Western brands and retailers whose orders have been caught up in last week’s violent protests by garment workers in Bangladesh will no doubt take some comfort from news that hundreds of garment factories have now reopened for business.

But their relief is likely to be short-lived unless the issues at the core of this long-term and simmering unrest – an increase in the national minimum wage and better working conditions – are addressed.

The protests, which most recently centred on the Ashulia manufacturing zone 20 miles north of Dhaka, where owners were forced to shut all 250 garment factories after workers clashed with security forces, mark an escalation in garment-industry violence in Bangladesh that has been festering for years.

Indeed, pay and working conditions in the country’s factories have long been a source of concern, with workers – who are easily among the world's worst paid – currently earning just BDT1,662 (US$24) per month.

This national minimum wage, which was set by the government in 2006, was deemed to be inadequate to meet basic needs back then. And today its falls woefully short of covering soaring food and property prices, consequently pushing many workers below the poverty line.

For others, the situation is thought to be even more desperate. Not only have workers had to face rising inflation over the past four years, but factories have cut wages by 20-30% in a bid to compete for orders with countries such as Vietnam, China and India.

Unskilled workers in the garment sector are worse off still, receiving just BDT800 (US$11.5) a month and often forced to toil for 14-16 hours a day.

Labour groups also claim that in many cases salaries are not paid on time, with delays of up to two months to receive pay cheques.

Protestors have been calling for basic salaries to be raised to BDT5,000 (US$72) a month to enable workers to keep pace of expenses including food, shelter, clothes, education, health care and transport.

Key to economy
Garments are Bangladesh's biggest export and as such are key to the country’s economy, with around 4,000 garment factories employing 2m people and accounting for more than 80% of annual export earnings worth $15bn.

Some of the leading names in US and European retail, including Marks & Spencer, H&M, Zara, Primark, Asda, Tesco, Gap and Wal-Mart all source from the country, ironically attracted by costs that are among the lowest in the world.

Many of these firms, however, are also taking issue over low garment worker wages amid fears that sweatshop allegations could taint their reputations as socially responsible companies. Indeed, a group of global retailers in February advised the Bangladeshi Prime Minister that “swift action” was needed to tackle the problem.

Part of the government’s response has been to set up a tripartite wage board with representatives from the government (Department of Labour/Ministry of Labour and Manpower), factory owners (such as the Bangladesh Garments Manufacturers and Exporters Association) and workers’ unions – and has promised an announcement on the new wage structure by 28 July.

But signs so far are not promising.

Workers claim the factory owners are at fault by under-cutting prices to compete with each other, and that they are weak in negotiations with buyers/importers on price related issues.

The factory owners, on the other hand, say they can only raise the minimum wage by $3-5 and are bargaining hard to keep wages below US$30 per month.

However, the government is keen to settle the issue by the end of July. This is because the month of Ramadan begins in August, followed by the Eid Al-Fitr holiday that marks the end of Ramadan – both of which are traditionally a time of higher prices and living costs.

Alternative production sources
Not surprisingly there are concerns that if a settlement is not agreed, then demonstrations and stoppages are likely to escalate again, and that retailers and importers will have no option but to find alternative production sources.

For buyers to leave Bangladesh, however, would make the problem worse, according to Mike Flanagan, chief executive of Clothesource.

“More than anywhere else in the world, Bangladesh's economy depends on low-cost garments for European, American and, increasingly, Japanese chains.”

According to Clothesource, the most helpful things garment buyers can do are:

  • To continue buying from Bangladesh
  • To mistrust scare stories of imminent chaos
  • To continue pressure for decent wages
  • But to source from Bangladesh only garments that can survive extended production cycles.

“Though violence has become part of the Bangladesh way of making garments, Bangladesh has become an essential part of most buyers' sourcing mix,” Flanagan says.

“There is no real alternative source of low-cost volume knitwear, and foreign businesses continue to invest in manufacturing capacity there. Continuing support for the country's products – but properly controlled – is still a commercially wise strategy.”