TIB urges govt to review minimum wage for garment workers

The Transparency International Bangladesh (TIB) has called on the government to conduct a thorough review, denouncing the current adjustment as deceptive.

TIB presented its analysis to the Minimum Wage Board, asserting that while the announced minimum gross wage increase for garment workers is 52-56%, the actual rise ranges from 25-28.88%.

According to the analysis, the wages of garment workers have not experienced a real increase of 30%, factoring in the 5% annual increase, inflation, and the rising dollar exchange rate. TIB has emphasised the need for a comprehensive review, considering the standards set by the International Labor Organization, the living standards of garment workers, and the escalating prices of commodities.

The letter from TIB highlighted that, based on the minimum wage structure published on 8 October 2018, instructions were given to increase basic wages at a rate of 5% per annum. Accordingly, the basic wages for the previous Grade 7 or the newly proposed Grade 5 in 2023 should be a minimum of Tk5232.75. However, the proposed new basic pay in this grade is Tk6700, representing an actual increase of 28.04%. Similar discrepancies exist in other grades, with Grade 4 showing a growth rate of 26.52%, and Grades 3, 2, and 1 displaying increases of 24.16%, 23.97%, and 24.71% respectively.

Considering a 5% annual increase, the minimum gross wages in the newly proposed Grade 5 in 2023 should be Tk9699.13. However, as per the new proposed structure, the total wage proposed in this grade is Tk12500, indicating an actual increase of only 28.88%. Similar discrepancies are observed in other grades, with the total wage growth rates for Grades 4, 3, 2, and 1 being only 27.59%, 25.58%, 25.35%, and 25.93% respectively.

Adjusting for inflation, the minimum basic wages for garment workers in Grade 5 should be Tk5,572.26, while the new proposed basic wages are Tk6,700. This signifies an actual increase of 20.24%. The real rate of increase in basic wages in other grades stands at 18.81%, 16.59%, 16.41%, and 17.11%. Similarly, taking inflation into account, a Grade 5 worker is expected to earn Tk9,913.50 in 2023, even though the total wage is said to have increased by 56% to Tk12,500, indicating an actual increase of only 26.09%. Inflation-adjusted real wage growth rates for Grades 4, 3, 2, and 1 are 24.80%, 22.80%, 22.55%, and 23.10%.

Moreover, despite international standards considering basic wages as 60% of total wages, the proposed wage structure for Bangladesh has increased it from 53% to 56%. TIB points out that this adjustment, coupled with the opportunity to increase basic wages by 5% annually, will result in relatively lower wages for workers in the future—a significant weakness in the current wage structure.

Dr. Iftekharuzzaman, Executive Director of TIB, remarked, "Various reliable studies and analyses indicate that the newly proposed minimum wage for garment workers falls significantly below living requirements." TIB recommends a reconsideration of worker expectations and demands based on the mentioned criteria, international experience, and discussions with all stakeholders involved in the wage structure to ensure the minimum standard of living for workers.

Dr. Iftekharuzzaman Zaman expressed sadness over the tragic incident of four workers losing their lives during the protests for a wage increase. He emphasised that Bangladesh, the world's second-largest exporter of garments, is failing to provide reasonable wages to meet the basic needs of garment workers, and this situation is shameful. Furthermore, Bangladesh continues to pay the lowest wages compared to competing countries in the global garment export market, as indicated by the newly announced framework.

In light of these realities, TIB strongly recommends a reconsideration of worker expectations and demands, taking into account the mentioned criteria and international experience, through discussions with all stakeholders involved in the wage structure to ensure the minimum standard of living for workers.