Minimum wage in Bangladesh: All talk and no action

What should be the minimum wage for workers in different sectors? It is a fairly valid question that keeps surfacing every now and then. 

The Minimum Wage Board is responsible for recommending changes, which vary by industry, to the government. They cover 42 sectors at present. But hardly is it ever enforced, except in the RMG sector, where greater international scrutiny and stronger labour demands can ensure the minimum wage to a large extent. 

But for the other sectors, that is not the case at all. 

Even within industries under the purview of the board, wage rates remain exceptionally low. According to the ILO, Bangladesh has the lowest minimum wage in Asia and the Pacific, falling below the international poverty line. The situation is further aggravated by poor implementation. 

The inability to maintain a fixed minimum wage in Bangladesh stems from structural deficiencies, economic constraints, and weak enforcement mechanisms. These factors collectively allow widespread non-compliance across industries, leading to stagnant wages and worker exploitation.

"When fixing the minimum wage, oftentimes an evidence-based process is not strictly maintained to determine the amount. Then, the employers have the main negotiating power. Also, since there is no structure, the workers themselves don't know what their wage should be." Tamim Ahmed, Senior Research Associate, CPD

One of the key reasons behind this shortcoming is the limited coverage of the Minimum Wage Board. The number of industries under its regulation has remained stagnant at 42 for an extended period, with no significant expansion despite legal provisions mandating wage revisions every five years. Nineteen of them have not updated their wages in five years, according to data from the board. 

Moreover, the informal sector, which covers 85% of the total labour force, includes industries not covered by the 42 sectors. 

There are about 140 sectors and sub-sectors in the country, both formal and informal. 

This lack of progress leaves a vast number of workers without wage protections. Sectors such as agriculture and domestic work remain entirely outside the purview of any minimum wage regulations, exacerbating income disparities.

Mohammad Nazmul Avi Hossain, a labour economist at ILO Bangladesh, said, "The employers do not feel that they are not obligated to follow the minimum wage rules. There is no way for the workers to conduct collective bargaining with the employers. 

"Secondly, there is an excess supply of labour in Bangladesh. So, you can get away with not paying the minimum wage. And for the worker, it is disincentivising. He knows that if he demands a fair wage, he can be sacked, and there are many ready to take his place at a lower wage due to widespread unemployment," he added. 

"And thirdly, determining the minimum wage is not structured. The methodology is unclear. Ideally, to determine the minimum wage, a survey is needed, benchmarking is needed; how much money is needed to ensure a decent living standard," Hossain further said.

"When fixing the minimum wage, oftentimes an evidence-based process is not strictly maintained to determine the amount. Then, the employers have the main negotiating power," said CPD Senior Research Associate Tamim Ahmed. 

"Also, since there is no structure, the workers themselves don't know what their wage should be," he added. 

Inspection and enforcement mechanisms are inadequate as well. The Department of Inspection for Factories and Establishments (DIFE), responsible for ensuring compliance, suffers from limitations in both intent and capacity. Inspections remain insufficient, allowing employers to circumvent wage regulations with little fear of repercussions. 

The penalties for non-compliance are weak too — violators face either a fine of only Tk5,000 or imprisonment of up to one year, neither of which is substantial to act as a deterrent.

Employers resist demands, arguing that increased wages would undermine competitiveness in the global market. Instead of addressing wage concerns, authorities often resort to suppressing worker movements, further entrenching labour rights violations — a trend that persists even today. 

"Following the 2018 minimum wage declaration in the garment sector, a study revealed that after three years, 40% of workers still had not received the government-declared minimum wage," said CPD Senior Research Associate Tamim Ahmed. 

He also pointed out that some factories fail to properly compensate for overtime work, despite it being legally required.

This is the situation in the industry where there is somewhat enforcement of the minimum wage. In other industries, wage regulations are paid less attention. 

Take the tannery sector as an example, where 69% of firms fail to adhere to the official grading structure. There, workers' demands for Tk25,000 were met with a lower proposed wage of Tk18,001, failing to reflect the real cost of living. Similarly, in the cold storage sector, the government raised the minimum wage to Tk14,000 in 2024, but enforcement remains weak, leading to partial or delayed wage implementation.

Tea workers continue to be among the most underpaid in Bangladesh. Despite wage revisions in 2018, many still earn below subsistence levels. The combination of weak union representation and a lack of political will to enforce wage laws perpetuates this exploitation. 

Business owners maintain considerable influence over policymakers, lobbying against stringent labour laws. The government often prioritises industrial growth over worker welfare, leading to reluctance to minimum wage regulations. Prolonged delays in labour court cases further discourage workers from seeking legal redress, reinforcing a culture of non-compliance.

"Usually, wage negotiations are influenced by politics, which favours the employers. So, the workers don't get a fair wage," Tamim Ahmed said.  

Economic constraints also drive wage suppression. Employers, particularly in export-dependent industries, argue that higher wages would increase production costs, reducing competitiveness in the global market. 

The pressure to maintain low prices from international buyers exacerbates this issue, as manufacturers operate on thin margins. Inflation further undermines any wage revisions, rendering increases insufficient to meet rising living costs.

The predominance of the informal sector further complicates wage regulation. With the vast majority of workers lacking formal contracts, enforcing wage standards remains nearly impossible. Construction and domestic work sectors are particularly affected, as they operate outside formal legal frameworks, leaving workers vulnerable to wage exploitation and job insecurity.

Currently, in the absence of this policy, the Minimum Wage Board sets different wage rates for various sectors. However, with a minimum wage policy in place, wages would be determined in accordance with it, and no sector would be allowed to establish wages below the prescribed minimum wage. 

"It is very disappointing that there is no national wage policy in Bangladesh. In its absence, such implementation issues will happen, as the government has no accountability to enforce the minimum wage. We need to have a National Wage Policy to dictate how often it has to be updated, what its benchmarking is, and what its methodology is," Nazmul Avi Hossain said.