The Effect of Political and Labour Unrest on Productivity: Evidence from Bangladeshi Garments

The paper examines the effects of political strikes and labour unrest on production in 33 large ready-made garment factories in Bangladesh. We find that the political strikes (hartals) lasting one or two days have very little effect on productivity or worker absenteeism. We see some negative effects on factories for strikes lasting five days or more. The main channel for negative effects appears to be supply chain disruptions rather than worker absenteeism. These effects are much more modest that is typically portrayed in the press, but are similar to other academic studies. Labour unrest has a more immediate negative effect, increasing absenteeism and quality defect rates and decreasing output. Where protests extent to a second day, we find that production falls by around 10 percent among factories in the affected area. The paper also compares the magnitude of hartals and labour unrest with the effects of temperature on production.