The commentary argues that the current labour unrest in Bangladesh’s ready-made garment (RMG) sector is not merely a demand for higher wages but a manifestation of deeper structural weaknesses in wage-setting and labour governance. The protests reflected not only economic pressures from inflation and higher living costs but also growing dissatisfaction with a wage-setting system that appears more reactive to industrial action than proactive in addressing worker grievances. While workers seek wages that better reflect real living conditions, factory owners face increasing costs from imported raw materials, energy shortages, and broader economic uncertainty. The article highlights the inherent tension within Bangladesh’s export-oriented RMG model, where international competitiveness relies heavily on low production costs. It contends that recurring unrest reflects distrust in existing institutions and calls for wage indexing, greater transparency, and more proactive engagement among workers, employers, the state, and international buyers
The Immediate Crisis
The workers started their protest on the 31st of October, demanding a wage raise of 30,000 taka from the current 12,500 taka. The protests began in Ashulia and subsequently spread to Dhaka, Gazipur, and Narayanganj. BGMEA counted 529 of 2,134 factories disrupted on 1 November due to walkouts. The government formed a six-member board on 1 November. The Prime Minister, Tarique Rahman, held an emergency meeting to curb the resistance; however, the workers continued their protest. Thousands blocked a highway and clashed with police on 2 November. Police used tear gas and grenades against the protestors. The newly created wage board decided on a revised wage structure, which is expected to take effect from December 2026, and the workers will receive their first revised payment from January 2027. However, the new revised wage structure is yet to be announced. The unrest also covers larger issues like the demand for blacklisting, reinstatement of dismissed workers and an end to layoffs. This is important because it concerns broader employment insecurity and labour relations and goes beyond wages.
This commentary examines whether this is a single episode of a wage dispute or if this protest movement needs greater discussion on the table for both the workers and the garment industry. In the last few years, energy insecurity owing to the war in the Middle East, domestic economic pressures, and political instability have had an impact on the garment industry, which is about 8 percent of Bangladesh's GDP. This is now topped by the crisis in wages.
The Economics Behind the Dispute
The rise of the garment industry, especially the Ready-Made Garment (RMG) industry, is one of the most compelling stories from the Global South. From a few factories in the 1970s to contributing around 8 percent to Bangladesh's GDP in FY 2025-26, it has been a story of resilience and transformation. The current value of exports has been over US$38.70 billion in FY 2025-2026 and accounts for about 80.63 percent of total merchandise exports.
The industry's last wage raise was in November 2023, when the wage was raised from 8,000 taka to 12,500 taka. The new labour law, which was amended in April 2026, requires the minimum wage to be revised once every three years. That puts the next revision due around now. The Labour union demanded a change in wages in August 2026 but received no response. The board was only formed on 1 November 2026, after the protest had already started.
The current agitation also raises a more pressing question: whether Bangladesh's wage-setting mechanism can keep pace with inflation and the cost of living, rather than revising wages only after major industrial unrests, because wages rose in 2010 and 2023 after strikes. Average inflation was 10.0 percent in FY25 and 8.7 percent in FY26, so prices rose about 20 percent over two years, while wages stayed at 12,500 taka. The rising costs of food, housing, transport , and healthcare have sharply eroded their purchasing power, with prices rising nearly 29.5 percent since December 2023. According to a report by the Bangladesh newspaper Prothom Alo, if we use minimum fairness as the benchmark, the worker’s wage should be at least 17,500 taka to maintain the previous level of real income, which is to cover inflation. Also, to keep the shortfall from exceeding the previous 3,000 taka, the wage would need to be at least 18,000 taka. It is also to be noted that the Bangladesh Bureau of Statistics’ Household Living Standards Survey 2025 found an average monthly household expenditure of 46,778 taka in city corporation areas and 37,344 taka in other urban areas. The minimum wage of 12,500 taka covers about 27 percent of the city corporation figure. An amount like 30,000 on the higher end also leaves room for negotiation for both parties. In this context, it should also be mentioned that the owners are battling their own battles with a rise in the cost of raw materials, the shortage of energy resources, and the uncertainty of the current banking system of Bangladesh.
The other significant concern is the safety of the workers. The Rana Plaza collapse in 2013 killed more than 1,100 workers, putting the safety of the workers also at the centre of the debate, and even though safety has improved in recent years for the factories covered by the Accord and the RMG Sustainability Council, the coverage as a whole is low. In October 2025, a fire at a Mirpur garment factory and chemical warehouse killed 16 workers. The factory was outside the Council’s inspection programme. The latest example is in September 2026, when a gas cylinder explosion and fire at a factory in Ashulia killed at least nine. Ashulia is also where the current protests began.
