Bangladesh’s readymade garment (RMG) workers will get a 9% increase in their wages, Labour and Employment Adviser M Sakhawat Hussain announced on Tuesday.

The annual increment raise will be effective December 1, 2024, and will be reflected in January 2025 wages.

The existing increment for the labourers of the country’s highest export-earning sector is 5%, and the government decided to add a 4% hike to it.

The adviser said the increment will remain effective until the government or the Minimum Wage Board announces a new minimum wage, adding that the previously set 5% annual pay increment, fixed by the Minimum Wage Board, will remain in place.

He clarified that any worker who is supposed to get a yearly increment in December will enjoy the additional increase. Those not supposed to get an increment in December will still get a 4% rise in their wages.

He also said that a vested interest group has been trying to divert buyers away from Bangladesh by publishing negative news in local and foreign newspapers. 

Many workers are protesting without understanding and are being trapped by multidimensional provocation. He urged everyone to address the conspiracy looming against the country’s RMG sector.

Earlier, at their 5th meeting, the Capacity and Implementation Committee on Minimum Wage Revision and Annual Increment recommended an annual 9% increment for the RMG sector.

At the meeting, the labour representatives proposed for a 10% annual increment hike, emphasizing the rising cost of living. In response, the employer representatives proposed an 8% yearly increment due to financial constraints and an aggressively competitive global market.

Mohammad Khorshed Alam of Shromik Dol, Babul Akhtar of Bangladesh Garment and Industrial Workers Federation, and Kabir Ahmed of Bangladesh Shromik Kalyan Federation signed as labour representatives.

ANM Saifuddin, member of the BGMEA’s assistance committee, and Fazlee Shamim Ehsan, executive president of the BKMEA, signed as employers’ representatives.

SM Enamul Haque, director of DoL, Md Hasibuzzaman, joint IG of DIFE, Raisa Afroz, secretary of Minimum Wage Board, and Mohammad Masukur Shikdar, joint secretary of MoLE, signed as government representatives.

Paying increments to be challenging

Talking to Dhaka Tribune regarding the increment hike, Former BGMEA Director Mohiuddin Rubel said it would be difficult for them to pay the increment because the industry’s capacity is not that high. Production costs have increased, but income has not increased in the same way.

“The price of RMG items has also decreased in the global market. However, since this is a tripartite decision, there is no other way but to accept it,” he added, urging the government to provide the necessary policy support to overcome the pressure the manufacturers will face in implementing this decision.

He also said that it is more viable to make these decisions while keeping in mind the capacity of the manufacturers so that they can implement them.

“It has now become a trend to take to the street with another demand if one demand is met. If they take to the street with another demand tomorrow, it will become impossible to run the business. The government will have to provide support, security, and assurance so that a fair working environment can be ensured,” he added.

He also said that the buyers are responsible and should ensure fair prices. Prices are falling in the global market, and they must adjust their prices.

“If they don’t raise prices but demand ethical production, it will become contradictory. If they pay a fair price, ethical production and sustainability will accelerate,” he added.

Meanwhile, a leading apparel exporter, speaking on condition of anonymity, expressed concerns about the industry’s challenges.

“We feel trapped after investing heavily in this sector, especially as the previous government increased utility costs significantly,” he added, fearing that many factories might struggle to implement further wage increases, especially after the recent major wage adjustments.

He suggested that the government conduct a comprehensive survey to assess the industry’s capacity and the workers’ needs.

He also said the industry’s ongoing struggles with the unreliable supply of quality energy.

“On top of that, the reduction in cash incentives has put exporters in an even tighter corner,” he added.

Talking to Dhaka Tribune, Nazma Akter, president of the Sommilito Garments Sramik Federation, said that the proposed increment is insufficient to meet workers’ basic needs.

She also criticized the process, questioning how labour representatives could demand a 15% annual increment without consulting labour organizations. “Additionally, no government officials communicated with us regarding this matter,” she alleged.

“We urge the government to implement an increment that accounts for inflation, enabling workers to meet their basic needs and maintain proper nutrition. This will not only improve their well-being but also boost productivity,” she added.

On December 4, the factory owners agreed on a 7% increment, and they had previously proposed a 6% where the labour leaders, who earlier proposed a 15% hike, reviewed their proposal and cut the figure to 12%, in the fourth meeting of the committee.

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However, the talks remain stuck because of failure to agree on the wage increases that will lead to a review of the minimum wage. The fourth meeting in the committee initiated by the Ministry of Labour on this has ended without a decision. This meeting was chaired by Additional Secretary Sabur Hossain at the conference room of the Ministry of Labour on Tuesday. Six representatives each from the owners and from the workers were present in the meeting to argue the case brought by their sides.

