Revising RMG workers' minimum wage

Determining the minimum wage structure for the country's export-oriented ready-made garments (RMG) industry workers is tricky. Though an independent wage board is responsible for doing the work, it has to go through a lot of debate and protests. The government has already formed a board, with representation from the factory owners, workers, and an independent member. The board is expected to finalise a fresh minimum wage structure by the end of this year.
Earlier, it was in 2018 when the then-wage board revised the minimum wage structure for the RMG workers with Tk 8,000 as the monthly minimum pay for a worker. Five years later, the demand for an upward revision of the wage is logical. The workers' unions and rights organisations have long been demanding a reasonable hike in the minimum wage as persistent inflation erodes the real wage drastically.
The country's overall wage increased by 7.04 per cent in the last fiscal year, according to the national wage rate index (WRI) prepared by Bangladesh Bureau of Statistics (BBS). At the same time, an annual average rate of inflation based on the consumer price index (CPI) stood at 9.02 per cent. Thus, in simple terms, the overall real wage declined by around 2 percentage points, although BBS does not release any data on real wages.
WRI also showed that overall industrial wages rose by 6.97 per cent in FY23, while agriculture and service wages increased by 7.056 per cent and 7.31 per cent, respectively. It means that, on average, workers in the industrial sector, including the RMG sector, suffered the most regarding real wage erosion. Thus, an upward revision of the RMG workers' wage is due.
Right activists and workers' union leaders have already asked the government to re-fix the minimum wage at Tk 23,000, which is around a three-fold jump from the current minimum wage. So far, the industry owners have not responded in this connection, and their side also has not come up with any counter-proposal. It is, however, clear that the owners will not agree to such a big hike and might offer a smaller increase as they did in the past.
Moreover, the wage structure of the RMG industry comprises various grades for various types of work. The wage of the lowest grade or grade- eight is considered the minimum wage of the industry, which is currently Tk 8,000, which includes Tk 4,100 as basic wage. Fixed in January 2019, with effect from December 2018, the minimum wage rate was US$95 at that time. Due to the big depreciation of the local currency in recent years, the rate now stands at US$72, one of the lowest wage rates in the global RMG industry. It is also the lowest in Asia as minimum wages for the RMG factory workers in India, Pakistan, Sri Lanka, Myanmar, Indonesia, Vietnam, and Cambodia are higher than Bangladesh.
As higher grades have higher wages, the owners want to keep the wage for the lowest grade as minimum as possible so that the hike on higher grades can also be nominal. For instance, in the current structure, the gross wage for grade seven is Tk 8,420 and for grade one, it is Tk 18,257.
Though the country is the second largest exporter of clothing in the world market, followed by Vietnam, which is third in the league, most of the workers in the industry are poorly paid. Bangladesh's share in the global RMG export market also increased to 7.90 per cent in 2022 from 6.40 per cent in 2021, according to World Trade Organization (WTO) statistics. Total export of RMG from Bangladesh reached US$44.35 billion in 2022, registering around 27 per cent annual growth.
In the meantime, leading brands and retailers, including H&M, Inditex and Primark, have urged a substantial increase in the minimum wage for garment workers in Bangladesh. Members of the Action, Collaboration, Transformation (ACT) initiative have already sent a letter to the country's RMG Minimum Wage Board. ACT is a coalition or joint initiative between 19 international garment brands, retailers and IndustriALL Global Union. It argues that the long-term sustainability of the RMG industry hinges on significant strides toward achieving living wages. Other signatories include ASOS, Bestseller, Big W, C&A, Cotton On Group, Esprit, G-Star Raw, Kmart, Lidl, New Look, Next, Pentland, PVH, Tchibo, Tesco and Zalando, as well as the IndustriALL global union. Supporting the coalition move, they also called for ensuring the wage gains and increases to overcome the pressure of inflation and higher cost of living.
It is sad to note that revision or adjustment of the minimum wage has never taken place without continuous demand and protest by factory workers and labour rights activists. Revising the rate after setting the minimum monthly salary at Tk 930 in 1994 took more than a decade. Following violent protests, the government and factory owners finally agreed to adjust the minimum wage, and the board re-fixed it at Tk 1662.50 in 2006. Later, in 2010, the rate was revised upward to Tk 3,000. Following the Rana Plaza disaster that killed over 1,100 innocent workers in 2013, pressure mounted on factory owners to improve working conditions and wages. Global brands or the international buyers of the Bangladesh-made clothing were also heavily criticised. Thus, the minimum wage was re-fixed at Tk 5,300 in the same year. Lastly, in 2018, the wage board announced another hike in minimum wage setting it at Tk 8,000.
However, the protests by the workers at different times did not go without retaliation by the factory owners, as many workers lost their jobs. Some labour leaders and rights activists faced intimidation and jail. So, the price to pay by the workers in their struggle to get a minimum wage adjustment in the RMG industry is rather high. Nevertheless, better factory conditions coupled with some non-cash benefits provided by many owners have made lives a little bit easier for many workers. Now, a quick upward revision of the minimum wage is necessary to help the workers cope with the soaring inflation.
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