Far from quelling months of violent protests over pay and conditions, an 80% rise in the minimum wage for garment workers in Bangladesh has simply led to a fresh wave of violence over claims it still doesn't meet the high cost of living.

Unrest during the days following last week’s pay deal saw as many as 350 factories forced to close, while others faced disruption to their shipments after rioting workers blocked roads and the port city of Chittagong.

Estimates put the combined loss of work at around US$100m, as well as additional costs of several million dollars to air-freight orders to meet delivery schedules for retailers and brands in the EU, US and Canada.

The situation has even spiralled into a new spate of government crackdowns on the leaders of apparel workers’ groups who were organising public protests for better pay, with many now facing criminal charges or forced into hiding to escape arrest and beatings according to labour rights groups.

No quick-fix solution
Of course it was naive to think the new wage deal was going to be the quick-fix solution claimed by the government, which itself hinted at a three-fold rise in salaries and promised to settle the issue before the month of Ramadan in August. And with the benefit of hindsight, there were plenty of hints that the wage issue wasn’t going to be an easy one to settle.

The first clue that getting any kind of consensus agreement out of Ministers, factory owners and workers’ unions was going to be tough to pull off came from the seven-months of acrimonious talks leading up to last week's decision.

The second was that Bangladeshi factories have already proved to be pretty adept at dodging the issue of raising worker salaries to the level of a living wage, with estimates from the Bangladeshi Ministry of Commerce suggesting that around one-quarter of factories don't comply with mandatory standards on pay, working hours and conditions.

And even a 200% rise in basic living costs since salaries were last reviewed in 2006 has done little to sway employers, with the situation becoming so desperate for many garment workers that the government has on several occasions been forced to step in to provide them with subsidised rice.

“Inhumane” is how Prime Minister Sheikh Hasina described apparel workers’ wages to a recent session of parliament.

And it now seems workers and labour rights groups on the one hand, and factory owners on the other, continue to be locked in yet another stalemate – albeit one where the minimum wage has risen from BDT1,662 ($24) to BDT3,000 (US$43) a month.

The lure of cheap prices
Despite widespread condemnation from western retailers and consumers over allegations ranging from child labour to poor workplace safety and working conditions, low wages and lack of freedom of association in the Bangladesh clothing industry, most large firms source here – lured by the promise of cheap prices. Indeed, apparel exports edged up to US$12.496bn in the year to June 2010.

But it’s hard to know what’ll happen next. The threat of disruption to orders and deliveries has always offset Bangladesh’s strengths as a sourcing destination and this unreliability is now likely to continue to hang over the country for the foreseeable future.

Labour rights groups claim the new wage deal still fails to cover basic living costs, and say they will continue to protest for a minimum wage of BDT5,000 (US$72) a month. Unions also point out that during the current presidency in Bangladesh, five other minimum wages have been set in other industrial sectors, none of them below BDT4200.

They also want the new pay scale to be implemented immediately as Labor Minister Khandaker Mosharraf Hossain initially promised – not from 1 November as negotiated by the factory owners. And they claim the failure by many factories to pay salaries on a regular basis exacerbates the situation.

Factory owners, meanwhile, allege the protests are part of a conspiracy to destroy the industry, which competes with major exporters like India and China.

Many say they simply can’t afford to nearly double their workers’ wages – they campaigned hard during the pay talks to keep salaries below $30 per month – since buyers and importers themselves won’t pay higher prices. And they also point out they’re facing higher costs of inputs such as cotton and other raw materials, coupled with rising production costs due to uncertain energy supplies, a poor infrastructure, excessively high interest rates, and soaring freight prices.

What has proved to be something of a tipping point, though, has been the realisation by companies that outsource production to Bangladesh that unless they support living wages in their supply chains, they leave themselves open to accusations of exploitation.

Calls earlier this year by leading US and European retailers, including Marks & Spencer, H&M, Zara, Primark, Asda, Tesco, Gap and Wal-Mart for “swift action” to tackle low garment worker wages was one of the key catalysts for the pay talks to garner momentum in the first place.

Funding the pay process
But will they put their money where their mouth is and commit to raising their prices too? That seems to be where the debate now sits, with Bangladeshi manufacturers saying they can't afford to pay more unless the retailers do too. And that as long as retailers continue to drive down prices, it will be nigh-on impossible to improve factory pay and conditions.

While retailers have told just-style they support an increased minimum wage and regular revisions to wages in the future, they are reluctant to be drawn on the issue of how, exactly, this will all be funded.

While several talk about projects to increase productivity and quality in a bid to pass efficiency gains on to workers in the form of higher wages, this still falls woefully short of the price increases factories need if they are to deliver on the agreed pay deal. And could lead to an endless cycle of factory closures, job losses – and recurring violence.

But if Bangladeshi prices rise, what guarantee would there be for any buyer that the difficulties of operating here would get any easier?

Shifting orders elsewhere is no simple solution either. Labour unrest has been on the increase all over Asia, typically in the countries which have major garment exports.

The last months have seen protests against wages and labour conditions, with major strikes, demonstrations and protest marches in China, the Philippines, Thailand, Pakistan, Cambodia, Burma (Myanmar), Sri Lanka and India.

The bottom line is sobering though. Campaigners in the UK have calculated that adding just GBP0.06 (US$0.09) on a T-shirt, or GBP0.12 on a pair of jeans from Bangladesh would afford workers a living wage.