Skills in Bangladesh

The garments sector is a major exporter and employer in Bangladesh, and around 80% of employees are low-income women. Skills training programmes should enable workers to increase their skills and make firms more productive, enabling faster employment and wage growth.

However, while complaining about the lack of skills, Bangladeshi garment factories are reluctant to pay for training, and often prefer to employ slightly cheaper unskilled workers at the factory gates. Fraud occurs when private training providers (PTPs) whose payments are linked to results overstate employment success of their trainees, sometimes in collusion with agencies charged with releasing payments.

To solve this puzzle we used insights from research on the determinants of productivity. The productivity of a worker in a factory depends jointly on the skill of the worker and the organisational capability of the factory. A badly organized factory is not likely to observe any significant improvement in productivity by putting a skilled worker onto a poorly functioning production line. In contrast, in a factory with high organisational capabilities, an unskilled worker slows down the production line and skill deficits are easily detected.

The research suggested that corruption and fraud in skills training programmes may be a result of an inappropriate design of incentives to improve the marketability of skills, while monitoring and enforcement does not work well, even in very well-managed programmes. A feasible and effective anti-corruption strategy would be to jointly support skills training together with support for the organisational upgrading of firms.

SOAS-ACE is currently undertaking research in Bangladesh and Nigeria, including in the education, health and power sectors, as well as on successful collective action that overthrew a corrupt autocracy. Moving beyond pure research, we are also monitoring the implementation of anti-corruption strategies our research has recommended, such as a strategy to reduce pharmaceutical companies’ overpricing of medicines.

Our partners on this project were: Joseph Ajefu (SOAS University of London), Sumaiya Kabir Talukder and Mehnaz Rabbani (BRAC Institute of Governance and Development – BRAC University).