BANGLADESH: Labour unrest a risk to apparel production
Labour unrest is likely disrupt production in Bangladesh's apparel sector as workers demand higher wages and better working conditions, the global credit rating agency Moody's Investors Services has warned.
"The recent escalation in garment worker unrest puts on the radar screen the stability of the labour market, US-based Moody's said in its latest analysis, which was submitted to the Bangladesh government this week.
It added that this could, in turn, have "negative implications on foreign aid and investment flows, as well as on export and economic growth."
Moody's observations come as a rise in violent strikes and disruption has plagued the country's major foreign currency earner sector in recent years.
The ratings agency also said Bangladesh's current account has consistently posted surpluses since the fiscal year 2005-06, reflecting the continued strength of readymade garment (RMG) exports and stable inflows from workers' remittances.
"Bangladesh has nibbled away at China's market share, which is still by far the world's largest export of apparel," it noted.
The report also identified slower exports as a near-term risk for the South Asian country, saying exports are poorly diversified, both by product and region, largely weighted towards RMG and heavily exposed to Europe.
Indeed, Bangladesh's export growth has already significantly moderated from a high of 41.7% in 2011 to just 5.9% in recent months, according to the analysis.
The country's low costs are a main driver for its export business, but have led to widespread and frequent unrest by workers demanding better pay and conditions. Most recently in mid-June this year, protests and violence by Bangladeshi garment workers led to a week-long closure of 300 factories.
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