Life with Minimum

Wage in Readymade

Garments Sector in

Bangladesh

ii

Abstract

Minimum wage has always been a matter of debate in Readymade garments sector of

Bangladesh. At present, there are several assumptions , whether a person can meet

his/her required level of nutrition, shelter and other element of life through this mere

salary they receive through their hardcore work. This report have emphasized on this

particular topic based on the current scenario and tried to deliver a near-perfect answer

to all questions regarding this particular matter.

iii

Abbreviations

ADB Asian Development Bank

BGMEA Bangladesh Garment Manufactures & Exporters Association

BIDS Bangladesh Institute of Development Studies

BKMEA Bangladesh Knitwear Manufacturers and Exporters Association

BSR Business for Social Responsibility

CEPAA Council on Economic Priorities Accreditation Agency

COC Code of Conduct

CPD Center for Policy Dialogue

CSR Corporate Social Responsibility

EIT Ethical Trading Initiative

ETP Effluent Treatment Plant

EU European Union

FDI Foreign Direct Investment

FLA Fair Labor Association

GSP Generalized System of Preferences

IFC International Finance Corporation

ILO International Labor Union

LDC Least Developed Country

MOLE Ministry of Labour and Employment

NGO Non-Governmental Organizations

PREMA Profitable Environmental Management Approach

R&D Research and Development

UN United Nations

WRAP Worldwide Responsible Apparel production

iv

CONTENTS

Executive Summary 5

1. Introduction 6

2. Background 8

2.a. Research Hypothesis 9

2.b. Research Question 10

2.c. Limitations 10

2.d. Scope 11

3. Literature Review 12

4. Research Methodology 25

5. Analysis 26

6. Recommendations 33

7. Conclusion 35

8. Appendix 37

v

6

Executive Summary

This report discusses about the minimum wage of Readymade garment sector in

Bangladesh and workers lifestyle. According to many labor board and NGOs , the

minimum wage allowed to Bangladesh garment sector workers is not enough to meet all

be basic needs to have a normal and healthy life standard. The report exhibits the

current condition of workers earnings, expenses and life standard. It emphasizes on

how workers spend their earnings and how they manage to live a normal life with

minimum to spent. Though, the sector itself has given a lot of opportunity to rural people

to improve their life and have a better future by working in countries top-export oriented

sector. But few unwanted incidents and myths around the industry, hampers the regular

growth and reputation of the industry globally. With proper statistical presentation and

analysis of renowned research firm, the report clearly states whether it is possible to

afford all the basic need with the lowest wage practiced in RMG sector in present time.

7

Introduction

Today, the readymade garment (RMG) sector of Bangladesh is an industry of

US$ 21 billion with a workforce of more than 4 million. 80% of workforce is low earning

and poverty affected women, who have got a salvation through this sector for

fighting poverty and making best out of life for them and their family. The industry began

its journey in late 80s of last century and has never looked backward. Though, at first

there were some struggles faced by early entrepreneurs of this sector to achieve orders

from foreign clients and deliver on time by maintaining a standard. But as time passed

and more entrepreneurs entered the industry with a hope of achieving something big,

the industry grew at higher pace and in 2012-13 the number of factories in RMG sector

is around 5600 and this number is expected to grow in coming years as this industry will

flourish more and increase it share in global market. Bangladesh experienced rapid

economic growth through the RMG sector as this industry is the highest foreign

currency earner. In FY2012-2013, the RMG sector contributed almost 79% of gross

national export of Bangladesh and this uprising trend contribution in national export is a

regular scenario for past decades. Through, producing cloths of global standard at

lowest cost this sector has earned Bangladesh recognition and admiration from all

around the world.

The two major strengths, which helped this industry to reach its current stature,

are cheap labor and capacity of production it retain. Global buyers have been always

attracted to this country’s RMG sector due to the quality of product it produce at a

cheaper rate that the global market share of Bangladeshi RMG sector increased

continuously. This industry not only outclassed its global competitor by its quality of

products but also with the capacity of meeting buyer’s large demand on time. In current

time, only a handful of countries are able to meet those criteria. With proper

development of skilled workers and increased productivity through upgraded production

facilities, Bangladesh has the potential to become the number one RMG manufacturer

in coming years.

Despite the achievement this industry has brought for the country, there has

been always an issue of workers safety in RMG factories of Bangladesh. In its early

days, the industry faced child labor problem and it was solved through various initiatives

but the safety standards in RMG factories of Bangladesh has been remained a question

which is yet to answer. The industry faced numerous incidents which costs lives and

future of family. Mostly, garments workers belong to poverty affected low earning family

where the worker is the principle earner thus the family was depended on one life. But

devastating incidents in factories have caused families not only lost their loved one but

also their future went blackout. Many initiatives by government and responsible

administration have been taken after such incidents had occurred but they were never

8

fruitful as soon as the dead bodies of demise were buried, people began to forget what

had happened and what should be done to avoid recurrence of incident alike. Due to

reoccurrence of devastating accidents in RMG workplace, buyers and consumers are

concern about the working condition and also demanding for proper safety compliance

within RMG factories in Bangladesh.

In spite of having an impressive performance, the RMG industry frequent conflict

and unrest between workers and management. Frequent unrest is a very common

pervasive incident around the garments sector which makes all walks of people

(workers, owners, buyers, investors) apprehensive towards its potentiality. Daily unrest

has become a common feature in the RMG industry. There is a growing concern that

unrests are usually ignored by the owners of the RMG factories. Typically, the factory

owners also actively control the role of management. This controlled management

sometimes disregards some fundamental requirements of workers (like- minimum

payment of wages, unjust payment of wages, irregular and untimely payment of wages,

unfair dismissal and retrenchment, physical and verbal harassment, discrimination on

the grounds of sexual, gender, racial, and religious aspects) which cause serious

hindrance to the productivity and shipment of garments. When these requirements are

ignored by the factory owners, workers become frantic to materialize their demands

through stopping work, demonstration or even vandalism. In this state, the relationship

between workers and management turns into turmoil and trepidation and overall

economic and social condition of the country remain jeopardized. This is a severe threat

to the topmost foreign exchange earning sector of Bangladesh. These incidents have

threatens the very foundation of this industry and its future existence as foreign buyers

are proposing for moving their order to other RMG industries. Effective measures are

needed to be taken in order to save this industry and this country’s economy.

Minimum wage of workers in RMG sector has always remain a topic of

discussion and an important issue, which have been discussed in numerous seminars,

reports and conferences across the country. This issue always makes foreign clients

and international labor bodies concern as they believe that Bangladeshi garments

factories pay their workers a very low wage compared to its peers in other country.

Several survey and researches also suggests that the minimum amount paid by the

factories is not enough for workers to sustain a better lifestyle. RMG workers of

Bangladesh somehow manage to survive with the little money they make from their

earning. Though, RMG sector have the highest revenue from any other sector of

Bangladesh , the factory owners are often criticized that they do not spent a fair share of

their earning behind workers wage or development. This report primarily focuses on the

issue of minimum wage and to judge whether a person or a family can fulfill their basic

needs with the minimum wage provided by the garments sector of Bangladesh.

