Indications of collapse in garment exports, major employment risks ahead

Staff Correspondent

Bangladesh’s ready-made  garment sector is now facing a clear warning. With export growth negative for seven consecutive months, pressure is building within the industry, which may soon be visible in the labor market. While employers are talking about retaining employment for the time being, reality suggests that layoffs may become inevitable if the crisis lasts longer.

According to the latest data from the Export Promotion Bureau, export earnings fell by 12.03 percent in February 2026. Total export earnings fell by 3.13 percent in the first eight months of the current fiscal year (July-February). In other words, the strong growth hopes that were created at the beginning of the fiscal year have quickly collapsed.

The numbers become even more worrying when looking at the ready-made garment sector. In February, the sector’s export earnings fell by 13.21 percent to $2.81 billion. While a year ago, this income was $3.24 billion in the same period. In other words, there is a clear contraction in the country’s main export-dependent sector.

Analyzing the trend over the entire period, it is seen that the exceptionally high growth in July (about 25 percent) created a ‘base effect’, but it did not last. The decline that began in August intensified in September, October, November and December. The highest contraction was seen in December. Despite a slight relief in January, the decline in February proves that this is not temporary, but a sign of structural weakness.

While exporters blame the global recession, high inflation, and falling demand, questions are also being raised about domestic capacity. Rising production costs, energy uncertainty, and a lack of product diversity are also emerging as reasons for lagging behind in the competition.

This dual reality is also clear in the statements of industry stakeholders. On the one hand, they talk about ‘challenging times’, on the other hand, they assure that there will be no immediate impact on employment. But the natural law of economics says that if orders decrease, production will decrease, and if production decreases, it will be difficult to retain workers.

Policy analysts are also warning that prolonged negative growth will first hit new hiring, followed by reductions in working hours and finally layoffs. This, coupled with uncertainty over payment of wages and benefits, could also lead to social unrest.

More worryingly, new investment has been almost stagnant for two years. This means that the sector is not only stuck in the current crisis, but is also losing its capacity for future expansion. This effectively blocks the path to creating new employment opportunities.

In this context, the question arises as to how much of the crisis is temporary and how much is structural. If global factors were the only driver, some markets would have shown signs of recovery. But the continued decline suggests that the sector will not be able to make a sustainable recovery without internal reforms.

According to experts, it is no longer enough to simply ‘wait’ and hope for the situation to normalize. The crisis could deepen if strategies such as reducing production costs, increasing efficiency, diversifying into higher-value products, and entering new markets are not implemented quickly.

Overall, the current slowdown in the RMG sector is not just a sectoral problem; it signals a potential risk to the country’s overall economy and the livelihoods of millions of workers. This crisis could escalate further if effective policy action is not taken now.