THE IMPACT OF COVID-19 IN

RMG SECTOR
Course Name: Strategic Human Resource Management

Course ID: HRM 390

Section 01

Faculty: Dr. A.N.M. Shibly Noman Khan

Group Members name and IDs: Md. Shafianul Islam Efad 1830730

Tahmid Ahnaf Khan 1830606

Noman Islam 1820523

Date of Submission: 7th April 2022

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Contents
Letter of Transmittal....................................................................................................................................3
Acknowledgements.....................................................................................................................................4
Executive Summary.....................................................................................................................................5
Introduction.................................................................................................................................................6
Economic Impact Of Covid 19................................................................................................................7
Impact Of Covid 19 Into RMG Sector.......................................................................................................10
Impact Of Covid 19 On Epyllion...............................................................................................................13
Conclusion:...............................................................................................................................................15
References.................................................................................................................................................16

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Letter of Transmittal

07.04.2022

Dr. A.N. M. Shibly Noman Khan

Associate Professor, School of Business

Independent University, Bangladesh

Subject: Submission of group assignment for HRM 390

Dear Sir,

With due respect we have prepared this analytical report on how the COVID 19 has affected the
employment opportunities in the RMG sector of Bangladesh. Though we are in learning curve,
this report had enabled us to gain insight into the core analysis from an HR perspective.
Therefore, it was certainly challenging and interesting experience. The core objective is to
develop an analytical report focusing on the employment opportunities.

We have put all the efforts to summarize our knowledge in this report to make it comprehensive
and to meet your expectations.

Yours sincerely,

MD SHAFIANUL ISLAM EFAD

Tahmid Ahnaf Khan

Noman Islam

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Acknowledgements

First, we would like to express our deepest gratitude to Almighty for giving us the strength and
composure to finish the assignment within the allotted time. This assignment was like a bridge
between the reality and hypothetical theories. I am feeling very obliged and therefore special
thanks to our honorable faculty Dr. A.N.M. Shibly Noman Khan Sir, who gave us the
opportunity to think and to show creativeness that we possess and also making us realize what I
am capable of.

My sincere gratitude goes to our honorable teacher Dr. A.N.M. Shibly Noman Khan, associated
professor at School Of Business, IUB, without his support and encouragement such an attempt to
enhance our practical along with enhancing my theoretical knowledge about the real situation,
this assignment would not be possible.

We have no valuable words to express our feelings but our hearts are still full of the favors
received from every person who helped us composing this paper.

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Executive Summary

With the impact of COVID-19, being felt across the world and health and safety being the top
priority businesses have taken a hit comparable to the situation during the great depression.
Among all the affected businesses, no other industry has taken a greater hit than the Ready Made
Garments Industry (RMG). To take a closer look at what the ramifications of Covid-19 is we
have conducted our analysis from the employment point if view.

The pandemic has had a torrid effect on the industry as a whole with more than 1 million
unemployed and rising. The main currency exchange earner industry in our country is the Rmg
Industry. All this has led to a massive reduction in employees and staff in nearly all the facilities
and with no end in sight, the future looks glum for the RMG workers.

Job cuts are not the only thing that these factories are using to cope with this unprecedented
scenario. There have been large-scale pay cuts for the employees that remain, which includes the
top management as well. Another tactic that factories are using to stop communal transmission is
reducing the working hours and making workers sit back to back instead of face-to-face.

To keep the industry running the government, stepped in with the stimulus packages for the
RMG sector. Until date the government did not provide any stimulus packages for the industry
but the impact of COVID 19 is too intense that even stimulus package was not able to revive the
industry. To overcome the wounds of COVID 19 the industry needs has a long way to go.

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Introduction

The Epyllion Group is Bangladesh's largest manufacturer of readymade clothes. Knitwear and
garments are the main products of this Garment Company. They distribute their manufacturing
products throughout Bangladesh as well as overseas markets such as Europe, Australia, and the
United States. The clothing business is divided into four parts.