9

Background

The report primarily focuses on the minimum wage currently provided by the

readymade garment sector of Bangladesh to their workers. Currently, Bangladesh RMG

sector has 8 grades of workers within its workforce. Different category receives different

remuneration and facilities due their responsibilities and importance within the operation

line. The minimum wages board under the authority of Ministry of Labour and

Employment (MOLE) of Bangladesh determents and initiates the minimum wage for

every sector in Bangladesh. Every sector is bound to obey the order and policies

implied by the authority, otherwise strict actions are taken against responsible party.

Minimum wage has always been an issue of debate and unrest among the

owners and workers of RMG sector. During past few years, several workers unrests

have occurred in this sector, which was triggered by safety concern and low wage of

workers in the industry. Though, authority to maintain a balanced relationship and tries

to maintain a healthy relationship between owners and workforce but several external

factors triggers such unrest, which causes unwelcomed consequences for the industry.

The readymade garments sector has experienced a regular growth in past

decade and expected to outclass China by 2021. But the bitter of this scenario is

workers lifestyle has not changed as much as it was supposed to. Though, some factory

owners are heavily involved in social activity to improve workers and their facilities life

through introducing free-school, free health checkup and recreational activities but in

the end there is always a trend of dissatisfaction remain present among] the workforce.

One of the prime reasons of workers failure to manage a standard lifestyle within

minimum wage is actually inflation. Currently, Bangladesh has an inflation rate of

around 7% on average. Though, minimum wage board has recently passed a new

minimum wage structure for RMG sector in 2013 but before that minimum wage was

revised in 2010. Through, these 3 fiscal periods the inflation has remain almost constant

and sometimes reaching around 12%. Thus, such rate of inflation makes difficult for

people from RMG sector workforce to survive. As consequences, some force their kids

to quit education and make them to join factories or other occupations for earning

money. Therefore, they could not escape from the trap of RMG sector. Apart from that,

as low income people live in a less hygienic environment with lack of proper sanitation

facilities. They often get sick and this causes them to spend a huge chunk of money

from their wage. Though, medical allowances are mandatory from factories but it is not

enough.

10

Therefore, it is required to justify that whether a person or a family can fulfill their

all basic needs with the minimum wage resolute by the minimum wage board and

whether it really helps them to make their future more secured as expected.

Hypothesis

Basic needs are vital for a human being to have a sound life. That includes food,

cloths, education, medical benefit and shelter. These five (5) items are needed for a

person to live a healthy life. Apart from these five (5) elements, a person cannot live a

life to the fullest or remain happy. People earn money with a prime target to meet

his/her basic need and afterward they seek optional element of life.

Hypothesis of the report is that the minimum wage for each grade of worker is

enough for a person to fulfill his /her five (5) basic needs given above without any

difficulty. This report only focuses on the basic need of a human needed to survive in

the society with minimal respect and acceptance from his/her peer and the report is

based on the assumption that minimum wage allows a person to have it without any

additional suffering or difficulty.

The report is expected to demonstrate that a person can afford following

elements without any difficulty by only considering the minimum wage a RMG worker

expected to receives:

1. Have the daily required calorie intake for an adult without any borrowing.

2. Provide himself/herself the required cloths for a person live through different

season and without degrading his/her image in the society.

3. Take treatment from doctor or visit hospital in case of illness or disease without

any financial insolvency.

4. Afford education benefit to his/her children on regular basis.

5. Have enough money to afford a good household with proper sanitation facility in

a hygienic environment.

11

Research Questions

The report is expected to reach a conclusion through primary and secondary

research. The primary research has been conducted using a questionnaire, designed

for readymade garment sector worker, which will help to understand the earning and

living expense of an individual working in garments industry of Bangladesh. The

outcome of research is anticipated to answer following questions:

1. What is the average monthly earning of a specific grade of worker in readymade

garments sector?

2. What is the average monthly expense of a specific grade of worker in readymade

garments sector?

3. Can a readymade garments worker meet the basic needs?

4. Is minimum wage is enough for workers to meet their all necessity?

5. Does minimum wage allow an individual to afford optional needs apart from basic

needs?

The questions mentioned above are expected to be answered through the

analysis of primary data and secondary data gathered for the purpose of this research.

Limitations

The limitations of this report are chiefly concerned with the factor of time and the

lack of availability of relevant research findings pertaining to the Bangladeshi RMG

sector. It can fairly be said that for an extensive secondary research, as of the kind of

this report, a fairly longer time allowing greater and minute analysis of secondary

resources is very much essential. Nonetheless, this report has attempted with much

viability to overcome this limitation.

On the other hand, the lack of research findings and secondary resources

pertaining exclusively to the RMG sector of Bangladesh has been major

limitation to the preparation of this report. The analyses of secondary resources that

have been done for the purpose of this report consisted of theoretical frameworks

germane to the RMG sector in general. The report herein thus attempted to overcome

this limitation by the synthesis and symbiosis of the subjective research findings of the

secondary resources that were obtained and the insights provided by the speakers on

the topics in the seminar. Although research findings exclusive to the RMG sector of

Bangladesh were quite unavailable, newspaper articles and other such materials

provided quite some assistance in overcoming the limitation.

12

The other limitation that this report is subjected to is that the authors were not

exposed to the insight of the representatives of all the stakeholders of the RMG

sector of Bangladesh. The seminar without doubt did give a platform to various

people from the large community of stakeholders of the RMG sector of Bangladesh.

However, many representatives were not present in certain topics discussed

where their presence would have broadened the horizon of insights and thus

enhanced this report qualitatively.

Scopes

This report can be utilized as a reference for further research upon the RMG

sector of Bangladesh. Taking the note of limitations of this report it is known a priori

that very little research is available, thus done, on the RMG sector of Bangladesh.

Therefore, any research work that is intended to be done upon the Bangladeshi RMG

sector in the long run might benefit from the analyses done in this report.

Other than that this report might be useful in understanding the current trend

and initiatives that are in limelight in the RMG sector of Bangladesh. The

manufacturers and other stakeholders of the sector both in Bangladesh and beyond

may get significant insights sketched out in this report. The report might be useful in

understanding the pros and cons of various industrial practices and the views of

scholars and academicians regarding them.

Furthermore, the report might be of assistance in developing strategies by

manufacturers addressing labor issues. Thus, the position enjoyed by the RMG

sector of Bangladesh might be strengthened or enhanced. All these may encourage

further research works to be undertaken focusing on particular aspects of the

sector.

13

Literature review Background of Readymade Garment Sector in Bangladesh

Bangladesh is a one of the largest readymade garment sector in the world

behind China and it is expected to excel to another the summit in few decades. The

sector has become the backbone of Bangladeshi economy, helping to earn immense

foreign exchange for the country as well as establishing the country’s image as one of

finest readymade garments manufacturing figure. Throughout the establishment of this

sector, overall the sector has experience many ups and downs during its early stage.

