
Major global fashion retailers, including H&M (HMb.ST) and Gap (GPS.N), have affirmed their commitment to increasing the purchase prices of clothing manufactured in Bangladesh.
Reports maintained this adding this pledge aims to assist factories in compensating for the recent surge in workers’ wages, following the Government’s mandate of nearly a 60 per cent raise in the minimum monthly wage to Taka 12,500 (US $ 113) starting December.
This marks the first wage increase in five years, triggered in part by clashes between police and factory workers.
The wage hike, occurring ahead of a January general election, is expected to impact factory profit margins by raising costs by 5-6 per cent, as indicated by industry estimates where labour constitutes 10-13 per cent of total manufacturing costs.
Despite the minimum wage increase, some workers view it as insufficient.
Bangladesh’s garment industry, employing approximately four million people, has thrived on low wages.
It may be mentioned here, readymade garments contribute significantly to the economy, constituting nearly 16 per cent of GDP.
However, even with the recent raise, Bangladesh falls behind other regional garment manufacturing hubs such as Vietnam (average monthly wage of US $ 275) and Cambodia (average monthly wage of US $ 250), according to data from the International Labour Organization.