Published: 01:13 AM, 29 June 2026
Garments Industry in Bangladesh Swirls Within Losses and Layoffs
Bangladesh's ready-made garments (RMG) industry, the country's largest export-earning sector and the backbone of its economy, is navigating one of the most difficult periods in its history. Rising production costs, declining global demand, inflation, supply chain disruptions, and labor unrest have combined to create a challenging environment for manufacturers. As profit margins continue to shrink, many factories have resorted to reducing production, laying off workers, or shutting down operations altogether.
The garment industry contributes more than 80 percent of Bangladesh's export earnings and employs over four million workers, the majority of whom are women. For decades, the sector has been celebrated as the engine of economic growth, poverty reduction, and women's empowerment. However, recent developments suggest that this vital industry is under immense pressure, raising concerns about its long-term sustainability and its impact on the national economy.
A Decline in Global Demand
The slowdown in the global economy has significantly affected Bangladesh's garment exports. Major markets such as the United States, the European Union, and Canada have experienced high inflation and reduced consumer spending. As households prioritize essential goods over fashion and apparel, international retailers have cut back on new orders.
Many Bangladeshi manufacturers report receiving fewer purchase orders than in previous years. Buyers are also negotiating lower prices while demanding shorter delivery times and higher compliance standards. Factory owners argue that these conditions make it increasingly difficult to maintain profitability.
Industry insiders note that although export figures have shown occasional signs of recovery, the volume of orders remains inconsistent. Smaller and medium-sized factories, in particular, have struggled to compete with larger manufacturers that possess stronger financial resources and long-term relationships with global brands.
Rising Costs Squeeze Profit Margins
One of the biggest challenges facing garment manufacturers is the sharp increase in production costs. Prices of imported raw materials, including cotton, dyes, chemicals, and accessories, have risen substantially due to global inflation and currency fluctuations.
Energy costs have also increased significantly. Electricity shortages, higher fuel prices, and rising transportation expenses have added to production costs. Many factories have had to rely on expensive backup generators during power interruptions, further reducing profit margins.
The depreciation of the Bangladeshi currency has made imported materials more expensive. Although a weaker currency can benefit exporters by making products more competitive internationally, the rising cost of imports has offset much of this advantage.
Factory owners argue that international buyers have been reluctant to adjust purchasing prices despite these increased operational expenses. Consequently, many manufacturers are absorbing higher costs without corresponding increases in revenue.
Wage Increases and Labor Unrest
The recent increase in the minimum wage for garment workers has been welcomed by labor rights advocates as an important step toward improving workers' living standards. However, factory owners contend that the wage hike has further increased operating expenses during an already difficult period. Many workers argue that even with higher wages, rising food prices, rent, transportation costs, and healthcare expenses have reduced their purchasing power. As a result, demands for better salaries, safer working conditions, and timely payment have intensified.
Labor demonstrations and occasional factory closures have disrupted production schedules. While workers seek fair compensation for their contributions, employers emphasize the financial constraints imposed by declining international orders and increasing production costs.Maintaining a balance between workers' welfare and factory sustainability remains one of the industry's greatest challenges.
Layoffs and Factory Closures
As financial pressures mount, numerous factories have reduced their workforce. Some manufacturers have implemented temporary layoffs, while others have permanently closed production units.
Smaller factories, which often operate with limited financial reserves, have been particularly vulnerable. Without sufficient working capital or access to affordable loans, many have found it impossible to continue operations during prolonged periods of reduced demand.
The consequences of these closures extend far beyond factory gates. Thousands of workers have lost their primary source of income, affecting families and local communities that depend heavily on garment employment.
Women, who constitute the majority of the garment workforce, have been disproportionately affected. Many support entire households, and unemployment has increased financial insecurity for countless families across Bangladesh.
Supply Chain Challenges
Global supply chain disruptions continue to affect production schedules. Delays in receiving imported raw materials have forced manufacturers to postpone shipments and renegotiate delivery deadlines with international buyers.
Shipping costs remain higher than pre-pandemic levels in some trade routes. Port congestion, logistical inefficiencies, and geopolitical uncertainties have further complicated international trade. Manufacturers face the difficult task of meeting strict delivery deadlines while coping with delayed shipments and rising transportation expenses. Failure to deliver products on time may result in financial penalties or the loss of future contracts.
Competition from Other Countries
Bangladesh remains one of the world's leading apparel exporters, but competition from countries such as Vietnam, India, Cambodia, Indonesia, and Turkey has intensified. Several competing nations have invested heavily in automation, technological innovation, and supply chain modernization. They have also diversified into higher-value apparel products that generate larger profit margins.Bangladesh's comparative advantage has traditionally been its abundant labor force and competitive production costs. However, rising wages and production expenses have narrowed this advantage.
Industry experts argue that Bangladesh must move beyond basic garment manufacturing and invest in product diversification, innovation, branding, and advanced textile technologies to remain globally competitive.
Sustainability and Green Manufacturing
Despite current challenges, Bangladesh has made remarkable progress in sustainable manufacturing. The country now hosts many of the world's highest-rated environmentally friendly garment factories.
These green factories use energy-efficient technologies, water recycling systems, and environmentally responsible production practices. International buyers increasingly favor suppliers that demonstrate strong environmental and social compliance.
Investment in sustainability not only enhances Bangladesh's international reputation but also improves long-term competitiveness by reducing operational costs and attracting premium buyers.
However, establishing green factories requires significant financial investment, which remains difficult for smaller manufacturers struggling with declining revenues.
Government Support Measures
The government has introduced several initiatives to support the garment industry during difficult economic periods. These include financial stimulus packages, export incentives, low-interest loans, and policy reforms aimed at strengthening industrial competitiveness.
Business associations have urged policymakers to simplify export procedures, improve access to financing, stabilize energy supplies, and negotiate better trade agreements with international partners.Industry leaders also advocate for investments in infrastructure, ports, transportation networks, and vocational training to enhance productivity and reduce operational costs.
Many economists believe that coordinated efforts between government agencies, factory owners, labor organizations, and international buyers are essential for ensuring the industry's long-term resilience.
Digital Transformation and Automation
Technological innovation presents both opportunities and challenges for Bangladesh's garment industry.
Many factories are gradually adopting automated cutting machines, digital design software, artificial intelligence, robotics, and real-time production monitoring systems. These technologies improve efficiency, reduce waste, and enhance product quality. However, automation may also reduce demand for low-skilled labor, potentially creating new employment challenges. Experts emphasize the importance of retraining workers so they can adapt to increasingly technology-driven production processes.
Investing in education, technical skills, and digital literacy will be essential for preparing the workforce for the future of manufacturing.
The Human Cost
Behind every factory closure lies a personal story of hardship. Thousands of workers who lose their jobs face uncertainty about meeting basic household expenses.
Many former garment employees struggle to find alternative employment due to limited educational qualifications or specialized experience. Some migrate to other cities in search of work, while others return to rural communities where employment opportunities remain scarce.
Nasir Uddin Shah is Chief Reporter
at The Asian Age.
