The recent minimum wage crisis in Bangladesh exposes critical issues in the global fashion industry's labour practices. After six months of negotiation, a new minimum wage was announced on 7th November 2023, amidst significant controversy from trade unions and labour advocates.

Recent events not only affect the millions of workers in Bangladesh’s garment sector but also underscores the significant impact of international fashion brands' purchasing practices. We engaged with labour rights activists and consulted the top 15 international buyers in the country, to provide a comprehensive view of worker demands and how brands are responding to these pressing issues.

Backdrop to the crisis

Between October 2023 to January 2024, BHRRC has monitored protests at 25 factories. Garment workers in Bangladesh have long contended with stagnant wages that lag behind escalating living costs and inflation. Basona, Vice-President of Solar Garments United Shramik Union, highlighted when interviewed by BHRRC the extreme measures workers take to meet basic needs, including “borrowing at high interest rates for essential expenses”. Since April 2023, when the new round of minimum wage negotiations began, escalating protests have demanded fair wages and expressed concerns about the proposed settlement falling short of covering living expenses.

Government response and aftermath

After protracted protests, on 7th November 2023 the government set a new minimum wage at BDT12,500 (US$113), far below the BDT23,000 (US$208) demanded by workers. This demand is still well below the Bangladesh Institute of Labour Studies’ calculations, which advocates for a living wage of BDT33,368 (US$302). The aftermath of this decision saw intensifying protests and reported violence against protestors, leading to casualties and numerous arrests. The Worker Rights Consortium (WRC) approximates that between 115 to 200 individuals are currently incarcerated, with many enduring dire conditions and lacking the possibility of bail.

Reasons for Continued Protests in Bangladesh's Garment Industry

"Zoon Sweater Limited workers were receiving wages below the minimum living standard. Their Eid bonus in the year 2024 is barely sufficient and it does not reflect the hardships they endure." Alma Akhter, Secretary of Zoon Sweater Shramik Union

• Wages falling short of workers’ needs: The government's new wage structure has failed to meet workers' expectations and is insufficient to cover basic living costs. Garment workers, supported by their unions, have continued to advocate for higher wages, with calls for a minimum wage increase to BDT23,000 to meet basic living expenses. Alma Akhter, Secretary of Zoon Sweater Shramik Union, pointed out, "Zoon Sweater Limited workers were receiving wages below the minimum living standard. Their Eid bonus in the year 2024 is barely sufficient and it does not reflect the hardships they endure."
• Unfulfilled wage payments after increase: Following the minimum wage increase, BHRRC has monitored reports outlining the failure of employers to pay the new increment. Two months after the wage increase, the Bangladesh Garment Manufacturers & Exporters Association (BGMEA) reported manufacturers in the country as citing that 79% of buyers have yet to increase product prices in line with these commitments.
• Unfair Worker Classification: Workers interviewed by BHRRC were keen to stress the link between the minimum wage increase and the knock-on effect this has had on their grade classifications, as suppliers attempt to mitigate their increased payroll costs. In the wage restructuring accompanying the announcement of the new wage, the government reduced the number of pay grades from seven to four. As a result, workers have reported that employers have been misclassifying workers; demoting them to lower wage categories, reportedly in an attempt to circumvent higher wages. Parul, General Secretary of Solar Garments United Shramik Union, we interviewed, highlighted that the new structure benefits very few workers, while perpetuating low wages for the majority.

Overview of brand responses to BHRRC outreach 

BHRRC reached out to the top 15 international buyers sourcing from Bangladesh, providing them with an opportunity to respond to concerns regarding the implementation of the new minimum wage laws and examining how they have adjusted their purchasing practices to align with these changes.

Questions asked to brands:

• How you have adjusted your prices to factor in the updated minimum wage across your suppliers in Bangladesh.
• How you have undertaken or plan to undertake due diligence to ensure that workers receive their entitled wage allowance.
• How you have supported your suppliers in the country to ensure that the updated minimum wage is being paid to workers.
• How you are engaging with workers and their trade union representatives in ensuring that minimum wages are paid and workers’ rights to organise and protest are protected.
• How you currently implement or plan to implement support for suppliers, workers and their trade union representatives in Bangladesh to ensure living wages are paid, in line with good practice.

Brand responses: Key takeaways

Ten brands (ASDA, BESTSELLER, C&A, Gap Inc, H&M, Inditex, Mango, Next, Primark & Tesco) responded, with a further 5 brands (Kontoor brands, Marks & Spencer, Target, PVH Corp. & Walmart) chose not to respond.

• Adjusting prices to factor in updated minimum wages: 9 brands from the ones who responded, report that they have adjusted their pricing strategies to account for the increase in minimum wages. This involves revising price negotiations with suppliers to ensure that the costs of the new wage requirements are incorporated into financial agreements. 4 brands - BESTSELLER, Next, Inditex and H&M- have outlined that they incorporate wages as itemised costs in their pricing strategies, and report that they have explicitly implemented this approach in Bangladesh. Additionally, 3 brands- Primark, Next and Bestseller – have taken steps to adjust pricing for orders already made prior to the new wage implementation. Numerous brands stated that suppliers must to comply with sourcing policies, yet fail to explicitly detail how they modify their pricing strategies to reflect increased minimum wages. This omission can lead to suppliers bearing the cost burden, potentially leading to wage violations.
• Undertaking Due Diligence to Ensure Workers Receive Entitled Wage Allowance: 7 brand responses outline that they have undertaken some form of due diligence to verify that workers are receiving their legally mandated wages. And while six brands reported undertaking some form of due diligence to ensure wage compliance, including factory visits, audits and reviewing payroll records, 3 brands outlined that they had been in dialogue with workers/ worker representatives regarding their concerns.
• Engaging with Workers and Trade Union Representatives: 8 brand responses demonstrate a commitment to engaging with trade unions through various initiatives. Many have structured programs that attempt to address and incorporate worker feedback. However, responses lacked detailed outcomes or effectiveness of these engagements. Brands could benefit from direct engagement with workers at all levels and enhancing transparency about outcomes and effectiveness of such engagement initiatives.
• Engaging with ACT (Action, Collaboration, Transformation): 7 Brands i.e Bestseller, H&M, Tesco, C&A, Next, Inditex, and Primark are members of ACT (Action, Collaboration, Transformation), an initiative between international brands and retailers, manufacturers, and trade unions focused on addressing the issue of living wages in the textile and garment supply chain, with a particular emphasis on Bangladesh.
• Response to our allegations: Brands addressing worker concerns- 3 brands—C&A, H&M, and Primark—confirmed they source from suppliers that had been involved in worker protests and reported that thorough investigations were conducted where concerns were raised. Notably, H&M went beyond the legal requirements by ensuring that after the protests in January 2024, all their supplier factories in the Dhaka EPZ not only met but exceeded the mandated minimum wage. This action underscores H&M's commitment to exceeding legal standards and addressing worker demands proactively. H&M, C&A and Primark, have confirmed that the issues in these factories have been effectively resolved.