Hikes in Minimum Wage in Bangladesh Lead to Frustration

What is happening in Bangladesh and why?

Following a weekend of violent demonstrations and weeks of protests, the salary structure for garment factory workers was increased by 56per cent, from $75 to $113. However, this is not the victory it may appear to be and has counteractively heightened ‘extreme frustration’ within the workforce, which consists of over 4 million people. This wage increase is the first to follow since the last hike in 2019, which demonstrates the long-standing frustration and income inequality which has been building over a long period of time. 

Bangladesh’s capital, Dhaka, and major industrial areas have seen large and violent demonstrations over the last couple of weeks. These have involved the use of tear gas by the police to disperse protests, blocked highways, and altercations between protestors and the police which led to the death of two factory workers. This increased tension led to pressure on the government, leading them to form a panel with factory owners and union leaders to discuss the current increase in wages. 

Reasons for frustration

This is occurring due to increasing economic instability within the region alongside global conditions which have affected transport and energy costs. Inflation within the region is currently running at 9.5 per cent, increasing from 5.5 per cent when the wages were last reviewed. According to the current inflation rate, 23,000 taka ($208) is the living wage required to cover basic living costs including education, food, rent, and other essential expenses. However, with the government failing to meet this requirement and large corporations refusing to adjust their payments to garment companies, civilians have been facing a crippling cost of living crisis. 

Compared to other garment-producing countries, Bangladesh has one of the lowest minimum wages in the world. For example, Cambodia has the highest wages at $200, Vietnam at $192, India at $165, China at $161, and Pakistan at $110 per month. This figure is even more concerning when considering that Bangladesh is the second-largest garment producer in the world, with it taking up around 16 per cent of its GDP and 80 per cent of its export earnings. 

Implications

The implications of this are devastating and far-reaching. With women accounting for more than 70 per cent of this workforce, they are likely to be disproportionately impacted. For example, an even larger burden may be placed on them as they will have to work overtime to make ends meet, adding to the already exhausting 10-12 hour long days.  

Furthermore, this also raises apprehensions in terms of child safety and labour. With families being unable to support themselves, their reliance on other members of their family may grow; seeking loans from relatives could undermine their own financial security, or they may be forced to send their children to work instead of attending school. 

Food security is another rising concern amid this crisis as families struggle to provide for themselves. Due to income crises, families may be plunged into starvation. Alongside inflation, food prices have also risen over the past year. For example, the price for a kilogram of potatoes has risen 133 per cent and onions even more dramatically by 160% per cent. 

The ongoing repression of workers and trade union rights is another worry following these events, where their rights to freedom of association and collective bargaining are protected to make meaningful progress.

Looking forward

These conditions require large corporations to take concrete action to support the wage increase through higher payments for clothing orders. Although member brands from ACT such as Inditex, ASOS, New Look, and Next have sent a joint letter recognising their role in ‘supporting wage development’, they have yet to make progress in materially encouraging responsible purchasing practices. 

Alongside these verbal commitments, companies must ensure they are helping to implement actionable strategies to elevate at-risk workers out of poverty and injustice. 

By Areeba Ansari