Mr. Hoque
is the owner of two garment factories in Naranganj, with 600 workers each, and
previously served three terms as the President of the Bangladesh Knitwear
Manufacturers and Exporters Association, from April 2004 until July 2010.
Scholte: There was a lot of critical reporting earlier
this year in Germany about labor conditions in Bangladeshi factories. Did you
see it?
Hoque: Yes. I would like to go to Germany to talk to
people who have a bad image of readymade garment producers in Bangladesh. We
can organize seminars, we can invite the media. I would like to face them
directly. Bring your questions and I will answer.
I have good
connections with the employers‘ federation in Germany and I have the
certification of the International Labour Organization (ILO) that Bangladesh is
child-labor free and has relatively good working conditions. You can find it in
the ILO annual report.
In 1996-97
we also had very bad publicity and orders dropped almost 50% because of bad
press on child labor. Then we brought ILO on board and did a project with them.
ILO will certify that we have no child labor today.
Scholte: But wages in Bangladesh are so low. How can
workers live on them?
Hoque: The readymade garment sector is the only industry
in Bangladesh that has a minimum wage: 3000 taka. This is the highest official
entry level in the country. No one else pays this. The entry level is 3000 taka
and the range goes up to 20,000. Workers paid on a piece-rate basis earn more. Most
workers – 60% – earn 6000 to 10,000 takas a month.
The
readymade garment industry is not isolated. You have to consider the overall
economic, social, political situation of Bangladesh. This is not Germany. If
you try and find a problem, you will find ten. I also see many problems in
Germany. There are problems in any country.
If you take
the Bangladesh standard of living earnestly, you will find that the garment
workers enjoy a better standard of living than the average Bangladeshi. The
working environment is one of the best available to workers in Bangladesh. You
cannot take a yardstick from Germany and use it in Bangladesh. You have to
think about the overall socio-economic situation in Bangladesh.
Scholte: Some of your critics charge that there is a wage
gap between men and women – they say that for the same work, women are paid
less.
Hoque: It may happen that women are given lighter
work. Women work on the sewing machines, men less so. Men do the laborious jobs,
like the heavy knitting machines. That is the difference. If you just look at
the salaries, you don’t see this. But women workers have a huge majority on the
floor level – do you think it would be possible to continue to deprive them of
the same wages?
Scholte: What
about compliance with social and environmental standards?
Hoque: We have
been talking about social compliance for a long time now. With the support of
many development partners – GIZ, UNDP, EU, UNIDO[1]
– people have become very aware. The manufacturers are very aware that they
must meet the buyers’ requirements.
Scholte: Mr. Hoque, you have two garment factories. Are
your factories compliant with social standards?
Hoque: Well,
compliance has different definitions, you know. The government has some basic
rules. To us, if you follow the basic rules of the Labour Law 2006, you are
compliant – maybe I overlook some details, but big things like no child labor,
weekly holidays, overtime, maternity leave, working hours, enough health and
security, these are the very basic things – then my factories are basically
compliant.
Scholte: How do
you certify that, how do you prove what you say?
Hoque: BKMEA and
BGMEA[2]
do a basic certification – they report that this factory is compliant up to
this or that point. This includes child labor, security, etc. The next step is
third-party auditors like SGS, IST, Bureau Veritas, TÜV Germany. We use TÜV SÜD
and we are now undergoing certification by third party auditors for the
Business Social Compliance Initiative (BSCI), which is the common certification
of the European Union. We are doing this because we are now producing for a
German buyer who is promoting BSCI certification.
It is a continuous process. You do not get a certificate for
10 years; it is continuous. We are still at the beginning. Every three months
they come and check. They find things that need improvement. The first audit is
very thorough. The next time they just walk through and look at those points.
The big buyers, like Walmart and other American firms, have
their own auditors – not so much the Europeans, although H&M has their own
auditors.
Scholte: So what is the actual level of compliance among
the garment factories in Bangladesh?
Hoque: There are around 3000 factories in operation.
The number of totally compliant “A” factories is around 1000.[3]
These are big and medium-sized firms representing about 1.5 million workers. All
the new factories outside Dhaka are totally compliant. Many of the 1000 totally
compliant firms are also certified by third-party auditors. They can prove what
they are saying!
Then there
are maybe 1500 “B” firms, who have problems, for example, with lighting or
toilettes – they represent another 2 million workers.
Finally
there are 500 smaller “C” firms with bigger problems who employ around 500,000
people. And then there are the firms that are not even part of BKMEA and BGMEA.
The problematic firms are usually small firms inside the city of Dhaka.
The buyers
are very careful – they do not buy from firms that are not compliant. The
non-compliant firms are small firms selling to wholesalers, small buyers, and
on the street.
Scholte: You
played a key role in promoting compliance when you were President of the
Bangladesh Knitwear Manufacturers and Exporters Association and you encountered
a great deal of resistance in the beginning.
