A Structural Model for Assessing the Factors Influencing the Demand and Supply of Skills in the Garment Industry of Bangladesh
Year: 2025
Type: article
Study design: Observational Study
Abstract: Purpose: It is essential to formulate and implement different policy frameworks for skills development in Bangladesh's garment sector, which may play an important role in Bangladesh’s economic growth and sustainable development. That is why, in this study, the principal purpose has been made to formulate and estimate a structural model to identify the determinants of demand and supply of skills in the garment sector of Bangladesh to assess the needs of skilled workers in this sector as well as to find out the capacity of the training providers to bring out skilled graduates which may play an important role to formulate policies for sustainable development of the garment sector of Bangladesh. Design/methodology/approach: This study is based on primary data. Primary information on different variables is collected using a structured questionnaire from 130 garment workers in four big cities: Chattogram, Dhaka, Gazipur, and Narayanganj. Stratified random sampling is used to collect the sample observations, considering each city as a stratum, and a part of the sample is drawn at random from each city. We select respondents from the client's list of beneficiaries through simple random sampling. Advanced-level econometric techniques are used to provide a lucid analysis. Findings: From the χ2 -test results it is found that different pairs of attributes, such as skills and wages, skills and education level, and skills and required quality, are associated in the garment sector of Bangladesh. From the final estimates based on the two-stage least squares method of the demand and supply functions of skills of the structural model, it is found that the effects of the variables, education level of the employees, yearly sales revenue of the factories, and the total investment of the factories have significant positive impact, on the demand of skills and the variables monthly cost of living of the workers has statistically significant positive effects and the variable wage rate of the competitive sector hurts the supply of skills in the garment sector of Bangladesh Originality/value: To the best of my knowledge, this study is a unique attempt to formulate and estimate a structural model of the demand and supply of skills in the garment sector of Bangladesh to assess the needs of skilled workers in this sector based on the primary data of several variables. Conclusions: In this paper, a structural model is developed to assess the factors influencing the demand and supply of skills in Bangladesh’s garment industry. This model can be used to formulate and implement different policy frameworks for skills development in Bangladesh’s garment industry. Policies should be formulated based on the estimated results of the structural model. From the estimated results it is found that the variables, education level, expenditure for training programs, sales revenue and total investment play a significant positive role in the demand for skills in the garment sector of Bangladesh, therefore emphasis should be given to creating literate skilled workers, considering more expenditure for training programs, more investment in the garment sector, and the government and other stakeholders have to develop policy-frameworks to earn more sales revenue as a result the demand for skilled workers will increase. Since the variable wage rate of the competitive sectors plays a significant negative role in the supply of skills. Therefore, the government, including other stakeholders, have to take necessary measures to increase the wage rate of the garment sector of Bangladesh as a policy framework for the sustainable development of the garment sector; otherwise would be very difficult to find quality workers in the garment sector. As a result, the production function will be running as a decreasing return to scale for a long period. Therefore, it may work as a barrier to the development of the garment sector as well as for the national economy, and in future, this sector may happen like the Jute industry of Bangladesh.
Author: Md. Sharif Hossain
Institution: University of Dhaka
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
OpenAlex ID: W4411220320