Few energetic and dynamic entrepreneurs started doing business in readymade

garment at early 80s without any government aid or intervene.

During early 90s the sector started to grow at a higher rate as new entrepreneurs

were entering the emerging sector as well as financial institutions were also interested

to invest capital in this sector. As a result of increased interest from various agents of

the economy, this sector looks to take a shape of one of leading industrial sector.

Readymade garment sector was established during the period when one of the leading

industries of Bangladesh at that time, Jute industry was deteriorating at a faster pace.

Many factories involved in jute industry were shut-down due to low demand from buyers

and low margin. Therefore, many people become unemployed and though readymade

garments sector has given a light of hope to this unemployed labor force and created

several employment opportunities for people in lower hierarchy of society.

Readymade garments workers are mostly belong to the poverty stricken

population. In most cases, people belongs to this population lack the basic needs

required for a human being to live a healthy life. The majority of RMG workers also

belong to the rural area of Bangladesh. It is well known that rural areas of Bangladesh

are not much developed and lack the facilities, which are provided in urban area of the

country. Since, Bangladesh is a capital centered country, every day at least 1436

people get settled in Dhaka to have a better life and change their fate in the process

due to the facilities provided within the capital.

Through rural to urban transition, people find it hard to get settle in a busy city

and struggle for survival as lack of skill and expertise do not allow them to obtain work

so that they can earn money and survive. But, RMG sect have changed this scenario

and people living in poverty are able to change their life through the opportunities

provided by RMG sector. RMG sector hires people representing poverty stricken

population and train them in tasks they required within their labor force for operational

14

activity of their factory. In addition to that factories provide other benefit and a better

salary so that they can have a comfortable life and survive without worrying the future.

The Problems within Bangladeshi RMG sector

There is no doubt that RMG sector has immense contribution towards improving

the life and future of people living within poverty line of Bangladesh but several

international institutions and labor force bodies believe that workers working within the

RMG sector of Bangladesh are hugely underpaid compared to other countries RMG

sector workers. RMG sector factories of Bangladesh are alleged to pay low wage to

their workers compared to the profit they receive. Though, at the beginning of RMG

sector era in Bangladesh, there were not much regulation and policies for ensuring or

managing workers wage and safety but now a days, administration are much aware of

the underpaid workers scenario and encourages factory owners to follow guideline and

rules set by the government authority of Bangladesh which are established strictly for

RMG sector of Bangladesh. Though, there is always a loop whole remain in the policies

and people get benefit of these errors. There are several problems faced by workers

regarding payment of wage and working hour in RMG sector of Bangladesh.

Heavily underpaid

Safety issue at workplace

Wages remain due for more than one month

Workers in RMG sectors of Bangladesh are regarded as underpaid compared to

workers of RMG sector in other countries such as Vietnam, Sri Lanka, India and etc. It

has been seen that at entry level workers of RMG sector in Bangladesh receive $39 per

month, which is roughly half of the lowest applicable rate in other major garment-

exporting countries such as Cambodia, India, Pakistan, Sri Lanka and Vietnam. The

lowest wage applicable in Cambodia, India, Pakistan, Sri Lanka and Vietnam is

respectively US$ 80, US$ 71, US$ 79, US$ 73 and US$ 78. In china the relevant

provincial minimum wages now range from US$ 138 in Guangdong to US$ 262 in

Shanghai. (International Labor Union, 2013)

The differences of minimum wage received by RMG sector workers in

Bangladesh are too low compared to other countries. International Labor Union and

other international labor right body have asked local government authority and

Bangladesh Garment Manufactures & Exporters Association (BGMEA) for taking

initiatives to improve the payment and wage condition of local RMG workers of

Bangladesh. The quality and quantity of readymade garments good produced by RMG

sector of Bangladesh is huge. It has occupied almost 18% market share of international

15

readymade garments manufacturing good in the world market but still the workers do

not receive enough wage for their contribution towards the establishment and survival of

the industry in Bangladesh. According to Asian Development Bank (ADB), Bangladesh’s

share of the global garment market has been growing. It is the second-largest exporter

to the European Union, with a 12.0% market share in FY2012, when exports surged by

21.6%, substantially benefiting from a change in Generalized System of Preferences

rules of origin that became effective in January 2011. Bangladesh also has a significant

4.6% share of the US market. Exports of high-end garments are rising, and garment

sales to Australia, Canada, the People’s Republic of China, India, Japan, Turkey, and

other emerging markets in Asia and South America are expanding briskly.

(Asian Development Bank., 2013)

It must be mentioned that Bangladesh enjoys the comparative advantage over its

competition of RMG global market due to cheap labor and productivity of the workers

involved in the RMG sector but owners are utilizing this advantage against the very

workers, who are helping them to earn profit and achieve higher revenue target through

the dedication and endless working hour in the factory of RMG industry.

In addition to underpaid situation, RMG workers also need to work in an

unhealthy working condition. Due to the emergence of the RMG industry in early 80s

without any government regulatory and policies, enthusiast entrepreneurs have setup

garments privately without considering the safety concern and issues of workplaces. In

the early days of the industry , people used to setup their garments in narrow rooms and

building, which have cheap rent and low management cost but devastating accidents

have occurred in numerous timeframe , which raised the question of government

intervention and governments role to build a workers friendly working environment in

garments factory. As time passed and owners became more aware of the safety

concern, responsible entrepreneurs and factory owners began to operate their factories

with applicable set of safety rules and regulation implied by fire safety authority and

administrator but yet there were some people, who again overlooked these regulations

and began to operate their RMG operation in a more congested, unhealthy and risky

working environment with greed to earn more money with less to spent.

Most of the factories in Bangladesh do not have proper safety instruction or

system for risk management in case of accident or emergency. The lack of safety and

risk management practice has costs much accident in recent past. For example, the

calamity of Rena plaza and Train Fashion’s fire accident have grabbed media attention

worldwide but before these accidents occurred there were also other event, which have

costs many lives and precautionary measures have not been taken. Workers of

Bangladeshi RMG sector always complain about wage due from their employers. As

most of the garments worker fully rely on their wage they receive from their employers,

16

due wages make their life difficult and they are in most cases unable to meet their daily

need due to lack of financial stability or otherwise, they need to borrow money from

others at higher interest rate.

Current Scenario of Minimum Wage in Bangladesh and Other RMG Countries

In past few years, Bangladeshi RMG sector has experienced numerous workers

unrest. These unrests were primarily caused by the agendas mentioned above but

most important and frequently discussed agenda was garments workers low wage and

their life style. The sector overall has performed in a positive manner as the sector has

contributed 79.63 percent to total export for the FY 2012-2013. During this time, the

RMG sector exported an amount of $ 21.51 billion to global market. It has always

outperformed other sectors in Bangladeshi economy with continuous growth

and made major contribution towards country’s economy. (Trade Information, 2014)

The export trend of RMG sector has always been positive since its creation and

particularly last five years have been outstanding. The sector’s annual export

growth rate was 16.251 percent during last five year. And during this period of time

Bangladesh has an average inflation rate of around 7%, which sometimes has

fluctuated to 12% or went down to 6%. (Bangladesh Inflation Rate, 2014). But, the

minimum wage did not changed radically as inflation rate or growth in RMG sector of

Bangladesh.