The two-and-a-half-hour-long meeting could hear arguments from both parties justifying their stand on the demands.The owners expressed their willingness to increase the annual wage increment to 7%, considering current economic conditions and the sustainability of the industry. They emphasized that the global economic climate, inflationary pressures, and the need to maintain competitiveness in international markets limit their ability to meet the workers’ demands fully. On the other hand, workers reduced their initial demand from a 15% increment (including an additional 10% on top of the regular 5%) to 12%. They argued that rising living costs, inflation, and the increasing expenses of basic necessities necessitate a higher wage adjustment to ensure a decent standard of living.

There were no other comments as this third meeting of the committee had ended with the owners proposing a total 6% annual increment; 1% above the standard 5% actualized increment. This was a little advancement according to the expectations of workers but insufficient for them. At the recent meeting, the owners made the new attempt to find a common ground with their 7% proposal, but the workers were still firm on their 12% demand.

The deadlock led the committee members to decide to hold yet another meeting next week under the chairmanship of the Labour Secretary and with the aim of bridging the gap between both the parties.

These included some of the most glaring representatives from the meeting: Fazle Shamim Ehsan, Executive President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA); ANM Saifuddin, member, BGMEA supporting committee; Farooq Ahmed, Secretary General, Bangladesh Employers’ Federation; Mohammad Khorshed Alam, Youth Affairs Secretary, BNP Labour Wing; Babul Akhter, General Secretary, Bangladesh Garment and Industrial Workers Federation, and Kabir Ahmed, Central Vice-President, Bangladesh Workers Welfare Federation.

The stalemate presents very great evidence for the need for dialogue and compromise so that the interests of the workers and those of this cornerstone sector of Bangladesh economy-RMG-may share the stage at the end. Innovative negotiations and good faith among all working parties will be required to balance fair wages against the industrial hard economic realities.

Reference: https://www.ittefaq.com.bd/709449/

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The announcement, made through a notice signed by Labour Ministry Secretary AHM Shafiquzzaman, calls for immediate resumption of work at all Beximco facilities in the Ashulia-Chandra area. The secretary urged workers to return to their jobs promptly, emphasizing the government’s commitment to resolving the crisis.

The unrest began when workers from multiple Beximco factories staged demonstrations demanding overdue salaries. Today marked the fifth consecutive day of protests, with hundreds of workers blocking the Chandra-Nabinagar highway near the Chakraborty intersection in the Sarabo area of Kashimpur, Gazipur. Protesters resumed their blockade at around 10:00 am, following a temporary suspension of demonstrations late last night.

The blockade has disrupted transportation and trade activities along the vital highway, adding pressure on local authorities to resolve the standoff.

Speaking to reporters, a Labour Ministry official said, “This loan package demonstrates the government’s proactive role in addressing labour grievances. We urge the workers to trust this process and resume their duties immediately.”

Beximco management has welcomed the government’s support and pledged to disburse the pending salaries promptly upon receiving the funds.

The Finance Division is expected to release the loan amount within the next 48 hours, enabling factory operations to return to normal. Despite the assurance, workers have vowed to continue protests until wages are paid in full.

Local police have been deployed to maintain order, but the situation remains tense. Labour rights organizations have called for sustainable solutions to prevent recurring wage-related disruptions in the industrial sector.

The unfolding situation highlights ongoing challenges in ensuring timely wage disbursement and worker welfare in Bangladesh’s vital manufacturing sector.

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BGMEA President Faruque Hassan opened the letter by extending warm greetings during the festive season, celebrating the recent Victory Day of Bangladesh and expressing hopes for a prosperous New Year. Acknowledging the positive projections for U.S. holiday spending, BGMEA emphasized the potential for a better and prosperous year ahead.

The letter reiterated BGMEA’s previous communications dated September 20, November 8, and November 17, 2023, regarding the ongoing negotiations for minimum wages. BGMEA informed recipients that the government had officially published the final gazette on December 20, 2023, outlining the new minimum wages. These changes, effective from December 1, 2023, will see workers receiving the new wages in January 2024.

According to the letter, the new wage system reduces the number of grades from 7 to 4. Grade IV replaces the previous Grade VII, while Grade III combines the former Grades V and VI. The gross monthly minimum wage for unskilled Grade IV workers remains at Taka 12,500, representing a 56.25% increase. For Grade III, the gross monthly wage increases by 60.93% from Tk. 8,420 to Tk. 13,550.

