Can Bangladesh’s garment industry afford a 156% wage hike as factories struggle?
Bangladesh’s garment workers want a 156% increase in the minimum wage. Factory owners say they can barely afford the wages they already pay.
The competing demands have brought the country’s largest export industry to a difficult crossroads. Workers face soaring living costs. Manufacturers face shrinking orders, rising production expenses, energy shortages and mounting financial pressure.
The question is whether the industry can afford to more than double its minimum wage without putting thousands of jobs at risk.
Factory owners are expected to submit their counterproposal to the Minimum Wage Board on Monday (November 16), setting the stage for negotiations that could determine the future of wages across an industry employing nearly 40 lakh people.
Workers' representatives have proposed raising the minimum monthly wage for Grade 4 employees from 12,500 taka to 32,000 taka, an increase of 156%.
Employers have yet to put forward their figure. They say they first need to assess the industry's finances and wider economic conditions.
The government formed a six-member Minimum Wage Board on November 1 under the Bangladesh Labour Act, 2006, as amended in 2026, to review the existing pay structure.
The board has held two meetings. Workers' representatives have presented their demands, while employers were given four working days from November 9 to submit a counterproposal.
Several manufacturers interviewed by The Daily Waadaa agreed that wages must rise. But they questioned whether factories, particularly small and medium-sized businesses, could survive an increase of this scale.
They warned of production cuts, layoffs and further closures if higher labour costs could not be absorbed.
Talking with Daily Waadaa, Mijanur Rahman, vice-president for finance at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said workers had every right to demand higher wages. Whether 32,000 taka was justified, however, was for the wage board to determine.
"Whether 32,000 taka is logical or not will come later. A wage board has been formed to work on this process transparently and fairly. We have complete trust in the wage board," he said.
Mijanur said industry experts, think tanks and manufacturers must weigh several factors before deciding what factories could afford.
These include industrial infrastructure, global competitiveness, factory capacity, export prices, production costs, living expenses, inflation and economic growth.
"We will submit our proposed salary structure to the owners' representatives after scrutinising these factors. The process is underway, and we are working so that our representatives can place the proposal before the wage board on Monday," he said.
Rashid Ahmed Hossaini, a BGMEA director, was more explicit about the industry's financial constraints.
"Workers are the drivers of this economy and the garment industry," he told Waadaa.
He said wages needed to rise but questioned whether manufacturers could absorb an increase exceeding 150%, given years of gas and electricity shortages, inflation and disruption linked to the Middle East conflict.
Rashid estimated that nearly one-third of the industry's 40 lakh workers were employed by small and medium-sized enterprises.
A substantial wage increase, he warned, could put some of those jobs at risk.
"If such a significant increase is implemented, there is a possibility that some of these workers could lose their jobs, creating further economic and social pressure. Unemployment is already a concern, and the situation could worsen," he said.
Mohiuddin Rubel, a former BGMEA director, said manufacturers would respect the wage board's decision but questioned how individual factories could meet the additional costs.
"We have full faith and respect for the wage board. Whatever the wage board decides, we have to accept it," he told Waadaa.
From his own business perspective, however, more than doubling wages would be difficult to implement.
Mohiuddin argued that Bangladesh needed to move into higher-value garment production before manufacturers could consistently afford substantially higher wages.
He estimated that high-value products accounted for only $5 billion to $6 billion of the industry's roughly $38 billion in annual exports.
"If we can improve our product categories and produce and export more high-value-added items, which currently contribute only around $5 billion to $6 billion out of our total $38 billion in RMG exports, we may develop the capacity to pay such higher wages. Otherwise, it will be difficult," he said.
Nafis-Ud-Doula, a member of BGMEA's board of directors, offered an even bleaker assessment.
"Suppose the salaries are increased by 154%. In my personal opinion, only 10 to 15 large factories out of around 4,000 could survive such an increase. However, the wage board is working on the matter, and we have full faith in it," he told Waadaa.
Nafis said he could not afford to raise the minimum wage even to 20,000 taka across his four medium-sized factories.
Akhtar Hossain, chairman of BGMEA's Standing Committee on Crisis Management, also acknowledged the legitimacy of workers' demands but said manufacturers could not bear an increase of more than 150% under current conditions.
He pointed to a commercial constraint: international buyers often place orders six months in advance at agreed prices.
Those prices cannot simply be renegotiated when labour costs rise.
Akhtar also cited gas and electricity shortages, inflation, bank lending rates of around 14% and inefficient port facilities.
He said comparisons with wages in competing garment-producing countries often overlooked the financial support and infrastructure available to manufacturers elsewhere.
"Do not compare workers' salaries in other countries with ours without considering the facilities their manufacturers receive from their governments. We do not receive the same support. A level playing field is necessary before making such comparisons," he told Waadaa.