The definition of minimum wage is different in different countries. The meaning of

minimum wage based on constitution of different countries are given below (Centre for

Policy Dialogue, 2013)-

Mexico- The general minimum wage must be sufficient to satisfy the normal

necessities of a head of family in the material, social and cultural order and to

provide for the mandatory education of his children.

India - Living wage for workers, the state shall endeavor to secure suitable

legislation or economic organization or in any other way, to all workers.

Bangladesh- The setting of the minimum wage is an important policy instrument

that can contribute to the socio-economic wellbeing of workers in various

sectors. The term minimum wage is, however, not defined in the Bangladeshi

Labor Act 2006, or in the Amended Labor Act 2013. Although, in an article in

labor act related to wage setting in minimum wage board states that the cost

and standard of living of workers should be taken into consideration while

recommending a minimum wage for a sector: “In making its recommendation

1 Geometric mean of Annual Export of RMG sector between FY 2008-09 and 2012-13

17

the wage board always considers the cost of living, standard of living , cost of

production, productivity, price of products, business capability, economic and

social conditions of the country and of the locality concerned and other relevant

factors.

In economics, minimum wage is the minimum amount of compensation an

employee must receive for performing labor; Minimum wages are typically established

by contract or legislation by the government. As such, it is illegal to pay an employee

less than the minimum wage. (Investopedia, 2014)

Minimum Wage Structure (Effective since 1 November 2010) (Centre for Policy Dialogue, 2013)

Grade and Main Posts Basi

c

House Rent

(40% of

Basic)

Medical

Allowanc

e

Net

Salar

y Grade 1: Pattern Master, Chief

Quality

Controller

Tk. 6,500 Tk. 2,600 Tk. 200 Tk. 9,300

Grade 2: Mechanic, Electrician,

Cutting Master

Tk. 5,000 Tk. 2,000 Tk. 200 Tk. 7,200

Grade 3: Sample Machinist,

Senior Machine

Operator

Tk. 2,870 Tk. 1,148 Tk. 200 Tk. 4,218

Grade 4: Sewing Machine

Operator, Quality

Inspector, Cutter, Packer, Line

Leader

Tk. 2,615 Tk. 1,046 Tk. 200 Tk. 3,861

Grade 5: Junior Machine

Operator, Junior

CuƩer, Junior Marker

Tk. 2,395 Tk. 958 Tk. 200 Tk. 3,553

Grade 6: Operator of General

Sewing/Button

Machine

Tk. 2,230 Tk. 892 Tk. 200 Tk. 3,322

Grade 7: Assistant Sewing

Machine Operator, Assistant

Dry Washing Man, Line Iron

Man

Tk. 2,000 Tk. 800 Tk. 200 Tk. 3,000

Trainee - - - Tk. 2,500

18

Definition of minimum wages may vary from country to country but the principle

role of minimum wage is that the wage should be enough for an individual or head of a

family to run his/her family without any difficulty. The wage should be enough to provide

them proper education, proper food or calorie intake and a standard life style in which

they will be able to enjoy their life to the fullest and without worrying much about their

survival for the future. Though, some countries have equal minimum wage legislation

for all sectors but in Bangladesh, minimum wage varies from sector to sector. After

constant pressure from buyers and international labor union, the Minimum Wage Board

has decided to introduce new minimum wage for RMG sector of Bangladesh. In

minimum wage structure of 2010, the trainee was supposed to receive tk. 2500 each

month. During this period, an individual is more likely to grab a thorough experience of

working in RMG sector. The trainee post is the starting position of factory in RMG

sector. In general an individual works as a trainee for 3 month and afterward they move

into grade-7 category of workers.

Minimum Wage Structure (Effective since 1 December 2013)

Grade and Main Posts Basi

c

House Rent

(40% of

Basic)

Medical

Allowanc

e

Net

Salar

y Grade 1: Pattern Master, Chief

Quality

Controller

Tk. 8,500 Tk. 3,400 Tk. 250 Tk. 13,000

Grade 2: Mechanic, Electrician,

Cutting Master

Tk. 7,000 Tk. 2,800 Tk. 250 Tk. 10,900

Grade 3: Sample Machinist,

Senior Machine

Operator

Tk. 4,075 Tk. 1,630 Tk. 250 Tk. 6,805

Grade 4: Sewing Machine

Operator, Quality

Inspector, Cutter, Packer, Line

Leader

Tk. 3,800 Tk. 1,520 Tk. 250 Tk. 6,420

Grade 5: Junior Machine

Operator, Junior

CuƩer, Junior Marker

Tk. 3,530 Tk. 1412 Tk. 250 Tk. 6,042

Grade 6: Operator of General

Sewing/Button

Machine

Tk.3,270 Tk. 1,308 Tk. 250 Tk. 5,678

19

Source- (Gazette on Minimum Wages for RMG Sector Workers , 2013)

The new minimum wage structure of trainee has increased by 67% compared the

previous legislation passed by the government in 2010. But it is yet to decide whether

this minimum payment made to trainee is enough for an individual to survive in an

economy with constant rise in inflation rate.

Minimum wage is conceptually to be set a level which covers the basic needs of

the lowest earned workers on the job-ladder. In Bangladesh, revision has been taken

place for workers of all grades. In that case it is a fixation of structure of wages of

different graders instead of setting minimum wages. According to the last revision of

the minimum wages, grade 7 workers should receive wage around tk. 5300 per month

of which tk. 3000 as basic, tk. 1200 as house rent and tk. 250 as medical allowances.

However, an informal grade below grade 7 has been introduced during the revision of

2010 with the job title ‘trainee’. These temporary workers receive a lump-sum of Tk.

4180 per month. During the last revision, minimum wage for entry-level workers

increased by 67.2%, but a similar level of rise did not take place for workers in other

category. For example, grade 1 workers wage increased by 39.8%, grade 3 workers

wage increased by 61.3%. The relationship between wage level and seniority was not

reflected in the structure as evidenced by the low differentials between these grades.

(Estimating a Living Minimum Wage for the Ready Made Garment Sector in

Bangladesh, 2013)

The minimum wage structure per se in the RMG sector provides little incentive

for workers to work long term at the same factory. These can be provided by the factory

based on loyalty incentives. At present there is thus a high labor turnover within the

RMG sector as workers seek the best remuneration package for themselves. Some

companies have been introducing informal sub-grades with a view to recognizing and

remunerating different skills levels.

Apart from the minimum wage, there is an overtime culture in the Bangladesh

RMG sector, necessary for workers to achieve a take-home pay which comes anywhere

near to meeting their basic needs. It has been seen that dependency on excessive

overtime to attain a level of earnings to meet the cost of living is harmful to workers

health and general well-being. In the interest of a sound work-life balance, a minimum

wage needs to be based on improved compensation for normal working hours. For this

reasons overtime is not included in calculation of a minimum wage.

