Bangladesh should review wage setting process annually, says Cornell study

Monira Munni

Bangladesh should annually review its wage setting process as apparel workers in the country, paid the minimum wage, are losing income year-on-year with current inflation rates, said a policy brief of Cornell University.

The brief titled ‘Waiting Game: Minimum Wage-Setting in Bangladesh’s Apparel Industry’ by Global Labor Institute (GLI), a part of Cornell University ILR School, published recently also made a five-point set of recommendations, which include institutionalising the annual review of minimum wages and announcing a review of the 2023-set minimum wage to take place in 2025.

The brief of GLI, dedicated to independent quantitative research and action, analysed Bangladesh’s national minimum wage-setting policy as the new government plans major updates to labor law and practices.

The researchers noted that the long-time minimum-wage policy, which reviews wages every five years, favours employers over workers.

In addition, it noted that the local ‘purchasing power’ of workers’ wages in Bangladesh is significantly lower than those in competing apparel producing countries.

On employers’ argument of rising labour cost in a labour intensive sector would make their industry less competitive, the brief showed that there is no evidence to support this and the experience of Vietnam, Indonesia, Cambodia and elsewhere in recent years invalidates the argument.

Talking to the FE on Thursday, Jason Judd executive director of Cornell ILR executive director, explained that Cambodia’s apparel industry is a good example for Bangladesh to follow citing growth in wages and output.

He, who is in Bangladesh for a short visit until Friday, said Cambodian government took a similar approach when it overhauled its wage-setting policy a decade ago.

Munni_fe@yahoo.com