Cornell researchers call for annual review of Bangladesh RMG wages

Highlights

• • Cornell Researchers call for annual wage reviews in Bangladesh, similar to Cambodia
• • They said Bangladesh's workers are struggling with high inflation and stagnant wages
• • Wage review system in Bangladesh is every five years, current minimum wage Tk12,500
• • High inflation and long wage intervals favour employers, researchers said

Researchers from the Global Labor Institute (GLI) of Cornell University in New York, US, have called for an annual wage review and wage-setting process in Bangladesh's new government, a practice currently in place in Cambodia.

"Garment workers paid the national minimum wage in Bangladesh are 'under-water' and losing income year-on-year," reads a press release issued by the GLI on 20 February.

Currently, Bangladesh reviews RMG workers' wages every five years. The RMG sector is Bangladesh's highest export-earning industry, accounting for over 80% of total exports.

Around four million workers are employed in this sector, with a minimum wage of Tk12,500 (approximately $105), set in the last year.

The university researchers said that the long-time minimum-wage policy – which reviews wages every five years – compounded with high inflation, favours employers over workers.

In addition, they said that the local 'purchasing power' of workers' wages in Bangladesh is significantly lower than those of workers in competing apparel-producing countries.

"The experience of Cambodia's apparel industry in remarkably similar circumstances is very clear. A decade ago, the country also faced protests, prompting the government to implement an annual wage review policy," Jason Judd, executive director of Cornell ILR who is currently visiting Dhaka, told TBS in an interview yesterday.

A report, "Waiting Game: Minimum wage-setting in Bangladesh's apparel industry", published this month, by three researchers led by Jason Judd stated how delayed wage-setting impacts workers.

"There is a clear need and room — both political and economic — for an annual wage-setting process in Bangladesh. It's long overdue. Imagine waiting five years for a raise while inflation rages at 10% — that's the situation for workers under the current scheme," the press release reads.

Experts also support an annual wage hike in line with inflation.

Syed Sultan Uddin Ahmed, executive director of the Bangladesh Institute of Labour Studies and currently head of the Labour Reform Commission, told TBS, "We recently met with global retail brand representatives, and they also recommended a policy of annual wage review. They consider it a scientific approach."

"We also think that wages should be reviewed annually, considering inflation," he added.

5% annual increase

Currently, in the RMG sector, workers receive a 5% wage increase on their basic pay, as endorsed by the country's existing labour act.

However, Bangladesh has been experiencing persistently high inflation over the last three years, which hovers around 10%.

The Cornell University report indicated that after implementing the annual wage review policy in Cambodia, apparel exports continued to grow. However, the report did not mention the responsibilities of buyers and brands.

In 2024, the Bangladesh government increased the minimum wage for RMG workers by 56%. However, RMG exporters alleged that despite rising production costs significantly due to wage hikes and other factors, buyers have not increased clothing prices accordingly.

Jason Judd acknowledged this reality but also stated, "Bangladesh's RMG workers are among the lowest paid in the world."

Factory owners disagree

RMG owners argue that conditions vary across countries, making it unreasonable to implement policies in Bangladesh identical to those in Cambodia.

Shams Mahmud, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told TBS, "The researchers may not have enough understanding of Bangladesh's RMG sector."

"Under our existing labour law, garment workers' wages increase by at least 5% [of the basic salary] every year. This rate is even higher in EPZ factories. Additionally, workers receive separate support from the factory," he said.

So, not everything needs to follow the practices of other countries, Shams Mahmud added.