Growing unrest in the Bangladeshi garment industry has sparked a series of riots by workers protesting against low wages. Last week government officials and union representatives agreed to implement pay rises, but the increases have yet to be finalised. This, says Michael Flanagan, is just the tip of the iceberg.

Behind all the dismal news coming out of Bangladesh lies an extraordinary story of resilience. Indeed it was looking like the garment industry's great success story.

Between 2004 and the first quarter of 2006, the country - whose industry many activists predicted would collapse in 2005 - has accounted for a quarter of all the extra clothes imported into the EU, US and Japan combined, according to figures from Clothesource TradeTrak.

While that's dwarfed by the rise in imports from China (which accounted for just over half the growth), there's no question the Bangladeshi story is the more remarkable. China, after all, has nine times its population.

Bangladesh has achieved its success by keeping prices low - selling almost twice as many clothes to the West as India this year so far. For all the fuss European and American protectionists made about the drop in Chinese prices at the beginning of 2005, China never became as cheap as Bangladesh.

Cheap clothes challenge
However, making clothes cheap in Bangladesh isn't easy. The Asian Development Bank has claimed that freight costs through the major Bangladesh port, Chittagong, are twice those at ports in China, India, Taiwan or Thailand.

A Clothesource analysis showed that bribery to get a typical garment exported from Bangladesh on time costs about the same, on average, as the workers' wages to make it.

A government study quoted by the UN claimed that interest on working capital loans to smaller Bangladeshi factories averaged over 100% per year.

And for the past few months, the Bangladeshi press has been full of reports of production lines unpredictably closed down as power is cut off for up to half the day - with backup generators rendered inoperable by government regulations banning the transport of diesel to power them.

The Bangladesh government and banking system have created extraordinary problems for the garment industry. More extraordinary still, though, is the country's ability to blame everyone but its corrupt politicians for its problems.

In October, after riots followed garment worker deaths in a Savar car accident, a union official at a trade association press conference blamed British charity Oxfam for "trying to destroy the country's garment industry."

At the beginning of May, demonstrating workers blamed the EU for depriving the country's garments duty free access - something the EU repeatedly offers but the country's government repeatedly turns down as it would allow easier access to Bangladesh for Indian raw materials.

And representatives of the apparel trade association seemed simply unaware the tragic May riots had been started by a factory three months late in paying their workers' derisorily low wages.

"It may be a conspiracy of local and international collaborators. The countries that opposed us at the WTO meeting in Hong Kong may be behind the conspiracy. They want to tarnish our image and destroy us," business leaders were quoted as saying.

Their reaction was described by the ITGWLF international union as "so divorced from the reality of the industry that it made the employers of Bangladesh a laughing stock internationally."

Indeed, the only thing Bangladeshi businesses, union leaders and politicians haven't blamed foreigners for has been the horrific chapter of illegally built factories and ignored safety regulations which have led to so many deaths in the past year.

Underlying problem
Because the underlying problem in Bangladesh, sadly, is a lot more complicated than a simple matter of greedy employers.

It's certainly true that many Bangladeshi factories pay disgraceful wages - and that, as its Institute for Labour Studies pointed out, the industry has failed to honour four agreements on the issue signed between 1997 and 2005.

Many Bangladeshi businesses can survive only by paying disgraceful wages. Some survive, indeed, only by delaying the payment of those wages. However appalling that may be, it's very unlikely that 2 million people - 80% of them women - would remain in jobs if Bangladeshi businesses paid wages on a par with Thailand, China or even India.

This isn't because Bangladeshi employers are more evil - or incompetent - than their counterparts in China or even India.

It's that the corruption, inertia and endless squabbling of Bangladeshi politicians impose costs - in bribes, in inefficiency, in payments to loan sharks, in orders cancelled due to power outages - the country's competitors don't have to deal with.

Until these shortcomings are dealt with, the country's competitors may well point them out to their customers.

But mature politicians should handle this threat by tackling the country's real weaknesses, getting the income from the country's exports to the businesses and workers who create them.

It's a great deal easier though to keep things as they are and just cop out. The reaction of the Bangladesh Home Minister, Lutfuzzaman Babar, to widespread riots by people whose minimum wage has not been raised since 1998? "It is a conspiracy by our competitors to destroy the garment sector in our country."

As riots flared up again, foreign-invested apparel factories in the Dhaka Export Processing Zone (DEPZ) closed indefinitely on June 3. For once this seems to have forced a Bangladeshi politician to accept some responsibility, with State Minister for Labour and Employment Aman Ullah Aman launching an investigation into rule breaking.

Is it just possible there's a glimpse of a silver lining in the country's current troubles?

Mike Flanagan is chief executive of Clothesource Sourcing Intelligence, a UK-based consultancy that provides the western apparel buying community with objective information on apparel production, trade, price competitiveness, and apparel producers in over 100 countries.