BGMEA emphasized its commitment to worker well-being, noting that the adjustments align with official demands by workers and employers’ representatives. The association highlighted its efforts to educate member factories on the new wage system through workshops involving 1900 participants from 1300 factories.

The letter acknowledged the significant impact the new wages will have on industry costs but underlined the global community’s and brands’ emphasis on ensuring decent living wages for workers. BGMEA revealed it had received letters from influential organizations, including AMFORI, AAFA, and ACT, urging for fair wages during negotiations.

The letter also addressed the broader economic challenges faced by the industry, citing increases in production costs, electricity, gas, diesel prices, and other factors. BGMEA urged brands to consider these factors, including investments in sustainability, when calculating price adjustments.

Lastly, BGMEA expressed gratitude for the prompt response from many brands in adjusting their price calculations and urged continued collaboration to ensure a smooth and sustainable supply chain within the parameters of Environmental, Social, and Governance (ESG) standards.

As Bangladesh moves towards implementing the new minimum wages, the collaborative efforts of brands and manufacturers will play a crucial role in fostering a fair and sustainable garment industry.

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Earlier, on last Sunday (November 12), a declaration was made to shut down all activities of 130 garment factories in the area, ensuring the safety of workers and protection of the factories’ properties for an unspecified period. However, within two days of this announcement, the decision to reopen all factories was made following discussions involving workers, labor leaders, factory owners, and law enforcement.

BGMEA Director Mahiuddin Rubel stated that as the situation gradually normalizes, all closed factories will be reopened. The decision was reached through discussions involving workers, labor leaders, factory owners, and law enforcement.

In a statement addressing the current situation in the garment industry, BGMEA President Faruk Hasan mentioned that, with the cooperation of workers, labor unions, local political leaders, administration, industrial police, and media personnel, the garment industry in all areas of Bangladesh is currently operating in a stable and peaceful environment. Production activities are ongoing in all factories. As of now, there are no reports of dissatisfaction among workers in any factory.

He further mentioned that, in response to BGMEA’s call, workers, labor unions, local political leaders, administration, industrial police, and media personnel in the Ashulia area have expressed their desire for all closed garment factories in Ashulia to resume operations. Workers have assured that if the factories are reopened, they will work diligently. As a result, all closed factories in Ashulia will be reopened on November 15. Additionally, three garment factories in Kashimpur and Konabari areas have already been reopened. Consequently, normal production activities are taking place in all factories in those areas.

BGMEA President Faruque Hassan requested law enforcement agencies to ensure the security of all types of industrial establishments, including garment factories. He urged them to take strict measures for the safety of their properties. However, he emphasized the importance of working cautiously to prevent any worker, employee, or owner from falling victim to any fraud or deception in the process.

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Despite the fact that the gross wage of an unskilled worker at the entry-level has been increased by 4,500 taka, which is 56.25% more than that of the existing minimum wage, the one-sided narrative against the new wage is hurting our industry and economy.

Bangladesh Labor Act clearly spells out the wage determining factory, which are – standard of living, cost of living, production cost, workers’ productivity, price of produced goods, inflation, work hazard, the ability of the industry, and socio-economic perspective of the country. While the aggregate inflation since 2019 is recorded at around 35%, the minimum wage has been reviewed by 56.25%, way above inflation. But has the impact of this revised minimum wage been analyzed carefully and factored in to balance the other side?

Since there has been a wider debate about the sufficiency of the minimum wage, we feel compelled to issue this statement on the ultimate impact of the minimum wage and the actual take-home wage of a worker in the entry level, i.e. Grade 5 (Grade 7 as per minimum wage gazette of 2018).

Let us make it clear through an example. An unskilled worker named ‘ABC’ who enters into a factory in Grade-5 on 1 December 2023 and draws salary in January, will be entitled for 6700 taka as basic wage, 3350 taka as house rent, 750 taka as medical allowance, 450 taka as transport allowance and 1250 taka as food allowance; altogether 12,500 taka as gross monthly minimum wage.

On top of it, the worker ABC works in extended hour (overtime which is allowed up to maximum 4 hours per day) for draws 64.42 taka per hour of overtime work. This is calculated by dividing the basic wage 6700 taka by 208 hours of normal work in a month and then multiplied by 2. So if ABC works for 52 hours per month draws 3350 taka end of the month as overtime benefit, 5025 taka if worked for 78 hours, and 6700 taka if worked for a maximum of 104 hours in a month.