With its initial venture Dekko Knitwears Limited in 1994, Epyllion Group established a fantastic
position in the developing business of Ready Made Garments with two (two) sewing lines and a
total of 200 employees in Mirpur, Dhaka, Bangladesh. It now employs over 18,000 people over
111 sewing lines in several Epyllion Group projects around Dhaka and Gazipur, and is led by a
group of young and creative visionaries. Epyllion Group can now produce 92,000 ready-to-wear
clothing each day. Epyllion Group devotes a significant amount of time and attention to finding
answers to our clients' problems. They place a great value on the pleasure of their customers
when making sales. They provide them the sense of cooperation by balancing price and quality,
resulting in a win-win situation for both of us. As a result, they provide more than just products
and services; they also provide client happiness and a sense of trustworthiness.

Epyllion Group maintains an eye on the future and makes the necessary preparations to take
advantage of incoming possibilities. They are already keeping the required out sourcing to fulfill
the needs in a competitive manner while also being responsible for environmental problems,
since the worldwide market for readymade garments is expected to develop dramatically over the
next several years.

Sales plummeted dramatically during the epidemic, thus impacting cash flow and interfering
with financial discipline. During the pandemic, stockpiled merchandise resulted in greater 'Cost
of Inventory,' however it was progressively released. They failed to meet demand in the global
market following the initial wave of Covid since demand grew faster than supply. As a result,
they had to turn down excess orders from competitive countries. Although the price of raw
materials has grown, it has been difficult to negotiate with customers since they are hesitant to
increase the selling price while maintaining the same profit margin.

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Economic Impact Of Covid 19.
In 2020, BGMEA members' sales revenues fell 17.4 percent on average as compared to 2019.
The distribution of revenue changes for sample factories is shown in Figure 1; most firms had
revenue losses in 2020 compared to 2019. Despite the wide range of losses, the stated revenue
loss on average parallels Bangladesh's overall 16.9% drop in RMG export revenues in calendar
year 2020 (USD 27.47 billion) compared to 2019. (USD33.07 bn). Our research found that
revenue losses were higher for smaller companies, older factories, factories that were less well-
managed, and factories that sold to a wider range of consumers, after adjusting for a variety of
other factors.

The pandemic did not, on the whole, result in widespread and long-term industry closures. With
the exception of the government-sanctioned public holiday, 25% of factories have reported
shutting for at least one day as a result of the epidemic. Factory closures peaked in the second
quarter of 2020, when factories were shut down for an average of four days outside of the
COVID-19 public holiday, which ran from late March to late April. 5% of firms have been
closed from the start of the epidemic and are still closed at the time of the study; managers at
64% of these factories believe their factory will reopen. Controlling for many other factory

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characteristics, smaller factories and facilities selling to a wider range of consumers were more
likely to remain closed.

When correcting for firms' fixed characteristics, overall employment in factories decreased by
7.4% in the second half of 2020 compared to pre-COVID-19 levels (Figure 2). This figure hides
variation in job decreases between factories, despite the fact that it represents a significant
decrease. The pandemic had a greater negative impact on businesses that employed a higher
proportion of women (than the survey data's median). Employment decreased by 12.9 percent in
these factories, whereas employment declined by 3.5 percent in factories with a smaller
proportion of women employed. Importantly, manufacturers did not alter their balance of female
and male employees, implying that they did not treat female and male workers differently. This
pattern of effects shows that the demand shock to manufacturers, rather than a differential shock
to women and men's labor supply, is driving them. This notion is supported by the fact that
woven goods firms employed a higher percentage of women and faced bigger revenue decreases
during the epidemic. The fact that employment losses were higher in firms with a higher
proportion of female workers shows that female garment workers were more negatively affected
by job loss.

