In September 2018 the Bangladeshi government announced a new minimum wage for garment workers, which has fixed the minimum monthly wage at 8,000 Tk (95 US Dollars). The new minimum wage structure which consists of seven wage grades has come into effect on December 1. An entry-level operator will now receive 4,100 Tk in basic salary, in addition to 2,050 Tk in house rent, 600 Tk medical allowance, 350 Tk transport allowance and 900 Tk food allowance. The total minimum wage of 8,000 Tk represents a 51 percent increase compared to the last minimum wage set in December 2013 and will affect close to 4 million workers.

The Bangladeshi government had formed a wage board to review existing wages, as according to Bangladeshi Labour Law minimum wages shall be fixed every five years. While garment factory owners proposed a 6,000 TK, workers demanded up to 18,000 Tk as a minimum wage.

The declaration of the new minimum wage was met by protests from workers groups, who feel that their demands and basic needs are not met. The new outlet Asia Times has written an interesting article showcasing the different reactions and perspectives on the minimum wage increase with quotes from trade union leaders, economists and the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Perspective from Mahbubur Rahman Ismail, coordinator of the Movement for Garment Workers’ Rights:

“We had demanded Tk 18,000 ($215) and the government declared only Tk 8,000 ($96). It’s like a slap in our face”

Perspective from Roy Romesh Chandra, former secretary general of IndustriAll Bangladesh Council (IBC):

“In providing a good salary to workers, the makers have to increase price negotiation skill with the buyers. Only 12% of earnings from a product is spent for workers. […] Efficient management of earnings is very crucial for increasing the wages of workers. Buyers should be incorporated in setting the new wage structure”

Perspective from Siddiqur Rahman, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA):

“After the Rana Plaza accident, we needed to go through a lot of reforms in our infrastructure, which cost us significant investment […] We needed to improve the working conditions by freeing up the factory space and by bringing in new machines. This cost us lots of money. Besides, we needed to give the workers the increment. Under the circumstances, it has become hard for many of us to survive”

Read the full article from Asia Times here: http://www.atimes.com/article/protests-over-bangladeshs-minimum-wage-for-garment-workers/

According to another article published in the Dhaka Tribune, even after the wage increase Bangladesh still has the lowest labour costs for manufacturing garments in the world. The Dhaka Tribune refers to a survey report of the Japan External Trade Organisation. According to the survey, the average monthly wage for labour in Bangladesh is just $101, compared to $135 in Myanmar, $170 in Cambodia and $518 in China. These low labour costs are a competitive advantage for Bangladesh’s garment industry, though with increasing costs the advantage may not remain:

“The leverage of cheap labour is not a solution to the Bangladesh apparel industry, as it is going up continuously due to a rise in production cost, rise in wages and investment for safety improvement,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Senior Vice President Faruque Hassan told the Dhaka Tribune.

We have to fight with the productivity and efficiency, and for that we should focus on training and skill development so that manufacturing can remain competitive,” he added.

Read the full articles in the Dhaka Tribune here: https://www.dhakatribune.com/business/2018/11/12/apparel-workers-in-bangladesh-still-the-lowest-paid-by-global-standards

SUSA has been following the discussions closely, as we have been active in Bangladesh implementing programmes on improving worker-manager dialogue, working conditions and productivity in garment factories in the Dhaka area since 2007 and are working towards achieving a living wage for workers in the textile and garment sector.