Bangladesh Workers Rally at Rana Plaza Over Minimum Wage Increase
Bangladesh minimum wage discussions are heating up in Dhakjira.
While wage board representatives met on Oct. 1—marking the six-month deadline to reach an agreement—a lack of proposals from either side extended the effort to come up with a new wage structure.
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“There was a decision that the wage board will visit some factories then meet again. Now, the next meeting will be end-October, and we will have a chance to declare the salary by end-November and then make the gazette and then it will come into place on Jan. 1,” Siddiqur Rahman told Sourcing Journal, outlining the process ahead. Rahman is the former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), and the manufacturers’ representative on the wage board.
On Sunday, Dhaka think tank Center for Policy Dialogue released its proposal with an apparel worker monthly wage recommendation of 17,568 taka, or approximately $160.
This is less than the 23,000 ($208.64) to 25,000 ($226.79) that labor unions want, with activists erecting blockades and protesting in Dhaka in recent weeks. The latest rally was staged Monday in front of Rana Plaza in Savar.
Manufacturers aren’t happy that the number suggested by the think tank is more than double the present wage of 8,000 taka or $72.42.
Bangladesh revises the minimum wage every five years. This will be the sixth update since the minimum was set in 1994.
Garment manufacturers have cited declining orders and increasing inflationary pressures in recent months. If they don’t survive, there’s no salary at all for factory workers, they say. Bangladesh is the second-largest apparel exporter after China, employing more than four million workers.
Dr. Khondaker Golam Moazzem, research director at CPD, said that if the buyers increase payment by only 7 cents per garment, that would be enough to mitigate the additional costs for apparel manufacturers.
However, Rahman said that in a market economy, prices are open to negotiation.
“The buyers may even say they will pay the extra, but in the end, the price is always negotiable and is based on market demand. It’s an open economy,” he said. “If you can buy something for a lower price, why would you pay more. Does anybody love to pay more?”
The study by CPD was based on a survey of 228 workers from 76 apparel factories in Dhaka, Narayanganj, Gazipur and Chittagong.
Various industry stakeholders were present as the report was released last weekend, including key representatives of the minimum wage board—Liaquat Ali Mollah, chairman of the board, Siddiqur Rahman, who is representing the manufacturers and Sirajul Islam Rony representing the workers. Other important players from the industry included the top echelon from both sides, including the presidents of the two major garment associations, Faruque Hassan of the BGMEA and Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
The report noted that Bangladesh wages, at $72.42, adjusted to the current rate of the U.S. dollar, significantly lag other countries. The minimum wage in China is $303.59, India is $171.80, Indonesia is $242.94, Pakistan is $110.59 and Vietnam is $170.35.
Cambodia minimum wage negotiations ended late last month, with workers receiving a 2 percent increase from $200 to $204, far less than the $215 they were seeking.
“Despite tremendous growth, the minimum wage for apparel workers in Bangladesh is still the lowest in South Asia, as their currency has faced massive devaluation due to the economic crisis,” the report noted.
However, the report pointed out that in terms of per capita GDP, workers in Bangladesh fare better than some of their counterparts.
Bangladesh currency continues to face devaluation with a steep drop in foreign exchange rates in fiscal 2022-23.
“The issue of minimum wage is immensely important, particularly given that it has a substantial impact on the apparel industry’s overall competitiveness and the livelihood of workers. Hence, it is crucial to examine the current structure of wages and to determine a new wage in a way that allows workers to have a fair minimum wage,” the report noted.
In order to estimate the minimum wage, Anker’s method (2011) was applied in the survey, factoring in worker’s food and non-food family expenses, the number of household members, the number of earning members, and how they can have enough discretionary income or savings.
Using food costs as a key factor, the report shows that most workers spend much of their earnings on sustenance, with the standard food cost per total household an estimated 16,529 taka or approximately $150, when the average worker household contains 3.7 members.
With the sizable gap between the wage workers and employers want, there’s not telling when the two sides will get on the same page.
Hassan, the BGMEA president, has addressed the wage issue with brands. He has stressed the need to increase product price and ensure ethical buying practices to make the higher wage structure a reality.
On Monday, the Bangladesh Garment and Industrial Workers Federation (BGIWF) rallied in front of Rana Plaza, with participation from several other labor organizations demanding a minimum wage of 23,000 taka ($208.68) with 65 percent as basic salary, and an annual increase of 10 percent for apparel workers.
“The workers are enduring extremely challenging circumstances,” said BGIWF’s Sujan, urging Bangladesh to authorize the full wage that workers want.
