Bangladesh’s ‘Disheartening’ 14% Wage Hike Under Fire

Both the U.S. Department of State and the Department of Labor have condemned what they describe as “recent violence” against garment workers in Bangladesh who have been taking to the streets in and around the country’s capital of Dhaka, first in protest of wages as low as 8,000 Bangladeshi taka, or $72, a month, then following a government-greenlit pay hike that they’ve rejected for being insufficient in the face of climbing inflation.

The agencies expressed their sympathies for the deaths of Md. Rasel Howlader, a 25-year-old maintenance machinist who was reportedly killed in Gazipur by police last Monday, as well as Imran Hossain, a 32-year-old worker who died after arsonists of unclear affiliation torched his factory, also in Gazipur, later that day. On Wednesday, Anjuara Khatun, a 26-year-old machine operator at Islam Garments, was shot dead after Gazipur police purportedly opened fire at a group of demonstrators.

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“We call on the government of Bangladesh to respect workers’ freedom of assembly, end the violent crackdown on workers and conduct a full investigation of alleged police involvement in Howlader and Kahtun’s killings,” Thea Lee, deputy undersecretary for international affairs at the Labor Department said in a statement.

Matthew Miller, a spokesman for the State Department, said that the agency was concerned about the “ongoing repression” of workers and trade unionists.

“We call on the government of Bangladesh to protect workers’ right to peaceful protest and investigate allegations of false criminal charges against workers and labor leaders,” he added. “Governments must ensure workers are able to exercise their rights to freedom of association and collective bargaining without fear of violence, reprisal or intimidation.”

This comes after the government-formed minimum wage board announced that the floor pay for the country’s 4.1 million garment workers would increase by 56 percent to 12,500 taka ($113) beginning Dec. 1, the first increase of its kind in five years and far less than the 23,000 taka ($209) that unions were demanding.

But what workers are aking for isn’t even close to what would afford them a living wage, said Nazma Akter, founder and president of Sommilito Garments Sramik Federation, an IndustriALL-affiliated union to which Howlader belonged. She called the 12,500 taka concession a “mockery” and “not acceptable in any way.” Besides the deaths, she said, many more workers have been seriously injured in the ongoing conflict.

“We feel that the ongoing labor unrest will not abate with the way the police are resorting to torture—tear gas, rubber bullets, [batons]—on the workers to stop the ongoing unrest,” Akter said. “Rather, it will increase, so for the resolution of the ongoing labor dissatisfaction, the police and the local [enforcers] should be removed from such a hostile position, and the workers should be negotiated and re-fixed with reasonable consideration for modern wages.”

She told Sourcing Journal of multiple arrests, including that of Jewel Miya, a labor organizer from the Bangladesh Independent Garment Workers Union Federation.

In her statement, Lee called for Miya’s immediate release, as well as for the government of Bangladesh to “revisit” its minimum wage decision to ensure that it provides “equitable compensation that meets the needs of workers and their families.”

“To prevent future unrest, we also urge the amendment of existing labor laws to guarantee that all workers can fully exercise their right to freedom of association and collective bargaining, as called for by the International Labor Organization,” Lee added.

The Clean Clothes Campaign, the garment industry’s largest consortium of trade unions and workers’ rights organizations, called the 23,000 taka figure the minimum required to put the country’s 4.1 million workers above the poverty line.

“The new minimum wage condemns workers to a struggle for basic survival for the next five years,” said Bogu Gojdź, the organization’s public outreach coordinator, adding that the announced hike will only spark further unrest. “Workers are already relying on income earned in extra shifts—on top of their normal 48-hour work week—loans and skipping meals to save money. Poverty wages are also the main reason why parents sometimes find themselves forced to ask their children to work.”

While a number of fashion companies have signed letters, either directly or through multistakeholder organizations, in support of a higher wage, only Patagonia has expressed explicit support for the 23,000 taka number, albeit without saying that it would pay higher prices to its suppliers to enable this.

Gojdź blamed brands such as C&A, Marks & Spencer, Next, Uniqlo—and even H&M, which one Bangladesh Garment Manufacturers and Exporters Association (BGMEA) executive said was among a “handful” of brands that informed suppliers that they would be shelling out more following the bump—for contravening their longstanding living wage commitments by not using their “outsized” clout to ensure that workers making their clothes are not living in poverty.

“At the most crucial moment…they have failed to act, illustrating the emptiness of these commitments to [a] living wage,” Gojdź said. “It is now up to these brands to put their money where their mouth is and ensure workers in their supply chain earn at least 23,000 [taka].”

On Thursday, Faruque Hassan, president of the BGMEA, which represents factory owners, wrote to its buyers, expressing the challenge of meeting the new minimum wage and maintaining competitiveness under “current economic and financial circumstances.”

Hassan asked brands to consider “with highest empathy and consideration” the need to price in the increase after Dec. 1.

“Ensuring decent living of the workers also is a top priority for us, as well as for
global brands and retailers,” he wrote in a copy seen by Sourcing Journal. “Since we have accepted the new minimum wage, we will ensure implementation of it, and we need your support in terms of responsible purchasing practice.”

Hassan said that going forward, all business negotiations will need to keep not only the new minimum wage policy in mind but also ongoing investments in greenhouse-gas emissions reductions, resource efficiency and workplace safety.

