Annual wage review urged for RMG workers
Staff Reporter :
Bangladesh should conduct an annual review of its wage-setting process, as workers in the ready-made garment (RMG) sector who receive the minimum wage are losing income year on year due to the current inflation rates, according to a policy brief from the Global Labour Institute (GLI) at Cornell University.
The brief, titled “Waiting Game: Minimum Wage-Setting in Bangladesh’s Apparel Industry”, was recently published by the Global Labour Institute (GLI), which is part of Cornell University’s ILR School.
The brief outlined five key recommendations, including institutionalising an annual review of minimum wages and scheduling a review of the 2023 minimum wage in 2025.
The institute pointed out that the longstanding minimum wage policy, which only reviews wages every five years, combined with high inflation, disproportionately benefits employers over workers.
Around four million people are employed in this sector in Bangladesh, with a minimum wage of Tk12,500 ($105), set last year.
According to GLI, at current inflation rates, workers in Bangladesh earning the minimum wage or close to it are ‘under water’, losing real income year on year.
The policy brief noted that after Cambodia implemented an annual wage review policy, its apparel exports continued to grow.
It also highlighted that the local purchasing power of workers’ wages in Bangladesh is considerably lower than that of workers in competing countries.
Addressing employers’ concerns that rising labour costs in a labour-intensive sector would reduce the industry’s competitiveness, the brief found no evidence to support this claim.
It also cited the experiences of countries like Vietnam, Indonesia, and Cambodia in recent years, which undermine this argument.
The brief further noted that despite efforts by apparel brands and retailers to advocate for significantly higher wages and a regular wage-setting process, these have been largely ineffective.
The 2023 wage revision and the fall of the Hasina government in 2024 have once again drawn attention to the issue.
As a result, the researchers are urging the Bangladeshi government to simplify the minimum wage structure and adjust wages annually.