The Structure of the RMG Sector
The growth of the RMG Sector of Bangladesh is dependent on cheap labour. It is export-oriented, with major markets in the EU and the US. Most of its fabric is imported from China and India, creating backward linkage vulnerabilities, and Bangladesh mainly takes up the responsibility of creating the end product through designing and stitching. The success of RMG has created a structural tension. Its international competitiveness has partly depended on cost efficiency. Still, the social sustainability of that model requires wages that reflect the actual cost of living. Fabric, energy and credit costs are largely outside the factory’s control, so wages become the cost that gets squeezed. Demand usually shifts to the most price-competitive supplier, and hence demand keeps shifting from one country to another. This leaves very little space for wage growth. Buyer attrition is the threat owners and the state use to resist wage increases, and it is part of why wage revision comes late. Combined with this is the fact that manufacturing costs have seen a steep rise with the energy crisis in the Middle East and the systemic credit stress rising from its own banking system. Each of these factors also limits the space for wage negotiation that can be acceptable on all sides.
Implication for Bangladesh
An environment of unrest and factory shutdowns can negatively affect the economy of Bangladesh. Bangladesh is heavily reliant on the RMG sector, which is responsible for 80.6 percent of merchandise exports. Therefore, prolonged disruptions can directly threaten foreign exchange reserves and the country's macroeconomic stability. It also leaves scope for global diversification of supply sources if the demands are not met on time owing to disruptions, or creates a shift in demand from Bangladesh to other RMG-driven countries. After the 2024 unrest, even though exports recovered in value, the growth lagged rivals as some orders moved to countries like India.
There is also the critique of the government being reactive instead of proactive with regard to the increase in wages. There was a demand for a rise in wages in August 2026, which the government wasn't able to meet. The protests didn't stop either after the formation of the wage board. People wanted to keep the pressure on until their demands were met. This points to distrust in the system. The government's institutional mechanisms should be able to address these questions before the protest becomes violent or long-lasting.
Conclusion: Beyond Wage Revision
Understandably, the RMG sector is economically vulnerable, and this demonstrates to us the significance of industrial peace and stability for macroeconomic stability. The consequences of domestic labour unrest go well beyond delayed shipments. It strains foreign reserves, fuels inflation, and erodes fiscal health. The current RMG sector of Bangladesh also needs to build its own shock absorbers by improving the overall infrastructure, reducing reliance on imported raw materials, and investing in alternative and sustainable energy sources for seamless production.
In terms of labour wages, Bangladesh should look forward to automated inflation indexing and introducing proactive tripartite platforms that could open conversations between the trio of factory owners, labour federations, and state representatives. Even though conversations have taken place in the past, the owners have not been receptive to worker demands, and the wage board meets only after protests begin. A forum alone will not change that. Wage indexing could help. It would tie the minimum wage to a published cost-of-living measure, with a fixed review date. Wages would rise by that formula on that date, so owners would not have to concede the basic adjustment each time. Bargaining would then cover only the increase above inflation. The forum should also include the buyers. A Global Labor Institute study has recommended seeking explicit assurances from brands that they will support wage increases through higher prices. Transparency and trust-building measures on all sides can go a long way in maintaining a stable chain of demand and supply.
The structural logistics, like energy disruptions, gas shortages, and high commercial borrowing rates, also need to be addressed at the earliest to create a sustainable and stable economy out of the ready-made garment industry. The government should also publish how wage board decisions are reached.
Looking beyond wage revision and industrial relations, Bangladesh faces a broader strategic choice about its development trajectory. The question is not only how much garment workers should earn, but whether the country can continue to compete primarily on the basis of inexpensive labour in an increasingly automated and sustainability-conscious global economy. As major brands face pressure to strengthen environmental and social standards across supply chains, future competitiveness may depend less on keeping wages low and more on improving productivity, skills, technological upgrading, and value addition. A transition towards higher-value manufacturing, stronger domestic industrial linkages, and workforce upgrading would allow wage growth to become a source of economic resilience rather than a perceived threat to competitiveness. In that sense, the present unrest should be viewed not simply as a labour dispute, but as an early signal that Bangladesh’s economic model is approaching a critical point of transformation.
* Dr Atrayee Sinha is an Associate Research Fellow at Centre for Peace Studies. The views expressed are her own.
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