Bangladesh Minimum Wage Negotiations Put Brands’ Living Wage “Commitments” to the Test

Poverty wages and high inflation, make substantial minimum wage increase for garment workers long overdue—international brands must take responsibility

Impoverished garment workers in Bangladesh earning US$73 per month, while making apparel for top international brands, are calling for an increase in the country’s minimum wage to US$215 (23,000–25,000 Bangladesh taka, “BDT”) per month—a figure recent research shows is needed to address steep increases in costs of living for workers and families. Major brands sourcing from Bangladesh are facing calls to support this wage increase by committing to pay higher prices to factory suppliers and insisting on a transparent wage-setting process—simple actions which brands have thus far failed to do.

At an October 22nd meeting of the country’s Wage Board, a government-appointed body that issues recommendations to the Prime Minister for the minimum wage, factory owners demanded the minimum wage be set at less than half this amount, BDT 10,400 (US$95) per month, which provoked outcry from unions and other labor rights organizations. Factory owners’ resistance to meaningfully raising workers’ pay is increasing pressure on brands to show clear support for a substantial wage hike, ahead of the Wage Board’s next meeting on November 1st.

The Bangladesh garment industry’s current legal minimum wage, BDT 8,000 (US$73) per month, has not been increased since 2018, which, combined with a steep rise in inflation (with the Consumer Price Index up 35% over the past five years), has left already-poor workers living even deeper in poverty. This cost-of-living crisis has left four million workers going hungry while producing for the world’s biggest brands. Inflation in the country is at its highest level in 11 years, with the price of regular food items having increased beyond the ability of workers to pay.

Research studies show need for US$215 per month minimum wage—garment worker families going hungry, while international brands profit from sub-poverty wages

A recent research survey by the Bangladesh Institute for Labour Studies (BILS) shows that more than 80% of garment workers run out of money before receiving their next monthly pay check, with the same share of workers already in debt from taking out high-interest loans to survive. None of the workers BILS surveyed were earning enough to provide their families with an adequate diet, and barely 10% were able to afford their children’s school expenses.

The BILS study concluded that workers and their families require a minimum wage of at least BDT 23,000 per month in order to be above the ‘poverty line’—an amount most of the country’s garment worker unions have adopted as their wage demand, with other unions seeking a slightly higher increase to BDT 25,000. 

Bangladesh is the second largest exporter of garments in the world, behind only China. However, its wages for garment workers are among the world’s lowest, with WRC analysis showing workers in other low wage garment exporting countries like Cambodia, India, and Indonesia, earning well above Bangladeshi workers’ wages.

Brands’ price-squeezing practices belie so-called “living wage commitments”

Most of the major brands that have been profiting for years from the ultra-low wages paid to Bangladeshi garment workers have done so while proclaiming, at the same time, their commitment to achieving living wages in their global supply chains. The contradiction could not be more glaring. While major brands like Bestseller, H&M, and Inditex (Zara)—as well as other brands that are members of the industry’s leading voluntary multistakeholder initiatives—have been trumpeting their supposed commitment to living wages, they have poured so much business into Bangladesh’s sub-poverty-wage garment sector that the country will export close to US$47 billion worth of apparel in 2023.

Yet, in actuality, the dominant brand strategy of squeezing supplier factories on price, without regard for the impact on workers’ wages, continues unabated. As the United Nation’s Special Rapporteur on Extreme Poverty and Human Rights reported this year, “[Brands’] buying policies have systematically led factory owners in Bangladesh to cut down on expenses, in particular on wages”.

Multiple studies show that brands’ aggressive pricing demands on suppliers are particularly exploitative in Bangladesh, where the country’s reliance on a garment industry that accounts for 82% of exports makes it imperative to maintain competitive prices above all else, including workers’ wages. 2020 data from the US Office of Textiles and Apparel (OTEXA) showed that, compared with other major garment-exporting countries, Bangladeshi manufacturers are paid 14% less for women’s cotton jeans, or 26.5% less for men’s woven cotton shirts. Analysis by the WRC of OTEXA data for 2022 for similar product categories shows that this disparity remains.

Similarly, research by the International Labour Organization (ILO) in 2016 found that, among leading apparel exporters, Bangladesh had the second highest incidence of suppliers being forced to make unsustainable concessions to buyers, with more than half of factory owners accepting orders below production costs. The same study showed that just 17% of brands buying from Bangladesh were willing to adjust prices paid to factories upward to accommodate minimum wage increases. 

Despite reaping rising profits from Bangladeshi labor, brands have paid only lip service to raising garment workers’ wages

Brands have profited handsomely from this price squeeze, at workers’ expense. The cost, to brands, of Bangladeshi garment workers’ labor as an input—in dollars, which is how brands pay for garments—has plummeted since the minimum wage of 8,000 taka per month was set in late 2018. This is a result of three factors: the fact that the minimum wage has not been increased in nearly five years, a large drop in the value of the taka relative to the dollar, and US dollar inflation. At the beginning of 2019, the labor of a Bangladeshi garment worker, at the 2023 US dollar value, cost $117 per month or 56 cents per hour. Today that same month of labor costs $73 or 35 cents per hour. Thus, in real terms, brands have reduced their labor costs in Bangladesh by 38% since 2019. This is the reality that belies brands’ claimed commitments to making progress toward living wages for the workers who make their products.

