Low wages have helped Bangladesh become the world’s largest garment exporter after China, but soaring fuel and power prices have added to the spiralling cost of living for people in this developing South Asian nation. — Reuters
DHAKA: Several clothing factory owners in global fashion manufacturing hub Bangladesh are asking clients, that include H&M, to help them pay for an almost 60% government-mandated hike in wages, well aware that weaker sales may stymie their efforts.
Following a week of deadly clashes between garment industry workers and police over pay, the government on Tuesday said the minimum wage would rise by 56.25% to 12,500 taka (US$114) a month from Dec 1, the first increase in five years.
A panel of factory owners, union leaders and officials agreed to the increase unanimously, said Siddiqur Rahman, the owners’ representative.
Low wages have helped Bangladesh become the world’s largest garment exporter after China, but soaring fuel and power prices have added to the spiralling cost of living for people in this developing South Asian nation.
Speaking to Reuters on Wednesday, Rahman said the wage hike – which comes ahead of a January general election – could be a “disaster” for an industry that accounts for almost 16% of gross domestic product and generates more than US$40bil a year in export receipts.
Bangladesh is home to more than 4,000 factories that supply global brands ranging from fast fashion retailers such as Zara-owner Inditex and Gap Inc to the more upmarket Hugo Boss and Lululemon.
But like most makers of consumer goods, fashion retailers are grappling with high inventories and a slowing global economy, where shoppers in key markets are buying less as they feel the pinch. — Reuters