During the first through third quarters of 2020, 16.3 percent of factories reported temporarily or
permanently laying off workers. Permanent layoffs appear to have peaked in April-June 2020,

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although the rate has remained low, with 3.5 percent of workers permanently laid off with pay
and 1.3 percent permanently put off without pay. In reaction to COVID-19, factories have
reportedly reported adopting various steps to reduce labor expenses. During the second quarter of
2020, over 60% of respondents say they would cut overtime hours, 43% say they will cut regular
hours, 36% say they will delay payment, and 29% say they will decrease compensation. During
the third quarter of 2020, many employers continued to reduce working hours, while salary
delays and cutbacks were far lower than in the second quarter (14.4 percent and 6.8 percent ,
respectively). Factories have also reported a high adoption of the stimulus support for wage
payments, with roughly 72 percent using it.

COVID-19 prompted factories to postpone or cut back on anticipated investments in automation.

Prior to COVID-19, 58.2 percent of factories said they intended to invest in automation in 2020.
COVID-19 has caused 38 percent of these factories to postpone or reduce their investments,
while another 26 percent has reduced their investments. While this may increase their reliance on
labor in the short term, it may also delay or degrade Bangladesh's capacity to move into higher-
value-added parts of the global garment industry, resulting in fewer and perhaps lower-quality
employment for workers in the long run. Smaller industries were forced to sell land, buildings, or
equipment as a result of COVID-19, while bigger factories were not. Due to the consequences of
COVID-19, about 10% of smaller enterprises have reported selling physical capital. In contrast,
less than 1% of bigger factories report selling tangible assets as a result of COVID-19's
consequences. Small factories are defined as those having less than 1050 employees before
COVID in the survey data. From the first to the third quarters of 2020, the biggest COVID-19-
related difficulty for factories was a drop in demand (Table 2). The percentage of respondents
experiencing a drop in demand peaked at 60.1 percent in the second quarter of 2020, but
remained high in the third quarter, at 44.9 percent. During this period, respondents also report
dealing with a variety of additional issues, including as supply chain interruptions, production
shutdowns, absenteeism issues, and difficulty with COVID-19 health and safety procedures.

Factories have reported significant increases in the percentage of their output stranded in
Bangladesh. Stock lots are a term used in the clothing industry to describe excess completed

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apparel goods. Stock lots can arise for a variety of reasons, the most common of which being
quality-related rejections, shipment cancellations, and shipping delays caused by customers'
refusal to accept products or delays in export procedures. In Bangladesh, around 17% of factory
production was trapped in stock lots as of April 2020. Due to delayed or canceled import
shipments, 51 percent of manufacturers report a scarcity of raw materials. Due to delayed or
canceled material shipments from Bangladesh, 25% of firms are reporting a scarcity of raw
materials. China is the most prevalent raw material sourcing location; 81 percent of respondents
say China is one of their key sourcing destinations, with 50 percent reporting shipment delays or
cancellations. Surprisingly, COVID-19 has caused 37% of respondents to switch from importing
to sourcing locally for one or more of their input items.

Impact Of Covid 19 Into RMG Sector

On December 29, 2019, the COVID-19 made an appearance in Wuhan, China. It eventually
spread to 213 nations worldwide. On March 11th, 2020, the World Health Organization (WHO)
proclaimed it a pandemic, but it was first detected on March 8th, 2020 in Bangladesh. As a result
of this circumstance, Bangladesh's government has ordered a nationwide curfew beginning on
March 25, 2020. During the COVID crisis, Bangladesh's ready-to-wear apparel and textile
sectors had a bad time.

The RMG industry is the backbone of Bangladesh's economy, attracting the majority of foreign
direct investment (FDI) (84 percent). As a result, keeping this sector shut down for an extended
period of time proved extremely challenging. Though the Bangladesh government has gradually
opened RMG industries and corporate offices, its ambition to attain export revenues of $50
billion by 2021 has been severely disrupted and appears to be unrealistic. By 2021, around 8 to
10% of their previously set objective, worth 34 billion dollars, will be fulfilled. Various forms of
socio-economic concerns have been highlighted in Bangladesh's RMG sectors, including order
cancellation, lower export earnings growth and FDI, GDP decline, and demographic
consequences such as health, unemployment, and safety-related issues, among others.

