causes many of them to be shut down or left without buyers.
The Effects: Unemployment and Crime on the Rise
When factories close, it not only affects the businesses but also strongly affects workers and those who live around the factories. Due to factories closing, unemployment and poverty are rising because many people lose their jobs. Unemployment grew from 4.3% in 2023 to around 5.2% in 2024, most of this rise due to the garment sector, the Bangladesh Bureau of Statistics said. Several of these workers do not attend school often and have very few alternative jobs which causes poverty for many. Closing a factory is hard on the workers and it also causes difficulties for their families. Families often cannot meet the cost of school fees and uniforms which leads some children to drop out. There is more food insecurity and this can make health issues become more common. Many communities which rely on factory employment start to experience economic challenges. Rising crime in Bangladesh seems to link to more unemployment, the data from the Bangladesh Police indicates. Where factories shut down, there is an increase in theft, robbery, drug abuse and violence. Men without regular employment and no prospects are more likely to get involved in crime or join criminal gangs to live. Because of unemployment, people may have to deal with mental problems such as depression and anxiety. An increase in domestic violence and substance abuse is also commonly seen in areas with many job losses which puts more stress on social services and policing.
What Can Be Done? Practical Solutions
In order to handle factory closures, unemployment and increasing crime, Bangladesh needs a range of solutions. Facilitate Social Dialogue and Industrial Harmony, the government must work to keep an ongoing dialogue between factory owners, workers and trade unions. Labor and management working together on some issues can bring down the risk of strikes and strengthen trust among workers. Labor rights and negotiation training for managers may improve the balance of power between them and the workforce. Invest in Technology and Invent new Processes to Raise Factory’s Competitiveness. This process covers buying new technologies, making the supply chain digital and using information from data analytics to plan and improve the way products are made. With technology, Bangladeshi products can see their costs lowered, their quality improved and their delivery times reduced which makes them more appealing to overseas customers. A government can reach separate agreements for raw materials and set up subsidies for main inputs which helps reduce expenses. Better infrastructure for energy can help prevent power outages and make electricity cheaper which is good for factories.
Support new kinds of industry, like leather production, pharmaceuticals, information technology (IT) and food processing in addition to the garment sector. Supporting startups and small businesses could give workers extra employment options and relieve some workload from the RMG sector. Emphasize skills training in centers and schools so that young people receive education useful in the workplace. Working with industries allows the training to match what employers require, improving the chance of getting jobs away from traditional factory employment. Offer Social Protection and Safety Nets, Unemployed workers deserve assistance with money, medical treatment and help with getting jobs.
Assistance through social programs can keep people from falling into crime. Youth can find counseling and sports and arts activities at community centers. Having favorable trade deals and easy export procedures, the government has to negotiate terms that reduce tariffs. Making Bangladesh comply with global labor and environmental rules will gain buyers’ trust and open more chances to sell in the international market. Focus on rural development and urban infrastructure, as it will help improve rural industries, city transport and housing, making life better for rural communities and solving the job and space issue in cities. More infrastructure creates opportunities for investors and boosts quality of life in the area. Promote Corporate Social Responsibility (CSR) by making it mandatory for factories and multinationals to help employees with welfare programs and medical support. Loyalty among workers tends to go up and conflict at work decreases when companies focus on CSR. These solutions support Bangladesh in converting present challenges into advancement toward stronger and sustainable growth. With people working hard, entrepreneurial ideas and wise choices in policy, factories will keep operating, jobs will be brought back and communities will grow.
Unique Insight: Technology as a Game Changer
Unique Insight: Technology as a Game Changer
Bangladesh could try to boost technology use within the RMG industry. introducing automated machines, digital management and artificial intelligence into the supply chain can help companies work better and spend less. As an illustration, some factories in Bangladesh now use automated cutting machines and help from robots for packaging. When factories use these technologies, they can develop better clothing, work faster and keep production costs down, giving them a larger advantage globally even when wages rise. In addition, technology helps reduce risks of injuries and makes the job environment safer. Fewer labor conflicts would be expected and employees would be happier.
Conclusion
Conclusion
The shutting down of RMG factories and other companies in Bangladesh is a big difficulty. Many workers are affected by it and it also threatens the stability of society. Many reasons are at play, some being labor trouble, inflation, challenges in international trade and rivalry. Bangladesh still has resources it can use. Advancing discussions, supporting productivity, helping industries, improving skills and using technology can help the country keep jobs and improve its economy. We do not know how the story of Bangladesh’s factories might end. If we take the right approach, it can end in success, improvement and hope for millions.
Dr. Rubel Amin and Md. Rezaul
Karim are Head of Supply Chain Management at Standard MH Group
and Chief People Officer, Standard
AR Group, Dhaka respectively.
Dr. Rubel Amin and Md. Rezaul
Karim are Head of Supply Chain Management at Standard MH Group
and Chief People Officer, Standard
AR Group, Dhaka respectively.