Hoque: Yes a lot.
You know I was the representative of the owners and they are always looking for
support. They thought I should support them and protect them regardless of what
they were doing. That is the normal expectation. But I did not do that. I had a
lot of opposition from them. They told me I should not push compliance. I told
them: “OK, today you feel that I am not protecting you, but after five years,
you will appreciate that I protected you at the right time.”
Scholte: You
understood that, earlier than most people.
Hoque: Yes, I
think so and that is why I was not popular at that time. But now people
appreciate that I showed them the right way to survive.
In 2008 I also proposed that wages be increased by 20%. The
government formed a minimum wage commission to review the wage structure. But I
said, “Why wait for the government to push us and then raise a hew and cry
before we increase it? We as entrepreneurs should come up with a proposal to
increase wages. That will improve our image – to government, workers, society,
international buyers.
But it did not fly. We came up with another idea to help
poor workers. We opened fair price shops for commodities like rice, pulses,
sugar in different industrial zones because rice prices suddenly increased by
30, 40% in 2008.
Scholte: When was
the last increase in minimum wage?
Hoque: In 2010.
Scholte: And what about the price you get for your
garments?
Hoque: Prices have not increased that much. Actually
sometimes they have decreased. There was a minor increase when the price of raw
materials rose and the buyers were compelled to increase their offers, but in
general, it is not an upward trend.
Scholte: Do the buyers push you on price?
Hoque: Always, always they push – to the absolute
depths.
Scholte: Do they win? Do they pay less every year?
Hoque: They try to pay less. They try. It is a psychological
game between producers and buyers. They always threaten that if you do not
accept, they will go elsewhere. That is why I sometimes try to organize the
entrepreneurs – they need to know how to say, “No.” It is a psychological game.
If you say, “Go ahead, go,” you might lose one or two buyers. You will not lose
them all. I have proven it. I have never reduced the price. Never – it is my
bottom line policy. Never in my life. Sometimes because of my policy, I also
lose some buyers. They get a cheaper price somewhere else. They know I never
compromise with the price. They don’t like it. They think I am rigid.
Scholte: Do some of the brands pay more than others?
Hoque: Yes, some pay more than others, significantly
more. I also have to be flexible. It is a psychological game. I try to
understand the buyers, how much they can pay. If I think that the buyer can pay
$3.00, why does he offer $2.50? It also depends on the size of the
order.
Scholte: What would be the cheapest? What would a
really cheap buyer pay for one T-shirt?
Hoque: One German discounter tried to pay less than
$1.00. Other brands would pay $1.50 for the same shirt. The discounters have at
least 25% of the market in Bangladesh – all the discounters, not just the
German ones.
Scholte: So the criticism of some of the discounters is
justified then?
Hoque: Yes, they are killing us. You ask them: how do
they justify paying $1.00? Do the costing!
Scholte: But
demand for garments made in Bangladesh continues strong?
Hoque: There are
some signs of recession in different parts of the world – Europe, Greece,
Italy, Spain, America are not doing very well, but despite that negative
signal, we have a big positive signal, which we call the China factor. A lot of
orders are moving from China, buyers are getting tired of dealing with China,
because of the price, because of their policies. And China is so huge, that
even if 10% of the orders move from China, this is big for Bangladesh. That is
why we are not feeling the heat of the economic crisis in America. Otherwise,
we would have been in a tough situation the last two or three years. So the
China factor indirectly saved Bangladesh – not only saved us, gave us the
positive momentum to grow faster even.
The
opportunity is there and we have the potential, but we need to have enough
preparation to grab the opportunity. You know, you can take 100 apples from the
tree, but if your basket is small, you cannot bring 100 apples home. Our basket
is not big enough, right at this moment, to grab all the opportunity we have.
That is the biggest challenge we have.
Scholte: When did you start in garments?
Hoque: Fifteen years ago. Before that I had a job in
a private company. I worked there for four or five years after I got my MBA.
Then I started my own business. First I started in a rented house in Naranganj.
Then I bought land in Naranganj and built my own factory. The first one was very
small – 20 machines, 70-80 people. The machines were Japanese and my first
customer was from France.
Scholte: You knew nothing about sewing machines or
clothes?
Hoque: No, nothing – like almost everyone else in this sector in
Bangladesh.
Scholte: Thank
you very much for your time, Mr. Hoque!
©Threads and borders.All rights reserved. www.threadsandborders.blogspot.de
[1] Deutsche
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, United Nations
Development Programme, European Union, United Nations Industrial Development
Organization.
[2]Bangladesh
Knitwear Manufacturers and Exporters Association and Bangladesh Garment
Manufacturers and Exporters Association.
[3] The Government of Bangladesh, in
conjunction with BKMEA and BGMEA, rates BKMEA and BGMEA member factories as “A,”
“B,” or “C.”
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