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Factory shutdowns and decreased demand from both consumers and producers were the key
drivers of the economic downturn. Consumer spending and confidence are both reduced as a
result of the secondary effects. Companies are not developing new items during the pandemic;
instead, they are selling their existing stock, which has resulted in bottlenecks in terms of
outstanding orders as well as the inability to deliver products on time, and it also necessitates
transparency. The challenge of obtaining raw materials has a negative influence on production
timeliness.

Bangladesh's readymade garment (RMG) industry has faced a slew of issues as a result of the
COVID-19 crisis. The majority of the orders had been canceled by the US and UK brands.
Other well-known labels, such as H&M, GAP, JC Penney, Primark, and others, had also
canceled their purchases. According to BGMEA projections, Bangladesh's RMG sectors would
suffer financial losses of around $3.15 billion USD due to delayed work orders. It was a disaster
for the RMG industries and the 2 million employees who worked there.

The global supply chain has been disrupted by worldwide transportation shutdowns, work order
cancellations, insufficient assistance from backward linking sectors, issues with raw materials
supply, and other factors. COVID-19 has affected 425 yarn manufacturing businesses, 796 fabric

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manufacturing industries, and 240 dyeing-printing-finishing companies in Bangladesh. They
missed the deadline, causing the entire supply chain to be disrupted.

Bangladesh imports from a variety of nations, including Africa, India, and the United States. Due
to the Corona epidemic, several nations were quarantined. As a result, Bangladesh is having a
tough time obtaining raw materials such as fiber, yarn, and fabric. Only because of the supply
chain disruption, the rate of import fell by 3.87 percent in the first eight months, while the rate of
export fell by 12 percent by January. Many factors, including weaker domestic demand,
decreased raw material requirements from the textile and construction industries, and lower oil
prices, are projected to result in negative (-11.8 percent) increase in total import payments in FY
2020. Analyzing the RMG marketplaces of various nations, it is obvious that RMG exports have
declined substantially. Market growth percentages in FY 2018-2019 were 7.66 percent, down
from 1.48 percent in FY 20. Export growth in the United States was down 11.25 percent, in
Canada it was down 10.26 percent, and in the non-traditional market it was down 16.64 percent.
The RMG industry's overall export growth to the United States declined by 10.14 percent in
Bangladesh.

A lengthier time of lockdown impedes regular production flow. Bangladesh's RMG industries
are only partially open and run on a single-shift basis, eliminating overtime and double-shifting.
As a result, there are several outstanding orders that will take longer to complete with fewer
staff. Additional space is needed in the RMG sectors to preserve the social distance between
workers, which prevents more work plans from being placed.

The RMG workers' health and safety have been jeopardized by certain dubious choices by the
BGMEA and the Bangladesh government. Workers have returned to their employment as a result
of the RMG industry's decision to reopen, and COVID-19 is affecting them more. Workers fail
to follow the safety requirements correctly as a result of the RMG industry's openness. They
don't use personal protective equipment (PPE), instead opting for cotton face masks of poor
quality. It won't be able to stop the infection from spreading. Furthermore, the bulk of RMG
manufacturers work on a small scale, making social distance standards difficult to apply.

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Impact Of Covid 19 On Epyllion 
The globe is fighting the COVID-19 outbreak. Epyllion is also acting as a warrior in this scene.
Epyllion took procedures before the shutdown to guarantee that the workplace and its personnel
were protected from COVID-19. Temperature checks, maintaining a safe distance, limiting the
number of people (04) per elevator, raising hygiene awareness through training, leaflets, posters,
and AV, sanitizing hands for each entry and corner, and using PPE at work and outside in the
factory and corporate alike were among the safety measures implemented. It was necessary to
clean and disinfect the workplace on a regular basis. Epyllion is now enabling all of its workers
to work from home, following the motto "Stay Home, Stay Safe."

