Unionised RMG workers earn 10% higher wages: BIDS study

Unionised workers in Bangladesh's readymade garment (RMG) industry earn about 10% higher wages than non-unionised RMG and non-RMG workers, according to a new study by the Bangladesh Institute of Development Studies (BIDS).

The findings, presented at the Annual BIDS Conference on Development 2025 in Dhaka today (7 December), show an overall unionisation rate of 11.35% among manufacturing workers. 

The study, based on a 2024 survey of 3,005 workers across 20 industries, found that the wage premium for unionised workers remains statistically significant even after controlling for experience and tenure.

Presenting the study titled 'Wage earnings of manufacturing workers in Bangladesh: Do trade unions matter?', BIDS Research Director Mahmudul Hasan said workers in the RMG sector earn 19%-22% higher wages overall due to stronger compliance regimes, more formal structures, and higher skill requirements.

However, within the RMG sector itself, the study detected no significant wage difference between unionised and non-unionised workers once industry-level compliance and worker characteristics were considered. According to Mahmudul Hasan, this suggests that unions create a general wage premium across manufacturing, while compliance standards in RMG eliminate wage gaps within the sector but widen disparities between RMG and non-RMG industries.

The study recommends easing legal thresholds for union formation, expanding worker representation in smaller factories, and strengthening collective bargaining to ensure fairer wage negotiations. A stronger union presence, it notes, could help reduce industrial unrest by fostering dialogue among workers, employers, and the government.

In another presentation at the conference, BIDS Senior Research Fellow Mohammad Harunur Rashid Bhuyan highlighted ongoing challenges in ensuring decent work for the country's 4.22 million garment workers. He said rising temperatures inside factories pose health risks and reduce productivity, while increasing numbers of climate refugees entering the workforce may exert downward pressure on wages.

Bhuyan noted that some garment firms have started hiring personnel to manage sustainability-related upgrading programmes, and that digitisation is creating new job opportunities as more tasks shift from buyers to local manufacturers.

On environmental issues, he said short-term profitability continues to drive decision-making, limiting investments in green upgrades unless required by buyers' codes of conduct. Despite government targets to generate 30% of electricity from renewable sources by 2041, only 1.4% of power came from renewables in 2019, posing a major obstacle for environmental improvements in the RMG sector.

He stressed the need for policies to support economic upgrading, prioritise decent work, and expand access to renewable, green energy to ensure sustainable development in the industry.