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COLUMN SYED NASIM MANZUR

Raising productivity is the solution
Bangladeshi manufacturers are caught between a rock and a hard place. Globally the slowdown in the US and Europe means buyers who source from Bangladesh are not willing to raise their prices. On the other hand the increase in cost of living especially food in Bangladesh is already putting huge upward pressure on wages. So how does one solve this conundrum? There is only one solution: productivity.
I protest vociferously when our policy makers and business leaders start talking 'about “cheap" labour in Bangladesh: given the productivity levels here we are really not that cheap. One does not have to be an industrial engineer to realize the abysmal levels of productivity in Bangladesh , just walk into any government office or factory or even our homes. The time honoured approach here is if the job can be done by one person for 10 taka, hire 5 people to try and do the same at one taka each and pocket the difference. If there is a problem, throw more and more people at it until at least they obscure the view of the original problem. Consequently our shoe factory has an average productivity of 3 pairs per person versus 11 in Eastern Europe; the reason we can compete is the wage gap is even higher, but this gap will close as costs increase here. Let's take some more examples: most modern garment stitching machines can be equipped with auto thread cutters but I would hazard that the majority of our garment factories don't use them. Instead for each machine there is a helper or a thread cutter whose job is to do exactly that, cut thread. The usual reasons given: 1) thread cutter attachment costs more 2) auto thread cutter slows down the operator 3) the thread cutter by sitting next to the operator becomes an operator 4)the auto thread cutter is difficult to maintain. None of these arguments are valid : the initial investment can be recovered in less than a year, the operator gets accustomed to the auto cutter, watching a machine work is not training, and maintenance is a matter of learning.
Friends in Singapore and HongKong maintain large homes with the help of usually one Filipino or Sri Lankan maid who does everything in eight hours; we have in our homes usually at least four people struggling to complete the same tasks in 24 hours, at maybe half the cost, because they lack proper instruction andequipment.
A common practice in our factories is to hire excess people to counter high absenteeism. But by overstaffing we merely hide from chronic absenteeism and treat the
symptom, not the cause. And once again, productivity goes out the window. The same is true for illness and poor health. These cause high absenteeism that causes over staffing, that causes poor productivity. Basic education and healthcare are critical to redressing these problems. Instead we just throw more ill educated and unhealthy workers at each task, and to remain profitable we pay them subsistence wages that deny them
decent nutrition, and education for their children.
But the classic example of course is our much loved customs service. One has to marvel at the genius who devised the now patented "file flow" system that helps restrict the pace of work at most government offices to a gentle snooze. Files start from die bottom slowly ascend to the middle, usually stay there for a few weeks, then proceed carefully upwards, rest there
for a few weeks, usually down to the middle again , then again up, and finally carefully downwards to its final resting .place. All this is of course facilitated by countless devoted officers who are all overworked.
I believe that the entrepreneurs and government of Bangladesh have chosen to believe that our cheap (!) and abundant labour somehow allows us to ignore productivity. This is a fallacy. It is equally wrong to assume that low wages are the principal driving force behind today's global trade or FDI flows. Trebilcocks and House in their book "The Regulation of International Trade” wrote : “ This relationship between labour productivity and labour costs explains why most international firms are not seeking to relocate to , for example, Bangladesh, despite its low wages.” Bangladesh is even below the LDC per capita average in labour productivity in the non agricultural sector according to a report by the CPD in July 2006.
In the private sector we need to understand that the only way for us to remain com-petitive is to drive productivity : we need to look beyond total ouput and production to total factor productivity (TFP). We can achieve this as we integrate more and more with the world economy , as our firms acquire technology and finance, as we improve our human capital, as we gain size and scale and as the business environment improves especially law and order and infrastructure. Sure government, unions and workers have a role to play. But as Peter Drucker put it: "the productivity of work is not the responsibility of the worker but of the manager".
The writer is an economy! turned shoe maker and entrepreneur