A number of small factories have closed as a result of the post-Covid environment. In the
following years, it will be extremely difficult for them to recover. For the most part, production
facilities are well-managed and ready to go, and orders are delivered on time since demand is
high. As a result, the whole business is returning to its pre-Covid state. The only remaining risk
is a rise in raw material prices, which will have an impact on costs.

The ready-made garments business in Bangladesh contributes for over 80% of the country's
manufacturing income, employing at least 4 million people. Although the number of COVID-19
cases in the South Asian countries is not particularly large, the pandemic poses a serious threat to
the garment industry and the livelihoods of garment workers. The country's garment industry is
heavily reliant on export orders, which have dropped dramatically as a result of the spread of
new coronavirus infections around the world, including Europe and the United States. According
to Rubana Huq, head of Bangladesh's Garment Exporters and Manufacturers Association,
Bangladesh has lost roughly $1.5 billion (€1.4 billion) thus far, affecting 1.2 million workers
(BGMEA). Orders from foreign brands are increasingly being delayed or cancelled. Bangladeshi
firms are losing roughly $100 million (€92 million) each day since the rise of COVID-19 cases
in Europe and the United States.

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Various businesses are currently dealing with a variety of human resource difficulties. Epyllion
is also dealing with HR concerns as a result of the Covid 19 incident. Various HR difficulties
that the company is now facing are discussed below.

Health and Safety: One of HR's most important responsibilities is to guarantee workplace health
and safety. The HR department's job is to ensure that employees are working in a safe
environment and that no accidents or incidents occur as a result of an unsafe workplace.
However, as for the Covid 19, it is vital for the organization to maintain health and safety at
work in the current scenario. HR is working hard to resolve the problem and provide a safe
working environment for the employees.

Productivity: In the readymade garments industry, HR has made a significant contribution to

maximizing the firm's output so that the organization may fulfill its objectives. However, under
the current circumstances, Epyllion's HR department is unable to effectively maximize
organizational efficiency. This is why Epyllion's productivity has been highlighted as an HR
problem that the company has to address in order to achieve its organizational goals.

Recruitment: The HR department's primary responsibility is to cover the organization's human

resource deficit by recognizing human needs and recruiting outstanding employees. HR's
recruiting responsibility enables the company to hire bright and competent employees. As a
result, the recruitment duty is regarded as one of HR's most important responsibilities. Epyllion,
on the other hand, is now struggling due to a lack of an effective recruitment strategy. In the
current circumstances, the company is unable to consider the physical recruiting process, as a
result of which the firm is unable to fill the human gap and obtain competent individuals.

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Conclusion:
This epidemic has had catastrophic effects on the health and economic sectors across the world.
It has had a significant impact on RMG employees in lower-middle-income nations like
Bangladesh, owing to a lack of understanding and, in some cases, disinformation. Most of the
time, in order to cope with the economic calamity, Bangladesh's RMG sectors must neglect
security concerns that might endanger thousands of workers.

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References
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monitoring/country-specific-guidance/covid19-bangladesh/.

(n.d.). Retrieved from https://www.fibre2fashion.com/interviews/face2face/epyllion-group/reazuddin-

al-mamoon/12844-1.

(n.d.). Retrieved from https://pedl.cepr.org/publications/economic-effects-covid-19-ready-made-

garment-factories-bangladesh.

(n.d.). Retrieved from https://archive.dhakatribune.com/health/coronavirus/2020/04/08/coronavirus-

epyllion-group-donates-ppes-to-hospitals.

(n.d.). Retrieved from https://www.thedailystar.net/round-tables/news/covid-19-impact-selected-rmg-

factories-and-way-forward-1983209.

(n.d.). Retrieved from https://bigd.bracu.ac.bd/impact-of-covid-19-on-rmg-sector-the-false-narrative/.

(n.d.). Retrieved from

https://www.ilo.org/dhaka/Informationresources/Publicinformation/Pressreleases/
WCMS_814032/lang--en/index.htm.

(n.d.). Retrieved from https://www.mckinsey.com/industries/retail/our-insights/whats-next-for-

bangladeshs-garment-industry-after-a-decade-of-growth.

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