The New York Times

November 4, 2013

Bangladesh Takes Step to Raise $38-a-Month Minimum Wage

By JIM YARDLEY

Criticized over unsafe conditions and low pay in its garment industry, Bangladesh took a first step to raise wages on Monday with a special government-appointed board voting to nearly double the minimum wage. Factory owners complained that the increase was too high, labor leaders that it was too low.

Factories in Bangladesh, the world’s second-leading apparel exporter after China, keep costs down by paying garment workers the lowest wages in the world — the current minimum is 3,000 taka, about $38, a month. The wage board recommended on Monday that it be raised to 5,300 taka, about $68.

The recommendation is considered a critical step but not the last word; it must be approved by Bangladesh’s Labor Ministry before taking effect. Many observers predict that the final decision will be made by Prime Minister Sheikh Hasina, who intervened in favor of workers in 2010, during the last wage negotiations, to set the current minimum at a level slightly above what the wage board recommended.

“It is the expectation of all the workers that the prime minister will intervene, and she will increase the salaries,” Roy Ramesh Chandra, a labor leader involved in the wage negotiations, said in a telephone interview. Mr. Chandra noted that with national elections approaching, the country’s four million garment workers were watching the wage talks closely.

Bangladesh’s garment industry has faced growing international pressure to improve worker safety and wages, especially since the collapse of the Rana Plaza factory building in April, which killed more than 1,100 garment workers. But the Rana Plaza disaster also focused attention on a global supply chain in which multinational brands push hard to keep costs down, even as they promise consumers that their clothes are made in safe, well-run factories.

More than 100 multinational clothing brands and retailers have signed a legally binding, Europe-dominated accord that requires them to help finance fire safety and building improvements in Bangladeshi factories. But most American brands, including Walmart and Gap, refused to join, and have instead pursued an approach that does not oblige them to help finance safety improvements.

Bangladesh’s economy is heavily dependent on the garment industry for jobs and foreign exchange earnings. Factory owners say that to stay competitive they must keep wages from rising too high. They were clearly unhappy with the board’s recommendation: The board’s two industry representatives walked out before the vote on Monday.

“We tried so hard to reach an understanding,” said A. K. Ray, the chairman of the wage board, according to bdnews24.com, an English-language website in Dhaka, the capital. “But the owners did not agree, and left. I had to take votes to arrive at a decision.”

Mohammad Fazlul Azim, a factory owner and member of Parliament, warned that the wage increase could bankrupt many factories, especially smaller ones. In a telephone interview, he called on global brands to pay higher prices for the goods they order. “The customers, who are the supply chain partners, should help,” Mr. Azim said, but they have instead told factories to find savings in their own operations.

Labor leaders say the proposed $68-a-month minimum wage is still not enough to allow workers to meet their basic needs. Despite rapid economic growth, incomes in the country remain low — averaging $1,044 a year per person, according to the latest government estimates — and many garment workers find their limited earnings being eaten up by high inflation.

Protests over unpaid or low wages have become common.

A recent study by the Bangladesh Institute of Labor Studies found workers needed at least $100 a month to cover bare necessities. “There are a lot of workers who are struggling to survive, a huge number,” said Syed Sultan Uddin Ahmed, an analyst with the group.