Why Bangladesh must align wages, working conditions, trade union rights with international standards

By Abu Sufian* 

Bangladesh stands at a critical juncture in its quest to revive Generalized System of Preferences (GSP) benefits, which offer duty-free access to key markets like the United States and the European Union. Recent statements from Finance Adviser Dr. Salehuddin Ahmed and Commerce Adviser Sheikh Bashir Uddin underscore the interim government’s diplomatic push to restore these trade privileges, with a clear focus on addressing labour rights deficiencies. This initiative is not just about ticking boxes for GSP compliance—it’s about fostering fair, sustainable economic growth that aligns with global standards. For Bangladesh, a nation heavily reliant on its garment industry, prioritizing robust labour law implementation is non-negotiable.

The garment sector, which accounts for 85% of Bangladesh’s export earnings and ranks second globally, faces mounting challenges. Competitors like Vietnam, Cambodia, and Laos are gaining ground, and Bangladesh risks losing its edge if it fails to address persistent labour rights issues. The country has faced international criticism for substandard working conditions, inadequate wages, child labour, and restrictions on trade unions. These are not mere reputational blemishes—they threaten Bangladesh’s economic lifeline.

Take the recent 9% wage hike for garment workers, effective December 1, 2024. While a step forward, it falls short of the 15% increase workers demanded, especially against a backdrop of 14.1% food inflation (per BBS data from July 2024). With wage growth lagging behind inflation—6.17% in July and 8.1% in November 2024 against 13.8% inflation—workers’ real income and purchasing power are eroding. The minimum wage of $105 (recently increased) pales in comparison to Vietnam ($132–192), Jordan ($366), or even Cambodia. This reliance on cheap labour, a hallmark of Bangladesh’s garment industry for 45 years, is no longer viable in a competitive global market that increasingly values ethical production.

The consequences of low wages extend beyond worker dissatisfaction. Malnutrition and declining health are reducing productivity, trapping Bangladesh in a middle-income quagmire, as noted by economist Dr. Debapriya Bhattacharya. The International Labour Organization’s 2024–25 report ranks Bangladesh third in South Asia for low-wage workers, a statistic that should sound alarms. Meanwhile, the EU and U.S. have repeatedly flagged concerns about cheap labour, with the latter tying long-term purchase orders to meaningful wage increases, as seen in Cambodia’s successful model.

The U.S. has outlined 11 labour rights priorities for Bangladesh, including simplifying trade union registration (reducing the required worker consent from 20% to 10%) and raising minimum wages to global standards. A U.S. labour delegation’s visit to Dhaka in November 2024 reinforced this message: addressing labour rights is critical not only for GSP reinstatement but also for democratic stability and inclusive growth. The EU, which absorbs 58% of Bangladesh’s exports, offers GSP+ benefits contingent on compliance with 32 international conventions and the government’s National Action Plan (NAP). Failure to meet these standards risks a 8.7% duty on EU exports and a 16% duty on U.S. exports, which would cripple the garment sector.

The stakes are higher as Bangladesh nears graduation from least developed country (LDC) status, after which GSP benefits will vanish without robust labour reforms. The Rana Plaza collapse and Tazreen Fashions fire led to the U.S. suspending GSP benefits, a reminder of the cost of inaction. Yet, there is hope. The interim government’s formation of a Labour Reform Commission, welcomed by the U.S., and its acceptance of the EU’s 2023 Universal Periodic Review signal progress. But intent must translate into action.

Bangladesh’s economy, propped up by garment exports and remittances, cannot afford complacency. Labour law reform is not just a prerequisite for GSP benefits—it’s a moral and economic imperative. By aligning wages, working conditions, and trade union rights with international standards, Bangladesh can secure its place in global markets, improve worker livelihoods, and build a resilient economy. The time to act is now.

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*Independent researcher and freelance columnist