Impacts of COVID-19 on the Garment Sector of Bangladesh

Abstract

In this study, the principal purpose has been made to investigate the impacts of COVID-19 outbreak on the garment sector of Bangladesh including Bangladesh economy using the modern econometric techniques. For this study, the time series variables GDP, total export values (TEX), sales revenue of the garment sector (REVGS), employment in the garment sector (EMP), remittance inflows (REM) and unemployment rate (UNR) of Bangladesh are used in order to find the impacts of COVID-19 outbreak. In this paper, the impacts of COVID-19 outbreak are predicted using the Holt-Winters’ seasonal additive method for all variables individually for the years 2020 and 2021 and then for each and every variable the future values are forecasted. From the predicted results it is found that the loss of GDP, TEX, REVGS, and REM are $31,677.475 million, $6771.5296 million, $6854.089 million and $3941.4486 million in the year 2020 and in the year 2021 it will be $13,544.415 million, $3044.7328 million, $2026.187 million, and $934.513 million respectively for the country wide lockdown due to COVID-19 outbreak. In terms of percentage, the loss of these variables is 13.973%, 13.9726%, 21.789% and 21.650% in the year 2020 and 6.945%, 7.303%, 6.395% and 5.826% in the year 2021 respectively. From the forecasted values the declining trend is found for the variable sales revenue of the garment sector (REVGS) and will be continued for a long period of time. The long-lasting declining trend of REVGS is a red alarming for the garment sector as well as for the Bangladesh economy. Therefore all the stakeholders including BGMEA, BKMEA, and Bangladesh government have to take necessary steps from now to overcome the problem. From the predicted values it is found that in the garment sector the growths of employment are negative by -1.442% and -10.406% in the years 2020 and 2021 respectively. During the period of COVID-19 more than 348 garment factories have shut-down and 0.4 million garment workers lost their jobs. It is found that unemployment rate is upswing by 58.234% in the year 2020 and then will fall back by 18.72% in the year 2021, but from 2022 again increases returning to moderate levels with an increasing rate of 2.47% and will be continued for a long period of time due to COVID-19 outbreak. The long-lasting increases in unemployment rate will cause adverse effects on socio-economic conditions including the livelihood of the marginal people. During the period of COVID-19, unexpected outcomes such as reported women are being raped and suicide may adversely affect the mental health status of the garment female workers for future. Thus from the predicted values, the following policies should be implemented to tackle the problem of sales revenue, to improve the employment condition in garment sector and also to improve unemployment conditions in Bangladesh. The garment sector should develop and maintain good relationships with the international buyers and related stakeholders and have to negotiate with them regarding the price of the products. Price reduction policy with maintaining the quality of the products should be implemented for which the global demand will be increased as a result sales revenue of the garment sector will be increased. Emphasize should be given to provide tax benefits, to advance livelihoods programming for vulnerable workers, to formalize a centralized government database for the garment sector, to expand social protection programs for all garment workers, including unemployment benefits and housing and to rebuild trust between buyers, employers and workers. Monetary motivation and minimum risk premium policy should be introduced for which the garment workers can work with full enthusiasm. Collaboration between government and garment sector including other sectors should be developed to keep people employed and train them. Well-designed database can be created for matching job seekers and employers. Upskilling or reskilling the individual in conformance with the need of future driven skill trend. Enhancing digital literacy that will help the workers to find job in rapidly changing labor market. Entrepreneurs should be encouraged and different stimulus packages should be allocated and emphasize should be given for proper management of these packages so that there will be no scope of wastage money, as a result money can be used for right purposes. These policies will play significant roles for future development of the garment sector as well as for Bangladesh economy.