Workers' living costs tell a different story
Garment workers meanwhile are looking at the financial calculations in a very different way.
Years of inflation have eroded purchasing power, leaving many households struggling to cover food, housing, transport and other essentials.
According to the Bangladesh Bureau of Statistics, annual average inflation reached 10.03% in fiscal year 2024-25.
Food inflation was higher at 10.70%, while non-food inflation stood at 9.47%, according to figures published in Bangladesh Bank's annual economic indicators.
The Global Living Wage Coalition estimated that a garment worker in Dhaka needed 30,459 taka a month to earn a living wage under its 2025 Bangladesh benchmark.
For industrial areas outside the capital, the estimate was 25,166 taka.
A living wage is not the same as the statutory minimum wage. It is a research-based estimate of what workers need to maintain a basic but decent standard of living.
Yet the figures illustrate the gap between what workers earn and what they need.
The proposed minimum of 32,000 taka is close to the coalition's Dhaka living-wage benchmark. It is also more than two and a half times the existing minimum.
That difference lies at the heart of the dispute.
Manufacturers say wages must reflect what businesses can pay. Workers argue that wages must also reflect what it costs to live.
An industry under pressure
The wage negotiations come as Bangladesh's garment industry faces a difficult operating environment.
According to the Export Promotion Bureau, garment exports totalled approximately $38.5 billion in fiscal year 2024-25, down 1.64% from the previous year.
Factory closures have added to concerns about the industry's financial health.
Information presented to Parliament on September 3, citing a BGMEA report prepared on June 22, showed that 402 garment factories had closed between 2023 and 2026.
Energy shortages have compounded the pressure.
Reuters reported on September 22 that around 78% of 134 knitwear factories surveyed had partially suspended production since late August because of gas and electricity shortages.
The survey also found that 55% had experienced cancellations or reductions in international orders.
Some manufacturers have reportedly been operating on profit margins of just 1% to 4%, although profitability varies considerably by factory size, product category, efficiency and customer contracts.
Labour unrest has created further disruption.
Manufacturers are considering indefinite closures of around 210 factories in Ashulia and other areas affected by industrial disputes.
At least 143 factories in Ashulia, Jamgora and Hemayetpur were unable to operate on November 11 after workers reportedly entered their workplaces but refused to work or left after registering attendance.
Some factories have already issued closure notices under Section 13(1) of the Bangladesh Labour Act, which allows employers to suspend operations when labour unrest prevents production.
Industry representatives are expected to decide on the proposed closures at a meeting on Saturday, November 14.
The threat of further shutdowns has sharpened manufacturers' warnings about the consequences of a steep wage increase.
But labour leaders say the industry's financial difficulties cannot justify leaving workers with wages that fail to cover basic expenses.
Labour leaders insist wages must rise
Salahuddin Shopon, president of the IndustriALL Bangladesh Council, previously told Waadaa that workers' demands were justified by inflation and rising commodity prices.
"However, not all demands have been met in the past. This is part of an ongoing negotiation process, and we will have to see how things unfold," he told Waadaa.
Salahuddin described the proposed wage as an opening demand and expressed hope that employers would submit a counterproposal that recognised workers' needs while accounting for economic conditions.
Taslima Akhtar, president of Bangladesh Garment Workers Unity, said the proposed wage was reasonable given the increase in essential commodity prices.
She called for the revision to be completed through the established legal process.
But Taslima warned that delays in announcing a new wage structure could fuel further discontent, particularly as workers grappled with unpaid salaries, job losses and rising household expenses.
The wage board must now reconcile two competing realities: workers whose earnings have failed to keep pace with prices and factories whose costs have risen faster than their ability to charge customers more.
Khondaker Golam Moazzem, president of the Knowledge Hub Institute, said it was too early to determine the appropriate minimum wage.
"The newly formed wage board is working on it. We are also working on our calculations and hope to present them soon," he told Waadaa.
Khondaker said Section 141 of the Bangladesh Labour Act required the board to consider 11 factors when recommending minimum wages.
Workers' living expenses, employers' financial capacity, inflation and purchasing power were among the most important, he said.
"Among these, workers' living expenses, employers' financial capacity, and inflation and purchasing power are particularly important indicators that must be considered when reviewing and revising the salary structure," he added.
The dispute is not over whether garment workers deserve higher wages. Even manufacturers acknowledge that they do.
The disagreement is over how much, how quickly and at what cost to the industry's competitiveness and employment.
Monday's counterproposal will reveal how far apart workers and employers remain.
The wage board must then decide how to narrow that gap without leaving workers unable to meet their living costs or pushing financially vulnerable factories closer to closure.
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