Training, Productivity, and Upgrading: Evaluation of Female and Supervisor Training Programs in the Bangladesh Apparel Sector

The project studies the role of female managers in firm-level productivity in the ready-made garment (RMG) sector in Bangladesh. The study proposes to evaluate, through a Randomized Control Trial (RCT), the GIZ Female Supervisor Training Program, a scheme that selects and trains female workers to become line supervisors and middle managers. The rapidly growing literature that evaluates training programs on a variety of low-income groups through RCTs has focused on different target populations, e.g., ultra-poor programs in rural areas (see, e.g. Bandiera et al. (2011)) or the extensions of generic financial and accounting training to micro-entrepreneurs (see, e.g., Karlan and Valdivia (2011), Drexler et al. (2011) de Mel et al (2011)). To the best of our knowledge, the project would be the first randomized evaluation of a vocational training program for low income workers employed in larger factories. Furthermore, the project also relates to the recent RCT on the effects of management consultancy on firms productivity by Bloom et al. (2011). The program we propose to evaluate is developed by industry stakeholders and is targeted at the specific needs of the sector. There is a potentially large demand among the target population. Moreover, production worker training programs have been or are being developed by other stakeholders in the RMG sector in Bangladesh and other countries. The lessons learned from the evaluation of the GIZ program thus have broadly applicability.

The RMG sector in Bangladesh provides a uniquely appropriate laboratory to study how increases in productivity translate into job creation and poverty reduction. Most countries begun their process of industrialization by developing an apparel and textile sector. Exports in the apparel sector in low income countries, therefore, provide a unique opportunity for the creation of secure and relatively well paid jobs - particularly among women.

To compete successfully in the global apparel trade, however, firms must upgrade their capabilities and increase productivity. Through this process of upgrading low income countries can move beyond low wages as their exclusive source of competitive advantage and create jobs that pay higher incomes and satisfy more stringent social and environmental standards.

Rising labor costs in China, the world's largest exporter of RMG, have led to an increase in sourcing from other countries, including Bangladesh. However, a lack of skills, particularly at the intermediate managerial and line supervisor levels, poses a critical constraint on growth of the RMG sector in Bangladesh. More importantly, the managerial labour shortages constrain the ability to move up the value chain to produce higher quality, higher value-added products. Due in part to difficulties of retaining employees, firms do not provide formal management training to production workers. Stakeholders in the industry are increasingly focusing on this training as a key issue, establishing programs to provide vocational training program to workers in large factories. The proposed evaluation answers the following questions:
1. What is the impact of training and skills on i) the income, livelihoods and working conditions of production floor workers, particularly young women? and ii) factory productivity, organizational, labour and managerial practices as well as labour relations and conditions inside the factory?
2. What is the current demand and future sustainability of vocational training programs aimed at developing skills for production floor workers in larger factories?

The project will also have extensive impacts at the industry, firm and individual level.

For the almost 600 women participating in the training program, there are direct impacts from the training obtained. Moreover, if the evaluation demonstrates that the program provides benefits beyond the program costs, we would expect the results to lead to adoption of the program by a larger number of firms. In that case, a much larger number of female production workers would benefit indirectly from the project. Moreover, the detailed analysis of the program will provide insights to those designing and running the program, which may result in program modifications and improvements.

If the training program is found to be effective, producers participating in the project will benefit from increases in productivity either through greater output or through a reduction in output with quality defects. In that event, producers not participating in the project will also benefit. There is the potential for a powerful demonstration effect thereby more factories and buyers learn about the benefit of the program.

Factories and buyers will also benefit from improved understanding of the factors that lead to higher productivity in the factory.

The project will also benefit the international aid community, including government aid agencies (e.g., DFID), intergovernmental agencies (e.g., ILO), and non-governmental organizations. The randomized evaluation of the training program will provide credible evidence of whether this program works. We believe there will be some applicability of the results to similar programs in other countries or industries. The project is designed to increase the relevance to other training programs by studying the specific channels through which the program works.

The effects on the participants will occur during the project and soon after. The broader effects from expansion of the training program will occur soon after the project is completed.