This paper provides evidence for the existence of inflexibility of employment in the jute spinning industry of Bangladesh. Such inflexibility exists in relation to changes in manufacturing operating capacity at the plant level. Empirical support is obtained by relating the number of employed workers to the level of operating capacity in 40 jute spinning mills over a period extending to 26 years. This inflexibility has important implications for productivity progress in mills and may indicate, as suggested in this article, the existence of ‘overemployment’ (disguised unemployment) in jute mills.