“With every effort and action we take, we mean to complement our long-term goal, which is to grow mutually and sustainably,” he said. “We are working with our government relentlessly to ensure [a] more favorable environment for business. You are following the improvements made and in progress by the government to create better infrastructure and policies supporting envisioned growth and efficiency. I am sure with your continued support and collaboration we will continue to thrive.”

A representative from the BGMEA declined to comment about whether the wage increase was able to meet workers’ needs.

“Any increase in costs is a challenge, especially in the current environment when we are already facing inflationary pressures, and, of course, support from brands is always welcome in terms of fair prices and consistency around orders,” Mostafiz Uddin, managing director of Denim Expert in Chittagong, told Sourcing Journal. “Ultimately we will meet the new wage rise because that is the legal requirement. But it might be that we have to increase our own prices somewhere along the line. There is only so much that manufacturers can absorb in terms of rising costs before they have to start passing these on.”

According to newly released BGMEA data that was first reported by Apparel Insider, prices paid by U.S. and European brands have remained largely stagnant across most garment product categories over the past decade. The cost per T-shirt paid by American brands, for instance, averaged at $1.52 in 2012. In 2022, it was $1.83.

And in a study published in January by the University of Aberdeen Business School and the fair-trade organization Transform Trade, 76 percent of the 1,000 Bangladeshi manufacturers surveyed said they were selling at the same price as they did in March 2020, while 8 percent reported that they were making clothes for less than they cost to make, even for the likes of C&A, H&M and Zara owner Inditex.

Orders from key markets are also going down. Apparel exports from Bangladesh to the United States, for instance, fell by more than 23 percent year over year to $5.8 billion for the first nine months of 2023, according to data released Tuesday by the U.S. Department of Commerce’s Office of Textiles and Apparel. The shortfall was especially acute in September, when exports dropped by more than 34 percent year over year to $594.8 million. In Europe, where exports have seen modest overall growth, shipments to Germany, Bangladesh’s largest EU market, tumbled by 4.4 percent in July-September compared with the same period last year, according to the Export Promotion Bureau.

Despite contributing to 80 percent of the country’s exports, workers in the garment sector are still struggling to be heard, said Kalpona Akter, president of the Bangladesh Garment and Industrial Workers Federation.

“The owners accuse the workers of conspiracy,” she told the Daily Star, noting that many legislators are also factory owners. “But how is it a conspiracy when eggs cost 15 taka (14 cents) apiece, onions 120 taka ($1) per kg, and potatoes 70 taka (64 cents) per kg?”

“How long can the police suppress the workers?” Akter added. “The owners may not be able to ‘afford’ 23,000 taka, but the wage certainly cannot be 10,400 taka ($94) or even 12,000 taka ($109). It must enable the workers to survive, buy food, pay rent and support their families. With stagnant wages, reduced capacity to meet basic needs, and no significant growth between entry-level and skilled workers, how long will the workers suffer in silence?”

Bangladesh is the world’s second-largest apparel exporter after China, she said. If it cannot strengthen its position and negotiate with buyers, establishing a price threshold below which it will not go, that’s “disheartening.”

“We have powerful organizations like the BGMEA and [Bangladesh Knitwear Manufacturers and Exporters Association],” Akter said. “What do they do? Why do they foster internal competition within our sector? What is the purpose of their association then? As long as they don’t learn to say no, they’ll keep producing cheap clothing and claiming no profit.”

Steve Lamar, president and CEO of the American Apparel & Footwear Association, whose roster includes household names such as Adidas, J.Crew Group, Lululemon and Calvin Klein owner PVH Corp., said that its members are “absolutely committed” to responsible purchasing practices to support the wage increase.

He said that the trade group also renews its pleas for the adoption of an annual, tripartite minimum wage review mechanism—one that should not be “short-circuited by any [single] stakeholder”—so that Bangladesh’s workers are not “disadvantaged by changing macroeconomic conditions.”

“We mourn the senseless loss of life and call on the government to take every step to prevent violence,” Lamar added. “We urge that the government continue to partner with all parties [to] ensure an environment that fosters workers’ rights, worker welfare, and inclusive and peaceful multi-stakeholder dialogue. A responsible and competitive Bangladeshi apparel industry continues to remain an important part of the global fashion industry.”

A report filed by the United Nations’ special rapporteur on extreme poverty and human rights following a visit to Bangladesh in May singled out international brands as being “overwhelmingly responsible” for poverty wages in Bangladesh.

“Their buying policies have systematically led factory owners in Bangladesh to cut down on expenses, in particular on wages, or to rely on sub-contractors imposing sub-standard working conditions, in order to stay in business,” wrote Olivier De Schutter, citing the mass, often unilateral cancelation of orders during Covid-19 as an example of “irresponsible conduct [that] is not new.” If things are to change, buyers need to be held accountable with their purchasing practices “more closely monitored,” he said.

For Thulsi Narayanasamy, director of international advocacy at the Worker Rights Consortium, a Washington, D.C.-based think tank, the “refusal” of brands to pay fair prices to factories is what’s driving the “failure” to increase worker wages. Based on 37 percent inflation in Bangladesh between the end of 2018 and the end of 2023, using end-of-period consumer price index figures from the International Monetary Fund, the updated wage only boasts a real increase of roughly 14 percent.

“At the one moment where brands are in a position to use their leverage to lift the wage to a level that matches their stated commitments, they have utterly failed to follow through, condemning 4 million people to desperation,” she told Sourcing Journal. “Worse still, brands have turned their backs as their workers suffer punishment for raising their voices through the only avenue available, now on the receiving end of deadly violence and retaliatory arrests.”