Labour unrest leads to Tk5,000cr loss in industries, MCCI claims

• Protests have spread to Narayanganj, Savar, and Ashulia, heavily disrupting industries, especially garment factories
• Over 100 factories were vandalised or burned, leading to nearly 200 closures
• MCCI calls for government action to address unrest and improve factory security
• Despite a slight rise in the PMI index in August, the economy remains in contraction due to labour unrest and floods
• In August, the PMI increased by 3.3 points for agriculture, 13.6 points for manufacturing, and 6.2 points for services, while construction fell by 5 points

The Metropolitan Chamber of Commerce and Industry (MCCI) estimates that nearly three weeks of ongoing labour unrest in various industries nationwide have resulted in losses of approximately Tk5,000 crore.

Farooq Ahmed, secretary general of MCCI, shared this information during the release of the Purchasing Managers' Index (PMI) at the MCCI office in Gulshan Police Plaza today. Tareque Md Ali, director of MCCI, and Hasnat Alam, senior manager of Policy Exchange, also attended the event.

Labour unrest has been disrupting various industries, including garment factories, for nearly three weeks. The protests have led to incidents of vandalism and arson. Even today, after reopening most garment factories in Ashulia, workers continued to protest inside, causing at least 30 factories to shut down.

Farooq said since the new interim government took office in August, labour unrest has spread to various areas, including Narayanganj, Savar, and Ashulia, with workers voicing various demands.

"More than 100 factories have been vandalised or set on fire, leading to the shutdown of nearly 200 factories," he noted. "This has caused an estimated loss of around Tk5,000 crore, though the actual loss could be higher."

Farooq added that this financial loss estimate was based on discussions with factory owners rather than a formal survey.

"Besides workers, outsiders are also involved in these protests, which could make the situation even more dangerous."

He urged for help from the home affairs adviser and other authorities to ensure factory security.

"I hope the government acts quickly to address the unrest and restore normalcy," Farooq said. "Factory owners should also address workers' legitimate demands to prevent further instability, which could slow down the economy."

Economic indicators remain contractionary in August

The interim government led by Dr Yunus took office on 8 August. Although there was a brief period of stability, the situation soon worsened.

According to the MCCI, the PMI index saw a slight increase in August compared to July. However, labour protests and floods in several districts toward the end of the month prevented the index from rising as much as expected.

The MCCI reported that the economy remains in a contraction. The industrial sector is unstable, and if this is not addressed quickly, the economy may not recover soon. Workers, business owners, the interim government, and law enforcement need to collaborate to address these issues.

At the event, the MCCI announced a slight improvement in the economy for August compared to the severe contraction in July. The latest PMI index, from the MCCI and Policy Exchange, showed a 6.6% increase in August, reaching 43.5 points.

In June, the PMI index was 63.9 points, but it dropped to 36.9 in July, a decline of 27 points in just one month. The MCCI attributed this drop to ongoing protests and violence in July and August, which severely disrupted supply chains and caused declines across agriculture, manufacturing, construction, and services.

The PMI index is a monthly survey that tracks business conditions in over 80 countries. It gathers opinions from company executives to assess market trends and economic changes, helping investors make informed decisions.

The index is based on feedback from executives at over 500 private firms across agriculture, construction, manufacturing, and services. It is scored from 0 to 100: a score above 50 signals economic expansion, below 50 indicates a contraction, and 50 means no change.

In May, the country's PMI hit its highest-ever level at 70.1 points. All four major sectors—agriculture, manufacturing, construction, and services—saw expansion.

In August, the PMI for agriculture rose to 38.7, up from 35.4 in July, indicating an expansion of about 3.3 points. The manufacturing PMI increased significantly to 47.7 from 34.1 the previous month, a rise of about 13.6 points.

For construction and services, the PMI in August was 40 and 43.2, respectively. In July, the indices were 45 for construction and 37 for services. This means the construction sector's PMI fell by nearly 5 points, while the services sector's PMI rose by about 6.2 points.

The decline in the construction sector's PMI in August was attributed to halted government projects and slower progress in construction work due to ongoing protests, according to the MCCI.