Bangladesh Announces New Minimum Wage
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Bangladesh garment workers will get a 56.25 percent minimum wage increase starting Dec. 1.
On Tuesday Monnujan Sufian, state minister of Labour and Employment, announced that the wage board agreed to raise the minimum wage to 12,500 taka ($113.12) after six meetings, up from the current floor of 8,000 taka ($72.42). That’s still a far cry from the 23,000 taka ($208.20) that workers and unions originally called for and their revised proposal of 20,393 taka ($184.58).
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The increase came at “prime minister Sheikh Hasina’s directive,” according to Sufian.
The wage board sits every five years in Bangladesh, and each time months of protests, often with scuffles, blockades, tear gas and dispersal of crowds by the police as happened on Tuesday morning, even as the session was in place to come up with a final number of agreement.
Manufacturers on Tuesday came up with the higher number than the 10,400 taka ($94.11) they proposed at the Nov. 1 meeting.
Bangladesh is the world’s second-largest apparel exporter after China, with more than 4.25 million workers. Garments account for more than 80 percent of the country’s overall exports.
Siddiqur Rahman, who represented manufacturers on the wage board, told Sourcing Journal that garment workers will receive an “annual increment of 5 percent,” meaning their wages will rise by that much each year.
“There has also been a change in the pay structure from seven levels to five levels,” he added, pointing to manufacturers agreeing to raise salaries while dealing with a downturn in global orders.
The working group agreed that workers would get family cards they can use to buy discounted food and essentials to deal with inflation and a high cost of living.
Many worker groups and leaders were not quite on board with the number advanced by Sirajul Islam Rony, who is purposed to be the workers’ representative at the wage negotiations. Garment workers and union leaders have mounted protests in the past several weeks, urging officials to make 23,000 taka ($208.20) or even 25,000 taka ($226.32) the new monthly minimum. Two workers lost their lives in violence and chaos surrounding the protests, and several more were injured in the past weeks. Buses were torched, roads blocked, and factory owners worried about the unrest had shut down more than 500 factories.
Outside the wage board office at Segunbagicha in Dhaka Tuesday morning, a crowd of apparel workers and their unions gathered to renew calls for a 23,000 taka minimum.
“We need to be able to afford the ever-increasing rent [and] food prices,” said Farhana Begum, who said her salary supports her family of five, including her parents and younger brother and sister.
Meanwhile, members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) claim that tripling the minimum wage to meet worker demands was virtually impossible. Falling global demand has exacerbated their difficulties. Faced with rising costs, including shortages of gas and electricity, factory owners have few options when their expenses are increasing and buyers won’t pay more. Gas prices, for one, rose nearly 180 percent over the past year to reduce the burden of subsidies on the government. Raw material costs were higher as well, as the Bangladesh taka continued to decline, having lost an nearly 30 percent since January 2022.
BGMEA president Faruque Hassan said the trade group has worked with manufacturers to try to find the best way forward, and wants to convince buyers to find a way to make the new wage structure work within their operating costs.
While global brands and retailers have advocated for higher wages, manufacturers in turn have asked for higher purchase prices to help them meet rising costs.
This year, marking a decade since the Rana Plaza collapse killed more than 1,130 and maimed scores more, worker welfare and safety has never been a bigger focus. Factory owners in Bangladesh said that they have invested millions of dollars to improve facilities, worker training and safety.
Manufacturers say the wage issue has drawn notable international attention this year when previously it was viewed as a domestic matter between the Bangladesh government, factory owners and workers. Letters from global non-government organizations as well as from brand coalitions promoting a higher minimum wage have factored into the negotiations since the wage board was formed in April.
In a letter to Hasina on Oct. 13, Adidas, Gap Inc., American Eagle Outfitters, Levi Strauss and 11 other brands called for inclusive consultations and constructive dialogue between labor groups and the stakeholders involved.
The six-year renewal of the International Accord this week, which emerged from the Accord on Fire and Building Safety in Bangladesh, is another indicator of how global brands, manufacturers and workers are finding their way forward.
Meanwhile, analysts in Dhaka said that the wage board coinciding with the upcoming elections made the situation far more delicate, walking the thin line of satisfying stakeholders on all sides of the salary talks. Many expects ballots to be cast early in the new year though no official election dates have been announced.
