In Bangladesh’s RMG sector—employing over 4 million workers, 60% of whom are women—wage equality remains both a moral and economic imperative. Despite recent minimum wage increases, wage structures often lag behind inflation, productivity gains, and living cost standards. This gap not only affects workers’ livelihoods but also undermines long-term industry sustainability.

The solution? Structured dialogue that includes employers, worker representatives, and government—ensuring that wage setting reflects economic realities and human dignity.

Current Wage Landscape in Bangladesh’s RMG Sector

The minimum wage in the sector was revised in December 2023, setting the base at BDT 12,500/month, a 56% increase from the previous BDT 8,000. While this marked a significant nominal increase, workers’ unions argue it still falls short of a living wage—the amount needed to meet basic needs like food, housing, healthcare, and education.

Since the launch of Bangladesh’s export-oriented RMG sector in 1978, minimum wages have been revised seven times—starting in 1984 at BDT 560/month. Subsequent revisions occurred in 1994 (BDT 930, +66%), 2006 (BDT 1,662.50, +79%), 2010 (BDT 3,000, +80%), 2013 (BDT 5,300, +76%), 2018 (BDT 8,000, +51%), and 2023 (BDT 12,500, +56%), reflecting significant but uneven adjustments over time. Thus, it was seen that-

• Wage revisions have occurred irregularly, with gaps ranging from 4 to 12 years.
• The percentage increases have been substantial, but often delayed, leading to wage erosion due to inflation (averaging around 9–10% annually over the past few years)
• The 2023 revision was based on cost of living, inflation, and business capacity, with proposals suggesting BDT 17,568 as a more adequate wage

Comparative Benchmark:

Asia Floor Wage Alliance (2023) estimates a living wage for Bangladesh at ~BDT 23,000–25,000/month. Current average take-home pay (with overtime): ~BDT 16,000–18,000/month. Clearly, there is a gap, and closing it requires more than policy—it requires participation.

Why Dialogue Is Essential in Wage Design

Wage setting, when determined unilaterally, often leads to unrest and misalignment. In contrast, when negotiated through tripartite or bipartite dialogue, it builds:

• Transparency around cost structures and affordability.
• Trust between workers and factory owners.
• Legitimacy in the eyes of the global brands and buyers.

Case in Point:

In 2023, ahead of the wage board’s decision, the Minimum Wage Board included representatives from all three parties. Though the decision drew mixed responses, the process itself marked progress in inclusive wage governance.

Dialogue-Based Models for Wage Equity

Model                                                Description                                                      Global Example

Collective Bargaining                      Factory-level or sectoral negotiation         Vietnam, Indonesia

Wage Ladder                                    Gradual increase toward a living wage     Bangladesh (pilot by GIZ)

Productivity-Linked Pay                 Bonus tied to output + fixed wage            Sri Lanka’s apparel sector

Implementing such models in Bangladesh requires trust-building and capacity development, especially for worker representatives.

The Role of Industry Stakeholders

• Factory Owners & Associations: Take the lead in exploring fair cost-sharing models and advocate for responsible cost pass-throughs to buyers that support sustainable wage growth.
• Worker Federations & Trade Unions: Champion data-driven advocacy and actively engage in constructive, solution-focused dialogue to shape fair outcomes.
• Global Brands & Buyers: Play a vital role in shaping fair labor outcomes by aligning purchasing practices with shared responsibility—ensuring that pricing structures support sustainable wage growth and long-term industry resilience.
• Government: Strengthen wage governance by institutionalizing a transparent and predictable wage review system. Historically, Bangladesh has revised minimum wages for RMG workers, with formal wage boards formed to assess inflation, living costs, and industry capacity. To better protect workers’ purchasing power and reduce tensions, the government can consider shortening the review cycle to every three years or aligning it with inflation trends—ensuring fair, timely adjustments and long-term sector stability

Recommendations

1. Create Sector-Wide Wage Committees: Institutionalize regular review and forecasting of wage adjustments based on inflation and productivity indices.

2. Enhance Collective Bargaining Frameworks: Train union reps on financial literacy and negotiation; create safe spaces for open talks at factory level.

3. Promote Gender Pay Equity: Ensure that women, who dominate the workforce, are represented in wage decision processes.

4. Use Digital Wage Platforms: Ensure transparency and traceability through digital wage payment systems and wage dashboards.

Final Thought

Wage equity isn’t just about numbers—it’s about dignity. Through genuine dialogue, Bangladesh’s RMG industry can lead not only in volume and exports but also in values and worker well-being. Fair wages aren’t a cost—they’re an investment in the sustainability of the workforce and, by extension, the industry itself.

Author: Md. Mahfuz Ul Bashar, Team Leader, RSC