Grade 7: Assistant Sewing

Machine Operator, Assistant

Dry Washing Man, Line Iron

Man

Tk. 3,000 Tk. 1,200 Tk. 250 Tk. 5,300

Trainee - - - Tk. 4,180

20

In addition to overtime, fringe benefits are also received by employees of

garments factories. This allowances includes attendance allowances, transport

allowances, festival bonuses and production bonuses, But these benefits are not

included as part of the basic minimum wage as well due the lack of guaranty by law.

Lifestyle with Minimum Wage

There is no doubt that the amount RMG workers receive as wage from their

factories or workplace is not enough for them to change their lifestyle too much or

change their status within the society. They cannot afford the luxuries what others can

because they barely make something out of their salary to survive in a challenging

economic environment.

If we focus on the wage of lowest grade worker of RMG sector, which is grade 7,

he/she takes away home tk. 5,300 minimum per month. This amount includes house

rent, medical expense and other benefits as well. Some factories provide transportation

services and some factories do not. But it is mandatory for factories to provide free

lunch service to their worker every day. Center for Policy Dialogue (CPD) has

conducted a research, which gives an estimation of living with minimum wage of RMG

sector in Bangladesh. They have conducted the research based on three

methodologies.

1. Using upper poverty line.

2. Using real picture of existing expenditures and purchasing power.

3. Using a model diet which incorporates energy and nutritional values.

The upper poverty line

The HIES 2010 calculates the costs of a fixed food basket composed of 11

different food items, corresponding to the required minimum calorific intake of 2122

kilocalories per person per day. The costs of this food bundle per person per month

were 1018 Taka for the Dhaka Urban area in 2010.

To arrive at the total food costs for the family, it is assumed that the family

consists of 2.08 adults consuming 2,122 calories and 2 children aged 1 – 3 consuming

1060 calories each. For a single worker, food costs are equal to the poverty line food

costs corrected for inflation. The ratio of food to non-food costs is determined by using

the ratio of food poverty line: upper non- food allowance. The ratio is 57: 43

The following table presents the detailed estimates of required estimates of required

monthly income for workers having families in case of upper poverty line. The estimated

required monthly income for the married worker is Tk. 5223.

21

Issues Tk./month

Monthly per person food cost in 2010 1018.00 Household

size

4.08

Monthly family food cost in 2010 3135.44 No. of earners 1.44

Monthly food cost in 2013 after

inflation adjustment

4287.36

Monthly non-food cost (43% of total

cost)

3234.32

Monthly total cost for a family (Tk.) 5223.39

7521.6

8

Estimated Required Monthly

Income for a married worker

=(Food costs + Non-food

costs)/1.44

7521.68

Source- (Center for Policy Dialogue, 2013)

Actual Expenditures

CPD conducted field research on three areas: Ashulia, Tongi and Dhaka. In most

cases unmarried workers live with their parents and other family members are involved

in jobs. The effective participation in jobs of members of unmarried workers is rather

high compared to those of married workers. A major observation from the field survey is

non-food costs are a major expenditure for workers and their families. The ratios of food

to non-food costs for families of married and unmarried workers are likely to be 50.1:

49.9 and 47.8: 52.02 respectively. In fact non-food consumption expenditure is found to

be more important for unmarried workers. There is a difference in the ratios of food to

non-food consumption between sample workers and the national average of the urban

Dhaka region. Similarly, the size of the family is relatively small compared the national

norm. (Center for Policy Dialogue, 2013)

Furthermore, for a large number of families and in the case of unmarried

workers, if there have more than 1 earner in their Family, these are not always fulltime

earners. So the non-full time earners contribute relatively less to the family income. All

this worker-level information is very important to understand the structure of the family,

nature of participation in the job market and composition of household expenses etc.

22

The following table shows the estimation of required monthly income for married

workers:

Issues Tk./month

Monthly expenditures for the

family

Household size

3.2

Food Costs 5180.154 No. of earners 1.61

Non-food Costs

5172.308

No. of

effective

earners

1.24

Total Food + Non-food Costs 10352.46

Estimated Required Monthly

Income

=(Food costs + Non-food

costs of the family)/no of

earners)

6430

‘Effective’ Monthly Income =

(Food costs +

Non-food costs of the

family)/no. of full-time earners

8216

Source- (Center for Policy Dialogue, 2013)

23

The following table shows the estimation of required monthly income for unmarried

workers

Issues Tk./month

Monthly expenditures for the

family

Household size

3.13

Food Costs 4405.7 No. of earners 1.86

Non-food Costs

4776.6

No. of

effective

earners

1.28

Total Food + Non-food Costs 9182.3

Estimated Required Monthly

Income

=(Food costs + Non-food

costs of the family)/no of

earners)

4936.7

‘Effective’ Monthly Income =

(Food costs +

Non-food costs of the

family)/no. of full-time earners

7173.7

Source- (Center for Policy Dialogue, 2013)

Model Diet

Based on the model diet and family size (4.08) and composition (1 moderately

working man, 1.08 moderately working woman and 2 children aged 1-3) it is possible to

calculate the amounts of food items needed on a monthly basis. The study showed the

amount of food a worker can afford for himself/herself and for his/her family as well

within the minimum wage figure. This includes the required daily allowances in terms of

energy (kilocalories), macronutrients (fat, carbohydrates, and protein) and micronutrients

(vitamins and minerals). Such a model diet listing a number of food items and their

amount that should constitute a person’s daily intake, does not (yet) exist for

Bangladesh.

The costs of this monthly family food basket are furthermore calculated using a

price list for Bangladeshi food products in the Dhaka Urban area circulated by the

Ministry of Agriculture. In the case of a single worker, the same calculation is based on

the model diet for a moderately working man only.

24

A model for the non-food items a person needs does neither exist in the

Bangladeshi context, nor is there a consensus on the non-food items that are required to

meet a worker’s basic needs, since these are - more than food items - dependent on the

development level of a society. As part of this methodology, the non-food costs are

therefore calculated on the basis of the average ratio of food costs: non-food costs as

reported by workers in the FGDs.

The estimated required minimum wage for married and unmarried workers would

be Tk.14856 and Tk.6750 respectively.

The following table shows the estimation of required monthly income for unmarried

workers

Issues Tk.

Daily Food costs

Male 117.9 Household

size

4.08

Female 107.3 No. of earners 1.44

Child (2) 131.4

Total Daily Food Costs for a

Family

356.6

Monthly Food Costs for a Family 10696.9

Monthly Non-food Costs for a

Family (50% of total cost as per

the FGD)

10696.9

Monthly Food + Non-food Costs

for a Family

21393.7

Required Monthly Minimum

Wage=(Food costs +Non-food

costs)/no. of earners

14856.74

Source- (Center for Policy Dialogue, 2013)

The following table shows the estimation of required minimum wage for unmarried

workers

Issues Tk.

