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.
What is fast fashion’s significance to Bangladesh’s economy?
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.
Why are the RMG sector workers protesting now?
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.
What role can brand importers play?
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.
The Berlin-based coalition of “19 garment brands and IndustriALL Global Union”, called Action, Collaboration, Transformation (ACT) has pledged “supporting a living wage in the RMG sector in Bangladesh through the promotion of the conditions to achieve an industry-wide collective bargaining agreement supported by Brands’ purchasing practices”. ACT said this in a September letter this year addressed to Bangladesh’s RMG minimum wage board members. But just what these changes would be with respect to “purchasing practices” have not been spelt out. ACT includes H&M, ESPIRIT, and a few other brands that procure garments from Bangladesh.
A meaningful increase in their procurement costs would allow the majority of Bangladesh’s RMG SMEs to tide over spiralling inflation, and in no small measure, help in buttressing their profit margins and increasing workers’ wages.
What is the relationship between the RMG sector and carbon emissions?
According to the UN Environment Programme, the fashion industry is responsible for anywhere between 2-8% of global greenhouse gas emissions, making it “one of the largest contributors to the climate and ecological crisis”. In Bangladesh, the textile and RMG sector combined constitute more than a quarter of the country’s total emissions as on 2020, with an average annual growth rate of more than 8% CO2 emissions in the past two decades alone. According to the Green Climate Fund, a donor base for developing countries to realise their decarbonisation and climate resilience measures, Bangladesh’s RMG facilities “are not operating efficiently because of continuous usage of old and badly maintained machines, coupled with poor energy management…textile and RMG manufacturers face several barriers to investing in energy efficiency including inadequate financial incentives, lack of technical expertise and the lack of an enabling environment.”
Yet, Bangladesh has the maximum number of U.S. Green Building Council certified RMG factories globally. While 202 facilities out of more than 4,000 is a good start, there is still a long way to go to be on track to realise the country’s 15% reduction in greenhouse gas emissions by 2030. While top global fashion brands recognise these gaps in financing, technology, governance, and the fragility of highly climate vulnerable economies like Bangladesh, their response to the current RMG sector crisis and decarbonising their own supply chains, at best, could be described as wanting.
What is at stake for Sheikh Hasina?
The incumbent Prime Minister has been in power since 2008, making her the longest serving female head of state in history; and her government will be tested in the upcoming January 7 polls, where she is seeking a record fourth-term in office.
Scores of opposition leaders have been incarcerated in the past few months, including her rival and former Prime Minister and leader of BNP Khaleda Zia, who has been in jail since 2018.
About 200 named and 18,000 unnamed garment workers have criminal cases filed against them by the police accusing them of vandalism and obstructing law and order. Police repression and counter violence has killed about five people, with no let up on damage to property, and severe transportation constraints nationwide.
For PM Hasina, her prospects will hinge on how deftly she handles the workers grievances, the demands from the domestic RMG sector, while also ensuring big brands deliver on their promises on procurement practices. Ms. Hasina must do this, while she also attempts to rein in inflation and a precipitous fall in foreign exchange reserves.
It would be no exaggeration to say that this would be one of the biggest tests in her long political career.