BGMEA urges brands, retailers and buyers to help implement the new minimum wages

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged brands, retailers and buyers to help implement the new minimum wages of workers.

In a letter signed by BGMEA President Faruque Hassan, it was said there were projections that US holiday spending (Thanksgiving, Black Friday and Cyber Monday) this year will reach record level, and the November updates by the US Census Bureau indicates the same.

"This positive vibe brings the hope of a better and prosperous year ahead," it adds.

So, drawing on previous letter of BGMEA issued 20 September, 8 November and 17 November of 2023 the BGMEA president reiterated his call for support from stakeholders in implementing the new minimum wage.

"I would urge you to also consider the impact of other cost increases duly in addition to wage increase including factories investments in sustainability," said Faruque Hassan in the letter.

Faruque Hassan said the Minimum Wage Board tried its best to strike a balance so that the workers' livelihood is protected while the industry could also sustain. "Now it is a moral responsibility for us to ensure that the new wages is fully implemented in due time."

The implementation of the new wage will have a significant impact on the costing in every factory undoubtedly, but the increase of minimum wages and ensuring decent living of the workers has been an urge of the global community and the fashion brands/retailers as well.

"In fact, we have received several letters from influential organisations like AMFORI, American Apparel & Footwear Association (AAFA), and Action Collaboration Transformation (ACT) when the wage negotiation was in progress. Few of them wrote to the Prime Minister of Bangladesh directly urging for living wages of the workers. The expectations from the European Commission and the United States on workers empowerment and rights, covering wage issues, got momentum through recent steps and engagements. And on the 15th December, 8 congressmen of the US Congress signed a letter to AAFA urging them to initiate a set of actions which includes, among others, 'Commit to maintaining a long-term sourcing relationship with your suppliers and to increasing your purchasing prices to fully absorb the additional labor cost'," reads the BGMEA letter.

"We are also in support of better living of the workers in principle [in fact many of our factories provide a great number of non-wage and non-legally binding benefits to the workers] and we feel happy when our workers are happy, but we need a price that enables us to sustain a wage level.

The final gazette of the minimum wages of the garment workers was published by the government on 20 December.

As per the gazette notification, the new wage has come into effect from 1 December 2023 and the workers will start drawing the new wages in the beginning of the new year, i.e. January 2024.

The gross monthly minimum wage of an unskilled worker in Grade IV (the lowest grade as per new circular) workers remains the same as per initial declaration, which is Tk12,500 gross (increased by Tk4,500, or 56.25%).

Other factors affecting production cost

The letter read that minimum wages have also increased in allied industries, driving the cost of accessories and other inputs up.

Price of electricity has risen by 25%, gas price by 286.5%, diesel by 68%, and similar impact on transport and other cost factors are notable.

From July this year Bangladesh Bank has increased the interest to curb inflation, which has increased cost of production and cost of goods.

"In the past decade, the industry invested millions of dollars to remediate our factories, and we are constantly investing in greener manufacturing, emission reduction, resource efficiency to meet the emerging due diligence requirement.

Also, factories are adopting state-of-the-art technologies and machineries, upgrading processes, to enhance efficiency, reduce wastage and to make the workplaces more comfortable and convenient for the workers, eliminating unnecessary motions and physical burden on them. This reduces fatigue among the workers and enhance their productivity.

All these progresses and accomplishments are adding value to the supply chain and came through huge investment and cost which must be considered, reads the BGMEA letter.

Many brands have already sent letters to BGMEA confirming their stance on absorbing the wage increase in product price.