The impact of Bangladesh’s garment workers strike | Explained 

Bangladesh's 4.4M-strong RMG sector workers demand trebling of wages, while PM Hasina seeks 4th term. Opposition parties reject Jan 7 elections. Inflation, import curbs, power cuts & falling FX reserves make it hard to pay higher wages. Big brands face criticism for driving down costs. ACT coalition pledges support for living wage, but no details on purchasing practices. PM Hasina must handle workers' grievances, demands from RMG sector & ensure brands deliver on promises to pass biggest test of her career.

The story so far: Since the last week of October, one of Bangladesh’s largest labour forces — the 4.4 million-strong ready-made garment (RMG) sector workers are demanding a trebling of their legally mandated minimum wages from 8,000 Bangladeshi Taka (BDT), or about $72, to 23,000 taka ($208). Cashing in on this unrest, the country’s main Opposition — the Bangladesh Nationalists Party (BNP) began a two-day general strike on November 19, demanding the resignation of the Awami League-ruled Prime Minister Sheikh Hasina Wazed government, and the conduct of general elections under a care-taker government. Bangladesh’s Election Commission had announced January 7 next year as the date for elections but this has been rejected by all opposition parties.

Bangladesh is the world’s second-largest exporter of fast fashion, or RMG, after China, accounting for 85% of the country’s exports earnings of $55 billion in 2022. It has a global market share of almost 8%. The RMG sector’s main markets are the U.S., the U.K., Europe and Canada, with H&M being the top importer. Other big brands include Levi’s and Zara.

The 4,000 odd manufacturing facilities in the RMG sector are largely small and medium enterprises (SMEs), mainly employing rural women, and it has been credited with helping the country’s drastic reduction in poverty from 44.2% in 1991 to 5% in 2022 based on the international poverty line of $2.15 a day (using 2017 Purchasing Power Parity exchange rate). Rising remittances by a growing emigre population is the other factor contributing to the government’s foreign exchange.

It has been over five years since 2018, when Bangladesh’s Minimum Wage Board fixed a rate of BDT 8,000 for fast fashion sector workers. Unlike a universal base wage, Bangladesh follows a system of setting minimum wages for each sector of the economy, which is revised every five years. In the past four years, the country has witnessed steep inflation exacerbated by the COVID-19 pandemic, and more recently, the volatility in oil prices fuelled by the Russia-Ukraine war. The country’s apex bank, the Bangladesh Bank, has pegged inflation of a 12-month, monthly average at 9.37% in October 2023, which is a more than 2% point rise from 7.23% in the corresponding period last year. This has priced out essentials like food and fuel for a vast number of Bangladeshis.

Garment worker unions rejected a more than 50% raise in minimum wage proposed by Sheikh Hasina’s government earlier this month, saying it is too little too late. They have stuck to their demand of nothing short of BDT 23,000, which they proposed in April this year, when minimum wage negotiations began. Several economists, including the Bangladesh Institute of Labour Studies peg a minimum monthly living wage at BDT 33,368 ($302), for garment workers in a January 2023 report. Moreover, Bangladesh’s foreign exchange reserves have more than halved from a high of $48 billion in 2021 to less that $20 billion in mid-October of this year, according to the International Monetary Fund. The Sheikh Hasina-led government has taken strict austerity measures such as stifling imports of luxury goods. But the import curbs have also affected the functioning of the RMG sector. The sector has cited price rise, import curbs and frequent power cuts as reasons for their inability to pay higher than what has been proposed.

Big brands like Nike have faced intense criticism beginning in the 1990s for being responsible for driving down procurement costs and amassing super profits at the expense of workers’ rights in the Global South, as they took advantage of neo-liberalism’s ‘race to the bottom’ approach of finding the cheapest source wherever available.

These criticisms led to marginal changes, like verifying work conditions, working hours, safety gear, wages and sanitary conditions at global procurement facilities. But it did not lead to a meaningful contribution of sharing big brands’ profits, or investing in supplier SME’s infrastructure, or wages, until recently. This recent shift has been fuelled more so, by the global movement to decarbonise supply chains to tackle climate change.