Four-fifths buyers not sharing wage hike costs: BGMEA study
“Around 79% of buyers have no reaction to paying the additional price to pay workers while the new wage board increased workers’ monthly salaries by about 56%,” said Vidiya Amrit Khan, a director at BGMEA
Despite repeated commitments, about four-fifths of buyers are not sharing the additional costs arising from the implementation of the new wage structure since December last year, according to apparel manufacturers.
"Around 79% of buyers have no reaction to paying the additional price to pay workers while the new wage board increased workers' monthly salaries by about 56%," said Vidiya Amrit Khan, a director at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), referring to a study of the trade body, during a stakeholder workshop in the city on Tuesday.
"Buyers are gradually decreasing the price when our cost of production is on the rise," she said at the event on "Navigating the Path to Social Auditing in Bangladesh's Garment Industry," jointly organised by the Bangladesh University of Health Sciences and the University of Southern Denmark.
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Vidiya told The Business Standard that after the announcement of the new wage, almost every brand representative expressed their commitment to sharing the additional costs during a meeting with BGMEA.
However, she added that the scenario observed by the BGMEA is very different.
Mesbah Uddin Khan, managing director of Windy Group, also said after the implementation of the new wage, some buyers are raising new issues, such as the current poor global market demand, as an excuse to reduce prices.
He further emphasised that, despite all the challenges, manufacturers have no other option but to pay the increased wages.
Shovon Islam, managing director of Sparrow Group, told TBS that about 50% of well-known brands have already responded with an increase in prices, and the rest are committed to following suit during the next season.
"As per our knowledge, some reputed brands have increased prices by at least ¢10," he added.
According to BGMEA information, some buyers, such as M&S, G-Star Raw, H&M, GAP, J Crow, VF Asia, and Levi's, have increased their prices. However, in some cases, the increase is slightly lower than the cost of the wage hike.
Shafiur Rahman, the regional operations manager of G-Star RAW, told TBS earlier this week, "We have adjusted the total cost arising from the new wage structure."
He added, "We always strive to keep our suppliers competitive as per our business policy."
On 13 October last year, 15 major US brands sent a letter to the prime minister urging a successful conclusion to ongoing negotiations under the minimum wage review mechanism, incorporating the views of all stakeholders and reflecting the economic realities of Bangladesh.
The brands include Adidas, Gap Inc, Under Armour, Patagonia, Burton, Hugo Boss, Abercrombie & Fitch, Amer Sports, AEO Inc, Levi Strauss & Co, Lululemon, SanMar, KMD Brands, PVH Corp, and Puma.
