Trade union leaders have rejected the Tk 12,500 minimum monthly salary for readymade garment (RMG) factory workers, terming insufficient the figure set by wages board on Tuesday following a verbal directive from Prime Minister Sheikh Hasina.
Industry insiders say the minimum wage was set taking into consideration the skyrocketing inflation and struggling RMG industry amid global economic headwinds. Economists however recommended a review, saying the figure is insufficient for bettering a worker’s quality of life.
Workers’ representative to the wages board Shirajul Islam also believes that the new minimum wage is not enough for a worker to cover the living costs of his/her family. He however accepted the decision as it came from the prime minister.
The government had formed the new six-member wages board on April 9 this year, headed by Senior District Judge Liaquat Ali Molla. In the sixth meeting of the board held on Tuesday, owners proposed Tk 12,500 as minimum salary instead of the existing Tk 8,000.
But the workers’ representative of the board declined to accept this and demanded Tk 13,000 minimum monthly salary. The wages board later sent the proposal to the prime minister.
State Minister of the Ministry of Labour and Employment Begum Monnujan Sufian announced new minimum wages on Tuesday afternoon at the secretariat office in Dhaka, saying, “Our prime minister made the decision verbally, and I asked everyone to follow this decision.
“The workers have demanded a ration system for themselves, and the government has plans to start the initiative. The prime minister has decided to issue family cards for RMG workers to improve their lives.”
Speaking to The Business Post, Bangladesh Garment Workers Trade Union Centre Vice President Joly Talukder said, “The minimum wage proposal is not acceptable, and we will fight to ensure our rights. We will hold a rally on Friday.”
According to the Bangladesh Bureau of Statistics (BBS), the country is facing severe inflation since the last two years, and workers have been forced to live hand to mouth. This October, inflation once again grazed double digits, advancing 30 basis points to 9.93 per cent.
Food inflation, which is a major reason for the elevated inflation, stayed above 12 per cent for the third consecutive month. It was 12.56 per cent in October. Non-food inflation advanced 48 basis points to 8.3 per cent.
Addressing the issue, former lead economist of World Bank's Dhaka Office Zahid Hussain, “As per the BBS, back in 2022, per person monthly livelihood cost above poverty line in Dhaka city was Tk 4,922 and Tk 4,290 in Chattogram.
“Considering 10 per cent annual inflation, it reached Tk 5,414 in 2023 in the capital.”
He continued, “If a worker has to cover two persons’ expenses excluding him/her, he/she needs more than Tk 16,000 per month. Considering the government statistics, the minimum salary for the RMG workers is not sufficient. I think, Tk 15,000 could be a decent minimum salary.”
On October 8, local think tank Centre for Policy Dialogue (CPD) proposed Tk 17,568 as minimum wage for RMG workers on the backdrop of skyrocketing inflation, and claimed that it will be possible for a garment factory to execute this plan if the buyers hike the cost of manufacturing (CM) by just $0.07.
Commenting on the new wage structure, CPD Research Director Khondaker Golam Moazzem, who made the observation, said, “The proposal should be reconsidered considering the ongoing economic situation. Besides, buyers have also agreed to take responsibility for the new wages.”
The economist urged the prime minister to hold a meeting with the stakeholders and increase minimum wages, saying, “She had revised RMG wages structure previously.”
Owners, however, claimed that they are already in a severe crisis due to the ongoing global economic crisis, and most of the factories are running production with orders lower than the capacity.
In October this year, the sector posted more than 13 per cent negative export growth year-on-year. Amid this situation, factory owners’ have to execute a new wage structure, and many factories, especially the smaller ones will not be able to afford this.
Md Siddiqur Rahman, owners’ representative of the wages board said, “Remember, many factories have been forced to close their doors for good due to wage hikes.”
Experts however said businesses are still in a good enough position as the country’s local currency is losing power against USD and Euro. That is why they can easily recover from the downtrend.
It should be noted that the RMG workers get a minimum wage hike only every five years.
Commenting on the claim that businesses are not doing well, Zahid Hussain said, “Bangladesh is still able to retain its export growth despite the global economic crisis, and the USD is appreciating against local currency.
“We do not know whether they are able to make a profit or not. But I believe that the new minimum wage is not enough for a worker to cover the necessary expenses of their family.”