Daily Food Costs (average of male

and female)

108

Household

size

3.25

Monthly Food Costs 3240 No. of

earners

1

Monthly Non-food Costs (52% of

total cost as per the FGD)

3510

Food + Non-food Costs 6750

Required Monthly Minimum

Wage=(Food costs + Non-food

costs*household size)/no. of earners

6750

Source- (Center for Policy Dialogue, 2013)

25

Non-Food Expenditures

The FGDs with the workers reveal that non-food costs are equally important to food

costs for the garment workers. Overall expenditure as well as its distribution varies in

different locations. For example, the highest overall expenditure is observed in Tongi

followed by Ashulia and Rampura (Dhaka) which partly reflect the general perception of

differences in the expenditure pattern. In contrast, the distribution of consumption of

food and non-food items varies in the opposite direction- from the share of high food

ratio in Rampura followed by Ashulia and Tongi.

Among the food items, the cost of rice constitutes over one-fifth of total food costs both

for married and unmarried workers. In the case of the main non-food items, costs differ

between married and unmarried workers. The main non-food cost items include house

rent (15.3 per cent and 7.7 per cent respectively), education (12.9 per cent and 6.9 per

cent), medical (5.0 per cent and 4.3 per cent) and mobile bill (4.7 per cent and 5.9 per

cent) respectively. Because of a limited family income, workers often have to borrow a

part of income to meet their monthly expenses. The average monthly borrowing for

married and unmarried workers varied between Tk. 770 and Tk. 1830 respectively.

The following tables show the distribution of food and nonfood expense in different area

of Dhaka (Centre for Policy Dialogue, 2013)

Cost per month (Tk.) Ratio of food costs : non- food

costs

Ashulia Tongi Dhaka Ashulia Tongi Dhaka

Food 5294 7916 50 55 38

Non-Food 5296 6563 4440 50 45 62

10591 14479

Married Unmarried

Food Costs 5180 4406

Of which: Cost of Rice 1118 997

Non-Food Costs 5172 4777

Of which:

House Rent 789 367

Educational expenses 665 330

Medical expenses 261 206

Mobile phone bill 242 281

26

Research Methodology

Primary data collection through questionnaire

Desk research

Primary Research

The primary research is based on questionnaire developed for solely purpose of

collecting data on RMG sectors workers lifestyle and financial stability. Though, the

RMG sector has a vase category of worker, therefore, the report only focuses on grade

7 worker of the industry. They belong to lowest grade of workers in the industry with

less or no experience and they receive the minimum amount of wage compared to other

category of worker.

The primary research was more narrowed down according to matrimonial status

of sample as only single or unmarried individuals were considered as sample for

collection of data. The primary research was conducted in Dhaka city and sample size

is 20 , of which 50% is male and 50% is female.

Desk Research

The secondary sources of information are mostly journals, articles and reports

published by BGMEA, CPD and other relevant organizations. International references

like that of the ILO, report on global Bangladeshi RMG sector known as ‘Seeking

Employment Conditions for Better Socioeconomic Outcomes’ will be used to get a

holistic view of the best practices of this sector. Apart from that, numerous reports and

research conducted by CPD have been used for gather secondary data as well as

their analysis of current and past scenario of RMG sector. The literature review

section of the research paper was based on these secondary sources of information.

Reports from different websites and articles are used for the overall understanding of

the core research problem and the research questions.

Desk research has been conducted to find out:-

i. Preliminary results against the key research questions

ii. The best practices for ensuring labors do not remain underpaid.

iii. Initiatives taken by the various stakeholders for development of workers

lifestyle.

27

Analysis of Data

The minimum wage received by grade 7 worker in Bangladesh RMG sector is

around Tk. 5,300. The amount includes a basic of Tk. 3,000; House rent Tk. 1,200,

medical benefit worth of Tk. 250 and other monetary benefit provided by factories on

monthly basis. Grade 7 generally consist assistant sewing machine operator, assistant

dry washing man and line iron man. These posts in the line of operation of a garment

factory are lowest and required less expertise or experience to perform task.

The minimum wage, which is determined by the minimum wage board under the

Ministry of Labor and Employment of Bangladesh, is always a debatable issue as the

board faces external pressure from all stakeholders of RMG sector. They always seek

to determine or issue a unanimously acceptable figure. The factory owners always tend

to reduce the wage demanded by workers and workers often seek a higher wage, which

might not be acceptable for business purpose of factory owners. CPD have worked in

this issue for several years and they have actively participated in determining the

minimum wage of RMG sector. In 2010, their research suggested that a minimum

calorific intake of 2122 Kcal Is required for a person on daily basis.

They suggested an unmarried worker at least need tk. 4936.7 for meeting his/her

necessities. This amount was calculated in 2010 and as years based regarding inflation

this amount is around tk. 5500. Food expense is the prime expense in this case. It has

been seen that around more than half portion of wage is spent behind food expense.

CPD estimated that a person at least spend tk. 4405.7 per month as food expense.

Apart from that, on daily basis a male person needs to spend at least tk. 117.9

and female needs to spend at least tk. 107.3 for food. Rice is a prime source of energy

and it also cost around tk. 35/Kg. in local market of Bangladesh... The cost of rice

constitutes over one-fifth of total food costs both for married and unmarried workers. In

the case of the main non-food items, costs differ between married and unmarried

workers. The main non-food cost items include house rent (15.3 per cent and 7.7 per

cent respectively), education (12.9 per cent and 6.9 per cent), medical (5.0 per cent and

4.3 per cent) and mobile bill (4.7 per cent and 5.9 per cent) respectively. Because of a

limited family income, workers often have to borrow a part of income to meet their

monthly expenses. The average monthly borrowing for unmarried workers varied

between Tk. 770 and Tk. 1830

28

0

2

4

6

8

10

12

14

1 2 3 4

Years of Experience

Years of Experience

0

2

4

6

8

10

12

14

≥ 5,300 ≤ 5,500 ≤ 5,800

Monthly Salary (in Taka)

Monthly Salary (in Taka)

In general, it has been seen that people who work a grade 7 worker has a decent

work experience. On average, it has been seen that people have at least 2 years of

work experience worker. Though, this grade is the entrance level but many workers

tend to switch their

workplace for better

living and payment

therefore, they tend to

gain much experience

within this grade or

otherwise, they lack

required skill to move

upper grade of worker.

As, the primary

research was focused

on and grade seven

worker. It has been

seen that at least more

than half of sample

have a decent experience of two (2) years. Mainly, grade 7 workers are meant to assist

other workers therefore these grade workers requires less experience to perform task.

In addition, these tasks are less complicated than other tasks.

According to Minimum wage board , the minimum wage for grade 7 worker in

RMG sector is tk. 5,300 as the authority expects that a person is able to fulfill his/her

basic needs based on this earnings. RMG factories are also expected to at least pay

this amount in order to follow the guideline provided by the authority. Otherwise, they

might face consequences. Based on the research conducted on samples, it has been

seen that most of

workers earn around tk.

5,500 on average as

monthly salary. Which

is almost tk. 200 more

than the declared

minimum wage set by

the authority?

