A HIGH-TECH, LOW EMPLOYMENT FUTURE IN THE MANUFACTURING SECTOR – A CORRECT CONCLUSION?

A paper contributed by Asif Ibrahim Director, Dhaka Chamber of Commerce and Industry Managing Director, Newage Garments Ltd Bangladesh

1. Is the combination of (i) the “Chinese monopoly” on the low cost manufacturing and (ii) the increased automation with manufacturing industries likely to limit the scope available to developing and transition economies for reducing poverty through employment generation in the manufacturing sector? Automation usually implies an entrepreneur’s effort to cut down cost in the long run by leaning more towards the fixed costs of owning machineries rather than generating more variable costs in human resource employment. Having said this, automation and employment generation then stand at paradoxical ends of the factors of production. Can we not, thus, easily surmise from this that automation in the manufacturing industry may help reduce poverty in a country such as ours through increased production, but probably not employment generation? A country such as Bangladesh, developing and with one abundant source of production being its labor force, may not be able to sustain the blow that may be rendered by flooding its manufacturing industry with high-tech machineries. Such a step would mean that manual labor would be replaced by low-cost but machine-oriented methods of production. Yet, it is not only our labor market that would suffer if manufacturers of our country begin following the trends set by the “Chinese monopoly” on low-cost FMCG. Jute, one of Bangladesh’s crowning glories in the export sector has suffered precisely in the face of such changes. The rise of synthetic substitutes like polypropylene is now favorites to manufacturers. Hence, this has caused the jobs of over 25 million of the poorest Bangladeshis. Yet, however, if chosen