Come December and the minimum wage for a worker employed in the country’s readymade garment sector would be Taka 8,000 (US $ 95) a month, from Taka 5,300 (US $ 68) so far, making for a hike of Taka 2700.
No wonder the garment makers are a worried lot today! Banking on its low-cost manufacturing destination criteria — that has to a large extent helped Bangladesh become the second biggest apparel exporter globally — the increase in minimum wage could become a pivotal aspect in determining the sector’s future and growth.
However, as per a survey report of the Japan External Trade Organization (JETRO), the industry’s concerns as to the rising wages may not be as big a factor, after all as it still boasts of the lowest wage when compared to its competitors. The survey, conducted between December 2017 and March 2018, which underlined cheap labour as one of the strong factors behind the success of Bangladesh in apparel sector in the global export markets, reveals that labour in Bangladesh is still cheap and the average monthly wage is just around US $ 101, compared with US $ 135 for Myanmar, US $ 170 for Cambodia, US $ 234 for Vietnam and US $ 518 for China.
This edge is expected give the manufacturers a competitive advantage among its peers in the global export markets but the garment manufacturers are not game to agree on it. They seem to have reasons enough for the same as continued increase in other components apart from labour, can add up to put pressure on businesses.
“The leverage of cheap labour is not a solution to the Bangladesh apparel industry, as it is going up continuously due to a rise in production cost, rise in wages and investment for safety improvement,” stated Senior Vice President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Faruque Hassan while speaking to the media, adding, “In contrast with the competitors, Bangladesh’s minimum wage is going up as we are gradually increasing workers’ wages.”
In such a scenario, maintaining the stronghold in garment exports is definitely a big concern, but is there a solution to it?
“Increasing wages is not the matter of one day; it is a matter of continuity. If the development of the country is sustained, labour hiring will increase and wages will also go up,” states Executive Director of Policy Research Institute (PRI) Economist Ahsan H Mansur, who feels under the given circumstances, skill development and technological interventions are the only way out.
Technological development will have to match up economic development. If the technological development goes hand in hand, productivity will increase, observed Mansur while adding that technical training and workers’ dedication will also increase productivity. The ED of PRI is only concerned that technological interventions could eat into employment generation but is sure about the fact that those who would manage to continue working, productivity will increase.
It may be mentioned here that founded in February 1952, JETRO is an independent administrative institution established by Japan Export Trade Research Organization as a non profit corporation, which was reorganized later under the Ministry of International Trade and Industry (MITI) in 1958 (later the Ministry of Economy, Trade and Industry or METI), and became an Independent Administrative Institution in 2003, to consolidate Japan’s efforts in export promotion.
Initially, JETRO’s activities focused mainly on promoting exports to other countries. As exporters established themselves in world markets and the balance of trade turned from deficit to surplus, JETRO’s role shifted to encompass more varied activities. These have included the furtherance of mutual understanding with trading partners, import promotion, liaison between small businesses in Japan and their overseas counterparts, and data dissemination. JETRO’s import promotion services reportedly include publications, promotion of trade fairs, seminars, trade missions, etc.