According to workers,

the amount of minimum

wage settled by the

government is not

enough for them to

survive in Dhaka city,

29

75%

25%

Alternative Sources of Income

Not Required

Required

though people who live in outside of Dhaka can lead an acceptable way of life with

minimum wage. Therefore, many factories provide additional monetary benefit to their

workers by paying extra amount of money as salaries so that workers can live happily

and work more eagerly. The minimum wage have been received by two workers,

though they mentioned that the factory provide them free lunch and medical benefit

without any expense. More than 50% of sample said that they receive at least tk. 5,500

as their monthly salary though factories do not provide any additional benefit to them.

Apart from that, to motivate workforce and reduce employee turnover ratio, few factories

provide at least 70% more than the minimum wage. Almost six (6) people from the

sample receive wage around Tk. 5,700 from their employers. This strategy’ is common

among factories to keep their workers motivated and build up loyalty among workers

regarding business institute.

Apart from the main source of earning, many workers are tending to seek or have

alternative earning source. Though in most case, they do not get involve in these

alternative work on regular basis. However, in order to meet certain need workers

sometime work as tea-

staller, vegetable-fruit

seller and rickshaw puller

during their off time.

Though, every individual

has different need but less

than 50% workers have

alternative source of

income. The prime reason

for requiring alternative

sources of income is to

gather money to look after

family in village. Since,

villagers are tend to have

bigger family with minimum income, it is hard for few worker to live a life with mere

salary received from garments. Thus, they do part-time business on street as street

vendors or pull rickshaw in order to earn extra money so that they can send it to their

family back home.

30

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Rickshaw-puller Street vendor Tea-stall vendor

Earning from other sources

Alternative earning (in Taka)

0%

20%

40%

60%

80%

100%

≥ 5,000 ≤ 5,400 ≤ 5,800

Break Down of Expenses

Food Rent Misc. Medicine

Although, sometimes the amount they earn through these activities are not

enough for them to

send as families

expects a lot from

them in most cases.

A street vendor

roughly earns

around Tk. 3,000

monthly , a rickshaw-

puller earns around

tk. 2,500 monthly .

These figures do not

remain constant as

workers do not get

involved in these

activist on regular

basis because after working for around 12 hours or so , they feel fatigue which prevents

them to work part-time. Though, part-time tea-stall vendor tends to earn more than other

two alternative sources. This requires less physical activity and worker can rest on

his/her tea-stall if required as well as these stalls are popular resting place to street-

hawkers so it helps worker to earn more money and full fill his/her need.

The monthly expense of workers varies from person to person but on average

the expense remains

around tk. 5,000 on

monthly basis. Rent

expense also varies

area of Dhaka city as

well as many workers

prefers to live in

outskirt of Dhaka ,

where rent is

comparably low as

well as transportation

facilities are better to

their workplace.

Residence of workers

are tend to be slums

or commercial building of one rooms. These building do provide hygienic sanitation

facilities and including all utilize, the rent expense stands around Tk. 1,500 to Tk. 2,250

on monthly basis. The food expense varies from tk. 2,500 to tk. 3,200 individually.

31

90%

10%

Tendency to Borrow

Borrowed money

Did not borrowedmoney

0

2

4

6

8

10

12

14

≥ 5,000 ≤ 5,500 ≤ 5,800

Monthly Expense (in Taka)

Monthly Salary (in Taka)

Medical expense is almost similar for individuals as almost all factories provide

medical benefit to

their employees on

monthly basis at least.

Miscellaneous

expenses varies from

person to person and

basically to meet that

expense workers tend

to work or seek

alternative earning

sources so that they

can met their other

needs for example

buying cloths ,

electronics or

spending money for recreational purpose. Since, workers earn very less and hardly

maintain a quality life, there is no scope for them to have saving for their future. Though,

pension benefit is provided by RMG sector factories but there is no realistic scope for

these low earning workers to preserve some of their earning so that they can establish

their asset for future. Festival and performance bonuses are spend to meet their other

needs , which they could not meet in other time of the year. But , it also must be

mentioned that workers are more concern about surviving in present rather than

thinking about their future. One of the workers said “ We barely survive with this amount

of money and thinking about saving is nothing less than a joke to use , saving is a

luxury to us “. Among the samples , none of individual has saving account or purpose of

saving asset.

RMG workers have very low earning and sometimes they struggle to keep up

with their earnings to

maintain their regular life.

Therefore , they tend to

borrow money. Borrowing

money creates additional

pressure on them as well

as the burden of interest

makes them tense and

worried unless they repay

the borrowed amount. In

most cases, workers

borrows money when

32

there is medical emergency. As , they live in slums, where the environment is

unhygienic, people tend to get seek very frequently. Another prime cause behind

borrowing money is sending money to home for urgent basis. Though workers do not

borrow money to fulfill their luxurious demand but people have become more aware of

the burden of interest and day by day the tendency of borrowing is decreasing. Among

the samples at least 90% of individuals have borrowed money in some part of their life

and only 10% people have never borrowed money from other under any

circumstances.

According to primary research, the average monthly earning for grade 7 worker

in RMG sector is around Tk. 5,500 monthly. Though, pay scale varies from factories to

factories but none workers were found paid less than the legislative minimum wage

figure. In addition, it has been seen that companies do offer additional benefit to their

workers during the employment period, which reduces the burden or expenses of

workers. As part of RMG factories social accountability drive, these initiatives or benefits

help factories to keep their workforce motivate as well as reduce the employee turnover.

Though, this research primarily focuses on unmarried workers, some factories offer free

daycare school to workers infants as well as support meritorious students by offering

scholarship for further studies if required.

The average monthly expense a grade 7 worker is around tk. 5,000. However,

expenses solely depends on people preferences and need. It has been seen that some

people prefers to live in a more hygienic environment, thus additional portion of money

is spend on rent for better housing facilities. In addition to that, utility bills also plays an

important role in determining monthly expense. Since, telecommunication has become

an integral part of our lifestyle, people tend to spent at least tk. 300 monthly for this

purpose as well as internet surfing causes the net expense to increase. Some individual

tends to take medicine for different purpose. Since regular medication can cost a

significant portion of salary, variation in monthly expense can be seen by this factor as

well.

The most important portion of expense is food. An individual can easily reduce

his/her food cost if he/she only requires to eat vegetables without consuming any meat

or fish. Though, protein is necessary but people tend to overlook this important food

element due to lack of purchasing power or tend to ration the consumption of protein on

weekly basis. Thus, food expense variations are seen among individual. Workers seem

to be able to meet all of their basic need with this money as they do not need to borrow

additional money to meet their basic needs.

33

However, they do not need have the ability to afford other luxuries but the prime

target of minimum wage is to provide a person the basic needs require to live a normal

life and stay above poverty line. But it must be said that, the minimum wage is not

enough for a person since it does not give them the chance to save for future or build up

their own asset. They work hard every day for a long hour of shift and has very less to

save for their future or for any unexpected need occur in future. The amount given as

minimum wage is never enough, since every person has the right to live a happy and

enjoyable life, minimum wage does not allow them to do so. Some workers tend to work

in part-time at other occupation to fulfill their additional needs due to lack of saving

opportunities.

