The $47 billion ready-made garment (RMG) business in Bangladesh is undergoing a fast transformation due to artificial intelligence. This is increasing efficiency and exports, but it is also causing concerns about potential mass job losses in the industry, which supports the economy of the South Asian nation and employs some 4 million people.
AI in Bangladesh RMG: Gains vs. Costs
| Category | Key Statistic | Source / Verification | Impact |
|---|---|---|---|
| Sector Overview | US $ 47.39 billion exports; 4M employees (Calendar Year 2023) | EPB / BGMEA (official data) | Backbone of the economy (82% of exports) |
| Efficiency Gains | 15% fabric waste reduction; 20% productivity boost | Industry claims (no independent audit) | Faster, cheaper production; stronger competitiveness vs Vietnam/Turkey |
| Export Growth | Q1 2025 EU exports: US $8.07 B (+24%) Value addition: 65.97% in FY2022-23, up from 54.38% from FY2021-22 |
EPB / Bangladesh Bank | Higher local sourcing; stronger profits |
| Job Losses (Current) | Overall decline: 30.6% – Sweaters: –37% – Cutting: –48% – Sewing: –27% |
BRAC Univ. / Solidaridad / BLF study | Disproportionately affects women, helpers, and older workers |
| Job Losses (Projected) | 18 lakh (1.8M) jobs lost in manufacturing if efficiency rises 50% 10 lakh (1M) of these from RMG |
BIDS estimate | Urgent need for retraining programs and social safety nets |
| Business Performance | Listed RMG firms: +50% profits (Q4 2024) SMEs: High borrowing costs; struggle with integration |
Stock reports / CPD study | Big exporters thrive; SMEs face financing and technology challenges |
Factories cut waste, boost output
A few major manufacturers have introduced AI-driven cutting machines, automated quality inspection systems, and digital forecasting tools. Company executives claim that the technology has reduced fabric waste by up to 15% and increased line productivity by approximately 20%, although no independent audit of these claims is publicly available.
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“Automation gives us speed and consistency that global buyers now demand,” said a senior manager at a Dhaka-based garment exporter.
“Without it, we cannot stay competitive against Vietnam or Turkey.”
In the first quarter of 2025, exports to the EU increased by 24%, reaching $8.07 billion, according to official statistics. Value addition in the RMG sector climbed to 65.97% in FY 2022–23, compared with 54.38% the previous year, as more raw materials were sourced locally.
Workers are displaced in large numbers
However, these gains have come at a cost: automation has already reduced employment on factory floors. A study by BRAC University, Solidaridad Bangladesh, and the Bangladesh Labour Foundation found a 30.6% fall in jobs across production processes due to automation.
The sweater segment saw a 37% drop in employment, a nearly 48% reduction in cutting-room staff, and a 27% decrease in sewing-line workers. Women, helpers, and older workers were the most affected, according to the research.
The Bangladesh Institute of Development Studies (BIDS) estimates that a 50% rise in technological efficiency could eliminate 1 million jobs in the RMG sector alone, accounting for 1.8 million jobs across the economy.
“Low-skilled helpers are the first to go,” said Kalpona Akter, a labour rights activist. “Most are women, and many will not find alternative work.”
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Big firms adapt, SMEs struggle
Larger exporters have posted strong results despite political unrest and financing strains, with profits of listed RMG makers surging 50% year-on-year in the last quarter of 2024 as orders recovered.
Smaller factories, however, face high borrowing costs, rising wages, and difficulties integrating advanced machinery. Banking delays and charges have added to their burden, according to a study by the Centre for Policy Dialogue.
Pressure on policymakers and buyers
The industry’s reliance on foreign buyers leaves suppliers little room to resist demands for lower costs and faster delivery, prompting them to adopt AI. However, the social cost is rising.
Analysts and trade unions are calling for a national transition fund to finance retraining, targeted subsidies for SMEs, and mandatory impact assessments before large automation projects.
Labour groups are urging global brands to include “just transition” clauses in sourcing contracts. These would co-fund retraining programs and guarantee order stability to prevent abrupt layoffs.
The stakes
Bangladesh’s garment sector is the world’s second largest after China and remains the country’s primary foreign-exchange earner. Any disruption carries economic and political risks.
“AI could help Bangladesh climb the value chain,” said a European trade consultant. “But the social costs will outweigh efficiency gains if one million people lose their jobs without safety nets.”
Factories continue to automate, buyers demand faster and cheaper deliveries, and workers face growing uncertainty. The question is whether policymakers and industry leaders can guide the sector toward inclusive growth—or if the technology shift will exacerbate inequality in one of the world’s most labor-dependent industries.
