BGMEA seeks AAFA support in responsible purchasing practice

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has written to the President and CEO of the American Apparel & Footwear Association, Stephen Lamar, seeking support in terms of responsible purchasing practices.

“To ensure uninterrupted and smoother operation in the industry, it is important that prices of all goods which will be shipped from December 1, 2023, are duly adjusted/ up-charged covering the increment in wage component,” BGMEA President Faruque Hassan wrote, according to a UNB report.

The American Apparel & Footwear Association (AAFA) is a national trade association representing apparel, footwear and other sewn product companies, and their suppliers, which compete in the global market.

From now onward, the BGMEA president said, all business negotiations and deals will have to be made adhering to the new minimum wage policy. “Therefore, I would humbly request you to kindly pursue the AAFA members to collaborate with their Bangladeshi suppliers with due empathy and consideration,” the BGMEA chief wrote in his letter.

“With every effort and action we take, we mean to complement our long-term goal, which is to grow mutually and sustainably. We are working with our government relentlessly to ensure a more favourable environment for business,” Faruque said.

“You are following the improvements made and progress by the government to create better infrastructure and policies supporting envisioned growth and efficiency. I am sure with your continued support and collaboration we will continue to thrive," said the BGMEA President.

In his letter to Lamar, the BGMEA chief said the minimum wage in 2023 for garment workers was declared by the government on November 7.

The declaration was made based on the proposal submitted by the Minimum Wage Board, and was widely consulted and agreed upon by the stakeholders including workers’ and employers’ representatives, he said.

As per the new minimum wage, the gross minimum monthly wage of the 7th-grade workers has been set at Tk 12,500, equivalent to around USD 113.63 – a 56.25 per cent increase of the gross wage while the basic wage has gone up by 63.41 per cent.

The new minimum wages come at a time when the global economy is going through an unprecedented situation, and so is Bangladesh’s economy, said the BGMEA chief.

“The RMG industry in Bangladesh is feeling the heat of this crisis, especially with soaring inflation, all our input costs have increased significantly including fuel, gas, electricity, and transportation,” he said.

From the first of July this year, Bangladesh Bank has increased interest rates which made trade and investment finance more costly.

“You are aware that since 2013, the industry had to make a huge investment to ensure international standard workplace safety, which we have done diligently despite all the difficulties,” he wrote.

“Now to align with the global climate action agenda, our factories are making further investments to reduce GHG emissions and be more resource efficient. Not only that, for ensuring workplace safety, and comfort for our workers and to reduce fatigue, factories are upgrading machines, process and production methods,” said the BGMEA president.

“Through all these efforts, Bangladesh has emerged as a reliable, sustainable and one of the most preferred sourcing destinations,” Faruque said, adding that all these initiatives and investments have an impact on the business, in relative and absolute terms.

“Now, with the increase in the minimum wages, this industry has taken the challenge to ensure better living standards for the workers while maintaining competitiveness,” he said.

The raise in the minimum wage, especially a 63.41 per cent rise in the basic wage, leads to higher benefits for the workers in terms of overtime benefits, earned leave encashment, festival bonuses and other allowances, Faruque said.

“The implementation of the new wage structure would exert a huge financial impact on the factories. This will be challenging for many of our factories to implement the new wage in the current economic and financial circumstances,” he wrote in the letter.

However, Faruque said, ensuring decent living standards for the workers is a top priority for them, as well as for global brands and retailers.

“Since we have accepted the new minimum wage, we will ensure implementation of it, and we need your support in terms of responsible purchasing practice,” the BGMEA president wrote in the letter to the CEO of the American Apparel & Footwear Association.