34

Recommendations

The readymade garments sector has created jobs for millions of people in

Bangladesh and contributing to the social welfare of this country since its inception. The

sector does not only gives people from below poverty line a lifeline to improve their life

but also an opportunity to change their and their next generations fate. Readymade

garments sector has shown a path for woman development and proves how effective

women can be if they get proper guideline and encouragement from the society. The

sector not only changed the social barrier worked against women empowerment but

also allowed women to become independent without relying on others. Thus, the

contribution this sector has made towards Bangladeshi society is immense.

Though, there is always an issue remain a topic of debate. Many believe and

even proved that the garments workers are heavily underpaid and they need to have

better paid to have a healthy life. Studies suggests that the amount earned by people of

RMG sector, is not enough for a person to meet basic need of life. CPD and other

institutions also agrees with the hypothesis that the minimum wage practiced in this

sector required regular adjustment as inflation fluctuates but wages do not.

Therefore, according to the outcome of this research paper following

recommendation are made in order to improve workers life style so that workers

become more efficient, happy and productive , which will help the sector as well as the

country’s economy in coming days.

Minimum wage should be revised on semi-annual basis.

Free school , medical benefit , free lunch should be mandatory as social

welfare activity within every factory of RMG sector.

In general practice, the minimum wage is revised once in two or three years. This

practice is needed to be change. Labor unrests are generally caused by the inflation

and difficulties faced by workers to cop up with their mere salary they get from their job

place. Since , this sector provides a greater chunk of remittance to the economy,

authorities and business personal directly connected to this sector need to evaluate the

lifestyle scenario of workers on semi-annually basis. The price of basic goods in

Bangladeshi market fluctuate a lot as the government do not have strong control over

the pricing of commodities. Therefore, the consumer and in this case , low earners like

garments workers have to pay price by surviving in tough conditions of life. Labor

ministry should track the market of basic need as well as workers lifestyle on semi-

annually basis to evaluate whether the minimum wage is enough for people to survive

without any difficulty. Inflation adjusted minimum wage policy is also possible but this

option is nearly impractical as workers would not prefer a cut back in their salary if

35

deflation occurs. But a semi-annual observation can reduce unwanted unrest among

workers regarding their wage and expense issue. In this method, the ministry will

establish a basket of essential commodities for workers and evaluate the price of those

commodities on regular basis. The evaluation of commodities will be done by the

minimum wage board. They will submit an evaluation report on semi-annual basis,

which will be given to responsible authority and stakeholders of RMG sector. The report

will be expected to suggest , whether the minimum wage can allow a person to fulfill

their basic need based on current market scenario. Based on the outcome of the

evaluation , the minimum wage board can recommend required action as if new

minimum wage is required or not. If this initiative is taken then all the stakeholder will

also be able to understand the expense burden of workers as well as a valid logic can

be raised for increasing the minimum wage without any complication and unwanted

chaos.

Additional benefits are provided by many factories of RMG sector to their

workers. These benefits include free lunch, free health care facilities , day care and

school for workers children. These benefits not only help the workers but also benefit

firms through increasing productivity of their workers. These benefits are not provided

by all factories as these are not made mandatory by authorities or government. If free

lunch, free education for workers children and free health care service is provided by

firms then , it will eventually reduce the expense burden of workers. As a result, their

monthly expense will reduce significantly and allow them to have the opportunity for

saving. Thus, these additional benefits should be included as mandatory under social

service provided by companies.

36

Conclusion

The RMG industry of Bangladesh undoubtedly has a bright future and potential

to become the leader of global RMG manufacturer. The comparative advantages

Bangladesh has over other RMG manufacturing country are cheap labour and large

capacity to produce as mentioned earlier. With proper and effective development in this

sector along with the comparative advantages the industry pursue in present time. It will

not only benefit the industry itself but also the overall economy of Bangladesh.

Bangladeshi economy is overall dependent on this specific sector, as this sector is

considered as the backbone of nation’s economy. Banking sector, transport sector and

shipping sector are directly connected with the performance of RMG industry.

Cheap labor allows Bangladesh to remain in the competition in global market.

Bangladesh do not have technical advantage as in most factories machines are

imported from abroad and requires huge capital investment for future improvement and

upgrade. But due to cheap labor and low wage offered to workers, Bangladeshi RMG

factories can offer clothes at lower cost. Although, this cheap labor prevents workers in

this sector to have a better life.

According to analysis of data gathered for the purpose of this research, the

hypothesis is found truth as with minimum wage workers can afford to meet all their

basic needs . It is true that they could not afford savings or have other optional elements

of live but they can meet all their basic needs with the minimum wage. But , authority

and government should focus improve the minimum wage scenario so that workers can

have the opportunity to have saving and build up their asset without any extra labor. So,

their future generation can have a far better and bright future than themselves.

37

APPENDIX

38

Survey Questionnaire

1. Gender - Male Female

2. Experience (in years) - 1 2 3 4 or more

3. Monthly Salary (in taka)- ≥5,300 ≤ 5,500 ≤ 5,800

4. Other Source of Income - Yes No

5. Earning from other source of income - ≥ 2,500 ≤ 3,000 ≤ 4,000

6. Total Monthly Expenditure – ≥ 5,000 ≤ 5,500 ≤ 5,800

7. Monthly Expenditure on Rent ≤ 1,500 ≤ 2,000 ≤ 3,000

8. Monthly Expenditure on Food - ≥ 2,500 ≤ 3,000 ≤ 4,000

9. Monthly Expenditure on medicine - ≥ 250 ≤ 500 ≤ 1,000

10. Monthly Expenditure on misc. – ≥ 2,500 ≤ 3,000 ≤ 4,000

11. Monthly Savings- Yes No

12. Monthly Borrowing- Yes No

References

Gazette on Minimum Wages for RMG Sector Workers . (2013, 12 05). Minimum Wage Board.

Bangladesh.

Bangladesh Inflation Rate. (2014). Retrieved from Trading Economics:

http://www.tradingeconomics.com/bangladesh/inflation-cpi

Trade Information. (2014). Retrieved from BGMEA: http://bgmea.com.bd/

Asian Development Bank. (2013). Asian Development Outlook 2013. Asian Development Bank. .

39

Center for Policy Dialogue. (2013). Estimating a Living Minimum Wage for the Ready Made Garment

Sector in Bangladesh. Center for Policy Dialogue.

Centre for Policy Dialogue. (2013). Revision of the Minimum Wage in The RMG Sector in 2013.

Centre for Policy Dialouge. (2014). Minimum Wage in the RMG sectory of Bangladesh.

International Labor Union. (2013). Seeking Bettern Employment Conditions for Better SocioEconomic

Outcomes.

Investopedia. (2014). Definition of 'Minimum Wage'. Retrieved from

http://www.investopedia.com/terms/m/minimum_wage.asp