Brands fully recognize the power they have to undermine or enable increases in garment worker wages through the prices they agree to pay to suppliers. During minimum wage negotiations in Cambodia in 2014, at least eight major brands including H&M, Inditex, and Primark wrote to the Garment Manufacturers Association in Cambodia (now called Textile, Apparel, Footwear & Travel Goods Association in Cambodia), the equivalent of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), stating “…our purchasing practices will enable the payment of a fair living wage and increased wages will be reflected in our prices…”

During the current minimum wage negotiations in Bangladesh, while multiple brands have issued statements generally supporting a wage increase, only one brand has actually said what level of wage hike it endorses. Earlier this month, 15 North American brands including PVH, Gap, and Levi’s wrote a joint letter to the Bangladeshi Prime Minister in support of a minimum wage increase, joining other brands, such as ASOS, Primark, and C&A, that have issued similar statements. Yet none of these statements endorsed the minimum wage figure of BDT 23,000–25,000 per month that the BILS research study shows is needed to address increases in workers’ cost of living.

Moreover, no brand, in any of these communications, has committed to increase the prices it pays to suppliers to accommodate a substantial minimum wage increase. This omission has not gone unnoticed by factory owners. BGMEA, in recognition of brands’ historical unwillingness to lift prices in support of pay hikes, recently responded to a letter from brands concerning the minimum wage-setting process, by emphasizing: “… [W]e also expect fair price and ethical sourcing from our valued buyers. … [and for] them to be more empathetic and rational on pricing and sourcing practices.”

Lack of transparency and true labor voices lock workers out of minimum wage talks, while violence and repression seek to stifle workers’ right to protest poverty pay

Bangladesh’s Wage Board met for the first time in five years in May 2023. While it is a tripartite body intended to include representatives of workers, industry, and the government, no independent (non-party-aligned or employer-influenced) unions sit on the Wage Board, and its proceedings are conducted in private, without any transparency as to how the eventual recommended wage figure is determined.

The recommendation of the BILS research study, to raise the minimum wage to BDT 23,000 per month, was reached using criteria prescribed under both the country’s labor law (the Bangladesh Labor Act) and international labor standards (ILO Convention 131 on Minimum Wage Fixing). Yet the absence of brands endorsing this figure—much less committing to raise prices for suppliers to support its adoption—has led garment factory owners, unsurprisingly, to counter with a proposal for only BDT 10,400 monthly—despite the lack of any support for such a low figure under either the labor law or ILO conventions.

Garment workers calling for a minimum wage increase in Bangladesh have historically faced severe repression when they have exercised their fundamental right to protest in support of increased wages and a fairer process of wage setting. Previous minimum wage negotiations in Bangladesh in 2018 took place alongside a wave of violence against workers, who faced water cannons and tear gas, with at least one worker dying at the hands of police firing rubber bullets. Fear of facing violent retaliation for raising wage demands, among workers and unions, has only escalated since then, following the recent murder of trade unionist Shahidul Islam, who was killed in June 2023 after attempting to negotiate with the management of a factory that had not paid workers their wages for the previous two months.

Since factory owners proposed a wage figure at the October 22nd Wage Board meeting of BDT 10,400, representing less than half the wage recommended by research institutions and demanded by workers, the protests that this move by employers has sparked in the country have already been met with police force. Union leaders have been warned by police against organizing further protests, and, in at least one incident on October 23rd, workers producing for an international brand were tear gassed.

What brands must do to support a meaningful minimum wage increase for Bangladeshi garment workers

At this crucial juncture, brands, and the associated multistakeholder initiatives they are members of, should make clear to their suppliers, the BGMEA, and the Bangladesh Government that they, as buyers:

  • Insist that the deliberations of the national Wage Board are conducted transparently and that the voices of worker organizations that are truly independent from employers and political interests (i.e., independent trade unions) are consulted and heard in this process;
  • Demand that workers’ and unions’ fundamental associational rights to engage in nonviolent protest in support of a meaningful minimum wage increase be respected by both the government and factory owners, without use of force or other retaliation; and
  • Equally, are committed to maintaining production levels in Bangladesh, while increasing the prices they pay to suppliers—and that they are willing to do so by a sufficient amount for factories to absorb an increase in the minimum wage to no less than the amount that credible research has shown workers and their families need, approximately US$215 (23,000–25,000 taka) per month.

It is time for brands to pay more than lip service to the goal of living wages for the workers who make their products. The current minimum wage negotiations in Bangladesh are the right place to make a start.