Enabling sustained labour rights in Bangladesh: Institutional reforms

Ensuring labour rights is increasingly becoming a critical determinant of global market competitiveness.

The European Union (EU) is set to implement the Corporate Sustainability Due Diligence Directive (CSDDD) in 2026. This will require not only European companies but also Bangladeshi businesses, as value chain partners, to adopt sustainable and responsible corporate practices in their operations. Similarly, the OECD Guidelines for Multinational Enterprises, updated in 2024, emphasise integrating responsible business practices across all stages of the value chain, extending their influence on Bangladeshi companies as well. Hence, beyond ethical concerns, labour rights are poised to have a stronger economic linkage than ever before.

Over the past decades, Bangladesh's performance in advancing labour rights has fallen short of expectations. Along with legal and operational weaknesses, ineffectiveness of relevant institutions could be attributed to this outcome.

A committee of interim government is already working to revise the existing labour law to make it align with global standards as much as possible. At the same time, the labour reform commission is expected to propose practical recommendations soon to the interim government to improve the labour rights situation. Among all these initiatives, it has to be ensured that reform of the institutions responsible for ensuring labour rights gets special attention. Strengthening of institutions often receive insufficient focus as it requires sustained, long-term efforts, while the outcomes become apparent in the medium to long term. Without addressing institutional weaknesses, any reform initiative aimed at improving labour rights may not sustain in future.

The Department of Inspection for Factories and Establishments (DIFE), a public entity responsible for monitoring and enforcing workers' welfare, safety, and health in the workplace, has allegedly underperformed its duties due to limited capacity and insufficient intent. Following the Rana Plaza disaster in 2013, several initiatives were implemented to enhance its technical and institutional capacity. Despite improvements in some areas, significant gaps remain. The agency still lacks an adequate number of labour inspectors compared to what is needed. Although a number of additional posts have been created in recent years, most of these positions remain vacant.

In fact, consistently increasing the size of DIFE's workforce is neither realistic nor necessary. Many developed countries do not have public agencies as large as their industrial sectors. Therefore, while there is a need to expand the size of DIFE, there is also a need to introduce more diverse and effective monitoring mechanisms.

To alleviate the inspection burden and other responsibilities of the limited number of DIFE inspectors, LIMA - a digital inspection module - has been established with the support of development partners. However, its functionality remains limited, and many industry stakeholders are unaware of this tool. It must be understood that simply enabling LIMA without ensuring its functionality and ongoing efforts to improve it will not be sufficient to foster a true digital inspection culture in the country.

DIFE inspectors are often accused of lacking motivation and occasionally demanding bribes during inspections, possibly due to a lack of accountability mechanisms. The budget allocated to DIFE has remained limited over the years, and as a result, promotion opportunities, risk allowances, and performance bonuses are absent, preventing DIFE from attracting highly skilled inspectors. At the same time, the private sector is well-equipped with technical skills and manpower to effectively monitor and enforce workers' rights. Allowing the private sector to conduct inspections under DIFE's supervision could address the issue of limited skilled manpower and improve outcomes.

Merely strengthening DIFE's inspection capacity may not be sufficient to ensure strong labour rights monitoring. Currently, DIFE lacks the legal authority to take action in the case of labour law violations. Additionally, DIFE is not permitted to conduct unannounced inspections at establishments within the Export Processing Zones (EPZs) or to file cases in labour courts for violations within these zones. As is the case in other countries, DIFE should be granted some legal authority to take action when labour law violations occur in any industrial establishment in Bangladesh.

The low quality and unavailability of data from DIFE have always been significant obstacles to ensuring transparency in monitoring and understanding the true state of labour rights. In fact, over a past few years, DIFE has exhibited a tendency to withhold inspection and accident-related information. The underreporting of accidents and the injuries or deaths of workers, which often do not align with data reported by other public and private entities, remains a major concern. Addressing this issue should be a special priority.

Alongside DIFE, several other agencies are pivotal in ensuring labour rights. In the case of workplace safety, the Bangladesh Fire Service and Civil Defence (BFSCD), Public Works Department (PWD), Rajdhani Unnayan Kartripakkha (Rajuk), Office of the Chief Inspector of Boilers, Bangladesh Standards and Testing Institution (BSTI), and Department of Environment (DoE) all play significant roles.

However, appropriate coordination among these agencies is currently lacking. For instance, a joint inspection programme led by the Bangladesh Investment Development Authority (Bida) after the disastrous fire incident at Hashem Foods in 2022 inspected 5,206 factories and identified at least 106 risky factories, including 17 categorised as the most vulnerable. Despite this effort, no follow-up activities on these joint inspections have been documented, and detailed findings have not been disclosed publicly. Therefore, there is a pressing need to establish a dedicated central body to coordinate inter-ministerial and departmental efforts, ensuring compliance and enhancing safety across industries.

Labour courts are another critical entity in enforcing compliance. However, prolonged delays in resolving cases often discourage workers from filing complaints, even when their rights are violated. While the number of labour courts has been increased recently, there is still a need for additional courts to handle the volume of cases effectively. The court proceedings should adopt more digital approaches to minimise processing times. Additionally, alternative dispute resolution (ADR) mechanisms should be made mandatory, allowing labour courts to direct parties to mediation. This could mirror the provisions of the Family Court Ordinance, facilitating quicker and less adversarial resolutions of disputes.

Tamim Ahmed is a Senior Research Associate at the Centre for Policy Dialogue (CPD).