For Bangladesh’s Garment Sector, the ‘Spotlight Moves’ But Struggles Continue

The massive-scale protests that spelled widespread disruptions for Bangladesh’s tentpole garment industry at the close of 2023 may have abated, but the fallout over the increased minimum wage is far from over. Yet for many there is also a sense of wait-and-see: Workers are waiting to see if their employers are paying the new monthly floor; suppliers are waiting to see if their buyers will pony up the prices necessary to cover their additional costs. Everyone is waiting to see if Sheikh Hasina’s fourth consecutive electoral win will further consolidate the ruling Awami League’s power despite the growing anti-incumbency backlash.

But the world’s second-largest exporter of clothing after China is far from in a stasis. As of Jan. 23, four union leaders have been released on bail, including Babul Hossain, general secretary at Bangladesh Garment Workers Solidarity, who was accused of setting fire to a car and hurling a brick at its driver during a heated melee even though witnesses say he wasn’t in Gazipur at the time. Hossain, who was behind bars for 69 days, believes he was “unjustly detained” for “completely false” reasons as punishment for supporting the labor movement. Now, he wants justice.

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“I want false cases against all workers to be withdrawn,” Hossain said. “More than a hundred workers and some labor leaders are still under arrest in Gazipur Jail. I want them all released.”

Hossain isn’t in the clear just yet. None of the cases have been dropped, which means workers still have to check in with law enforcement as their cases progress. And while no more arrests are being made through the 43 or so First Information Reports (FIRs) that were filed with the police by frustrated factory owners at the height of the demonstrations, those haven’t been dismissed, either. Thousands of workers still face a “looming threat” of being captured, perhaps for retaliatory reasons, said Thulsi Narayanasamy, director of international advocacy at the Worker Rights Consortium, a Washington, D.C. labor rights group. Because the majority of the workers in the FIRs are unnamed, the accusations can be leveled at just about anyone. But even the veracity of the claims in cases against named workers is questionable, as with Hossain’s, she said.

“It seems like the intention is to follow through unless you’re going to drop them,” Narayanasamy said, noting that there haven’t been calls by the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA, for their members to do so despite statements in November pushing for the arrests of so-called arsonists and saboteurs. The BGMEA did not respond to a request for comment.

Union leaders say that at least 3,000 workers, perhaps more, have been fired from their jobs or are in hiding from potential arrests, though the BGMEA itself denies any knowledge of such reductions in the workforce.

What’s certain is that protests were fomenting before the Labour and Employment Ministry announced on Nov. 7 a revised monthly minimum of 12,500 Bangladeshi taka ($114), a 56 percent uptick from the previous 8,000 taka ($73). Workers had been asking for 23,000 taka ($210), a figure that had a better chance of standing up against the skyrocketing cost of living. Campaigners like Narayanasamy also balked at the framing of the “hike”: 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 number only provides a real increase of roughly 14 percent. And that’s on top of what amounted to poverty pay.

With “no real pathway” to the wage that they want, workers are feeling deflated. “When they do protest, they face such heavy retaliation,” she said. “There just isn’t any avenue for them to do that.”

But Hasina’s continued rule could make future bargaining more difficult, which in turn could trigger further dissent from the workforce, said Reema Bhattacharya, head of Asia research at Verisk Maplecroft, a risk intelligence company.

“The Awamaki League’s uncontested electoral victory and the shrinking space and scope of collective bargaining instruments will widen the chasm between the RMG labor unions and the factory owner’s association, adversely affecting future negotiations on critical sector-related reforms and thereby increasing the frequency of labor protests and strikes,” she said, using an acronym for ready-made garment.

Bhattacharya predicted that the government will maintain its “tried-and-tested economic formula,” where growth is based on the production of cheap goods and critical export-focused sectors, such as garment production, are buyer-regulated and “focused on pushing prices down.” In a recent report about political risks in emerging manufacturing economies, Verisk Maplecroft rated Bangladesh as the seventh-highest country, risk-wise, on its Civil Unrest Index.

“The competitive nature of the market will continue to create a ‘race to the bottom’ and exacerbate the systemic challenges within the RMG sector, including low wages and the lack of adequate accident insurance, grievance redressal and compensation mechanisms,” Bhattacharya said. “These issues will also heighten safety risks in the industry, triggering greater international scrutiny and criticism of foreign companies sourcing RMG products from Bangladesh in the coming years.”

For Bangladesh’s garment suppliers, however, what concerns them is today. Factory executives who spoke on the condition of anonymity agreed that the wage increase was necessary. The problem is the “little to no support” they receive from most of their customers. Some brands are even pressing for lower prices, perhaps with the knowledge that production capacity during these lean times is exceeding demand and suppliers are becoming desperate. “However, we are accepting their price, hoping for a better market situation in the coming years,” one said.

Another supplier, who also said that brands are decreasing rather than increasing their prices, making it challenging to pay wages, was more blunt: “Buyers are taking advantage of global crisis and they know factories need orders to pay the workers and they are taking advantage of the situation.”

But even manufacturers with customers that have explicitly said they will pay more—H&M Group, being a notable example—don’t expect to see the extra money at least until April, when newly negotiated orders ship. The fact that payment terms have been getting longer isn’t helping. A Better Buying Institute index published this week, for instance, reported that the number of suppliers who agreed to payment terms of more than 91 days increased from 14 percent in 2022 to 22 percent in 2023. Pre-pandemic, the norm was 30-60 days.

In any case, unless brands make repeat orders—rare in the case of trend-driven labels—it can be difficult to tell if they’re shelling out more, said Md. Fazlul Hoque, managing director of Plummy Fashions, a “green” knitwear factory in Dhaka. And for every powerhouse name that attracts public scrutiny for its purchasing practices, there are dozens of off-the-radar brands that don’t feel the pressure to shore up their prices. With Bangladesh’s gas shortages causing suppliers to seek more expensive alternatives like diesel, it’s been a “really tough time” for the sector, he said.

“Manufacturers might struggle to pay salaries on time and with this higher rate,” said Hoque, who previously served as president of the Bangladesh Knitwear Manufacturers & Exporters Association, or BKMEA.

A BGMEA survey published this week found that 79 percent of buyers have not raised their prices, while a mite 3 percent has upped rates by 5 percent. More than 47 percent of the suppliers polled said that their free-on-board prices have fallen by more than 5 percent year over year. And some 42 percent reported having enough orders to fill only 50 percent of their production capacity. On average, suppliers churned out goods at 27.5 percent below capacity in 2023 due to a falloff in orders.

“Due to the global economic crisis, our RMG industry is suffering,” BGMEA vice president Faisal Samad said at the survey’s launch. “Such surveys help to find out the real scenario.”

Workers, meanwhile, are experiencing “malnutrition en masse,” as the advocacy group Remake described a 2023 Asia Floor Wage Alliance report that pegged the average Bangladeshi garment worker’s nutritional consumption at 1,950 calories a day, far less than the 3,000 calories someone involved in physical exertion requires. Even fulfilling this cost 120 taka ($1) a day, or 44 percent of the monthly minimum at the time. No number of CSR initiatives, however well-meaning, can replace a wage that people can live on, Narayanasamy said.

“They’ve got a tiny increase [now] but these are workers who haven’t had enough to eat, who haven’t been able to afford medicines, who haven’t been able to feed their children or school their children,” she said. “They’re still in exactly the same precarious situation. And now, the spotlight just moves from them and their struggles continue. Brands predicted that they would wait out the storm and that’s what exactly happened.”