Bangladesh has nothing to worry about new US labour policy

The newly enacted U.S. labour policy is designed to bolster workers' rights by enhancing collective bargaining power and ensuring a fair and just workplace. The legislation aims to strengthen unions, protect workers from unfair labour practices, and empower employees to negotiate better wages and working conditions. While the policy's intended impact is clear within the U.S., its consequences may reverberate globally, particularly in countries heavily dependent on export-oriented industries.

Among those nations, Bangladesh, a major player in the ready-made garments (RMG) sector, finds itself under the spotlight as the possibility of sanctions looms for some political reasons. Bangladesh should not be worried in this new but unexpected circumstance, although there are some issues to be addressed to avoid the impact of a probable sanction on garments sector.

The content of the latest US Labour Act

Presidential Memorandum on Advancing Worker Empowerment, Rights, and High Labour Standards Globally (November 2023) outlines the Biden administration's commitment to strengthening worker rights and labour standards both domestically and internationally. It emphasizes the importance of protecting union rights, promoting collective bargaining, enforcing proper labour laws, making formation of unions easier and ensuring that workers have a voice in their workplaces. The Occupational Safety and Health Administration (OSHA) will work to increase its enforcement of worker safety and health standards. This policy also includes increasing the number of workplace inspections and pursuing civil penalties against employers who violate safety regulations. The Biden administration has supported raising the federal minimum wage to $15 per hour for the USA and expressed their expectation to increase minimum wage for the labours globally. The Biden administration has proposed expanding access to paid family and medical leave, retirement security for workers. 

Potential impact on Bangladesh’s RMG sector

The US policy provides for potential trade sanctions and restrictions against countries that fail to uphold labour rights. This could negatively impact the Bangladesh garment sector, as the US is a major export market (around 17% of total export from Bangladesh). As outcomes of a possible sanction on RMG sector of Bangladesh, U.S. companies may face increased scrutiny when sourcing products from Bangladesh – thereby leading to assessments of the working conditions and labour practices of manufacturers in this sector. In addition, implementing improved labour standards and minimum wage may lead to increased production costs for garment manufacturers, potentially affecting prices and competitiveness. Bangladesh stands out as one of the world's leading exporters of ready-made garments, with the sector playing a pivotal role in its economy. The country's success in this industry has largely been attributed to competitive labour costs. However, the new U.S. labour policy could pose challenges for Bangladeshi manufacturers if sanctions are imposed. Moreover, the policy's implementation and its implications for the Bangladesh garment sector remain uncertain. This uncertainty could create anxiety among garment workers who fear potential job losses or industry decline if stricter labour regulations are enforced. Additionally, greater scrutiny and potential labour disputes could create delays in production and export. Ultimately, American giant companies might diversify their supply chains, seeking countries with labour practices aligned with the new U.S. policy. This could potentially divert orders away from Bangladesh, impacting its garment exports.

Government & industry responses and recommendations

Bangladesh being a sovereign country is closely monitoring the situation and have expressed a commitment to maintaining compliance with international labour standards. The government has already reformed labour law and factory conditions and prioritised ethical and sustainable labour practices to safeguard the country's export market, to align with the expectations of major trading partners like the U.S.

Bangladesh has recently increased the minimum salary of the fresh and unskilled garments workers to 56% and the present minimum salary is 12,500 BDT monthly. The salary of the permanent and skilled workers is higher than the minimum salary. Besides, the monthly salary, workers can earn extra salary by working over-time, additionally, they get tiffin allowance, risk allowance, profit sharing of the companies, maternity leave with full salary, death allowance, and different types of leaves with salary. In Bangladesh, the poverty line income is around 20,000 BDT. The life expenses in cities and villages are not same in Bangladesh. In most cases, the family of the workers live in rural areas. On the other hand, it is not a wise thing to compare the minimum salary of Bangladeshi workers to the workers of developed countries like the USA. Considering all the conditions and comparing the salary structure of India, Sri Lanka, and Vietnam, the minimum salary can be increased. We need to reform the minimum wage structure by taking into consideration of economic conditions (like price inflation, living standard, house rent etc.) for our labours as well as female workers.

Bangladesh is working sincerely to fulfil the requirements for SDG 8 that stipulates "Decent Work and Economic Growth". The Labour Act of 2006 (revised in 2012, 2018) is quite up-to-date and it follows the criterial of the ILO standard. The Labour Act of Bangladesh has emphasised on labour rights, safety, maternity and overall welfare of the labours.

Short-run steps:

• Immediate collaboration between the government, industry, and international organisations should be arranged to address potential challenges.
• Dialogue between factory owners and labours; factory and buyers; and government and foreign governments should be arranged immediately to advocate the actions taken by Bangladesh regarding labour rights, compliance issues, workers’ health and safety, and the social impact of this sector.
• Now compliance officers are mandatory in every office, but they should be monitored properly by the authorities. Besides, compliance in every sector should be emphasised.
• Finding positive sides of Labour Act of Bangladesh and campaign around the world by researchers, academicians, diplomats and ambassadors, expatriates and so on.
• Arranging a diplomatic discussion with buyers and advocating abut healthy working environment of Bangladeshi factories and increase facilities for our Labours through higher prices.
• Rethinking about minimum wage rate. The minimum salary of the garment workers can be increased to 14,000 BDT to 15,000 BDT considering the salary of other south Asian countries. Initiative should be taken to inform the international community about the justification of minimum wages in the socio-economic context of Bangladesh. In addition, government should promote publicity of a comparative statistical analysis of wage rate and other benefits of Labours among Bangladeshi and other Asian or similar type countries (Example- publicity of average wage rate of Bangladeshi labour, wage rate in terms of purchasing power parity.
• Some factories and owners do not follow the labour act and guidelines properly and they do not give salary to the workers in time, which sometimes creates unrest in this booming sector. Government has to take initiatives to monitor these types of factories and some other conspiracies perpetrated to destabilise this sector.
• Our foreign missions and immigrants living in developed countries have a role to disseminate the truth about the real picture of growing garment sector of Bangladesh to our foreign friends and economic partners.

Long-run steps

• Diversifying export sectors- emphasizing on leather, footwear, medicine, agro-based processed products- jute and handy-craft industries, expanding ICT and software industry is important in the long run. Our exports are solely dependent on the garments sector (around 80%), diversification is a demand of time.
• Only 15-17% of garments products are exported to the USA, we can find new markets in Africa and other countries to be safe. Additionally, more research is needed to find better solution for this type of circumstances.
• Bangladesh has to improve the labour skills through education, training, research, experience, and foreign training & exchange. With that knowledge, our labour can be concerned about their position and empowered by showing bargaining capacity with the factory owners.
• Specialisation of garments industry by becoming self-reliant on raw material productions and experts.
• Exporting skilled manpower through training and technical education is also crucial.

To conclude, we can say that Bangladesh, aware of the potential impact of the newest US labour policy, may proactively work towards improving its labour laws and practices to align with international standards – thereby ensuring the sustainability of its vital RMG sector. It is crucial for stakeholders in the Bangladesh garment sector, including manufacturers, workers, and the government, to stay informed and engage in the ongoing discussions surrounding the US labour policy. Proper advocacy of the positive aspects of Bangladesh labour conditions, labour laws, and logic for the present minimum wage can change the game.

The writer, a distinguished senior professor, researcher, and academic teaching advisor with extensive experience in ICT sector, is currently working as a full-time member of the University Grants Commission of Bangladesh (UGC).