Plus, the worker ABC draws 2 festival bonuses per year, each equivalent to a basic wage of 6700 taka. So in the first year of ABC’s service, an amount of 13,400 taka is drawn in the year, which comes to around 1116 taka per month.

Plus, an allowance of 500 taka is given on average as an attendance bonus per month. This amount varies from factory to factory (300-1000 taka).

Plus, the workers are allowed to encash 50% of their annual earned leave legally, though factories usually pay the full amount of the actual earned leave. Workers are now entitled to 1 day of leave for every 18 days worked, which was 1 day for every 22 days earlier, and the earned leaves can be carried forward for up to 3 years. As per this calculation, ABC is entitled for 16 days of earned leave which is given at the rate of one day’s gross salary, i.e. 12500 divided by 30 days = 417 taka per day. So the total amount of 16 days of earned leave

comes to around 6667 taka in the year, of which ABC can legally draw 50%, i.e. 3333 taka. This is around 278 taka per month.

Therefore, the actual net amount ABC is taking home after a month is 17,744 taka if worked 2 hours overtime per day, or 19,419 taka if worked 3 hours overtime per day, or 21,094 taka if worked 4 hours overtime per day throughout the month.

The following table may be helpful to have a clearer picture of these equations of the minimum wages of 2018 and 2023 –

Now, a few points need to be considered while criticizing –

1. Bangladesh’s garment industry has emerged based on the strength of our competitive workforce. We don’t have any other competitive advantage whatsoever, neither cotton (required to produce yarn and fabric), nor any other core raw materials including petro-chemicals (required to produce synthetic, polyester and MMF yarn and fabric, button, hanger, polybags, etc.) and paper pulp (required to produce price tag, hand tag, carton, backboard, neck-board, etc.), dyes, chemicals, and machineries required by this industry. If the wage increase is not done pragmatically, this will question our global competitiveness.
2. There are 44 industrial sectors in our economy having official minimum wages. Considering the requirement of skills, education and experience, the work hazard of respective industries, a comparative analysis of different sectors need to be done, and an evaluation of garment workers compared to others to be realized. The garment workers are unfoundedly better of than any other sectors.
3. The non-wage benefits given by the employers to the workers are never factored in. There are numbers of non-wage benefits given by factories including food and groceries at subsidized price, transport facilities, schools for children, day care center, and many more. Factories spend for these benefits toward worker to make their lives easier and comfortable, but these facts are never recognized as we see the criticisms.
4. The average age of ABC is around 23-24 years (as per the survey report by ACD, 2020). The minimum wage 12,500 taka is applicable for this unskilled worker, and for the workers in the upper grade the wage amount is negotiated and far higher than the amount mentioned in the gazette. But the narratives around wage mostly generalize 12,500 taka for all, which is wrong. In fact, 17,744-21,094 taka take home for a worker of 23-24 years should be enough considering their household profile.
5. Factories significantly vary within the industry, we have larger ones having ability to pay higher and better, vis-à-vis the smaller and medium ones who are more challenged. Whenever policies are made the context of the SMEs are considered, and this is done for all industries in all circumstances, given the fact that the larger ones are and will continue to pay higher wages and benefits to their workers at all times compared to the SMEs. The fixation of minimum wages has a bearing on SME sustenance.

The wider debate around wage tends to question the sufficiency of the wages, but the rational and empathy toward the industry remains absent. We must remember that the importance of the jobs created by this industry cannot be over-emphasized, and there is no alternative sector that can absorb such a huge employment. Therefore, the industry deserves more appreciation and attention, as much as we do care of our workers, so that we don’t make the equation it one-sided and imbalanced.

Faruque Hassan President, BGMEA

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As the industry grows, the well-being of the workers is better addressed and will continue to do so. What’s perhaps missing is acknowledgment, empathy, and endurance.

Author -Mohiuddin Rubel
Director, BGMEA
Managing Director, Bangladesh Apparel Exchange
Additional Managing Director, Denim Expert Ltd

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She also urged the demonstrating workers to rejoin their respective factories.

Of the new wages, 63% of it will be basic pay, while the new minimum wage will be effective from January, with their December wages.

The new minimum wage surpasses the previous entry-level RMG workers’ wages of Tk8,000 that was set in 2018.

Earlier on the day, the RMG factory owners hiked their wage proposal to Tk12,500 from the previous Tk10,400 per month during the sixth meeting of the Minimum Wages Board.

However, the workers’ representative persisted in their previous demand, Tk20,393.

However, both parties agreed to set 63% as the basic wage, up from the existing structure and lowered the grade to 5 from 7.

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